Export Performance & Prospects - 2019-2020 Irish Food, Drink & Horticulture - Bord Bia
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Export Irish Food, Drink
& Horticulture
Performance
& Prospects 2019–2020
Ireland’s Agri-Food Sector Ireland’s agri-food sector encompasses primary production (agriculture, fishing and forestry) as well as food, beverage and horticulture production and wood processing. According to the most recently available annual data (2018) from the Department of Agriculture, Food and the Marine (DAFM), employment in the agri-food sector accounts for approximately 173,000 jobs or 7.7% of total employment in Ireland. It represents 7.7% of modified Gross National Income and 10% of total exports. Data from the Central Statistics Office (CSO) shows that the food and beverages sector accounts for 21% of all industrial turnover and 23% of all manufacturing industry turnover. DISCLAIMER This publication has been produced solely for information purposes and has been prepared on the basis of information that is publicly available, internally generated or from other sources, which are believed to be reliable. Projections and forecasts are estimates only, based on assumptions involving subjective judgement and based on analysis that may or may not be correct. Reasonable care has been taken in the preparation of the information in this publication and we do not guarantee the accuracy or completeness of the information contained therein.
DAFM and the CSO statistics for the agri-food sector include food, drink and edible horticulture along with non-edible items such as live horses, animal foodstuffs, forestry and amenity horticulture, and animal hides and skins. Exports of non-edible agri-food sector goods are estimated by DAFM at €1.5bn in 2019. Adding this estimate to the Bord Bia figures for the food, drink and horticulture sectors, which are the focus of this report, indicates that total agri-food sector exports in 2019 amounted to €14.5 bn. AGRI-FOOD SECTOR PEOPLE NON-EDIBLE EXPORTS EMPLOYED ITEMS €14.5bn +10k €1.5bn In 2019 Since 2010 In 2019
Contents Executive Summary 8 Overview 16 Dairy 22 Meat and Livestock 30 Beef 33 Pigmeat 35 Sheepmeat 37 Poultry 40 Live Animals 42 Prepared Consumer Foods and Prepared Food 44 Alcohol 50 Seafood 54 Horticulture 60 Edible Horticulture and Cereals 62 Amenity Horticulture 63
6 Export Performance & Prospects 2019–2020
Irish Food
& Drink Exports
DESTINATIONS INTERNATIONAL MARKETS
31%
EU MARKETS UK MARKET
35% 34%
MARKETS WORLDWIDE Irish food and drink is sold in more
+180 than 180 markets worldwide
FOOD
& DRINK 10th
EXPORTS YEAR OF
EXPORT
€13bn GROWTH
Up 67% in volume
terms since
Since 2010 2010
7 Export Performance & Prospects 2019–2020
CATEGORIES
DAIRY MEAT & LIVESTOCK
34% 30%
PREPARED FOOD ALCOHOL
18% 11%
SEAFOOD HORTICULTURE
5% 2%
8 Export Performance & Prospects 2019–2020
Executive
Summary
KEY DRIVERS OF EXPORT PERFORMANCE
1. Global consumer spending remained strong
FOOD & DRINK
2. Increase in demand for proteins globally
EXPORTS
€13bn 3. Lower EU demand and supply challenges reducing beef and sheepmeat exports
4. Brexit uncertainty curtailing GDP growth and business confidence in the UK
7% INCREASE 5. Weakening Euro improving competiveness for Irish exports internationally
Up 67% PERFORMANCE AND OUTLOOK
The estimated value of food, drink
protein and dairy driving sustained
increase in demand for Irish product.
This was achieved in an increasingly
Since 2010 and horticulture exports from Ireland
complex trade environment where
for 2019 is €13bn - capping a decade
weakening confidence in the global
of extraordinary growth where the
economy, volatility in key currencies
value of Irish food and drink exports
and shifting commodity prices played
increased 67%. This has been achieved
instrumental roles. It was also a year
through sustained, incremental
when the increased use of tariffs as an
increases in value and volume across
expression of trade policy by the US
Ireland’s food and drink categories,
government impacted directly on Irish
and across its key markets. In adding
food and drink exports. This complex
to this picture, the 2019 figures also
overall environment can be seen to have
reverse one aspect of the previous
impacted on sectoral performances
year’s performance, with the value of
in different ways.
growth once again outpacing volume
increases. The 2019 exports were 7% Dairy exports grew more than 11%,
higher than the 2018 figure, while despite a weakening in some of the
volume output grew by 5%. key commodity prices. For the beef
industry, the repercussions of a difficult
Irish food and drink sustained its
2018 as well as weakening demand in
position as by far the most global of
key markets brought the issue of the
Ireland’s indigenous industries, with
DESTINATIONS its products finding markets in over
price being paid to producers to the fore
in the latter half of the year. This led to
180 countries. It was a year when
circumstances where exports of beef
diversification gained pace and, across
and sheepmeat were heavily curtailed
many categories, there was significant
for a number of weeks, reducing exports
growth in markets that, at the start of
in both categories in 2019.
the decade, would have been seen as of
only the most marginal interest for Irish As a result of African Swine Fever’s
exporters. This is growth very much in effect on global animal protein demand,
line with Bord Bia’s long-term strategy pigmeat prices were significantly up,
for the industry and towards which the leading to a record high in that sectors
organisation’s resources continue to be export value.
geared. Ireland’s enduring reputation
Prepared Food grew 12%, driven by
as a source of high quality, safe and
strong demand in the UK market, while
sustainable food and drink provides
UK 34% alcohol’s 8% growth was to a great
a strong foundation for future
extent the result of Irish whiskey’s
Rest of EU 35% development in this regard.
continued success in the US. Seafood
International 31% Strong growth of 7% to reach that exports grew 6% as Asian demand for
record export value of €13bn was high value products delivered returns.
achieved because of a positive global
supply/demand dynamic for animal
9 Export Performance & Prospects 2019–2020 Executive Summary
A DECADE OF EXTRAORDINARY GROWTH Value
2010-2019
Volume
MARKET CHALLENGES It was also a year when trade countered sluggish demand across
disputes between the world’s major the EU, as the European Commission
Significant challenges presented
trading economies continued to sap estimates per capita consumption of
themselves at all levels of the
confidence in global markets. The meat to fall by 0.5% in 2019.
