Food exports drop 5% due to currency factors

06-Sep-2015 - Last updated on 07-Sep-2015 at 15:47 GMT

Food and non-alcoholic drink exports suffered to due to the weakening euro and strengthening pound

UK exports of food and non-alcoholic drink exports dropped 5.3% in value to £6bn in the first six months of the year, as the strength of sterling became “a growing concern”, warned the Food & Drink Exporters Association (FDEA).

The value of exports to the EU – the nation’s most important food and drink export destination – shrank by 7.5% in the first half of the year, according to figures released by the Food and Drink Federation (FDF) and the FDEA. The rise of pound against the sharply depreciated euro was said to have made UK exports less competitive in key Eurozone markets.

FDEA director Elsa Fairbanks said: “Our latest export survey revealed that although the strength of sterling is a growing concern, FDEA members continue to see growth potential across Asia and the Middle East as well as established markets in North America and the EU.”

‘Strength of sterling’

Exports to non-EU markets were up by 1%, with strong rises on value added goods. Exports of tomato ketchup rose by £3M and bread, pastry and cakes by £7M. Confectionery exports to Canada also rose by £7M.

But dairy exports saw losses of £157M on the same period last year. However, exports remained above pre-2014 levels and exported volumes were higher for both processed and unprocessed milk and cream.

Fish and seafood exports were £137M down in value, mainly due to a big fall in salmon exports.

FDF economics and commercial services director Steve Barnes said: “Food and drink has been bucking the trend when it comes to exports for years and the value of the sector’s exports is still declining less than UK exports overall.

‘Negative effect of exchange rates’

“However, we are starting to see the negative effect of exchange rates, particularly in Eurozone which remains the key destination for UK food and non-alcoholic drink exports.

“The good news is that volumes in many categories are still up and exports of value added goods to both EU and to non-EU countries are rising. Exports continue to be a key area of growth for food and drink companies …”, he said.

The FDEA said bright spots were a rise in the value of traditional products – such as cheddar cheese, which rose by £20M – and innovative products in the health and wellbeing categories.

To help food and drink manufacturers make the most of exports, the FDF, FDEA and the online export community Open to Export have joined the government in staging an initiative designed to boost overseas sales to run between September 7 – 22.

More information is available here.