Irish food & drink exports hit €12.6 billion record, sector remains cautious on Brexit

11 Jan 2018

11 Jan 2018 --- Irish food and drink exports have reached a record high of €12.6 billion (US$15 billion) bolstered by butter as dairy remains the country’s most valuable agri-food sector, according to new figures from Bord Bia. And buoyant beef sales are also helping to strengthen exports as the key category continues to play a pivotal role in Irish exports, as do prepared foods and beverages.

Irish Minister for Agriculture, Food and the Marine, Michael Creed TD, announced that the value of Irish food, drink and horticulture exports increased by 13 percent in 2017, to reach €12.6 billion for the first time.

The figure increased to €13.5 billion (US$16.1 billion) when non-edible products such as forestry are included.

Speaking at the launch of Bord Bia’s Export Performance and Prospects 2017-2018 report, the Minister said that 2017 marked the eighth successive year of growth for total Irish agri-food exports.

“Bord Bia’s report provides valuable insights into the sectors and markets behind the very welcome 13 percent increase in the value of food and drinks exports to €12.6 billion,” he said. “Industry, in line with my department’s market prioritization strategy, is continuing to diversify, with exports to international markets reaching €4 billion for the first time.”

Growth to the UK market continues despite Brexit fears
Despite some concern over the impact of Britain leaving the European Union and what effect this could have on trade, sales growth to the UK is continuing to swell.

“Trade with the UK, which remains our most valuable market, has grown in overall terms, despite the difficulty presented by Brexit and a weaker sterling,” adds Creed.

“I am pleased that the significant additional resources provided by my department to Bord Bia as a key part of our Brexit response has helped to support Irish food and drink company’s export performance in 2017, as evidenced by these results, and will continue to do so into the future.”

Surge in dairy, beef sales are buoyant
According to the Bord Bia report, last year’s export performance was driven by a surge in dairy exports to more than €4 billion (US$4.7 billion), which is up 19 percent and is now one-third of all food and drink exports.

There were continued buoyant sales of Irish beef, up five percent, which represents a fifth of all exports at almost €2.5billion (US$3 billion). Notable growth was also recorded for prepared foods which increased 17 percent to €2.2bn (US$2.6 billion) and beverages were up 8 percent to €1.5 billion (US$1.79 billion).

Bord Bia CEO, Tara McCarthy, emphasized how increased volume in Ireland’s key export sectors, combined with strong market returns, helped boost trade throughout 2017.

“In terms of yearly growth rates, the dairy sector grew by almost 20 percent to reach €4.02 billion, confirming its position as the number one exporting sector. Within the dairy sector, the value of Ireland’s butter exports rose by a remarkable 60 percent this year alone, to reach €879 million (US$105 million).

“This growth accounted for over half of the total increase in dairy exports. Notwithstanding its impact on the overall export figures, it is worth noting that increased export volumes recorded for both beef and dairy also played a pivotal role in this year’s export performance. Pigmeat and sheepmeat also recorded increased volumes, at three and 14 percent respectively.”

On a more cautionary note, McCarthy also highlighted the currency risk that remains for all sectors especially those such as horticulture and prepared consumer foods that are hugely dependent on the UK market.

“Sterling volatility, combined with slower economic growth, food inflation and lower wage forecasts, will put further pressure on the UK market as an export destination. While the UK remains our most important market, these prospects provide an additional incentive for Irish exporters to explore new markets within the EU26 and beyond.”

Over recent months, Bord Bia, supported by the Department of Agriculture, Food and the Marine, has collaborated with the agri-food industry to develop a more data-led, strategic approach to export diversification and market prioritization.

“Trading in the international marketplace has been a strengthening component of our industry over the last decade. However, Brexit has, of course, placed a new urgency around diversification for many exporters,” adds McCarthy.

“We believe we are starting a new chapter in the development of Ireland’s largest indigenous industry and we recognize that Irish exporters require higher levels of consumer insight, market information and understanding to successfully enter, and more importantly grow, in any international market.”

“The longer-term outlook is positive and Bord Bia’s focus now is to put the infrastructure in place to ensure Ireland’s agri-food industry is best informed, best positioned and best prepared to avail of all possible opportunities that will arise.”

Overview of Irish food & drink exports
In addition to the dairy surge, pigmeat, seafood and beef all recorded strong results, with 14, 16 and 5 percent growth respectively. At a lower level in absolute terms, live animal exports also registered a big lift in sales for the year, while prepared foods (+17 percent) and beverages (+8 percent) also performed well.

Edible horticulture and poultry had the lowest levels of uplift – constrained by price sensitivity and volume.

The UK remains Ireland’s key export market, however, the percentage share of exports to Britain declined by two points to 35 percent of total exports. This reduction disguises the fact that sales still increased for the year by 7 percent to over €4.5 billion (US$5.3 billion).

Exports to other EU countries have risen by 16 percent to over €4 billion (US$4.7 billion) accelerating last year’s growth, mainly driven by strong dairy exports, which rose by over 40 percent to €1.2 billion (US$1.4 billion), as well as enhanced growth for seafood and pigmeat sales and a continued strong presence of beverages and prepared foods.

Meanwhile, shipments of Irish food and drink to international markets grew by 17 percent to exceed €4bn for the first time.

These are driven by strong sales of dairy products in North America, Africa and Asia, and beverages, which performed well in North America.

Dairy accounts for some 45 percent of all sales to international markets, while beverages represent 19 percent of total international exports.

Further expansion was recorded in the Middle East, Asia and Africa, while the United States recorded robust growth levels to exceed €1 billion (US$1.19 billion) for the first time.

McCarthy remains optimistic about the industry’s prospects for the year ahead. “While Brexit remains the great unknown, we still expect 2018 to be another year of growth, albeit at lower levels,” she said.

“Our key export categories, dairy and beef, remain stable with further volume growth anticipated. This coupled with the significant opportunities evident in beverages, in particular, Irish whiskey, provide further reasoning for the positive outlook.”