Rising prices lift Irish food and drink exports to €16.7bn

Bord Bia’s annual performance and prospects report launched this week reveals a 22% growth in the value of food and drink exports to a record €16.7bn.

All of the main agri-food categories show an increase with the largest in dairy, up by 33% to €6.8bn.

Beef returns an 18% increase to €2.65bn (including offal), while sheepmeat value is up 17% to €475m.

Pigs show a 2% increase to €540m, poultry a 14% increase to €143m, horticulture including cereals €301m and live exports increased by 8% to €230m.

However, all of this came at a cost to farmers with the agricultural input price index up 35% in October 2022 compared with October 2021.

Dairy was undoubtedly the star performer for export values in 2022 with the €6.8bn of sales to 130 countries a new record. Irish output of 8.7bn litres was almost at 2021 levels, while production in the rest of Europe and New Zealand fell.

The top-performing markets for Irish dairy sales were the EU and UK, with exceptional increases recorded in the sales value of commodities for the first nine months of 2022.

Butter exports contributed €1.32bn of dairy export value, an increase of €270m or 26% on 2021, with North America, the EU and the UK taking 95% of all butter exports. It was a similarly impressive performance by cheese with the value rising by €260m or 25% on 2021 to €1.3bn.

Key markets

With the key markets of the UK and North America being similar for cheese to 2021, growth was driven by increased business in France, Germany and Netherlands made possible by reduced local production.

Despite a 15% drop in volumes, fat-filled milk powder export values increased by 34% to €920m, reflecting the higher energy costs in production and a strong dollar compared to the euro for much of 2022 and skimmed milk powder exports grew by 44% to €560m.

The UK remains the largest single export market, growing by 39% in 2022 to €1.3bn

Specialised nutritional powders recorded the first increase in five years, up 11% to €730m. This was driven by a one-off opportunity in the US due to their production difficulties though the Chinese market continues to decline.

Casein exports returned the biggest growth, an increase of 68% to €790m, driven by a 10% increase in Irish volume while global production fell.

Destinations

The UK remains the largest single export market, growing by 39% in 2022 to €1.3bn.

Butter volumes bounced back on 2021 when there was a carryover of stock from 2020 reflecting Brexit stockpiling.

Sales to the EU jumped by 42% to €2.3bn and North America delivered a 12% growth in volume and a 46% growth in value to €800m.

Exports to Africa increased by 33% to €925m, while sales to Asian markets increased by a more modest 15% to €955m.

The increased value of beef exports in 2022 was driven by a combination of a 9% increase in volume reflecting an increase in throughput of 120,000 at Irish factories, and strong UK and EU demand.

The UK remains Ireland’s main beef export market by a distance with the value increasing by 15% to €1.1bn or 43% of all Irish beef exports.

Tighter supplies in many EU markets also drove demand for Irish beef, leading to a 26% increase in value to €1.3bn for exports to EU countries.

Live exports performed strongly, increasing by 15% to €170m for the 285,000 head exported in 2022

While the UK and EU returned a strong performance, sales outside these regions were particularly disappointing falling to just €162m or 6.5% of total Irish beef export values. This compares with €190m or 9% the previous year and 8% in 2020.

Bord Bia describes the outlook for 2023 as uncertain with concern about the impact of cost of living pressures and consumer sentiment on beef.

The subsequent announcement about China reopening will provide a more positive angle on prospects for 2023.

Live exports performed strongly, increasing by 15% to €170m for the 285,000 head exported in 2022.

Calves accounted for 60% of these exports though there was also increased store demand from the EU, Middle East and North Africa. Exports to Northern Ireland were lower in 2022 though it still accounted for 51% of the total live cattle export value.

Concern

Bord Bia also flagged a longer-term concern about continued export of calves after this year with new welfare legislation, especially for unweaned calves creating uncertainty around exports from 2024 onwards.

Bord Bia described 2022 as a year of two halves for sheepmeat with the first half strong despite an increase in production.

