Business Irish

Thursday 2 October 2014

Daragh McCullough: €370m food exports surge a sign of things to come

Published 25/07/2013 | 05:00

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Dairy exports were up 4 per cent

Irish food exports continue to reach new record highs according to the State's food agency, Bord Bia. Despite breaching the €9bn barrier for the first time last year, early data indicates that sales growth in the food sector forged ahead by another 8.6pc during the first six months of 2013. This equates to over €370m of additional sales.

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The two big food sectors, dairy and meat, grew significantly. Dairy exports were up by 4pc on the back of a sustained 20pc rise in milk prices over the last 12 months.

Beef sales received an even bigger lift, with price increases accounting for 5pc and volume growth accounting for an additional 10pc growth. The meat price increase has been largely driven by a deficit of cattle supplies in Britain, which remains the key customer for half of our beef output.

High grain prices and a global demand that threatened to outstrip supply during 2012 also drove animal protein prices in both meat and dairy markets.

The figures suggest that meat has seen the biggest jump in volume terms, but this comes on the back of a historically low level in 2012. A booming domestic market resulted in Irish cattle and sheep prices being simply too saucy for live-shippers, who traditionally moved tens of thousands of calves, steers, heifers and lambs to everywhere from Holland and Italy to Libya and Egypt.

Then the weather intervened. Farmer confidence waned bit by bit as each sodden month of 2012 slipped by. The seemingly never-ending winter that followed resulted in a huge shortage of animal feed all over the country.

Supplies of meat and milk suffered and there were concerns that Minister Simon Coveney's grand plans for 50pc growth by 2020 were being permanently derailed.

But it appears that the agri-food sector's output is more resilient than that.

Indeed, it is likely that the figures will continue to increase as the dairy industry revs up for a big jump in output. Its increases in output volumes have been limited to no more than 1pc a year for the last six years.

But that is likely to jump to somewhere between 5pc to 10pc on an annual basis when EU milk quotas disappear in 2015.

Of course weather will continue to play a big role in determining what the actual increase year-on-year will actually end up, but these last three years have been as good a test as any in terms of the ability of the Irish food sector to cope with weather extremes

It proves a point that the policy makers bought into when they rowed in behind the Food Harvest 2020 targets a few years ago.

While Ireland's climate might not be everybody's cup of tea in terms of maintaining a nice tan, it is perfectly suited on average to producing the fuel that drives the entire sector – grass.

It was the same realisation 30 years ago in New Zealand that gave policy makers the courage to axe farm subsidies and let the fittest survive.

A freedom to farm has allowed the New Zealand dairy industry quadruple in output over that time. Their annual growth rate in milk output jumped from 1pc in the 20 years up to 1983 to just under 4pc for the three decades since.

Kiwis have been subjected to the same vagaries in weather extremes as Irish farmers. Last year, New Zealand experienced its worst drought in living memory. It managed to halt output growth for the first time in years, but they are expected to bounce back again this year.

Irish farmers have also proved that they can cope with the worst of weather. And with burgeoning demand up for Irish product in new markets such as West Africa and beyond, Bord Bia can look forward to more positive reports in the months and years ahead.

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