global economy in 2019. The issue
introduction of ad valorem tariffs
of Brexit presented by far the most A trade milestone with particular
by the US on EU imports in October
immediate threat to the food, drink resonance for Irish agriculture was
spilled over into real disruption for the
and horticulture industry, as the risk reached in mid-2019 when, following
Irish dairy and alcohol industries. The
of the departure of the UK from the two decades of negotiations, the EU-
tariffs present a significant challenge
EU without any deal in place became a Mercosur Association Agreement was
for Ireland’s butter, cheese and cream
critical concern on occasion. concluded. If ratified and implemented,
liqueur producers in particular as they
it will result in significantly increased
It was, however, in anticipation rather plan for the year ahead.
flows of beef from South America to
than in occurrence that Brexit was
Further trade stand offs between the EU. However, ratification in its
ultimately of consequence, with
the US and China did little to assuage current form remains an open question
stocking forward, currency volatility
fears that a global slowdown was as Brazil’s environmental record in
and weakening business sentiment
approaching, while China’s internal meat production raised concerns at
proving significant to a number of
difficulties with African Swine Fever intergovernmental level in the EU in
category performances in Ireland’s
(ASF) have had a decisive impact on 2019.
most important export market. The end
global agriculture prices.
of the year brought ratification of the Climate change continued to be
Withdrawal Agreement. The agreement The world’s second largest economy a disruptive force in agricultural
anticipates a trade deal in place by the opened its doors wider to protein production around the world, with
end of 2020. Most observers consider imports while it sets about rebuilding drought, flooding, and hurricanes
this an extremely challenging timeline. its pigmeat sector. That opportunity among the climate and environmental
10 Export Performance & Prospects 2019–2020 Executive Summary
Executive
Summary
ALL MARKETS pressures limiting production of key This is also the first year that a larger
commodities in many major production proportion of Irish food and drink
SECTORAL PERFORMANCE hubs. According to EU data, drought exports went to continental EU than
was a significant contributor to the those that went to the UK.
EU milk collection growing by just
0.5% compared to 2018. In Ireland, the DAIRY
issue of climate proved more benign in Ireland’s dairy sector maintained its
2019 than 2018 as favourable weather position as a pillar of Irish food and
conditions prevailed, benefitting drink exports, growing in value by 11%
increased output. However, with UN in 2019 to €4.4bn in value. This was
data showing July to have been the the third consecutive year in which
hottest month ever recorded and the value of dairy exports exceeded
climate change expected to exert the €4bn mark and was achieved
growing pressure on global agricultural despite weakening prices for key dairy
productivity in the coming decades, it categories internationally.
remains an issue of primary concern.
Dairy 34% The year’s events served as a reminder Driving this was exceptional
Meat & Livestock 30% that volatility in global agriculture is performance in butter, cheese and
here to stay, and set to be governed by dairy powders including skimmed milk
Prepared Food 18% increasingly extreme and unpredictable powder (SMP), whey and casein - with
Alcohol 11% events. How such events impact on value growth well ahead of volume in
Irish food and drink production and all these dairy powder categories.
Seafood 5% exports may not always be immediate
or obvious but will need to be factored In value terms, butter continued to
Horticulture 2% lead the way with 13% growth lifting
into future planning.
the value of category exports to €1.1bn
After an exceptionally difficult 2018, for the year. This was despite a fallback
the better weather in 2019 delivered in prices, felt particularly in EU markets.
a welcome boost to Irish farming in The growth reflects some stocking
terms of better grass growth, yield and forward in the US in anticipation of
animal thrive, and a reduction in the the tariffs that impacted the sector in
requirement for bought-in animal feed. Q4 2019. It was a strong year for Irish
Teagasc estimates that the average cheese exporters who saw increasing
farm income increased by 7% in 2019, diversification deliver promising results
DAIRY although the figure needs to be set
against the 21% decline experienced in
for the sector. As a result of the clearing
€4.4bn
out of intervention stocks and the
2018. Beef farmers recorded marginal highest commodity prices since 2014,
increases in income, largely the result of SMP exports increased in value 55% to
the exceptional aid provided by DAFM €332m. It is expected that the positive
in the middle of the year and lower feed demand dynamic will continue into at
inputs. Farm gate prices were lower
Up 11%
least Q1 2020.
in dairy, beef, and sheepmeat, as a
consequence of weakening commodity Although the UK remains the primary
prices, while pigmeat and poultry market for Ireland’s cheese exports –
In 2019 exporters benefitted from robust and cheddar is the mainstay of this –
export demand. Ireland’s seafood and there was a strong performance in
horticulture exporters also benefitted continental Europe, contributing to
from a shift in production to higher an overall increase in exports of 21%.
value outputs. The value of cheese exports to the US
and China also grew strongly, albeit
The ongoing diversification of Irish
from a small base. The former linked
food and drink exports was reflected
to growing consumer interest in non-
in an overall division of market share
domestic offerings and the latter to
that saw the UK as the destination for
demand in the foodservice sector,
34% of food and drink exports, Rest of
where it is a key ingredient in pizza.
EU account for 35%, with International
markets accounting for 31% - higher
than 30% for the first time.11 Export Performance & Prospects 2019–2020 Executive Summary
MARKET DISTRIBUTION OF 2019 2010
IRISH FOOD AND DRINK EXPORTS
2018
GROWTH IN INTERNATIONAL MARKETS 2010 v 2019
% INCREASE IN EXPORTS12 Export Performance & Prospects 2019–2020 Executive Summary
Executive
Summary
FY 2019 ESTIMATES
CATEGORY FY 2018 FY 2019 CHANGE
€ € %
Dairy 3,991,660,648 4,430,022,242 11%
Meat and Livestock 4,041,982,772 3,981,845,838 -1%
Beef inc offals 2,417,780,083 2,246,302,269 -7%
Pigmeat 835,490,602 940,993,138 13%
Sheep 315,366,109 293,966,537 -7%
Poultry 291,125,661 305,681,944 5%
Live Animals 172,402,463 167,034,694 -3%
Other Meat 9,817,854 9,326,961 -5%
Prepared Food 2,068,339,067 2,322,117,873 12%
Alcohol 1,338,714,079 1,448,550,314 8%
Seafood 570,273,630 605,288,756 6%
Horticulture 248,353,551 266,831,438 7%
Total 12,259,323,747 13,054,656,459 7%
MEAT AND LIVESTOCK €990m. Exporters countered some strongly as the year progressed,
of this by turning supply to the Rest with record returns achieved in
It was a mixed year for Irish meat and
of EU, which grew by 1% and through some instances as the year ended.
