Market insights: mid-term report

Despite the chaos caused by the global pandemic, Irish agri-food exports had a solid performance in the first half of 2020.

Beef

Irish beef exports were down 8% in value and 7% in volume in the first half of this year, reflecting a small reduction in cattle available for slaughter, increased live exports to Northern Ireland and reduced demand in main export markets. The UK remains the most important export market, taking 47% of total exports.

Sales to all continental markets were down between 5% and 22%. After the UK, the Netherlands is our most important beef export market, taking 19,381t, which is down 14% compared to the first half of 2019. France took 17,868t of Irish beef in the first half of the year and Italy was the next largest customer, taking 14,846t

International markets

Sales beyond the EU continued to grow, increasing again on 2019 levels, which in turn had shown growth compared with 2018. Five years after securing access to the US, it has become a meaningful market for Irish beef exports, taking 3,874t in the first half of 2020.

This is tiny compared with exports to the UK and relatively small beside other EU sales, but it represents a doubling of sales compared to the first half of 2019.

Mainland China was becoming a key market, taking 6,105t, making it Ireland’s seventh-largest export market for beef in the first half of the year, ahead of long-established markets like Sweden and Spain.

Most of these sales took place in the first five months of the year, as exports to China had to be suspended in June with the discovery of a case of BSE and have not yet resumed. Philippines has become a well-established market for cheaper cuts of beef and the 12,151t of Irish beef they bought in the first half of the year represents a 33% growth in that market.

Two other markets outside the EU that have shown dramatic growth – though from a small base – are Canada and Japan. Exports to Canada were 2,133t, a four fold increase on the same period in 2019, while sales to Japan were 2,800t, with virtually nothing exported in the same period last year. Free trade agreements between both of these countries and the EU have assisted the development of this business, as they previously had particularly high tariff barriers on beef.

In the case of Japan, these are reducing annually from 38.5% to 9% over 15 years, so we can expect further growth in this market for Irish beef in the years ahead.

Live exports

The other development that is significant for Irish beef producers is the surge in live cattle exports to Northern Ireland. This trade had virtually ceased in 2018, but started to recover last year.

It has grown again this year, with 36,453 head going north up to the 10 August, compared with 20,210 for the same period last year – an 80% increase.

Dairy €2,560bn (+8%), 785,901t (+5%)

The Irish dairy industry went from strength to strength in the first half of 2020 and despite the global pandemic, returned an increase in the volume of produce exported of almost 5%. The value of dairy exports at €2.5bn was an almost 8% increase on the previous year.

What is particularly striking about Irish dairy exports is that unlike beef, they are not over reliant on the UK

What is particularly striking about Irish dairy exports is that unlike beef, they are not over reliant on the UK, even though it is the largest single market, accounting for €396.8m of exports, down just under 10% on the same period last year. The volume of exports reached 160, 283t, down just under 7%.

In the EU, the Netherlands is the biggest destination, taking 139,902t, though much of the dairy produce shipped there is for onward delivery to international markets through Rotterdam port. Germany is a long-established market for Kerrygold butter and took 56,218t in the first half of the year, followed by France on 29,849t, which was a 12% drop in volume on the same period in 2019.

Next month, Bord Bia will kick-start a three year EU Pork and Poultry promotional campaign targeting China (pork and poultry) and Mexico (pork only). The €3.8m campaign will be launched at CIMIE (China International Meat Industry Exhibition), a major trade show organised by China Meat Association and International Meat Secretariat.

Markets outside Europe

Outside of Europe, Asia is the most important market for Irish dairy exports at €443m, an 8.5% increase on the first half of 2019, though the volume of sales was slightly down at 102,445t.

China is by far the biggest market in Asia, taking over half of this volume at 52,515t, a marginal increase of 1% on the previous year.

Japan grew significantly at 7,318t, up 36%, and as was the case with beef exports, the free trade agreement that will eliminate tariffs on cheese over time contributed to this growth.

Africa was the major growth market in the first half of the year, up over 34% to €332m, with volume up over 8% to 131,066t. It is mainly a market for milk powders, accounting for over half the sales value, followed by cheese and butter.

Most of these sales took place in the first five months of the year, as exports to China had to be suspended in June with the discovery of a case of BSE and have not yet resumed

Nigeria is the largest market in Africa, taking 28,121t, twice as much as the next largest buyer Senegal, who bought 13,779t

Sales to North America grew 15% in value to €217.7m compared with the first half of last year, with volume up slightly by 2% to 33,561t. The US is the main market, accounting for 27,102t of this, a 4.5% increase.

