Food export potential whets appetite for growth
OPINION:Target set by Food Harvest 2020 is now clearly within reach, and might even be exceeded
Delivering a €2 billion increase in exports over the last three years, to reach and exceed €9 billion for the first time, represents a highly commendable performance by the food and drink industry.
It suggests the addition of a further €3 billion over the next eight years, to meet the target set by Food Harvest 2020, is now clearly within reach, and might even be exceeded. It is of course not so simple, yet as the industry looks ahead it is worth reflecting upon.
The highest growth potential in the industry has still to be realised, and must await the lifting of dairy quotas from 2015. Should the anticipated expansion materialise in full,
it alone could add a further €1.5 billion to exports by the end of the decade.
The beef sector faces continuing challenges in relation to farm level profitability, yet it too could benefit from a larger dairy herd, while new market opportunities are set to open up once access to the US, China, and Japan is restored. The pigmeat and sheepmeat sectors also have growth potential.
In the beverages sector, the double digit growth in Irish whiskey sales is set to continue and even accelerate, based on current investments underway never mind other greenfield projects reported to be under consideration.
Seafood exports have grown by almost 60 per cent over the last three years and, if current licensing plans to increase production are successful, further significant growth is in prospect.
The prepared foods sector, with its reliance on UK and Euro area markets, has been facing significant challenges, not least the rising cost of ingredients and consumers’ search for value. It includes some of our most successful enterprises, yet significant growth may require new entrants and larger, scalable projects.
The current growth in the industry comes at a time when the world faces the challenge of expanding food production by 70 per cent over this and the next three decades. It must do so to meet the needs of an expanding population, including the shifting dietary habits of the extra three billion people set to join the middle classes in just this and the next decade alone.
World agriculture has been struggling to keep pace; as a consequence global food commodity prices today are double their level of 10 years ago, are on a clear upward trajectory, and are part of the reason behind rising export values. This is a strong growth story to underpin the industry’s own growth ambitions.
However, there are significant challenges. While commodity food prices are high and rising, they have also become subject to a high degree of volatility, driven in particular by unpredictable weather patterns. When prices are falling sharply they can severely shake the confidence of producers, just as they can send equally exaggerated signals when they are rising. Last year commodity prices fell on average by 8 per cent, having increased in the previous year by 23 per cent.