13 January 2014

11 minute read

Europe

This represents an increase of 9 per cent on the previous year and 40 per cent in the last four years with revenues almost €3 billion higher than in 2009.

Export values for dairy product and ingredients exceeded €3 billion for the first time and strong performances for meat and livestock (€3.3billion) and prepared foods (€1.65 billion) all contributed to the positive outcome.

Minister for Agriculture, Food and the Marine, Simon Coveney, TD said "Significant growth in 2013 has brought export values in the Irish Food and Drink sector to record levels.

“This leading performance in what was a challenging year for the industry, highlights the key role of agri-food, Ireland’s largest indigenous sector, in underpinning exports and economic activity.

“Export values of almost €10 billion are really impressive, and demonstrate the clear opportunity and benefit of investing in a sector with proven resilience, a significant domestic economic footprint and strong ability to grow.

“With increasing demand from more affluent consumers in key world markets, there is little doubt that the €12 billion export target set out in the industry-led strategy for the agri sector Food Harvest 2020 is well in sight."

Aidan Cotter, Chief Executive, Bord Bia said: "Among the highlights of 2013 have been the double digit growth in dairy and beef export values, the strong recovery in sales to eurozone destinations, and the exceptional performance of the industry in China, now Ireland’s second largest dairy and third largest pork market.

“The industry is well positioned to exploit the relentless growth in the global demand for food, underpinned by its grass-based production systems and its ability to build its presence on both new and established markets".

Bord Bia Chairman, Michael Carey, said "The significant export growth achieved by the Irish food and drink industry, in the face of an increasingly competitive environment for exporters confirms the dedication, ambition and resilience that is abundant in the sector.

“This impressive growth in exports by our largest indigenous industry reflects its persistent focus on innovation and differentiation as it seeks, successfully, to boost its position across key markets."
Key Markets

The UK remains the largest export destination for Irish food and drink with 42 per cent of exports worth an estimated €4.1 billion reaching that market in 2013.

Exports of food and drink to other EU markets increased by 11 per cent in 2013 reaching €3.2 billion with the key markets of Germany, France and the Netherlands all recording double digit growth.

Strong exports to Asia, and to a lesser extent Russia, contributed positively toward an increase of six per cent in the value of trade to international markets, which exceeded €2.6 billion in the period.

Exports to China grew by over 40 per cent, with values trebling over the last three years to reach €390 million in 2013.

It is now Ireland’s sixth largest market overall, driven in particular by strong dairy and pork exports.

Seafood and beverage exports are also growing solidly albeit from a lower base, while eventual access to the beef market will act to further broaden the industry’s presence in the world's fastest growing market.

The inclusion of hide exports from the beef industry would bring the market’s value overall for the sector to €432 million.

Prospects for 2014

The market environment for Irish food and drink remains positive for the year ahead, boosted by the strong growth recorded in 2013. A further rise in output is expected across key sectors and ongoing strong demand is anticipated in emerging economies. Much will depend on developments in more established markets and consumer sentiment will remain a critical driver.

Industry Sentiment

A Bord Bia industry survey carried out among Irish food and drink manufacturers has revealed that exporters remain positive about prospects for their business. In total more than eight out of 10 reported higher or similar turnover in the last 12 months. Innovation remains important for many food and drink companies with 91 per cent of exporters reporting that they had introduced new products in the last three years. Looking ahead to 2014, some 75 per cent of exporters expect their export sales to grow.

Key Bord Bia Initiatives for 2014

In 2014, Bord Bia will continue to promote Ireland's sustainable food and drink industry through its participation in some 15 trade exhibitions which will attract in excess of 800,000 business executives in Europe, Russia, the Middle East and Asia.

In February, Bord Bia will participate at Gulfood, the world’s biggest annual food and hospitality show taking place in Dubai.

The Ireland stand, which will include dairy, meat and consumer food companies, will be a significant and timely representation of the Irish industry following its recent Trade Mission to the Middle East and the opening of Bord Bia’s newest office in Dubai.

