Spiral in food exports drives encouraging trading balance
While the country’s trading figures have long been heavily reliant on pharma exports, the rise of the food sector is viewed as very positive for both Irish GDP and domestic employment.
Overall, Davy is predicting total Irish exports to grow by 3.5% this year and 4% in 2015. In the first half of the year, nominal pharma exports were up 5.9% on the year. Moreover, non-pharma exports were up 1.5% year-on-year, driven by a 10.2% rise in food exports.
The Dublin stockbrokerage is also of the view that the impact of the Russian ban on food imports from the EU will not be as damaging to Ireland as might initially have been feared.
“Much attention has focussed on the likely effect of the Russian sanctions and the risks to Irish export growth,” stated Davy stockbroker David McNamara. “However, the impact is expected to be negligible. Last year, food exports to Russia totalled €232m, a very small proportion of the €8.7bn worth of total food exports, while Bord Bia confirmed that just €70m worth of exports would be affected by the sanctions in the dairy, beef and seafood sectors.”
Bord Bia chief executive Aidan Cotter said a support unit had been set up to help Irish companies affected by the ban. The Bord Bia chief executive said the dairy sector would be most hit.
Of the €72m in lost food exports to Russia, around €40m of that total has been lost to the dairy sector, mostly milk powders, but also cheese. Other losses include €20m in seafood and €10m in beef,” he said.
However, Mr Cotter said a number of processing plants here in various sectors already had temporary bans placed on them before the latest restrictions.
“Adjustments will have been taking place in recent weeks and months because 12 processing plants in Ireland in the dairy, seafood and beef sector had already temporary bans placed on them by Russia. So some exporters will already have been seeking out alternative outlets in that period,” he said.
Mr Cotter said sectors such as pork meat had coped well with the ban and had found alternative markets across Europe, with the result that Irish pork prices were now 8% higher than they were for the same period last year.
“The short-term disruption will be of the greatest concern to people because we are talking about well-established trading patterns which have been established over a long period of time and that is clearly going to be very disruptive in the period ahead,” he said.
Minister Simon Coveney has most concern about the impact of a €4.5m loss to cheese producers, most of which are clustered in Munster, but he said the agriculture sector as a whole could weather the ban.
