Currency moves hit Irish food exporters

Irish food and drink companies are looking anxiously at the dwindling strength of sterling.

Some 42 per cent of Irish food exports go to the UK, which accounts for 50 per cent of Ireland's beef exports, some 278,000 tonnes.

This week, Cormac Healy of Meat Industry Ireland, representing the majority of the main processing sector, said the impact of the strengthening euro was significant.

"We saw the euro hit 76p sterling at the beginning of this week which is a 6 per cent change on pre-Christmas levels, and this represents a 15 per cent deterioration in the exchange rate compared to January 2007 when the euro equated to 66p sterling," he said.

He said that on top of that cattle prices here had increased by 10 per cent since before Christmas, yet increase in prices had not yet occurred in the British market and there is strong resistance to it there," he said.

"It looks like we have two hills to climb here, one at home and one in Britain and they look pretty insurmountable just now," he said.

Frank Hayes of Kerry plc was less gloomy but said the British market was "a highly competitive landscape" even before the weakening of sterling.

"There is no doubt it is creating problems for us especially in the chilled meats sector, but we do have advantages in so far as we sell into 140 different countries and manufacture in 19, so we can diversify," he said.

"Our business is performing well and we can get on top of increased raw material, energy and other costs, but there is less a company can do about this currency issue," he said.

John Stanley of Monaghan Mushrooms said his company's biggest market was also in the UK where it supplied to the multiple retail outlets. "I think that because we have built up a relationship with our customers in the UK and because this decline in the value of the currency has happened so quickly, there is a fair understanding there of the pressures we are coming under," he said.

"At the end of the day, the retail sector is in the business of making money, and to do that it has to rely on continuity of a quality supply and this should help resolve some of the difficulty we have in price," he said

Michael Murphy, director of markets at Bord Bia, said there were undoubted difficulties facing Irish exporters into Britain, but the industry was "pretty robust".

"I know that it is not easy to get price increases from retailers but while it is difficult, it is not impossible," he said.

He said the beef sector was one area where there had been an immediate impact but the market in Britain was continuing to grow and did present opportunities.

In other sectors, he said, there were possibilities of buying raw material in the sterling area and this was beginning to happen.

"On the whole, across the sectors this is a very big issue and it is hitting with varying degrees of intensity," he said.

The total value of Irish food and drink exports last year, according to the board, was €8.62 billion, which was a 5 per cent increase on the previous year.

Of this, €3.61 billion was exported to the UK, some of the main components being €770 million worth of beef, €125 million in pigmeat, €200 million worth of poultry and nearly half the dairy products and ingredients exported, worth €2.36 billion, went to the UK.

The UK was also the key market in the prepared foods sector where exports reached €1.85 billion last year and also took almost €100 million worth of Irish mushrooms.