livestock exports, the second pillar of
a trebling of exports to International The impact of ASF on supply across
industry exports. A 1% decline in the
markets, which were worth €147m. large swathes of Asia and reaching
value of meat and livestock exports
The mainland Chinese market, for into Central and Eastern Europe,
to €3.9bn reflects a challenging year
which access was only gained in 2018, contributed to this upward trend as
for beef and sheepmeat which more
when combined with Hong Kong, now exports for the year were valued at a
than offset a strong performance
represents the largest international record €941m.
in pigmeat. Beef and sheepmeat
outlet for Irish beef, with China and
continued to grapple with difficulties Increased demand also benefitted
Hong Kong absorbing €31m and €27m
created in the previous year, as poultry producers who delivered
respectively.
production volumes were down and another year of export growth, rising
the issue of declining farmer returns The sheepmeat sector also 5% to €306m. The UK remained a
came to the fore. encountered a difficult year. This was strong primary outlet, where much of
driven by sustained pressure on prices the supply is destined for processing
Beef production declined by 1.5%, with
in continental Europe as a result of and onward export. The Rest of EU
a 3% fall in throughput countered by
aggressive supply from the UK, and also saw strong growth on the back
a 1.5% increase in carcase weights,
by challenges in supply created by the of a successful diversification effort,
a result of better grazing conditions
blockade of key processing facilities in with the French market leading the
over the year. Beef prices in the key UK
August and September. way. Internationally, exports to South
market continued to tighten as a result
Africa remained strong in spite of
of weakening demand, and overall the Pigmeat prices started the year under
expectations of a significant fallback
market fell back by 15% to be worth downward pressure but rebounded
this year. Exports of live animals fell13 Export Performance & Prospects 2019–2020 Executive Summary
DESTINATIONS
OVER PAST 10 YEARS
(€ VALUE)
International
Rest of EU
UK
back 3% to be worth €167m. The year export output. However, 2019 also saw with customers and supporting the
was characterised by a strong increase growing traction for the sector in the innovation pipeline through the work
in calf export numbers, which are of Rest of EU markets, which now account of The Bord Bia Thinking House.
lower value than adult animals. for 25% of PCF exports, worth €666m.
The PF sector, which is defined to
Opportunities in the private label sector
PREPARED CONSUMER FOODS (PCF) include enriched dairy powders but
have influenced growth, with successes
AND PREPARED FOOD (PF) excludes some PCF categories such
in the UK often key to unlocking this.
as value-added meats, seafood, dairy,
PCF represents a broad category Internationally, markets such as US
and juices, also delivered a strong
of value-added convenience foods, and UAE also delivered growth for the
performance in 2019, with exports up
and takes in elements of the meat, sector. Recognising the value of strong
12% to be worth €2.32bn in 2019. The
beverage and dairy categories. The customer relationship management in
enriched powders category delivered
sector delivered a strong performance the UK market at this critical time, Bord
a strong performance with a 9%
in 2019 with export growth of 2% Bia has supported the more tailored
value increase to €725m and its six
delivering overall value of €2.66bn. marketing and supply strategies being
key markets – Netherlands, Nigeria,
The UK retains a central role in the advanced within the PCF sector, as well
Germany, Poland, Iraq and Senegal –
success of this sector absorbing 67% of as assisting in relationship building
encompass three continents.14 Export Performance & Prospects 2019–2020 Executive Summary
Executive
Summary
ALCOHOL terms of delivering overall export sales HORTICULTURE AND CEREALS
of 7.9m cases. Cider producers enjoyed
Irish alcohol exports grew by 8% in Mushroom exports constitute 42%
a strong export performance in 2019 as
2019 to be worth €1.45bn. Historically, of edible horticulture exports from
a result of high demand and stocking
a category with a broad global Ireland. The value of mushroom
forward in the key UK market, while
footprint, Irish whiskey continued to exports in 2019 was €104m, a 4% rise
beer production, increasingly diverse
be the pathfinder of new growth for on 2018’s value.
in both range and markets, enjoyed 1%
the entire sector, and of the €137m in
growth, with strengthening demand in It was a challenging year for
beverage export growth achieved in
continental Europe. In the more niche mushroom producers with continued
2019, some 50% was in this category.
categories of gin and vodka, there were consolidation of the sector and an
Strong demand in the US, driven by
also good export performances, the increased focus on productivity gains
its positioning in the premium and
former on the strength of sustained to help insulate against currency
super-premium segment has been
popularity of gin in the UK and the volatility and other cost increases.
instrumental to this. Overall, the value
latter accounted for by the positioning Producers have been focusing on new
of Irish whiskey exports grew by 11%
of Irish offerings in the premium and more profitable varieties including
in 2019 to €727m, with the industry’s
segment. brown mushrooms.
buoyancy reflected domestically in
a pipeline of new distillery openings SEAFOOD In the UK, the destination for
and the strong emergence of whiskey effectively all mushroom exports, the
Against sometimes difficult trading
heritage tourism. For the cream liqueur retail environment observed a decline
circumstances, and a reality of reduced
sector, the year brought less to cheer in value of flat mushrooms, which carry
quotas, Ireland’s seafood industry
about as the imposition of tariffs on lower profit margins, and stronger
delivered a story of growth in 2019 as
EU dairy in the US and pressure from performances in brown, button
overall export values increased by 6%
domestic suppliers in Canada impacted and Portobello mushrooms - more
to €605m. Reduced quotas impacted
the key North American market. profitable varieties.
on the ability to supply pelagic fish,
However, the category held its own in
including mackerel and horse mackerel, Exports of cereals from Ireland were
but was countered by strengthening worth €94m in 2019, with €74m of
prices internationally. The threat of that going to Northern Ireland. Grain
a no-deal Brexit and its implications production in Ireland was 2.37m tonnes
for access to waters drove a large in 2019, a 30% increase on 2018’s
proportion of the pelagic fleet to catch harvest, while the price environment
EXPORTS TO its quota in the early months of the year. was challenging.
