Sterling reverse could be first Brexit setback for food industry

Bord Bia report highlights large number of challenges posed by UK decision to leave EU

Beef remains the single biggest component of Ireland’s food export trade, valued at €2.4bn last year

Beef remains the single biggest component of Ireland’s food export trade, valued at €2.4bn last year

 

The Brexit-related slide in sterling wiped a potential €570 million off the value of Ireland’s food and drink export trade with the United Kingdom, according to Bord Bia’s latest export performance and prospects report.

When increased export volumes are taken into account, the actual hit was closer to €300 million, which is modest in the context of a sector worth €11 billion to the economy.

That said, the reverse may just be the opening sequence in what is likely to be a more prolonged and complex disruption to trade with our nearest neighbour.

Consumers and businesses are only adjusting to the new euro/sterling exchange, and the impact on consumption patterns and exporting volumes has yet to fully play out.

The sterling factor could also be overtaken by a greater set of challenges if Britain chooses to exit the single market in 2019, raising the prospect of export tariffs and “hard” borders.

Such a scenario could be compounded if the UK opts for a swift, post-Brexit deal with Mercosur, resulting in a flood of cheap food from South America into Ireland’s largest export market.

The sector has dealt with significant crises in the past, including BSE, foot-and-mouth disease, dioxins, but nothing on this scale.

No upside

Michael Creed

The only real policy option is market diversification. This is how Irish pig-meat producers dealt with the Russian food embargo, by essentially redirecting their produce into emerging markets in Asia.

Bord Bia’s director of markets Pádraig Brennan said some 80 per cent of total export growth last year was driven by trade to international markets where higher demand, improved market positioning and relatively steady exchange rates helped improve the competitive position of Irish exports.

He said the share of exports destined for the UK fell by 4 percentage points to 37 per cent in 2016. This trend is likely to accelerate amid the current climate of uncertainty.

The slide in Irish food exports to the UK last year was mirrored by a similar-sized pick-up in international markets, most obviously China, which is now our second biggest market for dairy.

Biggest component

The opening up of new export markets such as China, where consumption rates are rising sharply, is now more urgent than ever. The Department of Agriculture says it is working closely with Chinese authorities to finalise the remaining technical steps to allow trade to commence, but progress is very slow.

Ireland’s food and drink trade may be dwarfed in financial terms by pharma and IT, but its employment footprint, roughly 270,000 people, is bigger than the other two combined, and its future health is crucial to the rural economy.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.