Bord Bia this week launched its annual Performance andProspects for Irish food and drink exports.
This is an annual report on the export performance of the food and drink sector of the economy and, while the sector is fuelled by the raw materials produced on Irish farms, it focuses on the performance of products produced after they leave the farm.
As might be expected, the impact of the COVID-19 global pandemic caused disruption to the industry.
However, people still had to eat, so while the route to market may have changed, the export market survived even with disruption.
Just as farmers and marts adopted new procedures and online technology to keep business going, so too did the food industry, with a major switch from food service and hospitality to retail.
Overall, Irish food and drink exports were back by €200m to €13bn, with a further €1.3bn of non-edible agri products such as cattle hides, sheep skins, etc. After a decade of growth, Irish exports have now steadied.
Dairy exports remained the largest and most diversified Irish food export in 2020. They comprised almost half (49%) of total sales outside the EU, with €874m sales to Asia, €662m to Africa (an increase of 22% on 2019) and €339m to the Middle East. Despite fears that the impact of COVID-19 on China would lead to a fall in sales, its rapid recovery from the pandemic meant dairy exports to China in 2020 reached €591m, an increase of 5%.
Despite the introduction of 25% import tariffs by the US on EU dairy as part of the Boeing–Airbus dispute, Irish dairy sales to the US increased by 11% to €380m.
Butter was the big performer, accounting for €210m of US dairy exports. This was a 9% increase on 2019, with volume sales up by 5% and Kerrygold remaining the second most popular butter brand in the US. The overall value of Irish butter exports was down 13%, reflecting a decline in global prices, but volume was up 12%.
Cheese is the sector of Irish dairy particularly exposed to the UK market, which accounted for 40% of Irish cheese exports in 2020. Overall, the volume of Irish cheese exports was down 10% in 2020 but strong prices meant that the value was similar to the previous year at €961m. Like butter, the route to market for Irish cheese switched to retail from food service because of the closures and reduced trading caused by the pandemic.
Irish cheese production remains concentrated on cheddar but there are signs of diversification, with mozzarella exports up to a still modest 7,600t. A particularly positive development in 2020 was the growth in sales to Japan by over one-third to 15,000t, reflecting the impact of reduced tariffs agreed in the EU-Japan trade deal that came into effect in 2019.
Skimmed milk powder (SMP) export volumes were similar to 2019 at 170,000t but the value increased by 13% to €440m. Fat-filled milk powder volumes were marginally lower but again values increased, up 7% to €830m in spite of entry barriers to Nigeria, a key market.
Whey export volumes were up 5% to 20,000t with a value of €214m, up 8%, while whole milk powder exports were worth €208m, a 32% increase on the previous year. Specialised nutritional powder volumes were back 5% but the value increased by 5% and this remains the second most valuable dairy export category.
Overall the value of Irish beef exports fell by 2% to €1.9bn and the volume was back 4% to 550,000t. The UK remains the largest market at €835m, representing 44% of all beef exports, down from 47% in 2019.
Exports to the EU were slightly higher than to the UK at €845m but this is 7% down on the previous year.
Exports to the rest of the world in 2020 accounted for 11% of all exports, the highest in recent years.
It was a challenging year for beef exports with the loss of food service and hospitality markets, particularly in continental Europe where there is great reluctance to offer non-national beef in many supermarkets.
The EU is also Ireland’s main export market for steak meat, taking 60% of all steak exports. It was somewhat different in the UK as while there is also a preference for UK beef, Irish product is stocked to varying degrees by the top three supermarket groups – Tesco, Asda and Sainsbury’s.
There was some progress in international markets for beef sales, with a notable increase in the US from €19m to €34m. Canada was at €12m, a threefold increase on last year, but the Philippines was the top performer, taking €53m of Irish beef exports in 2020.
The biggest disappointment was China, where sales had been strong before the discovery of a BSE case in May and a suspension of exports, haven’t yet resumed.
Given the continued demand from China for beef, this remains Ireland’s best prospect for a large volumes of sales beyond the UK and EU.
