Bord Bia this week published the research on potential markets for the Irish food and drink industry that was driven by the Minister committing an extra €6.75m for Bord Bia to undertake additional projects. The ambition is to help offset some of the consequences of Brexit by diversification of markets.

Bord Bia are calling the work “the most detailed and broad-ranging study[...] ever undertaken on behalf of our food industry.” Basically it involves an initial examination of 180 markets using top line information from which a shortlist of 30 was produced for each category. This was further reduced following engagement with the industry to 15 priority markets from which five are selected for in-depth study.

The ambition of the research is to examine countries that have potential that haven’t been explored in detail so far.

Target countries

This means the UK and wider EU are excluded as are prominent non-EU markets that considerable research has been carried out in.

In this category are countries including China, –which has just had a trade mission– the USA and the Philippines.

The five countries that are receiving in-depth investigation are: Japan, South Korea, Mexico, Vietnam and Malaysia. Ireland is already doing some business in these countries with Japan taking 6,000t of Irish beef and pigmeat products in 2016 which is miniscule in a market that imports over 1.6 million tonnes of beef and pigmeat combined.

Japan

The USA and Australia dominate beef supplies to Japan with Australia having a low tariff agreement. Ireland too will benefit from the EU – Japan free trade agreement (FTA) which will start coming into effect next year and ultimately will reduce beef tariffs to 9% from the current 38.5% and virtually eliminate pigmeat import tariffs.

The USA however won’t benefit from a reduced tariff as they pulled out of the Trans-Pacific Partnership which was a proposed trade agreement between the USA and a number of Pacific Rim countries including Japan.

Mexico

Mexico isn’t a present market for any type of Irish meat according to Bord Bia, but with an annual import requirement of almost 1 million tonnes of pigmeat and 190,000t of beef it is a market with potential.

This is made more interesting by the agreement of an enhanced FTA with the EU earlier this year.

South Korea and Vietnam

South Korea is one of the more developed countries of South East Asia and the 15th largest economy in the wold. It currently has per capita beef consumption approaching 10kg annually, and this is reflected in annual imports of 465,000t of pigmeat and 366,000t of beef meaning that over a quarter of the country’s meat demand is met from imports. Ireland has only a small presence in this market for pigmeat with Australia and the USA dominant suppliers. Vietnam on the other hand is a massive beef market, importing 700,000t despite being a less economically developed country than South Korea. The statistic however is driven by lower quality buffalo meat particularly from India and given the country’s port facilities Vietnam is often a transit country for distribution to other south east Asian markets.

Malaysia

Malaysia is another developing Asian economy that demonstrated the well-established pattern of dietary habits following western trends as wealth increases. It is a 165,000t beef market, 33,000t sheep meat market and a 22,000t pigmeat market. There is a twist to doing business with Malaysia as half the country’s population are Muslim which required meat be halal slaughtered.

Dairy

Irish dairy exports are well established across the world compared with meat, beef in particular. In terms of the research identifying new opportunities, there is considerable overlap with potential markets for dairy produce as the countries identified as the same as for beef with the exception of Mexico being replaced by Indonesia.

The “deep dive” research on these markets will look to establish the potential growth in import demand in each market and how it is matched with Ireland’s ability to supply dairy products that meet local requirements.

The prominence of butter which has been a strong performer in the dairy category is lower than may have been expected. However the Bord Bia view is that in these newer developing markets the strongest growth rates have been for powders over recent years, with butter more prominent as an ingredient in other food categories.

Comment

Much is already understood about meat and dairy markets and the performance of exports over the past decade reflects this. Brexit presents a once in a lifetime challenge which has the potential to be catastrophic if there is no deal. It is recognised that no market will replace the UK, even China with its huge potential.

It is however correct that Bord Bia explores whatever is out there, but it is also essential that a way is found to make sure a fair share of the value from this work makes its way to farmers by getting more value into their produce.