Ireland’s food industry, a sector central to the health of the former Celtic tiger, suffered from a slump in exports last year as the weak pound hit shipments to the UK, a key market. In the first just the answer interview of 2010, Michelle Russell spoke to Aidan Cotter, chief executive of Ireland’s food export agency, Bord Bia, about the prospects for recovery this year and why he is targeting Asia for growth.
just-food: Bord Bia said last week that Ireland’s food exports are expected to recover in 2010 after falling 12% last year. How much of an impact has the recession had on Irish exports?
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Aidan Cotter: One of the single biggest factors in the decline has been the depreciation of sterling against the euro. Last year, there was a depreciation of 12% and if you take it accumulatively over two years, it has amounted to a 30% decline against the euro over that period. Some 45% of Ireland food and drink exports are destined for the UK market; we reckon that of almost a EUR1bn decline in exports, EUR400m of that was due to sterling.
Some of the decline was due to product being put into storage in the dairy sector, which came off a global commodity peak in 2007/08. The EU decided to purchase product into storage and take it off the market. That effectively represents deferred export that will be exported in the future. So, all in all, volume decline was not 12% but rather more like 3% or 4%.
just-food: Are you expecting a recovery and what do you see as the long-term outlook for the sector?
Aidan Cotter: It’s very difficult to say what kind of a recovery will come into place this year but we can say looking at the two sectors that represent the largest component of our exports – dairy and meat – both of those are very well-positioned for growth in the coming year. Global dairy prices are continuing to rise since the latter part of last year, and we know that farmers will respond in terms of higher output as well, so we expect volume and price programmes in the dairy sector. In the meat sector, we believe there will be a more benign export market in Europe in the coming year.
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By GlobalDataIn the long term, we are confident that there is a very positive future for our food and drink exporters. After all, the world has to produce more than 40% more food over the next 20 years and by 2050 we need to produce more than 70% more food to meet the needs of an expanding global population.
just-food: The UK was Ireland’s principal export destination in 2009, although sales fell 15%, principally due to the weakness of sterling. Could other Eurozone markets offer more stability and which countries in particular could the board target?
Aidan Cotter: Our industry has been exploring more and more opportunities on Continental European markets and clearly there is the attractiveness of a country stability in the Eurozone territory. For that reason, I think it is much more interesting for exporters compared to the UK market, given what has been happening over the last 24 months with 30% accumulative depreciation. But that said, there is no doubt at all that the industry’s commitment to the UK market is complete. It has very, very long established links with its customers in the UK and it will continue to be by far the largest market. The Continental European market will be a part of the industry as it expands its exports into the future. It already takes approximately 50% of our beef exports for example. It’s a very significant market region for our dairy exports, beverages and increasingly for prepared foods. The industry exports to about 160 countries around the world so it has a fairly significant global footprint, and we will inevitably continue to expand that as time goes on.
just-food: And will you be looking to expand growth of exports into developing countries?
Aidan Cotter: Absolutely, and the Asian region is obviously one that has continued to grow, notwithstanding the downturn and numbers just in for the Chinese economy clearly indicate that it is continuing to expand at a very significant rate. We have established an office in Shanghai over the last two years and we envisage increasing activity in that region by our exporters, particularly in the area of dairy, beverage and meat exports.
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just-food: What initiatives does Bord Bia have in place to drive and broaden the Irish food industry’s market reach and boost its exports?
Aidan Cotter: One of our most important initiatives is going to take place on 9 February, when we will have about 360 buyers from the UK, Continental Europe, Russia, Asia, as well as from Ireland to meet with over 160 Irish companies. Over a single day we expect to have over 1,000 pre-arranged meetings taking place. That will offer a good opportunity to our exporters to identify new opportunities in those different market regions.
just-food: A number of years ago, it was said that functional foods were being seen as a significant area of potential growth for the Irish export sector. Has this proved to be the case?
Aidan Cotter: Certainly, there is no question. But the single biggest driver of change in the food industry for a long time to come will be health and wellness. Part of the reason for the expanding global population is because people are living longer and people recognise the link between diet and health and therefore, the role of food is becoming more and more recognised in people’s lifestyles and living a healthier lifestyle. And functional foods have an increasingly recognised role in that regard.
just-food: Last year, Bord Bia was criticised by chef Richard Corrigan, who said the agency should be abolished or overhauled and that its quality assurance scheme was deeply flawed. Corrigan said the scheme damages how Irish food is viewed abroad. What do you make of those allegations?
Aidan Cotter: Our scheme meets the highest international standards. The comments made at that time were misleading and they related principally to an issue around origin. Our scheme meets the highest international standards and … we are constantly raising the standards to meet and to be ahead of the competition. It allows us access into the most prestigious outfits around Europe. We have the best portfolio of leading supermarket and high-end food service and manufacturing customers of any national beef industry in the world I would say and that stands for itself.
just-food: Do you think Ireland needs to consider ‘traffic light’ labelling and other methods to alert consumers to healthy foods – being introduced by a number of supermarkets in the UK?
Aidan Cotter: Clear and simple information for consumers is critical so they can make informed choices. We have no particular position on what is the best form labelling may take. It may well differ from market to market. We certainly would regard whatever consumers themselves find the most helpful in making their choices should be the one adopted.
just-food: Earlier this month, UK agriculture secretary Hilary Benn told farmers that the UK needs to produce more food sustainably to respond to environmental challenges and to help provide food for a growing world population. Do you think this is something Ireland also needs to look at?
Aidan Cotter: Absolutely, we believe that our system of production is actually very fundamentally sustainable. It relies on natural production of grassland and that is something that is being built increasingly into the criteria of our farms quality assurance scheme and our scheme will increasingly be made up of more and more environmental standards as time goes on, recognising the importance of sustainability.
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