Live cattle export numbers in 2020 were 265,000 head, down from 298,000 the previous year, but the value actually increased to €133m compared with €118m in 2019. This reflects the fact that calf exports were down 54,000 head, seriously hampered by the introduction of Covid-19 restrictions in March.
Northern Ireland again became a major market for live cattle both for direct slaughter and further feeding, with 64,211 head going north in 2020 compared with 33,506 in 2019.
While Brexit concerns ahead of the agreement will have driven some of this demand, the introduction of online mart sales also greatly facilitated participation by northern buyers in marts in the Republic of Ireland.
A wide price differential also developed in the second half of 2020, with factory prices in the north consistently 40c/kg stronger than south of the border.
There was also strong growth in live cattle exports to north Africa, Spain and Kazakhstan.
Sheepmeat exports were strong in 2020 with the value up 12% to €357m, while the volume exported increased by 4%. This was made possible by the perfect combination of reduced supplies and increased retail demand as a result of the COVID-19 lockdown for much of the year throughout Europe. For the third year in a row, China is New Zealand’s top lamb export market, with lower volumes exported to the EU. Added to this, volumes from the UK to the EU were back 12% on 2019, making it a sellers’ market for Irish sheepmeat exporters. The EU is Ireland’s main export destination for sheepmeat, taking 72% of all exports. With the UK taking just 18%, it means sheepmeat is the sector of Irish agriculture least dependent on the UK market. Beyond the EU, Switzerland is the only significant international market, taking €26m of Irish exports in 2020. The US and China, who both approved Ireland open for beef exports, remain closed to Irish sheepmeat.
Pigmeat exports also performed strongly in 2020, with sales up 14% to €586m and export volumes up 3% to 234,000t. The continued deficit of supply in China because of African swine fever has meant demand from Asia was particularly strong in 2020, taking 41% of Irish exports by value and 47% by volume. The UK remains an important market, taking 30% of Irish exports in 2020, worth €177m, while sales to the EU exceeded €100m for the first time in 2020. Bord Bia has moved added-value pigmeat into the processed consumer foods category.
Live pig exports
Northern Ireland continues to be an important outlet for Irish pigs, with 450,000 going to NI factories, a 7% increase on 2019 and worth €65m to the sector.
While the value of Irish poultry exports fell by 2% to €152m, the volume increased to 124,000t with the number of birds up 3% to 110m. Exports to the UK were down 14% on the previous year to €81m but sales outside the UK and EU increased by 16% to €43m, with South Africa the main market, taking €34m.
The UK is the main market for this sector, taking 94% of all exports. Mushrooms account for €115m of the exports, a 14% increase on 2019 despite a reduction in volume of 4%. Cereal exports, which are mainly to Northern Ireland, were worth €46m, down 5%, with volumes down 20% caused by difficult weather conditions.
Bord Bia is positive about the prospects for Irish food and drink in 2021 as “the global supply and demand dynamic remains positive”. It expects growth in demand for dairy to outpace supply and that the global meat supply balance will continue to favour producers, particularly in Asia.
Bord Bia also says that Ireland is well placed to meet increased consumer expectations on sustainability and welfare and this will differentiate us from competitor exporting nations.
It is concerned with barriers to trade because of Brexit increasing cost but expects difficulties with the UK landbridge to be temporary, not lasting beyond the first quarter of this year.
Bord Bia’s outlook highlights the need for the Irish dairy sector to show “that it can address the questions being asked on sustainability and animal welfare” and shows that action is being taken to “protect and encourage biodiversity, water quality and the welfare of our cows and their offspring”.
On beef, Bord Bia expects tighter supplies in 2021 will help insulate prices and, with a favourable outcome to the EU-UK trade talks, noting: “Beef demand should strengthen somewhat as the year progresses.
“Sheepmeat is expected to continue performing strongly by Bord Bia in 2021 and, with Easter and Ramadan just nine days apart in April, high demand is expected in late March/early April. With supplies expected to remain tight in 2021, Bord Bia is concerned that there could be lack of visibility on supermarket shelves in EU lamb-consuming countries”.