Irish dairy exports noticed a modest decline on 2022’s record-breaking efficiency when dairy exports rose to €6.8bn (+33%) in worth phrases on the again of excessive farmgate milk costs and robust milk manufacturing.
However with international commerce experiencing a decline all through 2023, Irish dairy exports additionally slipped – by round 8% to €6.3bn in worth phrases, as revealed within the Irish Meals Board’s (Board Bia) annual export efficiency report. A mixed enhance of 6% within the worth of cheese, specialised dietary powders and yogurt helped to partially offset the general declined, stated Bord Bia however famous that 2023’s outcome was nonetheless 22% forward of 2021’s export efficiency.
David Kennedy, Bord Bia head of dairy, defined this yr’s dip in dairy exports with the oversupply state of affairs that materialized in 2023 and the bearish international commodity markets. “For those who suppose again to the second half of 2022, we noticed excessive farmgate costs the world over on milk, which led to elevated provide,” he stated. “That elevated provide meant that we began this yr globally with excessive shares and costly shares of dairy commodity merchandise. These merchandise struggled to work their means via the availability chain, as the price of residing disaster meant that affordability was an actual problem for the worldwide shoppers. We noticed this in Europe the place butter and cheese gross sales in retail have been challenged, and certainly North America and Southeast Asia and West Africa.”
Butter (€1.3bn), cheese (€1.2bn) and whey ($250m) made up 45% of the full dairy export quantity, with Kennedy stating all three commodities suffered value declines in 2023. “2022 was an unbelievable yr for butter, with EU costs of round €7,000 per ton obtainable all through the second half of the yr. Coming into 2023, these costs are again to €4,000-€5,000 per ton, so a major fall-back there. Equal costs on cheese, 25% again on 2022 costs after which SMP, 40% again on 2022 costs.
“There’s no shock with this entire portfolio again on costs in worth phrases that the general export efficiency was challenged.”
Irish butter exports proceed to develop within the US
Dairy exports to the EU slipped 9% in 2023 to a price of €2.2bn and North America additionally declined 8% to a price of €750m, with Asia (-3%) and Africa (-16%) additionally down on 2022.
Nevertheless, Irish butter exports to the US continued to extend, rising greater than 10% within the first 9 months of 2023. Based on the US Worldwide Commerce Commissions, elevated Irish butter imports over time have been pushed by Eire’s status for premium dairy and pure grass-fed manufacturing. Ornua’s Kerrygold is regarded as among the many largest butter manufacturers within the US market on the finish of 2023, second solely to Land O’Lakes.
Exports to Southeast Asia have been blended, with Kennedy noting that cheese volumes in Japan had been maintained, highlighting this as a constructive for what he described as a ‘actually necessary’ marketplace for Irish cheese exterior of Europe.
The Center East additionally carried out favorably, with the worth of Irish dairy exports rising 24% to €390m. Retail gross sales in Saudi Arabia are regarded as a key driver within the area.
Demand from China anticipated to return in 2024
Bord Bia’s head of dairy stated there was a chance that demand from China may lastly start to return in 2024. “Curiously in China, regardless of an total downturn in import demand, we noticed some solidity to the toddler method export figures versus earlier years, maybe indicating that the declines we now have seen in the previous couple of years have come to a slower cease.
“It’s predicted that markets like China ought to arrest its decline by way of demand and begin to come again.”
Wanting forward into 2024, Kennedy expects final yr’s challenges to be lessened this yr. “I imagine that international shares are decrease than they have been in 2023 and the shares are extra inexpensive than they have been coming into 2023,” he stated. “We count on to see elevated consumption of butter, cheese in these key retailer and foodservice markets.”
Demand for environmentally-sound dairy merchandise can also be more likely to stay a sustainable development, Kennedy predicts. “We’re more and more seeing demand from worldwide prospects for low-carbon footprint, extremely sustainable dairy elements. That is one thing Irish dairy exports can leverage to the benefit of our farmers via the yr.
“Irish dairy has demonstrated its diversified market portfolio and proven its resilience so after surviving a really robust 2023, I’ve nice confidence that Irish dairy can develop in 2024.”
Dairy wasn’t the one meals export section that recorded a decline in 2023 – Eire’s total meals, drink and horticulture exports have been down 4% on 2022, with meat (-1%), processed meals (-7%), drinks (-8%), seafood (-14%), and cereals and horticulture (-6%) additionally declining.
However, chief govt Jim O’Toole stated Bord Bia stays optimistic concerning the future because the physique appears to be like to launch a brand new four-year technique later this yr. He reported that confidence in European and Americas markets is the strongest, with virtually 70% of exporters believing some degree of growth could be achieved in these territories.
Some challenges stay nevertheless, with international financial development nonetheless projected to say no in 2024 and the mix of inflation and rates of interest more likely to have an effect on client sentiment and spending energy.
“Later this yr, Bord Bia will probably be launching a brand new four-year technique,” he stated. In devising that technique, we glance to the long run with optimism, regardless of ongoing challenges and uncertainty. We intend to take care of our regular course and proceed to construct on our strengths within the space of sustainability.”