INTERNATIONAL MARKETS Whitefish exports suffered both Amenity horticulture exports stayed
reduced quotas and declining flat in 2019 at €18.5m. The UK is the
international demand. Meanwhile, only major destination for these
a strong year for Irish farmed exports and work continues for
salmon exports ended abruptly as producers in diversifying away from
environmental and animal health that market. Hardy nursery stock had
issues forced the ceasing of supply a strong year increasing the value
for the final two months of the year. of exports to €8.3m - growth of €1m
For Irish shellfish producers, it was a which was limited by strong domestic
year of challenges as langoustine and demand.
mussel suppliers competed in crowded
markets and prices for Irish brown crab AGRI-FOOD INDUSTRY
fell on the back of weak demand in the The most recently available figures
Chinese market. In contrast, oyster (2018) show that the agri-food sector in
Dairy 44% producers had a strong year with a Ireland employs over 173,000 people,
Meat 4% refocus on European markets including which is 7.7% of the total working
the UK. population and an increase of more
Pigmeat 7%
In December 2019, quotas for 2020 than 10,000 since 2010. Outside
Prepared Food 15% were confirmed and those included Dublin and the mid-east region, the
Alcohol 22% a significant (40%) uplift in mackerel sector provides between 10% and 14%
quota for Irish fish, alongside a 15% of total employment.
Seafood 4%
decline for prawn.
Other 2%15 Export Performance & Prospects 2019–2020 Executive Summary
DESTINATIONS INTERNATIONAL MARKET PERFORMANCE
2019 was a year when value growth
returned to Irish food, drink and COUNTRIES € VALUE % GROWTH YOY
horticulture exports. It was also one
where diversification confirmed its North America 1,319m +21%
role in both driving future growth and
balancing risk. The UK remains the key Asia 1,340m +18%
destination for Irish food and drink
exports. However, the total percentage Africa 688m +10%
of exports destined there was 34%,
the lowest proportion since Bord Bia MENA 330m +2%
began tracking export destinations.
The Rest of EU accounted for 35% of Other 219m -9%
the country’s €13bn in food and drink
exports. Difficulties encountered by Central/South America 83m +16%
exporters in the UK, which were largely
the result of weakening economic Oceania 81m +18%
sentiment, were in many instances
mitigated by diversion of supply to the
Rest of EU and International markets.
The latter accounted for some 31%,
of all Irish food and drink exports. MAJOR EU PRIORITY MARKET PERFORMANCE
2019 was the first year that exports to
markets outside of the UK and the EU COUNTRIES € VALUE % GROWTH YOY
accounted for more than 30% of
the total. Netherlands 1,147m +19%
Brexit remained an issue of cardinal
importance in 2019 and brought France 884m +11%
continued uncertainty to Irish
exporters. However, it has undoubtedly Germany 773m +5%
also resulted in many food and drink
Italy 352m +5%
suppliers bringing a new focus on their
customer relationship management
strategy, which will play a role in
navigating the post-Brexit terrain both
in the UK and in markets elsewhere.
Bord Bia’s risk analysis tool - the Brexit
Barometer – continued to supply way in delivering this growth although of this growth. The 2019 growth
valuable information on the industry’s declines were seen in sheepmeat, has also been aided by impressive
preparedness for Brexit and at the pigmeat and prepared foods. The performances in other priority
start of 2019 recorded a pronounced industry’s performance in International markets that hold significant potential
acceleration in planning and mitigation Markets added a sense of momentum for the future. While issues such as
activities. Bord Bia also continued to to the increased diversification of Irish tariffs, transfer pricing decisions, and
offer its customised support services food and drink exports. Impressive plateaus in demand present distinct
in response to the knowledge gaps that growth of 15% lifted the value of and significant challenges, there is
were identified by the Barometer. This exports to rest of world markets to significant scope for continued export
has left Irish companies more informed just over €4bn, a figure that now value growth to be balanced between
about customs procedures, capable represents some 31% of total food and the established markets and the
of managing a tighter supply chain drink exports. This is a 131% increase on emerging markets. Bord Bia’s ongoing
and understanding the particulars of 2010’s value, a year when just 24% of market prioritisation work will fully
sanitary and phytosanitary controls. Irish food and drink exports left the EU. support this.
Exports to continental Europe grew In different sectors, and for different
by €400m in value, to reach €4.5bn, reasons, the world’s two most powerful
representing 7% year-on-year growth. economies, the US and China have
Dairy, poultry and seafood led the been drivers of some key elements16 Export Performance & Prospects 2019–2020
Overview
THE GLOBAL ECONOMY to come close to recession during sufficient in food production, a figure
AND IRISH EXPORTS 2019, largely as a result of weak that has declined from 75% in 1991. In
industrial growth, resilience in the addition, the UK retail sector has made
GLOBAL ECONOMY
services sector served to sustain clear its concern about the risk to food
The International Monetary Fund’s it on the path of moderate growth. security should current supply chains
(IMF) most recent prediction is that Unemployment rose during the be disrupted.
global growth for 2019 will be 3.2%, year but remained under the 4%
It is well to note that, in the midst of
expecting to pick up in 2020 to 3.5%. threshold while wage growth at 3.8%
this uncertainty, Irish food and drink
While Brexit, US trade protection ran ahead of the country’s inflation
exports to the UK have grown by
measures, the increased use of tariffs, rate of 1.7%. Consumer spending in
some €400m in the three years since
and heightening geopolitical tensions the UK is forecast to grow by 1.6%
the 2016 Referendum result. More
have contributed to this performance in 2019, a figure appearing to show
recently, the industry has made great
and outlook, emerging economies more confidence in the economy at
strides in preparation for post-Brexit
as well as reasonable economic personal level than by business. It is,
scenarios, with strategies in place to
performance in the US and EU have nevertheless, a modest expansion that
defend market share and grow new
buttressed performance. Notably, has come with some intense pressure
business. The industry’s world leading
while business confidence has fallen on the UK retail sector.
positions in the areas of sustainability,
and investment decisions are being
In terms of currency movements, an via the Origin Green programme, and
deferred, concerted monetary policy
underlying weakness in sterling since food safety and food quality through
accommodation has to date provided
the 2016 Brexit Referendum result has the Bord Bia’s Quality Assurance
something of buffer. Consumer
been punctuated by occasional rallies Scheme play important support
spending and employment also
that have generally coincided with roles in this.
remained resilient, largely as a
expectations of progress on Brexit.
result of strong performances in
In December 2019, sterling hit a 2.5
the services sector.
year high against the euro based on
UK OUTLOOK the return of a Conservative majority
in the December General Election,
While the political uncertainty reaching above 85p to one euro. Rates
surrounding Brexit on occasion of 90p to one euro have been more
reached crisis point in 2019, the typical over the period since 2016.
