Ireland, an Agrifood Exporting and Importing Island

Exports have grown significantly in the past 10 years and look set for further growth in the years ahead. Food Vision 2030** set a figure of at least €21bn of agrifood exports by 2030. With the growth in exports since the publishing of this strategy this target looks likely to be exceeded.

Despite Brexit, the UK is still by far our largest market, it was the destination for 38% of our exports in 2023***. The EU as a whole is the destination for 34%, the USA 9% and the rest of the world 20%. There are a number of reasons for the UK being our number one export destination, not least, proximity, language, similar legal, corporate and tax systems and of course an affluent market. If a company is considering exporting for the first time the importance of these factors should not be forgotten.

Main exports

In addition to dairy and meat (over €12bn of exports) exports, Prepared Consumer Foods (PCF) is also a significant sector with €3.3bn of exports in 2023. This includes meal solutions, bakery products and soft drinks and juices. PCF is a value-add sector with many innovative and niche agrifood offerings, and is a sector Ireland is well positioned in for further export growth.

The other side from exports

On the flipside to our robust export capabilities, Ireland had an agrifood import figure of over €13bn in 2023. While export markets such as the UK, EU and the US dwarf Ireland in terms of size, opportunities to supply the domestic market by displacing some of these imports, should be considered. The ease of doing business in the market you are based in, and experienced in, is a significant advantage.

Since 2014 the value of agrifood imports has increased by 68% from €7.8bn to over €13bn. The 5 main import categories are animal feed, beverages, cereal and cereal preparation, dairy produce, and fruit and vegetables accounting for over half of all imports.

The value of imports has increased over the past number of years while the volume of imports has actually reduced from its peak in 2018. This reflects the inflationary environment companies have found themselves trading in over the past number of years. This year's ifac food and agribusiness survey shows that over 80% of respondents indicated that they have seen a rise in input costs/cost of sales in the last 12 months.

Similar to exports, the UK is the main origin of our agrifood imports, supplying almost €5bn or 36% of imports in 2023. Of this about 40% was imported from Northern Ireland and the remaining 60% from Great Britain. This was followed by the Netherlands supplying €1.5bn, Germany almost €1bn and France with over €700m.

Excluding animal feeds, the main products imported from the UK were dairy, closely followed by cereal and cereal preparations. A number of large dairy processors work cross-border, between the North and South, with product freely moving which explains the large dairy figure. Ireland does not produce the flour required to make the bread we produce and consume which means cereal and cereal preparations will always be a large import also.

From other trading partners, products such as oils and fats, poultry and fruit and vegetables are the main categories. While previously it made sense from a pure cost perspective for products such as vegetables to be grown in countries such as Spain, and imported into Ireland, this may become problematic in the future due to climate change and logistic challenges. Almost 63% of respondents to the survey have cost or input availability as their main challenge to growth in the next year.

If we take vegetables as an example, are there opportunities for businesses who use or sell vegetables in Ireland to shorten supply chains by entering into agreements for supply of such produce from Irish growers? Price may be higher but the value of certainty of supply must be factored into decision making going forward.

The outlook

All forecasts indicate increased demand for agrifood products. Over 60% of respondents to the survey say they are optimistic or very optimistic for their business performance in the next 12 months. Given our rich tradition, combined with world leading research and innovation, Ireland is positioned to continue as one of the leading agrifood exporting nations. The move to more resilient, climate smart agriculture systems also mean huge opportunity for our agtech sector.

Exports can play a crucial role in the evolution and growth of any company. However, with agrifood imports of €13bn in 2023, the Irish market should not be ignored.

The ifac Food and Agribusiness sentiment survey shows that two thirds of companies are currently exporting. The number one destination for exports among respondents, and from official figures, is the UK (48% of respondents export to Northern Ireland and 38% to Great Britain). This market should be considered first in any plans for export and with the Windsor Framework Agreement in place trade with Northern Ireland remains a relatively smooth endeavour.

However, recent shocks, such as cost inflation and logistic issues must be factored into any plans companies are making in the sector. Robust business plans, macro-economic forecasts, combined with detailed scenario analysis should be completed to assess current situation and before any decisions on future strategy are made.

Irish agtech – driving sustainable food systems

The global agtech market is currently valued at circa $25bn and expected to grow substantially in next number of years. A recent Enterprise Ireland report estimates Irish Agtech sales of c.€1.1bn of which 60% is export generated. With the move to more climate smart, resource efficient agriculture there will be significant opportunities for Irish companies to grow in this market.

Global agrifood outlook

According to the OECD-FAO Agricultural Outlook 2024-33, global food consumption, the main use of agricultural commodities, is projected to increase by 1.2% annually due to population and income growth.

Well-functioning international agricultural commodity markets will remain important for global food security as 20% of calories are traded.

Agriculture’s global greenhouse gas (GHG) emissions intensity is expected to decline as production growth will be based on productivity improvements rather than cultivated land expansion although direct emissions from agriculture will still increase by 5%.

OECD-FAO Agricultural Outlook 2023-2032.

Agrifood sector – an Irish economic powerhouse

In 2022 the agrifood sector represented 6.5% of total employment (164,900 people), largely in rural and coastal communities. The 2021 Annual Business Survey of Economic Impact (ABSEI12) highlights how the Food, Drink and Primary Production (FDPP, i.e. agrifood) sector is embedded in the domestic economy. Firms in the sector represented 6.6% of the total value of sales among firms across all sectors surveyed but accounted for 12.3% of employment and 25% of direct expenditure (on payroll costs, goods and services) by firms in the Irish economy.

This equates to €15.81 billion in wages and purchases, and directly and indirectly supports consumption and employment in the wider domestic economy.

The sector is also increasingly export-oriented with export value being equivalent to 61% of the total value of sales among FDPP sector firms in the 2021 survey, compared to 47% in 2000 and 57% in 2010.

Government of Ireland, Spending Review 2023.

* DAFM, Trade Factsheet

** Food Vision 2030

*** CSO, 2023

This story was first published in our 2024 Food & Agribusiness Report.