Creed Announces Record Food and Drink Exports

Minister for Agriculture, Food and the Marine, Mr. Michael Creed TD, today announced that the value of Irish agri-food and drink exports had exceeded €11 billion for the first time ever in 2016. Speaking at the launch of Bord Bia’s Export Performance and Prospects 2016-2017 report, the Minister said: "2016 marked the 7th successive year of growth of Irish food and drink exports, with a further 2% increase recorded to reach a record high of €11.15 billion, an expansion of 41% or €3.3 billion since 2010. The strongest performing sectors last year were prepared foods (€1.92 billion, +9%), beverages (€1.4 billion, +4%) and dairy product and ingredients (€3.38 billion, +2%).”

“One of the notable features of this achievement is the impact of market diversification in the year in which the UK decided to leave the European Union. While trade with the UK fell by 8%, triggered by challenging exchange rates, uncertainty arising from Brexit and further competitive pressures, this was offset by increased exports to international and emerging markets such as North America (+€200 million to reach €1.1 billion), China (+35% to reach €845 million) and the rest of Asia (+6% to reach €330 million). An overall increase of 13% in shipments to international markets, to reach a value of approximately €3.5 billion, was particularly remarkable" added Minister Creed.

Meanwhile a welcome recovery was also seen in continental EU markets (+3% to reach €3.53 billion) as improving economic conditions led to stronger demand in key categories. The Euro strengthened by 13% against sterling in 2016 while there was little change in exchange rates with the US dollar. According to Bord Bia estimates, the underlying weakness and volatility of sterling negatively affected the competitiveness of Irish exports reducing the value of trade by a potential €570 million.

Noting that the UK referendum on Brexit had led to currency volatility and uncertainty, the Minister said this challenge, together with weakness in some commodity prices, highlighted the importance of market access, of identifying market opportunities for value added products and of continued investment in innovation and competitiveness. "The UK will continue to be a critically important market for Irish agri-food products. The triggering of Article 50 and the continued uncertainty around Brexit will present significant challenges for the sector. However, the 2016 export figures illustrate clearly the importance of collaborative action by Government, its agencies and the industry, and the potential for pro-active effort on international markets to mitigate the risks associated with these challenges."

Padraig Brennan, Director of Markets, Bord Bia highlighted how increased volume in key sectors, and an improvement in market demand for key categories, helped boosted trade throughout 2016. “Some 80% of total export growth in 2016 was recorded in trade to international markets where higher demand, improved market positioning and relatively steady exchange rates helped improve the competitive position of Irish exports” commented Mr. Brennan. “Since 2010, international markets have accounted for half of the growth in total exports, which reflects the industry’s ability to identify and develop new business opportunities. Irish food and drink exports to China have increased six fold in six years, while exports to North America and the Rest of Asia have doubled in the same period.”

Bord Bia Chairman Michael Carey welcomed the export results and commended the sector on its performance. “Despite difficult trading conditions, it is encouraging to see this industry continuing to grow business and extend its global footprint to more than 180 markets around the world. Increased export volumes were recorded across a number of key categories, with milk availability over 5% higher during the first 10 months of the year and beef export volumes up 5%. The combined impact of higher output in these sectors is estimated to be in the region of €250 million.”

The strongest performers in terms of export growth in 2016 were prepared foods, sheepmeat, beverages, pigmeat and to a lesser extent dairy. Weaker prices negatively affected the value of beef and edible horticulture exports while lower volumes affected seafood exports. Livestock exports declined in value terms largely due to a significant reduction in live cattle shipments, while poultry exports recorded a significant decrease due to both reduced prices and lower volumes.

Looking Ahead to 2017

Export markets look set to remain challenging in 2017 amid ongoing market uncertainty. However, the pickup in global dairy demand is expected to continue while further opportunities for growth are likely in beverages. Increased beef export availability may put some pressure on returns while prepared consumer foods exports are likely to face on-going competitive pressures, most notably the UK.

Noting the progress made in 2016 on improved market access for livestock and strengthening official relations with third countries through an ambitious programme of trade missions, Minister Creed added that close working relationships of between his Department, the development agencies, producers and industry were a key strength of the Irish food, drinks and horticulture sectors.

"As an exporting country, we need to identify and act on market opportunities promptly. The continued efforts of my Department in international markets and the additional funding for Bord Bia’s marketing strategy, which I have made available in both 2016 and 2017, will assist Irish exporters in their efforts to retain and diversify export markets."

Ireland’s Food and Drink Exports 2016 - Breakdown

Sectoral Analysis

Meat & Livestock

• Higher volumes for all categories were offset by a difficult market environment for some meats in 2016, leaving the value of meat and livestock exports 2% lower at around €3.66 billion. This equates to 33% of total food and drink exports.
• The value of Irish beef exports showed a slight fall, standing at €2.38 billion. The volume of beef available for export increased by 5% to around 535,000 tonnes, while average prices eased by 6%.
• The volume of pigmeat exports lifted by 2% while average pig prices were almost 2% higher. This left the value of Irish pigmeat exports up by 4% in 2016 at €615 million.
• An increase of 3% in sheepmeat volumes available to export coupled with steady lamb prices saw the total value of Irish sheepmeat exports increasing by over 4% in 2016 to reach €240 million.
• For the year it is estimated that the value of Irish poultry exports fell by 14% to €275 million, due to lower volumes coupled with weaker export prices.
• The value of Irish livestock exports was down 23% at an estimated €150 million as lower exports of cattle and pigs and more competitive prices in key export markets affected trade.
• The prospects for the meat and livestock sector in 2017 are mixed with a strong rise in finished cattle supplies expected, while prospects for sheep and pigmeat remain broadly positive amid anticipated steady supplies.