world’s fifth largest economy, and
the most important market for Irish A slow growing UK economy presents
food and drink, remained resilient if its own risks and threats to Irish
subdued during the year. Overall GDP exports quite apart from the ongoing
growth for the UK during the year is challenge of Brexit. This impacted
predicted at 1.2-1.5%, with the Bank on the performance of the industry
of England reporting in November during 2019, with a 2% contraction in
2019 that ‘underlying UK GDP growth export value. Ireland’s Economic and
slowed materially in 2019 as weaker Social Research Institute was among
global growth and Brexit-related a number of voices arguing that the
uncertainties weighed on spending’. impact of a no-deal Brexit would be
Following the UK elections of for such a contraction to spread to the
December 2019 which returned entire Irish economy. However, this
a Conservative majority, ratification scenario was avoided in 2019.
of the proposed withdrawal
In the event that the UK Houses of
agreement progressed in Parliament
Parliament ratify the EU Withdrawal
before Christmas.
Agreement as now seems likely,
An orderly departure from the EU in debate will move to the future
2020 is expected to see GDP growth trading relationship. There is general
moderate to 1%, with predictions by agreement that the current date set
the IMF and the UK’s Office for Budget for implementation of this, December
Responsibility that GDP growth 2020, is highly ambitious. Agriculture
will reach 2% by 2022 in the most and food may prove to be among the
favourable of circumstances. most contentious areas of negotiation
as data from the UK government
Although the UK economy appeared shows the country to be 60% self-17 Export Performance & Prospects 2019–2020 Overview
The aggregate euro area
unemployment rate in 2019
was 7.6% and is expected to
decrease to 7.3% by 2021
EURO AREA performance. The unemployment rate on the euro area economy than was
for the EU-28 fell to 6.3 % in October seen in 2019.
The European Commission’s economic
2019, the lowest recorded since EU-
forecast for 2019 predicts the world’s The value of the euro against the dollar
wide figures began to be measured in
largest trading bloc delivering its continued to decline over 2019. Having
January 2000. Total employment rose
seventh consecutive year of growth, started the year buying $1.14, one euro
to 241m, its highest level ever.
with labour markets remaining was worth $1.10 by December. This
strong and unemployment declining. The aggregate euro area contrasts to $1.20 at the beginning of
Nevertheless, it notes that both the unemployment rate in 2019 was 7.6% 2018, with some analysts arguing the
European and global economies have and is expected to decrease to 7.3% euro is now significantly undervalued.
weakened in the last year and expects by 2021. Wages across the EU also In the absence of any correction, the
euro area GDP growth to slow to 1.1% continued to rise during the year, a weakening of the euro is good news for
in 2020 from 1.9% in 2019, and only trend that was more pronounced exporters in 2020, particularly those
marginally improving to 1.2% by 2022. in Central and Eastern European that now need to factor in tariffs to
The Commission also expresses the countries and resulting in greater wage their supply costs.
hope that, by 2021, the economy will convergence across the EU.However,
have absorbed the most significant while this increase has helped to
disruptions, stating that ‘some of the sustain consumer spending, private
shocks that have dampened activity consumption growth in the euro area
in the euro area are expected to fade is expected to moderate to 1.1% in
over the forecast horizon’. Its forecast 2020, from 1.4% in 2019, and remain
also notes that, with the exception of at this level as both employment and
Ireland, investment growth in the euro income growth slow. A moderation
area will be weak up to 2021. in consumer spending may impact
Irish food and drink exports to the
Inflation remained low in the euro
euro area, which have increased
area over 2019, reaching just 1% in
significantly in recent years. In
November, below the European Central
addition, the impact of weakened
Bank target of 2%. However, the
demand in manufacturing and
resilience of labour markets in spite
industry, if sustained in 2020, may
of weakening business sentiment has
have more pronounced consequences
supported the EU’s overall economic18 Export Performance & Prospects 2019–2020 Overview
Overview
USA OTHER ASIAN ECONOMIES soybeans and maize rise, with lower
energy prices reducing input costs.
Growth in the US economy slowed The significance of Asia as an engine
in 2019 after a strong 2018, as for economic growth is reflected in GLOBAL FOOD PRICES
manufacturing weakened and business IMF data showing that China and India
The Food and Agriculture Organisation
sentiment was impacted by growing collectively accounted for more than
(FAO) predicts global milk production
US-China economic tensions and half of global growth in 2019. While
to reach 852m tonnes over the year, an
uncertainty surrounding trade policy. India has seen its own deceleration in
increase of 1.4%. This is a lower rate of
Policy easing by the US Federal growth, matching China with a 6.1%
growth than expected earlier in the year
Reserve reduced borrowing costs increase in GDP in 2019, it will see this
and is the result of lessening supply
and while not sufficient to stimulate rise to 7% in 2020 on the back of a new
in India and the EU. It estimates world
business investment to the degree economic stimulus package. Japan is
meat production to fall to around 335m
required, it served to buttress already currently experiencing more moderate
tonnes in 2019, 1% down on 2018. It
resilient consumer spending. On the growth of 0.9% in 2019 and expecting
assesses this as the first fall in total
strength of strong growth in services, just 0.5% in 2020 as consumer
production recorded in two decades
the unemployment rate continued to spending falls. For the ASEAN-5
and a demonstration of the impact of
decline in 2019 to 3.5%. Overall, the countries (Indonesia, Malaysia,
ASF on China and other Asian countries.
US economy is expected to see growth Philippines, Singapore, and Thailand),
The FAO Food Price Index (FPI), which
of 2.3% in 2019 before moderating the IMF sees weakening external
tracks agricultural commodity prices,
to 1.8% and 1.6% in 2020 and 2021 demand impacting on GDP, which will
averaged 177.2 points in November
respectively, as investment remains stabilise at 4%-5% for the year.
