Business Irish

Sunday 19 November 2017

Forfas warns higher costs a stumbling block for exports

Peter Flanagan

Peter Flanagan

THE economy remains too reliant on a small number of exports and the cost of business remains too high, Forfas boss Martin Shanahan has warned in the council's annual report.

"Some costs remain above those of our key competitors and until these are addressed, continuing to grow exports and increasing employment will be more difficult," Mr Shanahan said. "Ireland's growing service exports are also too reliant on a few sectors while we focus on too few markets."

While costs have fallen to levels last seen in 2002, some costs including labour, energy, waste and legal services remain relatively high compared to our competitors, he added.

The warning from Forfas came as food and drink exports surged 8pc in the first half of this year, as the beef industry in particular jumped to new highs.

According to Bord Bia, exports rose by €340m between January and June. The beef sector was the main driver, climbing 15pc, or €140m, during the period.

So far this year, some €4.7bn worth of food has been sold overseas. That meant that beef exports made up about 40pc of the overall increase.

Bord Bia chief executive Aidan Cotter said the figures were particularly impressive given the overall slide in exports over the same period. The slow-down in the European economy and the so-called patent cliff, which has cut exports of well-known drugs such as Lipitor and Viagra, have dented exports in recent months.

"Last year, Ireland's food and drink exports surpassed the €9bn mark for the first time and the prospects for the remainder of 2013 remain broadly positive with a strong demand for dairy and beef, combined with a more robust prepared foods performance and further steady growth in beverages," he claimed.

The agency attributed the jump in beef demand in part to the strong sourcing system for Irish cattle, but importantly the processed meat market showed signs of recovery after the horsemeat scandal.

In the dairy sector, higher prices helped boost the value of exports by 4pc. Prices were as much as 20pc ahead of the same time last year, said Bord Bia.

There were also good numbers from the prepared foods sector, with exports jumping 15pc to €730m. Drinks such as whiskey and cream liqueurs helped push a 4pc increase in beverages to €555m.

Unsurprisingly, the UK is Ireland's major export market, with some 41pc of the total, driven mainly by meats and dairy. Another 33pc of goods sent abroad go to the rest of the EU. Trade with Asia climbed 15pc, albeit from a low base.

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