Dairy Products & Ingredients

• The global dairy market remained weak during the first half of 2016 as supply growth continued to outpace import demand, before rebalancing as the year progressed leading to an improved price environment.
• For the year global dairy wholesale prices fell by over 10%. However, prices in the final quarter were significantly ahead of year earlier levels, reflecting the improved market environment.
• A rise of 5% in Irish milk output and a recovery in international demand as the year progressed combined to leave the value of Irish dairy and ingredient exports for the year around 2% higher at €3.38 billion.
• The strongest performing category was specialised nutritional dairy powders while whey, whole milk powder and yogurt also recorded growth but from a lower base.
• Despite higher volumes, the value of cheese exports declined by around 4% in 2016 to €675 million. The UK accounted for over 50% of cheese exports and trade into that market is estimated to have shown a double digit decline due to unfavourable exchange rates.
• The prospects for Irish dairy exports in 2017 look reasonably positive. Recovering global dairy prices and increased demand from key global dairy importers on the back of anticipated stronger oil prices should help exports.

Prepared Foods

• Prepared Food exports showed some recovery in 2016 driven by increased exports of dairy based enriched powders, which account for 37% of total exports within the category.
• Overall, exports of products covered under the prepared foods category increased by 9% to an estimated €1.9 billion.
• The strongest performing categories within Prepared Foods were dairy based enriched powders, bakery and chocolate confectionery while sauces and sugar based products also recorded growth. Lower exports were reported for pizzas, sauces and ice-cream.
• International markets exhibited the strongest growth with exports 16% ahead at €620 million. This helped offset a 4% reduction in exports to the UK.
• The outlook for prepared food exports for 2017 is mixed. Anticipated positive developments in the dairy sector should help trade of dairy based enriched powders while exchange rate developments will determine the environment for prepared foods categories in the UK.
• Key drivers of growth for the sector will be product innovation, growth in premium preparations and the delivery of customer service levels that can improve Ireland’s competitive advantage.

Prepared Consumer Foods

• Across all food and drink categories €2.5 billion or 23% of total food and drink exports can be classified as Prepared Consumer Foods (a new category included in the Food Wise 2025 report). Exports under this heading fell slightly due to reduced exports of value added meat and dairy products, which offset growth in exports of value added seafood, beverages, sugar confectionery and sauces & extracts.
• The UK remains the principal destination for prepared consumer foods accounting for approximately 65% of export value with trade around 9% lower in 2016 at an estimated €1.6 billion.
• Exports to other EU markets were around 15% higher at €615 million helped by stronger exports of value added seafood, beverages, bakery, confectionery and sauces. Key growth markets on the continent included France, Germany, Italy and Poland.

Beverages

• The global beverages market continued to grow in 2016 driven by demand for premium alcoholic products.
• Overall, beverage exports are estimated to have increased by 4% in 2016 to €1.4 billion.
• Sales were helped by sustained growth in whiskey demand combined with a further rise in ‘craft’ exports. Beer and cider also recorded growth while liqueurs remained relatively steady. Exports of non- alcoholic beverages were boosted by stronger sales of mineral waters.
• Exports to the UK were marginally lower at €380 million. Increased sales of whiskey, juices and cream liqueurs helped offset slower exports of cider and mineral water.
• Exports to other European markets showed little change at an estimated €315 million.
• Shipments to International markets increased strongly, due mainly to higher whiskey exports. Increased trade was reported to North America, Africa, Asia and the Middle East with overall exports to international markets estimated at €705 million.
• The outlook for Irish beverage exports in 2017 looks broadly positive helped by continued growth in whiskey sales, ongoing growth in emerging markets and the ever increasing range of craft products such as beers, whiskey and cream liqueurs produced in Ireland.

Seafood

• Seafood exports fell by an estimated 3% in 2016 to €555 million due to a decline of over 20% in volumes. This was partly offset by strong price increases.
• The main EU markets, namely France, Spain, UK, Italy and Germany continue to dominate seafood exports, accounting for some 63% of total exports by value.
• France the largest export market grew by 13% to an estimated €140 million while seafood exports to International markets were boosted by increased trade to Asia. This offset lower trade to West African markets, which account for over 10% of exports.
• Prospects for 2017 look positive on the back of higher demand and increased quota allocation. However, much will depend on the macroeconomic environment.

Edible Horticulture & Cereals

• Stronger mushroom export volumes were offset by unfavourable exchange rates while exports of cereals, fruit and vegetables fell to leave total edible horticulture and cereals exports 8% down at an estimated €230 million.
• The UK retail market for mushrooms increased in volume terms however, declines in average prices resulted in lower prices for Irish mushroom exports.
• The anticipated currency uncertainty for 2017 will lead to ongoing challenges for the horticulture sector