Brexit dampens Irish food and drink exports by €570m

The fall in sterling following Britain’s vote to leave the European Union is estimated to have cost Irish food and drink exporters about €570 million in 2016, Bord Bia has said.

Its annual Export Review and Prospects Report, published on Wednesday, warns exporters of a continuation of challenging conditions.

However, it noted an increase of 2 per cent on export values last year, setting a new record of €11.15 billion.

This marks the food and drink industry’s seventh consecutive year of growth and an expansion of 41 per cent, or €3.3 billion, since 2010.

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The strongest-performing sectors were prepared foods, beverages and dairy product and ingredients.

Sales in international markets continue to drive export growth, representing 80 per cent of total export growth for the year.

Trade with the UK fell by 8 per cent, due in part to challenging exchange rates and uncertainty arising from Brexit.

Emerging markets

However, there were increased exports to international and emerging markets including North America (adding €200 million), China and the rest of Asia.

Overall, there was a 13 per cent increase in shipments to international markets, reaching a value of approximately €3.5 billion.

There was also recovery in EU markets, adding 3 per cent to reach €3.53 billion.

The euro strengthened by 13 per cent against sterling in 2016 while there was little change in exchange rates with the US dollar.

According to Bord Bia estimates, the underlying weakness and volatility of sterling negatively affected the competitiveness of Irish exports reducing the value of trade by a potential €570 million.

Higher demand, improved market positioning and relatively steady exchange rates helped improve the competitive position of Irish exports, it said.

Dairy produce

Notable growth in 2016 was recorded among prepared foods, sheep meat, beverages, pig meat and, to a lesser extent, dairy produce.

Weaker prices negatively affected the value of beef and edible horticulture exports while lower volumes affected seafood exports.

Livestock exports declined in value terms largely due to a significant reduction in live cattle shipments, while poultry exports recorded a significant decrease due to both reduced prices and lower volumes.

Looking to this year, export markets will “remain challenging” amid ongoing market uncertainty.

An increase in demand is expected for dairy produce and the beverage sector. Prepared consumer foods exports are likely to face on-going competitive pressures, most notably the UK.