2019, up 15.4 points or 9.5% from
weak. Consumer price inflation is
GLOBAL COMMODITY MARKET November 2018. The November 2019
expected to grow modestly over
figure, driven by an increase in meat
this time, as the impact of tariffs on Commodity prices followed broadly
and vegetable oils prices, was also
imports is set to be felt. downward trends in 2019, led by
the highest in over two years. The FAO
energy, which the IMF projected to
CHINA Vegetable Oil Price Index averaged
fall by 15% over the year, as economic
150.6 points in November, its highest
The broad-based deceleration of the tensions and weaknesses, coupled
level since May 2018, while the FAO
Chinese economy continued in 2019, with falling goods trade, reduced
Dairy Price Index averaged 192.6 points
with the IMF predicting growth of 6.1% confidence in manufacturing and
in the same month, some 6% above the
over the year. Data from the first nine lowered investment. These end of year
year earlier figure. The FAO Meat Price
months of 2019 showed a moderation projections represented a substantial
Index was up 8.4 points in November,
of GDP expansion of 6.4%, 6.2% and reassessment from the IMF’s spring
the largest month-on-month increase
6% over the first three quarters of the review, and the decline is projected to
since May 2009 and raising the index
year. External pressures, most notably continue into 2020.
some 28 points (17.2%) above its year
escalating trade tensions with the US,
This weakening will see oil prices fall prior level. The increase in meat prices
and weakening domestic demand have
from an average $60 a barrel in 2019 was concentrated in the last quarter
played their part in this. Consumption
to $58 in 2020, reflecting the weak of 2019. It is still 21.5 points (9.4%)
remains a growth driver but, as
outlook for the global economy. Built below the peak reached in August 2014.
with GDP, has been on a downward
into this is the assumption that the Persistent strong import demand,
trajectory during the year, as a
production cuts announced by OPEC particularly from China was key to this
slowdown in the economy brings with
in December 2018 will continue into recent upturn.
it more cautious consumer behaviour.
2020. Geopolitical threats in 2019,
Decreased demand for imported This global dynamic hides regional
including mounting tensions between
goods and a higher propensity to specific dynamics. European meat
the US and Iran, and the attack on
save have also fed into lower levels of prices have been depressed throughout
Saudi Arabian oil processing facilities,
business investment. Growth is set to 2019, countering the overall global
offer reminders that this downward
drop to 5.8% in 2020 and 5.6% in 2021 trend reflected in the index.
trend in prices could be reversed due
as tensions with the US and the overall
to sudden supply shortages. The IMF
global slowdown impact on export
also predicts metal prices will fall 5%
performance, business sentiment and
in 2019 and remain on a downward
investment.
trajectory over 2020. Following
projected falls in 2019, agricultural
prices are expected to remain stable
in 2020. A positive outcome to US
China trade talks could see prices for19 Export Performance & Prospects 2019–2020 Overview EURO v GBP, 2019 EURO v DOLLAR, 2019 EURO v RMB, 2019
20 Export Performance & Prospects 2019–2020 Overview
Overview
In spite of some fractures in
the global economy, consumer
purchasing power on the whole
remained strong in 2019
PROSPECTS FOR IRISH FOOD AND are likely to be a contentious part of shy of demand. US trade tariffs aimed
DRINK EXPORTS IN 2020 the negotiations on the long term directly at EU dairy exports remain a
relationship between the UK and the EU. challenge for butter and cream liqueur
While the world economy is gearing
exporters if no political resolutions
towards a slowdown, shifts in Rabobank sees ASF and global trade
are found.
consumer preferences in developing disputes as presenting the key areas
economies towards dairy and animal of risk and uncertainty for global food In spite of some fractures in the global
protein consumption, combined with production in 2020. It notes, however, economy, consumer purchasing
production constraints impacting that the issue of sustainability power on the whole remained strong
across global agriculture, provide remains as an enduring challenge for in 2019. A prolonged weakening of
reasons for cautious optimism that global agriculture. Ireland’s food and economic indicators in 2020 could
Irish food and drink exports can drink industry, supported by Bord undermine this. However, the potential
sustain the path of growth in 2020. Bia’s Origin Green, the world’s first for progress in Brexit and a resolution
In the key UK market, this will be national sustainability programme, of trade tensions between the US and
contingent on 2020 delivering a firm is well positioned to speak to buyers China may provide the much needed
step forward in the Brexit debate, with increasing needs on sustainability stimulus to improve global economic
consumer and economic sentiment and to continue to evolve as the sentiment. With its strengthening
likely to be emboldened by a clearer challenge demands. global footprint and its credentials
picture of how the future relationship as a high quality, sustainable offering,
The impact of weakening EU prices
between the EU and the UK will take the Irish food and drink industry
on beef production is also likely to be
shape. is well placed to capitalise on this
felt by Irish producers. The European
opportunity.
Passage of the Withdrawal Agreement Commission predicts that the 0.5%
bill in Parliament prior to Christmas fall in per capita meat consumption
far from removes all challenges from in the EU in 2019 will go unchanged in
the table for Irish food and drink 2020. Against this, the stabilising or
exports. The Agreement provides for falling of feed prices will deliver some
maintenance of the status quo for just opportunities to recover margins,
12 months at which point a full trade and new export opportunities in Asia
deal is anticipated between the UK and will help offset weakened demand for
EU. Most observers see that timeline as beef in the EU. Closer to home, clarity
being extremely optimistic. This opens around Brexit and greater investment
the possibility of no-deal Brexit being a by the new UK government in 2020
reality again in twelve months time. may provide significant boosts to
consumer sentiment and spending.
Britain will remain dependent on food
and drink imports, and that fact will The global dairy market is expected
be some context in future relationship to hold firm through to the first half
negotiations, however food standards of 2020, as global supply remains just21 Export Performance & Prospects 2019–2020 Overview FAO FOOD PRICE TOTAL INDEX HISTORICAL VIEW BASE 2002-2004 = 100 FAO FOOD PRICE INDEX 2019 Food price Dairy Price BASE 2002-2004 = 100 Cereals Price Index Meat Price
DAIRY
€4.4bn The value of dairy exports, an increase of 11% on 2018 +55% SMP export +55% to €332m The top 5 markets Are the UK, the Netherlands, China, the US and Germany €584m Value of exports to China, the largest International priority market
24 Export Performance & Prospects 2019–2020
Dairy
OVERVIEW unique dynamics, Irish dairy exports Much of the credit for the 2019
grew in value by 17.6% while the volume performance, however, rests with the
Ireland’s largest food export sector
of those exports grew 12%, illustrating industry itself and the central dynamics
continued on its path of global growth
the greater value being captured by in the year’s performance may be
in 2019, delivering an 11% increase
Irish industry. identified as
on 2018 export values. It was an
assured performance from the Irish The issue of falling butter prices was • continued growth in domestic
dairy industry, and was delivered in a pronounced one across the EU in milk production
spite of some considerable market 2019, with suppliers exposed to the
• an intensifying industry focus on the
challenges. These included a significant downside of volatile trading conditions
development of new markets, and,
weakening in butter prices, the for dairy ingredients. The year closed
imposition of tariffs by the US on EU with a striking if predicted 50% fall • an enhanced portfolio of value-
dairy imports, and the ongoing market in EU butter prices, given the 2017/18 added products and customer-
pressures created by uncertainty spike was widely recognised as focused applications
surrounding Brexit. Given the unsustainable.
