Weakened by strong sterling
Ministers have been kept busy in the Dáil, soothing TDs upset by shops not reducing prices of imported goods, and by queues of north-bound cross-border shoppers.
Ministers have been happy to pander to the worries of our shopkeepers and shoppers — but the most pressing need is to protect the exports that keep our country afloat from the currency trends.
That means supporting agencies like Bord Bia in their efforts to help our food and drink exporters, about 50% of whose sales go to Britain.
The euro’s 30% gain versus sterling in 2008 has decimated their profits from British sales.
Bord Bia have put a special focus this year on switching sales from Britain to continental EU markets, to which Ireland exports more than €2.5bn worth of food and drink annually.
They helped 11 Irish companies, in October, to exhibit in Paris at SIAL, a leading food trade show, and 16 Irish food companies had earlier participated in Bord Bia’s first marketplace roadshow for Belgium and the Netherlands — which has resulted in three new business contracts valued at an estimated €1.3m per year, according to the food board.
A similar roadshow was organised for Italy and Greece, and it will be rolled out on Spain, Denmark, and Sweden in 2009. Bord Bia is investing €3.9m over three years to 2010, in its “quick lamb” campaign aimed at attracting a new, younger French consumer interested in taste and quality, convenience and speed.
Irish produce is generally welcomed on the Continent, where environmental concerns and sustainability come first for consumers. But health also remains a strong driver in food choices, and Bord Bia may need extra funding to help overcome the damage caused to our food reputation by the pork dioxin scare.
That effort must be concentrated on the continent, because there is little prospect of sterling recovering enough to compensate our exporters, as the British property market drags down their economy, and credit conditions worsen, further weakening their currency.
Getting over the sterling problem can enable our food industry to maintain its vital export role, because demand for food is less sensitive to recession than most other commodities.
And the strong euro isn’t all bad news for the sector, because it will help reduce fertiliser and feed costs on farms, which reached record levels in 2007 and early 2008.
With the slump in the cost of crude oil also pushing down prices of these commodities, the recession may not hit farmers too hard — unless it costs many part-time farmers their jobs.
The beef supply is expected to stay tight — perhaps the food commodity area where Ireland has most to gain from strong global markets.
Even if — as some fear — enough holdings are licensed in Brazil later this year to restore their role in the EU market, the Brazilians may find even better markets elsewhere, and may find export credit hard to obtain.
Our agricultural exports also depend on key markets like China and India continuing their current 5% to 8% annual growth, and continuing their switch to Western-style diet containing meat and dairy foods.
Our agricultural sector has often performed relatively well during downturns, and can do so again. But the strength of sterling is a new factor this time around, and special measures are needed to overcome that obstacle.