It is mainly a butter and cheese market, and this performance is particularly satisfying given the addition of a 25% tariff on imports by the US as part of the Boeing aircraft dispute.

Growth in Middle East markets

There was also strong growth in the Middle East, with sales of €172.8m in the first half of the year, a 26% increase. Volume was up 13% to 46,257t, with Iraq and the UAE the largest customers.

The highest value dairy export was infant food at €520.5m, a 5% increase on the same period last year, while butter remained the second-most valuable dairy export, accounting for €500m. This is the only category that has a lower value than the same period last year and this is despite the volume of butter increasing by 19% to 151,236t.

The value of cheese exports increased 14% to €439.5m on similar volumes, while powders and whey all showed a double digit growth increase in value on the same period last year.

Sheepmeat €168,017 (+7%), 35,000t (-2%)

It has been a reasonably satisfactory year so far for sheep farmers, with a strong export market showing an increase in value of 7% to €168m, despite a small drop in the volume of product shipped. Sheepmeat is nowhere near as dependent on the UK for sales as beef, though it is still an important customer, taking just over 8,000t in the first half of the year, 20% of exports.

France is the most important market, taking 10,275t, but the real growth market for the first half of the year was Germany, who bought 4,002t of Irish sheepmeat, an increase of 39% on the same period in 2019. Belgium took 2,233t and the remainder was spread across other EU markets, as virtually nothing is exported outside the EU and market access hasn’t yet been secured for either the US or China, unlike beef.

It has been a reasonably satisfactory year so far for sheep farmers, with a strong export market showing an increase in value of 7% to €168m

The strong performance in the first half of the year was driven by a combination of favourable factors. The major Muslim holidays were held earlier in the year, coinciding with peak supply of lambs, while production in the UK, the biggest exporter of sheepmeat in Europe, was down.

Drought in Australia curtailed the output of the world’s largest exporter, resulting in New Zealand focusing on supplying Asian markets more than the EU, leaving an opportunity for Irish exports.

Pigmeat €292,588 (+21%), 117,055t (+2%)

Pigmeat has been a major success story since the early part of last year, as African swine fever (ASF) affected the Chinese national pig herd, resulting in a surging global demand for pigmeat. Prices had been on the rise this time last year, but surged a further 21% to €292.6m in the first half of this year, with the volume only marginally up to 117,055t.

China was by far Ireland’s largest export market for pigmeat in the first half of the year, taking 45,467t, an increase of 9% on the same period last year.

Prices had been on the rise this time last year, but surged a further 21% to €292.6m in the first half of this year

The UK is the second-most important market, taking 28,783t, a fall of 8% on the first half of 2019. Pigmeat is the only Irish meat sold to Australia, with 4,751t heading down under in the first half of the year, a slight decrease on the same period in 2019.

Poultry €74,321 (-2%), 62,999t (-1%)

Poultry sales and volume were both down slightly in the first half of the year. The UK remains the main export market, taking 30,896t, just under half of the total production of 62,999t. The second-largest market is South Africa, taking 18,124t in the first half of 2020, a 10% increase on the same period last year.

Horticulture €113,278 (+10%), 156,383t (-10%)

Virtually all Irish horticulture exports are to the UK and while volume was down 10% in the first half of the year, value increased 10%. This was largely due to a particularly strong performance by the mushroom sector, where sales value increased by 25% to €60.8m.

While Irish dairy, pigmeat and sheepmeat have a good spread of global customers, beef exports are particularly exposed to the UK market, taking almost half of total beef exports. Tesco, Sainsbury’s and Asda all buy Irish beef, but the largest volume is sold in the catering and foodservice sector, which was still down by half in July.

There will be a considerable bounce back in August with the government’s “eat out to help out” support scheme attracting 35m users in 85,000 diners during the first half of August. Although Irish beef sales to the UK were down in the first half of the year, the Irish share of UK beef imports was actually higher, at 80% of total beef imports.

The loss of the catering and coffee shop sector during the coronavirus shutdown in the UK also hit Irish dairy exports, particularly butter, where volumes are down 38% and cheese is down 10% for the first half of the year. With a gradual reopening, recovery is expected in the second half of the year, though the extent is unclear given the wider economic disruption caused by the pandemic.

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