Competitors will seize on difficulties faced by Irish producers, writes Seán MacConnell, Agriculture Correspondent
IT IS impossible to predict the likely impact of the pigmeat contamination crisis on the Irish food sector, which is largely driven by exports.
But for the pork sector it could be disastrous. It has already been hit by high operating costs and cutthroat international competition.
Rivals in the international food market will seize on the fact that we have been forced to recall food and it may be very difficult to win back lost markets.
While the pig industry has declined in importance in Irish agriculture, it was estimated to be worth €368 million in exports to the economy last year. It is also a major employer, with 7,000 working in the sector, 1,200 of whom work on farms. A recent report complied by Teagasc noted close to 500 pig producers in the State producing 3.6 million pigs.
Irish pig farms are normally large and can only survive in large units. Many of the larger farms are owned by processing companies such as Dawn Foods.
The sector had a very difficult year in 2007 when the oil crisis doubled the cost of pig feed, which is normally grain. Typically, feed accounts for 70 per cent of the cost of producing a pig and high feed costs in Ireland mean farmers must be very efficient.
Last year, the sector exported approximately 60 per cent of its output or 129,000 tonnes to over 40 overseas markets. The United Kingdom was our main export market, taking approximately 56 per cent of the total exports from Ireland, worth €271 million.
In Europe, Germany imported €13.6 million worth of Irish pigmeat, France €7.5 million, Holland €8.9 million and Denmark €8.8 million.
Beyond the European market Russia purchased €12.1 million, Japan, €13.3 million, Hong Kong €2.2 million, USA €6.1 million and China €1.1 million
There were more than 40 markets in all for Irish pigmeat and 59 per cent was exported - 20 per cent was processed, 10 per cent went as bacon or ham, 6 per cent as sausages and 5 per cent as offal.
The authorities now know contaminated product has been sent to between 20 and 25 countries, according to Ireland's chief vetinary officer Patrick Rogan.
All our European neighbours have been alerted to the problem through the European Food Safety Alert system and teams of workers have been drafted in to contact customers worldwide. Bord Bia, the Irish food marketing board, has made rebuilding market confidence in Irish pork an absolute priority.
It held a conference with its overseas managers at the weekend to devise a strategy to cope with the expected fallout from the worldwide publicity the recall has created.
"A comprehensive action plan is now being prepared to secure our international trade, while also restoring consumer confidence on the crucially important domestic market" said Bord Bia chief executive Aidan Cotter.
The board will also focus on the home market and looks set to launch a new label for Irish pork produced after December 7th.
Food Drink Export Ireland (FDEI), part of the Irish Exporters Association (IEA), says it is concerned about the impact of the pigmeat recall on Irish food exporters. The implications go beyond the €300 million of direct pigmeat exports, it warned.
The other exports likely to be affected, for example, are pizza producers (where there is salami and bacon toppings); food service companies producing a range of sandwiches using bacon products, speciality pork pie producers and hamper producers.
Total exports of pigmeat and related added value products are estimated to be €750 million. The FDEI/IEA noted 63 per cent of pig meat and added value processed pork products are exported to the UK, where exporters are already under pressure due to the impact of the rapidly weakening euro.