Irish food and drink exports exceeded €11 billion in 2016

The value of Irish agri-food and drink exports exceeded €11 billion for the first time ever in 2016, it was announced at Bord Bia’s Export Performance and Prospects 2016-2017 report today.

Last year marked the seventh 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 Minister for Agriculture, Michael Creed, said at the launch.

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,” Minister Creed said.

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 €570m.

In 2016, trade with the UK fell by 8% which was caused by challenging exchange rates following uncertainty arising from Brexit and further competitive pressures, he said.

However, this was offset by increased exports to international and emerging markets such as North America (+€200m to reach €1.1 billion), China (+35% to reach €845m) and the rest of Asia (+6% to reach €330m), the Minister added.

An overall increase of 13% in shipments to international markets, to reach a value of approximately €3.5 billion, was particularly remarkable.

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, figures show.

The Euro strengthened by 13% against sterling in 2016 while there was little change in exchange rates with the US Dollar.

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.”

Bord Bia

Irish Dairy Exports in 2016

In the first half of 2016 the global dairy market remained weak as supply growth continued to outpace import demand, before rebalancing as the year progressed leading to an improved price environment, according to the report.

For the year, Bord Bia figures show that 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.

The Export Performance and Prospects report highlighted:

  • 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 €675m. 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, it found.

Recovering global dairy prices and increased demand from key global dairy importers on the back of anticipated stronger oil prices should help exports.

Breakdown of Meat and Livestock Exports

Meanwhile on the report outlined that for meat and livestock exports in 2016:

  • 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 535,000t, 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 €615m.
  • 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 €240m.

For the year Bord Bia estimated that the value of Irish poultry exports fell by 14% to €275m, 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.

Meanwhile, 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.

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.

“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, the report found.

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, according to the Bord Bia report.

However, Bord Bia believes the pickup in global dairy demand is expected to continue while further opportunities for growth are likely in beverages.

In 2017, 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 from the UK.

Minister Creed also noted the progress made in 2016 on improved market access for livestock and strengthening official relations with countries through an ambitious programme of trade missions.

He added that close working relationships 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,” he said.