Food, drink exports to grow in 2010

Export growth in Ireland's food sector will resume in 2010, Bord Bia said today, predicting a positive outlook for the sector.

Food and drink exports fell just under €1 billion, or 12 per cent in value, to €7.1 billion last year as the economic downturn, a decline in the value of sterling and "severe difficulties" in the global dairy market presented food and drink exporters with significant challenges, the body said.

In contrast, the industry saw a volume decline of an estimated 3 per cent, leading to the conclusion that sterling and price deflation were key factors in the decline in value.

"Sterling remains the single biggest issue for the industry," said Bord Bia chief executive Aidan Cotter. "In 2009, it is estimated the depreciation of sterling reduced the value of exports to the UK by some €400 million."

The UK is the Irish food and drink industry's principal export market, accounting for 44 per cent of exports. Sales in 2009 were just over €3.1 billion, down 15 per cent on the previous year.

However, there are signs that export values are beginning to stabilise, said chairman Dan Browne.

"The potential for stronger export revenues from the key dairy and meat sectors, and investments by prepared food companies to broaden their market presence on the Continent, will help exports as 2010 progresses. However, developments in sterling and consumer sentiment remain critical," he said.

The Irish agriculture and food industry is Ireland's largest indigenous sector. It accounts for almost 9 per cent of employment and 10 per cent of exports.

The report said the longer term outlook for the sector was also positive, with an expanding population and evolving demographics necessitating a 40 per cent increase in food production by 2030 and some 70 per cent by 2050.

The report warned that it would remain a challenge for the industry to improve competitiveness while broadening its export reach.

Exports to other EU markets accounted for 34 per cent last year, up from 32 per cent in 2008. This was mainly due to a higher share of beef exports destined for the continent, and a new focus on the region by prepared foods manufacturers.

Some 68 per cent of Irish food firms have reduced non-staff related costs, while 36 per cent have cut back on staff. This figure rises to 70 per cent among larger firms. Over a third have reduced the number of product lines they produce, while others have cut back on spending on business development and sale, and new product development.