central place of the UK for Irish dairy
The issue of EU price declines were,
exports, the protracted uncertainty
however, counterbalanced by
around the UK’s withdrawal from the
constraints to supply among Ireland’s
EU is creating a range of logistical
key competitors, among them New
challenges that cannot be effectively
Zealand, the US, Australia and the Rest
resolved without clarity on the future
of EU, resulting in a tightening of global
trading relationship between the two
milk supply and setting the stage for
countries.
a strong performance by the Irish
There is significant evidence of Irish industry.
industry capturing greater value. When
leaving aside the specialised nutritional
powders category, which has its own
IRISH MILK PRODUCTION 2015 2019
PRE QUOTA 2015 VERSUS POST QUOTA 2019
Source: CSO Ireland25 Export Performance & Prospects 2019–2020 Dairy
Dairy
GLOBAL OUTPUT Key market performances:
Global dairy supplies remained tight in NEW ZEALAND DAIRY EXPORTS
2019, with farmers in many producer
The world’s largest exporter of
countries unable to take advantage
dairy products, New Zealand has a
of higher farm gate prices. Regional
national dairy herd of some 6.4m
constraints included extreme weather
and the sector has enjoyed sustained
conditions, rising costs of production,
growth in recent years. Total dairy
and environmental limits on farm
production in 2018 stood at 3.21m
expansion.
tonnes, representing growth of 2% on
IRISH OUTPUT 2017. Rabobank predicts that, while
Irish milk production increased by
prices will remain strong, the 2019/20
season will conclude with either a
€1.2bn
approximately 6% year-on-year in Butter exports continue to
minor contraction (-1%) or zero growth
2019, approaching a record 8bn litres. surge ahead, increasing by
in output.
This strong performance was a result 13% in 2019
of both rising dairy herd numbers and AUSTRALIA
improvements in productivity. The Irish
With a national dairy herd of some
dairy herd now numbers approximately
1.5m cattle, increasing marginally in
1.5 million head, an increase of 40%
size in 2018/19, Australia has a national
since the ending of the milk quota
milk supply pool of some 9.3bn litres.
system in 2015. Improvements in
However, drought conditions which
productivity are demonstrated in
higher returns in milk solids (fat and
impacted the 2019 performances are
set to continue in 2020. Rabobank
€998m
protein) which resulted in more output Cheese exports grew
predicts that Australian milk
and value per litre at processing by 22% in 2019
production will decline by 3% for
level. Milk solids have increased
the 2019/20 season.
steadily in Irish milk supply over the
decade, primarily as a consequence EU
of investment in breeding. Milk fat
as a percentage of content increased In 2019, the European Commission
from 3.93% in 2010 to 4.22% in 2019. estimates total EU milk collection to
Year-on-year increases in quality can grow by just 0.5% on the year earlier
figure. A 1% decline in the EU dairy
also be accounted for by diet and 2019
was a case in point, with excellent grass herd, estimated at 22.9m in 2018, and 55.2%
growing conditions, particularly in drought conditions in some areas,
Skimmed Milk Powder
early spring, resulting in higher quality are contributing to this. This marginal
exports rose 55.2% to
outputs. Irish farm gate milk prices increase contrasts to the 6% achieved
€332m
averaged close to 33.6 c/l during the by Irish dairy suppliers during the
year, allowing farmers an opportunity year. However, Ireland remains a small
to recoup costs and recover from the player in the overall European context,
financial challenges of 2018 when accounting for just 5% of total EU milk
heavy feed inputs were required to production. The sharp fall in the EU
counter the impact of adverse weather butter prices has made EU butter more
and poor grass growth. attractive in international markets.
Cheese shipments have remained
More favourable weather conditions stable over the year, while exports
in 2019 also allowed for greater silage of skimmed milk powder (SMP) are
harvests on farms, reducing overall returning to levels last seen before
input costs for the year. the 2015/16 crash.26 Export Performance & Prospects 2019–2020 Dairy
Dairy
US CATEGORIES some 26% fed into the value of cheese
exports increasing by 22% to €998m.
Milk production levels in the US dairy BUTTER
states were effectively flat during 2019, In the context of expected increases in
Butter is the largest category within
largely a consequence of a continued milk output and a strategic requirement
Ireland’s dairy export portfolio and, in
contraction in the size of the national to defend existing market share while
2019, accounted for €1.1 billion, or one
herd. A modest pickup is predicted pursuing new opportunities, investment
quarter of total dairy export value.
in 2020, with Rabobank forecasting in innovation and new production
supply growth of 1%. This is the second year in which Irish butter facilities will be pivotal. Markets in Asia
exports surpassed the €1bn value mark. represent a key target and Japan has been
DESTINATIONS
Achieved as a result of a 22% increase in identified as an opportunity for dairy
Irish dairy exports found markets in volumes, which were up 48,000 tonnes growth through Bord Bia’s Prioritising
124 countries in 2019, with growth on 2018 and despite downward pressure Markets study. This is due to its affluent
delivered across almost all categories, on prices. By September 2019, EU butter and informed consumer base and ongoing
and led by strong performances in prices were around €3,500 per tonne, dependence on imported dairy ingredients
butter, cheese and SMP. The top five compared to a peak of over €6,500 per and products. The Japan-EU economic
destinations in 2019 were the UK, tonne in mid 2016. partnership has created the context for
the Netherlands, China, the US and Irish cheese exporters to expand market
Irish butter has enjoyed unprecedented share and capitalise on new opportunities
Germany.
demand in recent years, particularly in in the years ahead.
