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First signs of Covid-19 impact on food and drink exports evidenced in 9% decline

Bord Bia accelerates pandemic response to protect international trade

Date: 05/08/2020

The first quantifiable signs of the impact of Covid-19 on Ireland’s food and drink exports is evidenced in latest CSO data* which highlights a 2% decline in food and drink exports year-to-date in May 2020, and an even more significant year-on-year decline of 9% for the month. 

 In response to the trade challenges ahead, Bord Bia is delivering a comprehensive suite of newly-designed supports to Ireland’s food, drink and horticulture producers to assist them mitigate against the ongoing trade impacts of Covid-19 and Brexit. A crucial feature will be a first of its kind hybrid programme of offline / online trade engagement which will see exporters avail of new Bord Bia services including virtual international Trade Missions, participation in online Trade Shows, training and development for virtual business pitching and a new business development website targeting global food buyers. Last year, Bord Bia and Irish exporters participated in excess of 30 high profile trade shows around the world. Bord Bia’s new virtual approach to trade missions and online showcase events will replace the 2020 shows cancelled due to the global pandemic. 

 Tara McCarthy, Bord Bia CEO, commented: “Coming off the back of a decade of record food and drink export growth to €13bn last year, the recent export figures highlight the real impact Covid-19 has had on international trade with year-to-date food and drink exports down by €126mln. The figures bring into sharp focus the profound need for the sustained and targeted supports the Department of Agriculture, Food and the Marine and Bord Bia has continued to provide to the agri-food sector, as the industry deals with the ongoing challenges posed by Covid-19 and Brexit. A relentless focus on market diversification is critical as we seek to trade our way through 2020 and beyond in more innovative ways than ever to deliver the additional €6bn in exports needed to meet the ambitious €19bn target of Foodwise 2025”.

 Dairy and meat are the two key pillars of Ireland’s international food and drink exports, accounting for almost two thirds** of the sectors’ exports annually. In the first five months of the year, strong value growth in dairy has offset declines in other categories accounting for €2.05billion of exports, representing a year on year increase of €135million (+7.1%). The UK is the only region where dairy exports declined (-€66million /-17.7%), largely due to lower cheese exports, while strong dairy growth was been achieved in the EU (+€36million/+5.5%), Asia (+€31.5million/+9.7%) and North America (+€27million/+18.6%).  Despite the agility of the dairy sector in navigating the significant international turbulence to date, Bord Bia caution that due to the medium to long term nature of dairy contracts, the full impact of Covid-19 has yet to be felt in dairy exports and the outlook for year-to-go remains uncertain.

In addition, primary meat exports are now reflecting the decline in demand in Europe. Declines in primary beef exports to EU27 (-€60 million/-16% to €315million) and to the UK (-€42million/-11% to €331million) were countered to some extent by increases in values and volumes to Asia and to the US. Primary pigmeat remains in strong growth, up 22% to €245 million, as a result of a very strong global price environment driven by Chinese demand. Sheepmeat is up 7% to €139 million due to increases in exports to continental Europe, offsetting UK declines. 

In sectoral terms, the most significant year-to-date export decreases have been witnessed in alcohol (-21% to €463 million), followed by seafood (-17% to €205 million) (see Table 1 in appendix for full category breakdown).

Market Diversification & Export Redirection

Against the challenging global backdrop, growth in Asia – in particular in the pigmeat and dairy categories – provides encouraging evidence of how Ireland’s food and drink exporters have embraced market diversification. Food and drink exports to Asia in the first five months of the year increased by 7% to €570 million as China, Japan and the Philippines drove growth.

The factors driving demand for Irish produce in Asia over the last number of years remain robust, even in the midst of Covid-19 unpredictability. Populations in Asia are growing, urbanising and demanding high quality and safe food. While it is unlikely that the 7% growth year-to-date will continue at the same pace, Asia can continue to deliver growth, critically as it is at an earlier stage of recovery from Covid-19, notwithstanding ongoing uncertainty.

