Ireland's Food And Drink Industry Optimistic About Future Growth

By Noel Kilkenny, Consul General

Ireland's food and drink exports are booming and the sector is optimistic about future growth and job creation.

Those were the key messages as Bord Bia, the Irish Food Board, announced details of the industry's performance in Dublin this week.

Food and drink is Ireland's largest indigenous industry and the country boasts a range of heritage brands, such as whiskies, stout, cream liqueur and butter, that enjoy international recognition. It is also a major exporter of beef, food ingredients and consumer foods. Less well known is the fact that the industry proved to be one of the strongest performing sectors in the Irish economy in 2010, as export sales enjoyed double digit growth. A total increase of 11 per cent saw export sales reach €7.9 billion according to the Irish Food Board. The figures correspond with overall buoyancy in Irish exports, which enjoyed record growth in 2010 to reach €161 billion in total. The food and drink industry's total increase of just over €800 million outpaced that of total merchandise exports and is estimated to have accounted for almost one-third of total growth during the first nine months of 2010.

This surge is all the more remarkable given the country's key export markets continue to battle recession. The 2010 figures were supported by a range of factors according to the Irish Food Board, including a more stable consumer environment, reduced exchange rate pressures and improved relative competitiveness. It was also boosted by rising global prices for most agricultural commodities.

The strength of the industry's export performance is all the more commendable for the fact that it has been achieved in what remains a highly competitive marketing environment. All major categories recorded increases, led by dairy, which jumped by more than €300 million or 17 per cent. Meat and livestock exports were almost €200 million higher while beverage and prepared food exports recorded growth of €130 million and €100 million respectively.

The success of the industry in growing its penetration of Continental EU markets is also to be welcomed, with exports to the mainly eurozone markets increasing by 14 per cent. Continental EU markets now account for 34 per cent of the industry's total exports of food and drink.

Looking ahead to 2011 the prospects for Irish food and drink exports remain positive, helped by strong global demand for commodity products and a relatively tight supply situation in a number of key product categories. In a year in which the world's population will reach seven billion, growth in global demand is set to underpin food markets well into the future, albeit with some volatility to be expected. The challenge for the Irish food and drink industry is to maintain its current momentum, particularly in the areas of cost competitiveness, innovation and marketing.

The current strength of global food markets is providing a benign backdrop for the industry, particularly for the primary sectors. The FAO food price index reached an all-time high in December at 215 points, slightly higher than the previous peak in 2008 but as much as 25% higher than in December 2009 and more than double its level, at 90 points, in 2000. Looking ahead, the growth in world food prices is expected to remain high by historical standards while varying across commodities, with the strongest growth expected in cereals. Ireland's grass-based livestock production system is set to be among the beneficiaries, as it is well positioned to cope with these price pressures (from an input perspective) and even improve relative competitiveness. Ireland's food and drink industry has endured intense challenges in recent years.

The 2010 figures demonstrate it is capable of a vibrant response. We look forward to building on these successes in 2011 as the industry leads Ireland's export-led economic recovery with confidence.

Noel Kilkenny is Ireland's Consul General in New York City