Dairy and chicken hit hard as £300m knocked off food exports

UK food and drink exports are losing millions of pounds due to a combination of a strong pound, export bans and falling farmgate prices – with chicken and dairy hit the hardest.

New figures from the Food and Drink Federation (FDF) show the value of food and non-alcoholic drink exports dropped £300m to £6bn in the first half of the year, compared with the same period in 2014.

A strong pound against a weakening euro had made UK exports uncompetitive in key Eurozone markets, said the FDF, and £400m had been knocked off the value of exports to the EU, falling to £4.3bn.

But trade bodies said other factors had contributed more than a strong pound in certain sectors.

See also: Dairy exports top rest of UK food and drink sector

Massive effect on chicken and dairy

Chicken and dairy exports took some of the biggest hits, falling 19% and 20% in value respectively in the first half of 2015 compared with the same period last year.

The British Poultry Council (BPC) said the UK’s outbreak of avian influenza last year was the biggest reason for this fall, with key markets including South Africa, South Korea and west African countries closing their borders.

Russia’s ban on European food imports had added to the situation and the domestic market had had to absorb much of the additional meat. While this had dampened prices paid to processors, the BPC said it had not seen any evidence of this being passed down to producers.

Plunging farmgate milk prices since the middle of 2014 was the main reason dairy export value had dropped so dramatically, said AHDB Dairy analyst Luke Crossman.

Overall trade volume had not fallen enough to explain the 20% drop in export values, he said.

Farmgate milk prices have fallen 8.16p/litre (25.9%) in the 12 months to July 2015, with the average prices standing at 23.35p/litre in July.

The FDF figures showed unprocessed milk and cream exports fell £46m and processed milk and cream crashed by £58m in the first half of 2015 compared with the same period last year.

Sterling has risen 15% over the past two years against a number of currencies, with €1 buying £0.71 now compared to £0.86 in August 2013.

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.

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