EXPORTS OF food and drink grew by 11 per cent last year and accounted for two-thirds of all exports by indigenous industries. The good news is that this strong performance is expected to continue. Nearly two-thirds of these exporting companies expect to increase their sales during the coming months, according to a survey conducted for Ibec, and confidence within the sector is very high compared to other business groups.
The importance of the food and drinks sector lies in its integration with agriculture. These companies buy and process the bulk of farm outputs. When one industry does well, the other follows suit. Loss of competitiveness and the collapse of world dairy and food prices in 2008 hit both sectors hard. Between 2007 and 2009, farm incomes fell by 40 per cent. But, last year, that fall in income was wiped out as the euro weakened and world food prices bounced back. Recovery has not been as complete within the food and drinks industry. Exports fell to €7.3 billion in 2009 before recovering to €7.9 billion last year. However, they have yet to reach the peak of €8.6 billion achieved in 2007.
Currency exchange rates, world demand and increasing competitiveness are expected to drive both industries this year and that should have a positive, knock-on effect for the rest of the economy. Ireland sends most of its agricultural output abroad. It is the largest EU exporter of dairy products and the fourth largest beef exporter in the world. Britain is still our major customer. But considerable efforts have been made to develop new products and markets.
It is obviously of great comfort to farmers that their incomes have recovered to pre-recession levels and that the outlook for the sector is positive. Unemployment levels, however, remain crushingly high. The construction sector, which employed the sons of many farmers, remains depressed. There is a clear need to reskill and retrain the workforce and to provide employment opportunities for young people. In difficult fiscal circumstances, those objectives can be advanced if those sectors first out of recession begin to spend and invest. Unfortunately, more companies in the fast-recovering food sector expect to shed staff in the coming months than those planning to take on additional workers. Traditionally, farmers have been cautious with money. There is nothing wrong with that. But extreme caution can hold back development and lead to the closure of small, local businesses.