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IBEC senior economist Gerard Brady has looked at seven key agri-food commodities exported by Ireland and visualised how much of each product is exported to the UK (in red) and the rest of the world (in blue).
2/ Straight into it, first up likely the most exposed sector - Beef.
— Gerard Brady (@GerardBrady100) July 18, 2018
Progress report - definitely not diversifying. No progress. Low margins and the cost of getting products to other markets a huge issue. I'd be very worried about the sector pic.twitter.com/5z8suZI13w
The gap between red and blue is most striking for beef exports. While the UK represented half of Irish beef exports three and a half years ago, the sector's reliance on British buyers has increased constantly ever since. Another threat is that the "rest of the world" in this case is mostly continental Europe, where the market is already well supplied and would have difficulty absorbing more Irish beef. Greater diversification at the moment means going to Asia, including China.
3/ Second up, our friends in @DairyIndustryIE. Struggling when it comes to milk (although greater value sub-categories, such as whey, are rapidly expanding globally) but..... pic.twitter.com/SdWA2ouNtH
— Gerard Brady (@GerardBrady100) July 18, 2018
Milk powders are one of the few sectors where the UK accounts for less exports than the rest of the world. Again, China is a big factor here, with infant formula driving sales.
4/ The sector is doing much better when it comes to higher value-add products like butter. We've seen real evidence of diversification here ..... pic.twitter.com/JTWdJdxIpJ
— Gerard Brady (@GerardBrady100) July 18, 2018
Butter is the least UK-dependent of all commodities studied by Brady, with the US and Germany offering growing alternatives.
5/ ....and there has also been an exceptional level of diversification in the heavily UK reliant Cheese sector. Definitely the most impressive of all the sectors in this data. pic.twitter.com/SIYBQzpDMj
— Gerard Brady (@GerardBrady100) July 18, 2018
Brady notes the success in diversifying markets for Irish cheese away from UK-centered cheddar exports. This week's announcement of a new Glanbia Cheese mozarella factory in Portlaoise is an example of this.
6/ Beverages is next up.
— Gerard Brady (@GerardBrady100) July 18, 2018
Progress? We are definitely seeing a hit to exports to the UK but other markets not growing to replace them. Worrying when other, fast growing, parts of the sector such as @IrishWhiskeyAsc are facing other big threats from the global trade environment pic.twitter.com/KqG71JI71O
Beverages are more exposed, but the share of ingredients produced by Irish farmers in these products is smaller.
7/ Second last, Forestry. The UK remains the only viable market for most of our forestry products (climate, timber types etc) & that hasn't changed since the vote. Coillte's Fergal Leamy recently said publicly - non-UK market potential "very limited". Domestic demand is up though pic.twitter.com/ijQE3Nr2yL
— Gerard Brady (@GerardBrady100) July 18, 2018
Timber exports are entirely dependent on the UK, and growing production from maturing forests planted in recent decades need an outlet. The processing industry in Britain and Northern Ireland is increasingly sourcing timber from Ireland and this is under threat. Increasing construction activity and the development of a biomass industry within Ireland seem to be the only alternatives.
8/ Finally, vegetables. Again same story. Fresh produce doesn't travel well. Simple as that. pic.twitter.com/iZSSj1XHOT
— Gerard Brady (@GerardBrady100) July 18, 2018
The vegetable trade, especially mushrooms, is also heavily dependent on the UK for its exports.
Direct support
The latest Bord Bia Brexit Barometer showed that 85% of agri-food exporting companies were looking at expanding into new markets outside the UK. However, this was much stronger among large companies, leaving smaller ones more exposed.
In its budget submission, IBEC has called for direct financial support for exporters who need to invest in transforming their factories or develop new recipes and marketing to access different markets.
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