From Mercosur to Trump, the clouds darken for Irish food producers
KerryGold butter, a major Irish export, has previously found itself in the crosshairs of US tariffs under a Donald Trump administration.
Amid ongoing challenges from cost inflation and labour shortages to geopolitical tensions and market disruptions, Irish food and drink exports maintained resilience throughout a turbulent year, increasing by 5% to a record €17bn in 2024.
While largely offset by higher pricing to combat inflation, Bord Bia stressed in its Exports Performance and Prospectus Report 2024/2025 that several food and drink categories posted volume growth in addition to value growth, particularly within the seafood, prepared customer foods and meat sectors.
Commending food and drink producers for their resilient performance, Agriculture Minister Charlie McConalogue said the annual analysis was encouraging to see, noting: “Bord Bia shows a hugely positive performance for 2024.
“Add to this the value of non-edible products, and Irish agri-food exports are in the region of €19bn, a figure approaching a 5% increase on 2023. This is a significant achievement, given the prevailing impact of cost inflation and market volatility.”
Last year also saw Irish exports to the EU increase by 4% to almost €5.9bn, with the EU now accounting for 35% of all Irish food, drink and horticulture exports, back from a 36% share in 2023.
France, Germany and Belgium accounted for nearly 40% of total exports, with value increases recorded of 5%,12% and 12% respectively.
However, the UK continues to be the largest single market for Irish food, drink and horticulture exports, with value up 7% to €5.9bn.
The total share of exports for the UK in 2024 is estimated to be almost 35%, however, this remains lower than pre-Brexit trading, highlighting how Irish exporters have sought to diversify their exports to other markets.
Despite the UK market seeing inflation ease, cost-of-living challenges remain. In addition, the announcement of a landmark tax-raising budget poses challenges for consumers and businesses and could bring potential risks to Irish exporters in 2025.
The return of former US president Donald Trump to the White House is set to be another key issue for Irish food exporters heading into 2025.
Just last month, the Economic and Social Research Institute (ESRI) warned proposed policy changes by the incoming president could bring “considerable downside risks” for the Irish economy, which could severely impact trade, foreign direct investment (FDI), and public finances.
As part of his economic policies, Trump has promised broad tariffs and changes to tax policy to incentivise companies to return manufacturing to the US and stimulate domestic demand. Given Ireland’s extensive trading partnership with the US, such decisions could have a significant impact on exports.
Commenting on the research, ESRI professor Conor O'Toole said if the Trump administration fulfils its promises to levy broad tariffs on US imports, it could subdue overall world trade, which could have direct and indirect consequences for Ireland.
The US was Ireland’s largest export market in 2023, accounting for €54bn, or 28%, of all exports, according to the Central Statistics Office (CSO).
And it has happened before. In Trump's previous term as president, Irish food exports found themselves in the tariff spotlight.
In October 2019, Irish dairy exports became ensnared in a global trade war, as the White House took aim at EU-made goods. High-profile Irish brands such as Kerrygold, which is hugely popular in the US, cheese products, as well as some Irish whiskeys were added to the US sanctions list of EU goods.
It came as part of White House plans to slap tariffs on a huge range of products worth $7.5bn (€6.8bn) made in the EU, including British sweaters, French wine, and cheese from across the continent, as well as Irish dairy and whiskeys. For Ireland, sanctions on Irish dairy products featured high on the list.
Reflecting on Trump’s prior threats and the potential impact of new ones on Ireland, the Bord Bia chief executive Jim O'Toole noted: “That is the €54bn question, but there are a couple of things to think about.
“Firstly, Trump’s campaigning and his administration may be very different things. It’s also important to recognise that the US farming vote was very solidly in the Trump camp. The US is a huge producer and exporter of agricultural commodities.
“I think, first of all, we need to engage positively with the new administration and watch this space because there is potential jeopardy for both sides.”
In addition to this, the EU has taken another major step as part of talks with the South American trade bloc Mercosur in recent weeks as plans to seal one of the world’s most ambitious trade agreements progress.
The deal could potentially see cuts to more than €4bn in import tariffs on EU trade to South American economies, however, the deal has proven controversial, with stark opposition coming from European farmers and climate activists.
While likely to boost several non-food sectors such as cars and machinery, the deal will also see the European market opened to cheaper agricultural products from South America, which, according to the Irish Farmer’s Association (IFA), would include 99,000 tonnes of beef every year.
“There’s a lot of negotiation and detail to be developed,” Mr O'Toole said.
“But the deal will bring further competition to the meat and beef sector, particularly in continental Europe. I think there is, quite rightly, concern about that.”
Speaking to the following the launch of the 2024/2025 report, Mr O’Toole noted: “That could undermine our position, but the strength of the Irish meat and livestock industry has, as well as other sectors has been our investment in policy standards, traceability, and sustainability initiatives.”
“So we do have some mitigation against that threat. But yes, things will become more competitive, so it will be a question of how we stay ahead in that game while at the same time recognising the realities and cost pressures put on the supply chain as well.”
Asked if he believed the deal would be a net positive for Ireland, Mr O’Toole noted: “I certainly believe it is the right strategic choice and a worthwhile investment that has paid off for us.”
“We will have to wait and see in terms of how it progresses, but it is something we will be watching very closely."
Looking forward to 2025, Mr O’Toole said despite potential risks, it would be approached with a degree of optimism, tempered by some challenges.
“We will continue to work hard to try and build value for the output that comes from Irish farms and are processed in factories across the country.
"Hopefully when it comes to next year, we will see that even further progress has been made."
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