Irish Meat and Dairy Export Performance Q1
Recently released CSO trade statistics reveal that the value of food and drink exports for the first four months of the year was €3.93 billion, a 3% decline on the same period last year. The value of exports in April alone was €1.07 billion, 8% above what it was in April 2020 – the first month in which the Covid-19 pandemic began to impact exports.
Cormac Nolan, Market Insight Specialist with Bord Bia, analyses Irish exports to Ireland’s major markets (UK, EU, and Asia) for the dairy and meat sectors, from January to April (Q1).
Sector Summary – Dairy
Although global dairy markets are performing strongly this year a combination of stockpiling in priority export markets in the second half of 2020 and a decline in infant food exports in particular means that exports year to date are down 12% for the first four months.
Sector Summary – Meat
Beef exports for the first four months of the year are up 6%, (€36 million) to be worth €643 million. This growth has been driven by growth in the frozen boneless category.
The price available for pigmeat exports has declined sufficiently that even with more product leaving the country, the value of export has reduced 8%. Some of this decline in pricing follows a period of extremely high pricing and the market readjusting to some local recovery in production. Export to China has continued to do well and is up 25% (or €17 million) for the four months. This has been more than countered by significant declines to the UK (-56%, -€34 million) and to EU (-41%, -€14 million).
Sheepmeat exports continue to benefit from a strong increase in the price available and demand in the EU.
Poultry exports are particularly exposed to the UK where decline in demand has been significant. The UK’s total poultry import has declined 28%, and significant declines in import form all the major sources including Ireland can be observed.
Exports to the UK, for the first four months of the year, are 10% below 2020 exports (down €139 million). However, April was the first month of 2021 in which exports to the UK improved. Comparing April 2021 to April 2020, exports to the UK were up 11% to be worth €326 million for the month. Looking at 2019 to remove the Covid-19 effect, the value of exports in April were up 1%, (€15 million) in 2021 compared to 2019.
The decline in the value of exports to the UK is concentrated in dairy (-24%, -€53 million), itself very concentrated in declines in butter (-63%, -€27 million), liquid milk (-37%, -€11 million) and skim milk powder (SMP) (-55%, -€5 million).
Explaining this decline in dairy exports, David Kennedy said that “January to April exports from Ireland to the UK were influenced by a very strong end to 2020 as exporters looked to get stock into market before Brexit tariff implications and checks became enforced. April exports look nearer to what would normally be expected, indicating that this forward held stock has worked its way through the supply chain.”
On an April alone analysis, dairy to the UK is down only 1.4% with significant gains in cheese (+61%, +€11 million) countering ongoing declines in infant food (-53%, -€6 million), butter (-39%, -€3 million) and SMP (-74%, -€4 million).
Exports of beef the UK are down 3.3% (€9 million) for January to April. Compared to April 2020, beef is in growth, however, compared to April 2019 the value of beef exports to the UK for the month of April was down 10%, or €7 million. This reflects very strong sales of Irish beef to the through the final months of 2020 and ahead of the December 31st Brexit deadline. With high stocks of Irish beef in storage in the UK in early 2021 and lower cattle numbers coming forward in the early weeks of 2021, this impacted on exports to the UK in the 1st quarter.
Pigmeat exports to the UK continue to decline. They are back 56% (€34 million) for the January to April period. On an April only basis they are back 50% (€7 million). This value decline is consistent with the decline in volume, so it is not driven by a decline in price.
Explaining this drop in pigmeat exports, Peter Duggan, Sector manager for Pigmeat and Poultry in Bord Bia, noted that, “the key driver behind lower pigmeat exports to this market was linked to lower demand within the foodservice and the further manufacturing channel in response to the disruption caused by Covid-19”.
Exports to the EU have grown 1%, or €11 million for the January to April period. This growth has been driven by strong export performance to the region for beef (+25%, +€65 million) and for seafood (+53%, +€38 million) more than countering the declines in dairy (-11%, -€62 million), pigmeat (-41%, -€14 million) and prepared consumer foods (-4%, -€7 million).
Within the EU, there is an exceptional amount of variance between countries. Exceptional growth to Sweden is driven by beef exports, which have risen by €35 million (or 211%) for the period. Over 9,400 tonnes of beef have been exported to Sweden, up from 4,500 tonnes in the same period last year.
Declines to Germany is due to a fall in the value of cheese exports. Cheese exports are down by €37 million for the January to April period, primarily due to foodservice closure. While there has been some cheese growth to the Netherlands (+45%, +€7 million) this decline to Germany has been the driver of a significant decline in total cheese export to the EU.
Exports to Asia have declined by 12% or €57 million for the first four months of the year. All of this decline can be attributed to dairy (-25%, -€72 million) and beef (-46%, -€21 million). Both of these declines are driven by China.
On an April only basis, there is no significant change in the profile. Exports to Asia are back 24% for the month, with the declines entirely accounted for by declines in the value of dairy and beef exports.
Declines in the value of dairy exports are overwhelmingly accounted for by declines in Infant Food exports. This subcategory accounts for over 50% of dairy export to Asia and is down 44%, (- €81 million) for the first four months of the year.
Infant food accounts for 69% of all Irish dairy exports to China. This sector has seen reduced demand due to lower birth rates and increased investment in local brands and manufacturing. From a positive perspective this has driven demand for base ingredients with all other dairy exports from Ireland to China up 40%.
Beef exports to Asia remain affected by the suspension of beef exports to China as comparisons includes the months when Irish beef was going to China last year. Beef exports to Japan and the Philippines, the other major destinations in the region, remain depressed – Japan is back 79% (€5 million) for the January to April period. The Philippines is back 7% by €1 million.
Beef imports to many Asian markets such as Japan were very strong in late 2020 and as a result frozen stocks of beef started high in 2021. With Covid-19 impacting heavily on the foodservice sector demand, imports in early 2021 trended significantly lower (-11% year on year in Japan). However there is confidence that with demand improving and global supplies remaining constrained, Irish beef can make ground in these markets again in the 2nd half of the year.