However, the higher cost of production kicked in during the second half of the year as well as reduced consumer demand and additional supply from the UK and southern hemisphere.

Three-quarters of Irish lamb exports are to EU countries and this was worth €353m, up 18% on 2021.

France is the largest market, taking 40% or €141m of Irish lamb exports, with sales to Germany increasing by 30% to €78m.

This was also the value of exports to the UK in 2022, which was an increase of 15% on the previous year.

Bord Bia is nervous about prospects in 2023 highlighting “likely weaker demand from key export markets.” It also reports only some progress on technical issues which continue to frustrate accessing the lucrative US market, which was announced in April 2022.

Irish pigmeat exports showed a marginal increase in value in 2022. However, it is a year best remembered for horrendous losses suffered by producers caused by the perfect storm of rising feed and energy costs combined with weak markets.

Sales outside the UK and EU account for 69% of Irish pigmeat exports in 2022 and the recovery in Chinese domestic production led to a drop in Irish exports of 31% to €130m.

Sales to Australia, Philippines, US and South Korea increased by 40% to €150m, while sales to the EU were up 23% to €100m driven by reduced production in Germany, Denmark and Poland. Sales to the UK were up 3% to €95m.

In addition to these pigmeat exports, 400,000 pigs were exported to Northern Ireland for processing at a value of €60m.

Bord Bia highlights that the pigmeat sector remains exposed to the effects of the invasion of Ukraine for feed and energy costs, while US exports are impacted by the strength of the dollar.

Poultry exports recovered in 2022 with the value up 14% to €143m and a 3% increase in the volume exported to 78,000t.

Sales to the UK were up 19% to €85m, reflecting the recovery in the food service sector, while sales to the EU were up 31% to €30m.

Exports outside Europe remained difficult, down 7% to €31m with restrictions in access to South Africa having a continued impact.

Value-added or processed meats posted a strong performance with the export value up 30% to €925m in the €3bn prepared consumer foods category.

This category also included bakery, confectionery, ready meals and non-alcohol drinks.

Cereals

Cereals increased in value by 10% to €73m, despite a decrease in volume of 11% while mushroom sales were down 6% to €152m.

Inflation and extra volume drivers of record export values

The headline-grabbing figure of a record €16.7bn food and drink export value in 2022 reflects a superb performance by the Irish agri-food processing industry.

However, there is nothing unique about Ireland returning an increase in the value of exports in 2022 in a year when on-farm as well as factory input costs soared.

Irish beef export values increased by 15% on 9% more value. Elsewhere, US beef export values increased 14% on 3% more volume (January to November) and the value of Brazilian beef exports increased by 13% $5,730/t (€5,018/t). New Zealand milk fats including butter increased 40% in value, cheese by 19% and powders by 27%.

Agri-food commodity prices increased around the world in 2022, reflecting increased production costs and markets returning to normal following the COVID-19 disruption of 2020 and 2021.

The announcement last week that China will reopen for beef exports in 2023 is welcome news given the impact that Ireland had been making in that market before the suspension in May 2020.

In a year of rapidly rising input costs and food price inflation, a high value for exports is logical

However, our overall performance for beef in developing export markets outside the EU was particularly disappointing last year. Sales to the US halved on 2021, and were lower than they were in 2020. Unlike dairy, this market has not fulfilled expectations for beef since it opened in 2015.

Sheepmeat is still not getting into the market despite its opening being announced in April of this year.

Much was expected of Asia in last year’s report, particularly in the case of Japan where a “growing interest in Irish beef in Japan should also see growth in that market”. This certainly didn’t happen in 2022 though Bord Bia is confident it will still happen even if it takes more time.

Market information

Bord Bia is to be commended for the level of market information it provides and the ambassadorial role it performs for the Irish agri-food industry around the world.

In a year of rapidly rising input costs and food price inflation, a high value for exports is logical. What is of concern is the uncertainty that surrounds 2023 and the fact that apart from dairy and a lesser extent tillage, profitability at farm level is miniscule.