Gulfood is expected to attract over 77,000 food buyers from around the world.
This year will also see the roll out of Bord Bia’s Sustainable Dairy Assurance Scheme which has been designed to provide a uniform mechanism of recording, monitoring and improving the sustainability of Irish dairying at farm level - the first national dairy scheme of its type anywhere in the world.

The roll out of the scheme coincides with Bord Bia's plans to invest almost €3.5million during the year in a new targeted marketing campaign, under the 'Origin Green’ banner to promote Ireland as a source of world-class sustainably produced food and drink. The 'Origin Green' sustainability programme now encompasses 37,000 farms and more than 290 companies, accounting for some 85 per cent of Ireland's food and drink exports.

Additionally, starting this month, ten 'Origin Green' ambassadors will begin their placements with major international food businesses around the world, spreading the vision and the message of 'Origin Green'.

This follows a programme of induction at the Smurfit Graduate School of Business and on farms and factories in late 2013.

Meat & Livestock

The meat and livestock sector built on the strong performance of recent years in 2013. A combination of higher output in some categories, most notably beef and sheep meat together with stronger prices for cattle and pigs helped boost the value of trade.

For the year, it is estimated that the value of meat and livestock exports increased by 8 per cent or €245 million to reach €3.3 billion. This leaves the sector accounting for a third of food and drink exports.

The value of beef exports increased by almost 10 per cent reflecting a rise of 5 per cent in output and a four per cent increase in average prices. As a result, exports were valued at just under €2.1 billion. Despite a drop of around 2 per cent in pig meat production, a rise of almost 6 per cent in pig prices helped to boost the value of Irish pig meat exports by three per cent to reach €525 million.

The competitive market environment for poultry persisted in 2013 although higher export volumes combined with some improvement in prices led to the value of poultry exports rising by four per cent to an estimated €230 million.

A rise of seven per cent in sheep output helped offset lower carcase weights and a marginal drop in prices to leave the value of Irish –sheep meat exports over four per cent higher at €220 million.

A jump of a third in cattle exports and a doubling in sheep shipments helped drive a rise of 11 per cent in the value of livestock exports to leave trade valued at an estimated €240 million.

The prospects for the meat & livestock sector in 2014 remain broadly positive with relatively tight supplies persisting across the EU for most species.

While slower consumer demand is likely to continue in some EU markets, the overall trading environment is expected to be broadly positive, helped by strong global prices.

Dairy Products & Ingredients

Strong global dairy prices combined with increased Irish availability as the year progressed helped boost the value of dairy product and ingredients exports by an estimated 15 per cent to exceed €3 billion for the first time in 2013.

Tight global supplies and a spike in Chinese demand led to international dairy prices reaching record levels in April with Fonterra auction WMP prices reaching $6,283 USD/tonne compared to $2,766 in April 2012. Prices eased from this peak for around two months but started to firm again to year end, reflecting the ongoing tight supply situation.

Milk deliveries in Ireland were significantly impacted by poor weather during the spring. April deliveries were some 11 per cent behind the same month in 2012. Good weather, excellent grass growth rates and good ground conditions resulted in a surge in Irish milk deliveries from June with volumes for July - October nine per cent above 2012.

The strongest performing product categories were butter, cheese, infant formula, milk & cream, WMP and whey.

Strong double digit growth was evident across most European markets for Irish dairy products in 2013. In terms of International markets significant increases to China and parts of South East Asia offset reduced exports to the United States, Saudi Arabia and South Africa.

The prospects for Irish dairy exports in 2014 remain broadly positive with global demand likely to help clear any increase in output to keep prices well ahead of historical averages. Global stock levels and the relative strength of the euro will largely determine price prospects. Some further growth in Irish output is likely as producers gear up for the removal of quota’s in 2015.

