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Belgium’s food and drinks federation has delivered a stark warning over the future of the sector, with rising price risks just one of a number of concerns.
Fevia is calling for government “intervention” to support the industry, which it says is the largest in the country with sales of €85.1bn ($99.5bn) and exports of €42.4bn.
It said the “stability of the food industry in Belgium is threatened”.
The federation warned: “If the competitiveness of our companies continues to decline, production risks shifting to countries where production is cheaper. This will have consequences for employment, investment, and the entire agri-food chain.”
It said Belgium’s food and drinks manufacturers are absorbing higher costs and not passing them onto consumers, just as the crisis in the Middle East is putting pressure on prices through the supply chain.
Fevia suggested labour costs are too high, with products from overseas also threatening the local industry, while it implied the government needs to avoid any increases on VAT and reduce taxes on things like packaging.
“The Belgian food industry is at a turning point,” Fevia said. “Today, companies still have the necessary resilience to absorb shocks. But without swift and thoughtful policy, this resilience risks breaking.
“If the food industry falters, the entire chain falters, from agriculture to logistics, distribution, and the hospitality sector.”
The trade body’s CEO Ann Wurman warned local labour costs are more than 23% higher than other EU countries as she called for “wage indexation” to offset Belgium’s lack of competitiveness and “affordable electricity prices”.
She added: “If we want to protect and anchor our food industry in Belgium, we must act today, not tomorrow. Stimulate domestic demand by keeping food and beverage prices affordable and avoiding any VAT increases, reduce packaging and excise taxes, introduce a tax standard for beverages, and lower the litter tax to the level of our neighbouring countries.”
Without intervention, the federationsuggested Belgium manufacturers are likely to refrain from making investments and will “reassess their operations” and shift abroad.
“Profitability is under severe pressure, with consequences for investment and employment,” Fevia said.
“The war in the Middle East and the broader geopolitical context are intensifying pressure on energy, transport, and packaging prices, as well as on raw materials and logistics. Companies are currently absorbing the shocks but this is not sustainable in the medium term.”
The federation highlighted how job growth in the country’s food and drinks sector dropped last year to its lowest level since 2015, what it called a “structural warning sign”.
Markets for Belgium exporters are also drying up and “stagnating” outside of the EU, while in the US “momentum is weakening”, Fevia said.
It added: “Sales in the Belgian market are stagnating, cross-border purchases remain structurally high, and foreign products are gaining ground on supermarket shelves. At the same time, geopolitical tensions and the war in the Middle East are generating increased uncertainty and rising production costs.”
“Belgium food, drinks body warns “resilience” at risk without intervention” was originally created and published by Just Food, a GlobalData owned brand.
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