Irish food exports set to match record

Ireland's food and drink exports, one of the brightest spots in its struggling economy, will remain at record highs this year despite weak economic growth in key European export markets, the agriculture minister said in an interview.
The sector has made a key contribution to the balance of payments surplus that has fuelled optimism in recent months that Ireland may be the best-placed of Europe's peripheral economies to export its way out of debt. "We'll match it in value terms," Agriculture Minister Simon Coveney said on Wednesday, when asked if last year's 8.9 billion euro record could be repeated considering anaemic economic growth in the European Union, which accounted for three-quarters of sales, and weaker commodity prices.
"People are reading far too much into a so-called recession across Europe in the food industry, that's not our experience," Coveney said. "We are selling more food to the UK and Europe last year than we did in any previous year. People need to eat."
Dublin, which sought an 85 billion euro ($113 billion) bailout in late 2010, hopes to fully return to borrowing on international bond markets by the end of next year. The government has impressed investors with strong exports and tough austerity measures, but analysts warn any slippage in growth could push its debt to GDP ratio above the 120 percent many investors see as unsustainable.
Unlike the pharmaceutical and high-tech multinationals that have set up in Ireland to take advantage of tax breaks, who repatriate much of their profits to corporate headquarters abroad, agri-food tends to be produced by indigenous companies, and most of the money stays in Ireland. Ireland's merchandise trade was 3.6 billion euros in December, the last data available, and analysts expect it to beat its record trade surplus of 43.4 billion euros posted in 2010.
Concerns that weaker commodity prices will reverse the gains of around 1 billion euros per year in food and drink exports for the past two years have been overstated, Coveney said. Prices for dairy and beef, which account for close to half of exports by volume, "may soften slightly" compared to last year, but the shortfall can be made up by increased volumes and higher prices for some processed foods. Growth will slow from the 12 percent seen in last year, he said. "We may see some additional growth, but its not going to be in the double digits," he said.
With little state funds to invest, the government is seeking hundreds of millions of euros of investment in dairy and fish farming to regain momentum in the sector, Coveney said. The lifting of European milk quotas in 2015 will allow Ireland to boost its milk production by 50 percent over five years.
But the industry needs to invest in the region of 300 million in milk drying facilities to absorb the additional capacity and will probably require consolidation in the sector, he said. Food groups Glanbia and Kerry Group's Dairygold are likely to invest "in the hundreds of millions" into the sector.
The government is in talks about providing a license for its first deep-sea salmon farm off the west of Ireland with a capacity of 15,000 tonne per year capacity, worth over 100 million euros at current prices. It hopes to find investors to build six such farms by the end of the decade, Coveney said.