Prepared Foods

Prepared Food exports showed varied trends in 2013 with dairy based fat filled milk powders increasingly strongly on the back of strong global demand while some traditional categories faced a strongly competitive marketplace reflecting higher input costs, negative currency movements, difficulty in securing higher prices and competitor activity.

Overall, exports of products covered under the prepared foods category increased by 15 per cent to an estimated €1.65 billion. If value added meats and poultry are included, exports were in excess of €2 billion.

The strongest performing categories during the year were fat filled milk powders, which accounted for 80 per cent of the export growth in the category, cooked meats, pizza, sauces, bakery and to a lesser extent confectionery. These helped to largely offset a slower trade in the frozen ready meal category in particular.

While the UK continues to account for almost 40 per cent of exports, ongoing diversification to markets across the rest of Europe and niche opportunities across International markets help improve the market diversification of the sector.
The strong focus by the sector on new product development, innovation and the identification of new customers means it is well positioned to identify and develop market opportunities as they emerge.

As always, there are a number of factors outside the direct control of exporters that could significantly impact on export performance such as input costs, trends in consumer sentiment and the potential to deliver higher food prices. However, most exporters anticipate increased sales in 2014.

Beverages

Further growth was evident in the global beverages market in 2013 as a further rise in travel retail sales and a positive sales impact of trends such as premiumisation and enjoyment helped boost the value of the sector.

This helped offset ongoing subdued demand in many developed markets arising from the sluggish economic environment.

The Irish beverage sector put in a solid performance in 2013 as on-going growth in whiskey combined with stronger exports of non-alcoholic beverages helped to offset reduced trade in cider, beer and cream liqueurs. Overall, exports are estimated to have declined marginally in 2013 to reach €1.25 billion.

Despite the on-going competitive pressures exports to the United Kingdom performed reasonably well in 2013. Lower beer, cream liqueur and cider exports were offset by increased shipment of whiskey and mineral waters.

Exports were largely unchanged at just under €400m.This leaves the UK still as the largest single market for Irish beverage exports, accounting for around 32 per cent of the total.

The outlook for Irish beverage exports in 2013 continues to be broadly positive helped by an anticipated further rise in whiskey sales, the on-going development of emerging markets and an anticipated return to growth for some key categories. The ability of the sector to continue to develop new markets and innovative product solutions for developed markets will be critical.

Seafood

Seafood exports recorded a slight decline in 2013. However this follows growth of almost 65 per cent in the value of exports over the 2009 – 2012 period.

The main factor behind this easing was production and raw material limitations as unit prices were around 7 per cent higher in the 10 months to the end of October.

Overall for the year, the value of seafood exports is estimated to have eased by three per cent to an estimated €520 million.

Any increase in seafood exports in 2014 will be driven by price increases. Demand levels seem set to remain strong for most species in emerging markets and a number of European markets. On balance, there is potential for modest growth in export values.

Edible Horticulture & Cereals

Stronger mushroom exports were offset by lower grain prices as the year progressed to put some pressure on the value of edible horticulture and cereal exports in 2013. Overall, exports of edible horticulture and cereals are estimated to have been marginally lower at €225 million.

The exchange rate of sterling to the euro has a large impact on exporters. The UK economy has been forecast to grow at pre-recession rates in 2014, which in itself is likely to be positive for mushroom sales, but the other benefit of a growing economy may well be a strengthening pound which would benefit exporters.

Amenity Exports

Exports of amenity horticulture crops were valued at approximately €13.75 million in 2013 which is an increase of €2 million over 2012. An excellent harvest and sales period for daffodil bulbs helped to maximize returns this year with strong sales to new customers in the USA and Eastern Europe.

The Christmas Tree Growers Association estimated that 250,000 of the 650,000 trees harvested were exported in 2013 with an estimated export value of €5.5 million. Cut foliage sales rose to €3 million during the year as increased production capacity in southern counties started to impact on volumes available for sale.