Exports to the UK sustained despite the US. Kerrygold is now that country’s
a number of hard Brexit cliffedges. number two butter brand and the US is The UK accounted for 45% of Irish cheese
Stockpiling activity led to a shortage Ireland’s second largest overall market for exports during the year, down from 50%
of warehouse space available in the butter. Exports worth €218m represented in 2016. As with other food categories,
UK, diverting some product into 28% growth on the previous year. While some activity in 2019 can be attributed to
continental Europe. consumer demand undoubtedly played a shipments being maximised in response
part in this, growth was also attributable to Brexit. EU markets accounted for 32%
In the case of exports to the of cheese exports by value with strong
to stocking measures undertaken to
Netherlands, a relatively small amount performances in Germany and France in
mitigate against prospective tariffs on EU
is for domestic consumption. A good particular, where exports increased by
dairy goods. This proved farsighted as,
proportion of dairy exports to the 40% and 23% respectively.
following a WTO ruling, a 25% ad valorem
Netherlands is further processed
tariff impacting Irish butters and cheeses
there before reexport to other parts of The dynamic in the UK, whereby space in
was imposed by the US authorities on
continental Europe and Asia. chilled and frozen warehouses was short,
October 18th, 2019.
drove some of the increase in supply into
It was a promising year for dairy continental Europe
Irish butter exports also grew in Japan and
exports to the US, which increased by
in South East Asia in 2019, with markets
an estimated 30% to be worth more Cheese exports to the US increased by
such as Singapore, Indonesia, and the
than €411m. This has been driven by an estimated 36% to 9,500 tonnes and a
Philippines all showing increased demand.
exceptional demand for Irish butter value of €51m. From a small base, cheese
Butter is a relatively new export product
but also for cheese - in a short period exports to China continued to grow and
to China, where the bakery sector is the
of time, the US has grown to become were worth €5m in 2019. The foodservice
main driver of consumption. Irish butter
the fourth largest market for Irish channel is driving demand, with the
exports increased from an extremely small
cheese export - and for powders with opportunity for mozzarella, as a key
base in 2019 to be worth €2.23m, with
applications in sports nutrition. pizza ingredient, leading to considerable
continued growth expected in 2020.
investment in production facilities by
Asian destinations were the location international suppliers, including Ireland.
CHEESE
of some extraordinary growth figures Two Irish processors are set to release new
for Irish dairy exports, particularly for Cheese was Ireland’s second largest products targeting this and other Asian
ingredients, albeit these are coming dairy category in value terms in 2019. markets in 2020.
from a very low base. Dairy exports While Brexit presents a distinct concern
to priority markets like Indonesia for suppliers, 2019 was largely positive DAIRY POWDERS
and Malaysia increased 85% and 50% in terms of both ongoing UK market
After a number of years of relative
respectively to be worth more than receptivity and the broader story of
stagnation, the value of Ireland’s SMP
€50m cumulatively. diversification. A volume increase of
exports rose by 55% in 2019 to €331m.27 Export Performance & Prospects 2019–2020 Dairy
EU AVERAGE QUOTATIONS OF Volatility has been a feature of Cheddar
EU butter prices in recent years.
MAIN COMMODITIES A significant decline was seen
SMP
(IN €/100 KG) in 2019. WMP
Source: DG AGRI – Reg. 2017/1185 Butter
Art. 11 – Annex I.7
TOP 5 MARKETS FOR IRISH CHEESE 2018 2019
2018 v 201928 Export Performance & Prospects 2019–2020 Dairy
Dairy
This was achieved with volume growth Outside China there are other and the European Central Bank ended
of 30.2% to 172,000 tonnes. All EU opportunities in Asia, with notable 2019 by lowering rates and announcing
intervention stocks of SMP have now growth, albeit from a smaller base, quantitative easing.
been released. A successful year for recorded in Vietnam in particular, as
The Irish dairy sector is well positioned
SMP exports was reflected in increases exports for 2019 increased to €20.9m.
to grow exports further in 2020. At
in most key export markets and across
WHEY production level, conditions at the start
Europe in general. As reflected in
of the pasture season will be crucial to
the growth of value over volume, EU A category that incorporates a
determining the overall performance
pricing for SMP is currently strong, and growing range of high specification
of the sector for the remainder of the
increased by 41% in the period January products, whey powder exports for
year. Brexit will also continue to be
2018 to June 2019. The pricing dynamic 2019 increased by 31% to €131m in
the great uncertainty on our doorstep,
was positive and primarily shaped value, with a corresponding volume
and there remain permutations and
by exceptional demand from China rise of 20%. Recent value growth
possible outcomes in 2020 that could
through 2019. has been driven by demand in Asia
seriously impact on the performance
for specialised demineralised whey
SPECIALISED NUTRITIONAL POWDERS of the Irish dairy sector. The tariffs
powder, which is used in a number
impacting Irish butters and cheeses in
It was a more nuanced year in the of specialised applications and is a
the US will also have an impact on the
specialised nutritional powders product with significant opportunity
market performance there.
category, which includes infant for value capture.
formula, and where a decrease of 10.2% In spite of many caveats, 2020 offers
PROSPECTS
in value saw exports valued at €929m. the prospect of strong, continued
Continued changes in accounting In 2020, dairy supply is expected to growth – albeit at lower levels than
processes by a key multinational remain tight internationally, with the seen in the last few years – based on
manufacturer contributed to this current general firmness in global ongoing demand in Europe and key
decline. markets likely to remain in place international markets for Irish powder-
through to mid-2020. Rabobank based products, butter and cheese.
China and Hong Kong absorb 90% of
is predicting a production growth
Irish exports to Asia, with China alone Looking to the future, the Irish industry
increase of just 0.8% for the year, with
accounting for 36% of total exports. can continue to differentiate itself from
pressure on margins, driven by rising
Here values dropped 10% to €301m the larger global players. Key to its
costs of production, adding financial
and were again attributable in part to success will be identifying and pursuing
pressures to dairy farmers across all
accounting procedure changes. value adding opportunities that show
production regions.
an understanding of the needs of the
While the world-class safety and
Any potential slowing down of the supply chain and a keen focus on end
quality credentials of Ireland’s
global economy would also have a applications.
offering have underpinned its success
dampening effect on current demand.
to date, declining birth rates in key
Escalations in geo-political tensions,
markets will ultimately set a limit on
and the deepening of trade wars
the potential for future growth, with
and policy disputes could also bring
the overall market for specialised
uncertainty into the global trading
nutritional powders currently flat.
environment. There are strong
Greater competition from domestic
indications of a slowdown in the global
manufacturers and economic
economy in the second half of 2020,
uncertainty may further dampen
demand for imported product.You can also read