Understandably Irish food and drink exporters remain focused on dealing with the trade implications of Covid and Brexit, however the sector and Bord Bia continue to pursue alternative export growth opportunities. In Bord Bia’srecent ‘Risk Readiness Radar’ report, a comprehensive risk assessment study involving 128 companies, 91% of respondents cited the trade implications of Covid-19 as a top priority, while export market diversification was ranked the second biggest focus area for the industry, with over 70% of companies actively pursuing diversification opportunities.

As part of its ongoing Brexit response, Bord Bia is currently undertaking an ‘Export Redirection’ project which will identify and explore alternative export market opportunities for the agri-food sector. According to Bord Bia, the ‘Export Redirection’ project, due to be completed in early autumn, and all other market diversification initiatives are of increasing importance to the agri-food sector as the ever-uncertain political negotiations between the UK and the EU continue.

 Virtual Trade Missions and Online Trade Shows

International travel restrictions and ongoing social distancing guidelines has necessitated Bord Bia to revaluate its trade engagement strategy and planning for the remainder of the year. This week, Bord Bia will launch its new hybrid offline/online alternative programme of events. This will ensure sustained engagement to build Ireland’s reputation as a sustainable source of food in new markets worldwide, develop market understanding for client companies, and foster connections with prospective business partners.

 The first ever ‘Minister Led Virtual Trade Mission’ for Ireland’s food and drink industry will take place in the autumn targeting 150 trade buyers across Vietnam, South Korea, Philippines, Indonesia and Malaysia. Additional virtual trade engagements are planned by Bord Bia, in partnership with the Department of Agriculture, Food and the Marine, to target key customers across China, Japan, North America, Middle East, Asia and Europe throughout September, October and November.

Meanwhile, Bord Bia recently prepared 150 companies for the new reality of virtual business pitching as part of its ‘Perfecting the Virtual Pitch’ workshop and is currently working with a number of Irish drink exporters in preparation for the organisation’s first ever online trade show, scheduled to take place in Berlin this autumn

Commenting on taking international trade virtual, Tara McCarthy said: “In these challenging times for the food and drink export industry, it is more important than ever to maintain and grow our global connections in the export sector. Working alongside the Department of Agriculture, Food and the Marine, we are resolute in giving the industry every chance it needs to stay open for international business. Although there are significant restrictions on international travel and events, Bord Bia has continued to develop agile and proactive responses to these issues. We are excited about the role virtual trade missions can play in consolidating existing trade relationships, progressing market access aspirations world-wide, and how we continue to showcase Ireland’s world-leading food and drink industry credentials for global consumers in the most dynamic ways we can. In fact, it has never been more important.”

 

ENDS

 

Table 1: Year to date summary for each category and subcategory (in value terms) of Irish food and drink exports (listed alphabetically)

Category

Jan 19 - May 19 (€)

Jan 20 - May 20 (€)

Difference

% Change

Alcohol

588,253,050

463,371,021

-124,882,029

-21.2

Beef

803,503,817

738,839,167

-64,664,650

-8

Beef Offal

91,428,075

76,143,721

-15,284,354

-16.7

Dairy

1,914,634,185

2,049,699,427

135,065,242

7.1

Horticulture and cereals

89,282,012

97,429,455

8,147,443

9.1

Live Export (excludes horses)

71,518,745

45,359,231

-26,159,514

-36.6

Other meat and meat produce

5,934,999

5,906,778

-28,221

-0.5

PCF

1,036,037,832

987,340,720

-48,697,112

-4.7

Pigmeat

201,365,617

245,536,657

44,171,040

21.9

Poultry

63,999,546

62,742,124

-1,257,422

-2

Seafood

247,764,420

205,590,429

-42,173,991

-17

Sheep

129,895,230

139,389,918

9,494,688

7.3

Total

5,243,617,528

5,117,348,648

-126,268,880

-2

 

Sources:

*CSO May 2020 statistics

**Bord Bia’s Export Performance and Prospects Report 2019/2020