EXPORTS
Eastern promise
for Irish exports
The burgeoning middle classes in developing
markets such as China and India have a big appetite
for Irish food, writes Frank Dillon
F
ollowing years of underperformance, Ireland’s food industry is enjoying a remarkable renaissance, with farm incomes rising and agriculture and food
once again becoming an attractive career
option for Irish graduates. The backdrop to
this is that Irish food and drink is becoming
increasingly popular in world markets,
with food exporters tapping into a new demand for high-quality products.
Food exports are growing rapidly on the
back of the burgeoning middle class in developing markets such as China and India.
The abolition of milk quotas in 2015 will
also underpin this growth with the market
for Irish food exports soon to exceed ¤10
billion annually.
Growthofmiddleclass
Dairy exports from Ireland to China last
year accounted for ¤280 million, says Bord
Bia chief executive Aidan Cotter, adding
that 80 per cent comes from infant formula
and China is now our second largest market in this sub-sector, with 40 per cent annual growth.
OECD figures indicate the world’s middle class is expected to rise from 1.8 billion
in 2010 to 4.8 billion by 2030, with most of
the growth coming from the East. China
alone is expected to account for 18 per cent
of global consumption by then with $10 trillion of spending power. “As populations
grow in wealth their consumption of meat
and dairy products increases and we are
ideally placed to capitalise on this opportunity,” says Cotter.
Mike McKerr, managing partner at financial services firm EY, says that when
considering export opportunities, new
markets should be pursued but alongside
existing ones. “Emerging markets charge
very high import duties on foreign goods,
particularly those in the agricultural sector, in order to protect their local economy
as well as to raise revenue – with some countries raising over half their tax revenue
Vive La France!: Swift Fine Foods
It’stheyearoftheFrench,forMartinOrmonde,
salesmanagerwithSwiftFineFoods,aMonaghan-basedproducerofchilledandfrozen
readymeals.
Thecompany,whichemploys95peopleand
hasanumberofbrands,includingChef’sMade
andChef’sCuisine,isparticipatinginAccess6,
anEU-fundedexportdevelopmentprogramme
thataimstoboostIrishfood anddrinkexports
tothe¤312billionFrenchretailgroceryand
foodservicemarket.
“WeonlyrecentlybeganexportingtotheUK
andalreadyitaccountsforaround5percentof
turnover,sothesheersizeandproximityofthe
Frenchmarketmakesitworthwhileforustotry
anddevelopthattoo,”saysOrmonde.
TheAccess6programme,whichisdeliveredbytheIrishExportersAssociation(IEA),
aimstoprovideIrishSMEswithtrainingand
12 |THE IRISH TIMES | March 26, 2014
mentorshiptosuccessfullysupplyandtradein
anumberofforeignmarketsincludingtheUK,
France,Germany,Scandinavia,NorthAmerica
andBenelux.
Ofthose,Franceremainstheleading
continentalEuropeanmarketforIrishfoodand
drinkexports,andIreland’smostimportant
eurozonetradingpartnerinthesector,with
total2013foodanddrinkexportsestimatedat
¤673million.
Thedouble-digitgrowthachievedin2013
includednotonlyareasoftraditionalstrength
forIrishexporters,suchaslambandbeverages,butalsosignificantnewbusinessincategoriessuchasmushrooms,snails,bakery,
farmhousecheeseandsoftdrinks.
“Aspartoftheprogrammewewillmeetwith
Frenchbuyerstofindgapsinthemarketthere
thatwemightbeabletofill,”saysOrmonde.
from import taxes.”
There are also very strict permissions required in relation to agricultural products
with special approvals being required from
various government agencies before a permission to import is granted, he notes.
“There are many other factors to be wary
of when exporting to emerging markets, including: ensuring compliance with all documentary and legal requirements at the
time of import in order to avoid fines;
goods being stopped at the border, along
with issues of corruption when dealing
with foreign officials,” he adds.
The latest Pathways to Growth report
from Bord Bia sees fragmentation within
the industry as a problem, especially when
Ireland competes with major global food
players in international markets. “The
food industry is dominated by giant multinational firms, many of whom have turnovers well in excess of Ireland’s total food exports. Nestlé for example has a turnover of
over $100 billion.”
Cotter also acknowledges that a very
large part of the business is B2B (business
to business) so that even where a product is
sold with a value-added element, the final
element before the product is put into the
hands of consumers is not controlled by the
Irish producer. This has led to concerns the
industry is not as consumer-centric as it
should be.
Artisansector
Volatility remains a challenge, with climate having an increasingly important impact on world markets. Droughts and crop
failure can unleash a price dynamic. In the
short-term, global food shortages can lead
to higher prices but that also encourages
larger food producers in countries such as
the US to enter the market, which can result in a very significant price drop. The
threat of diseaseand compromises in the
food chain, such as the foot-and-mouth and
dioxin scares in recent years, can also
cause long-term damage to the industry
and requires vigilance at all levels.
However despite the potential pitfalls,
Asia remains an attractive prospect for
many Irish food producers. Exports to
Chin, for example, grew by over 40 per
cent, with values trebling over the last
three years to reach ¤390 million in 2013.
China is now Ireland’s sixth largest market overall, with strong dairy and pork exports contributing to this, and seafood and
beverage exports also growing. China, is
Ireland’s second largest dairy and third
largest pork market.
Demand in China for Irish seafood is also
expected to soar as appetites for
non-farmed fish increase.