Northern Ireland’s agri-food industry is well placed to capitalise on any opportunities that the UK’s exit from the EU may present, Ulster Bank said today.
Speaking at the bank’s annual briefing on the sector in Ten Square Hotel, Belfast, Ulster Bank Head of Northern Ireland, Richard Donnan said that although there is much uncertainty in relation to Brexit the agri-food industry has some fundamental strengths that will continue to provide opportunities into the future.
Mr Donnan pointed out that in this respect, the exchange rate is currently in local firms’ favour, but longer-term, Northern Ireland’s place in the UK market, the provenance of its produce, the quality of its supply chain, and the growing demand for food are key fundamental assets to build on.
He continued: “GB is a large and affluent market on our doorstep, and post-Brexit, Northern Ireland producers and processors are likely to have access to it that other countries may not. There are certainly many potential challenges in relation to how Brexit might unfold, and how agricultural policy is shaped locally and in Westminster going forward will also be crucial. But local agri-food companies are best advised to focus on the things they can control so that they are positioned well to capitalise on whatever opportunities emerge. That means continuing to generate great produce and products, adding value where possible, investing in R&D and innovation, and mitigating uncertainty.”
“The agri-food sector is a crucial component of the Northern Ireland economy and we are strongly committed to continuing to support it through the funds we have available to lend and the expertise of our team,” he added.
Attendees at the event also heard from Richard Ramsey, Chief Economist, NI, at Ulster Bank, and Cormac McKervey, the bank’s Senior Agriculture Manager. They were speaking to an audience including members of the Guild of Agricultural Journalists, other media representatives, and stakeholders from the farming and food sectors.
The event is a key part of Ulster Bank’s build-up to its principal sponsorship of the Balmoral Show, and has been run each year since 2009. This year the show will take place over four days at Balmoral Park – from 10-13 May – and is a major event for the agri-food sector, as well as families.
Mr Ramsey pointed out that the weakness of sterling helped turn 2016 into a positive year for Northern Ireland’s agri-food sector, after a very difficult 2015. Indeed, he says that2015 was something of an annus horriblis for the sector. For instance, Total Income From Farming (TIFF) in Northern Ireland rose 21 percent in 2016, and there were also ongoing improvements in productivity, something Mr Ramsey says the wider economy would do well to emulate.
However, Mr Ramsey states that inflation is one of the main challenges for the Northern Ireland economy in 2017, evident in the rising price of food.
Ulster Fry Index
To illustrate the point, he presented his annual Ulster Bank Ulster Fry Index, which shows that the price of items making up a cooked breakfast have increased by 2.8 percent in the last 12 months, based on the Consumer Prices Index (CPI).
The bank’s popular measure of food price inflation suggests that an Ulster fry is the most expensive it has been in three years. Consumers had been benefiting from falling prices – the Ulster Fry Index fell by 9 percent in 2016 and 3 per cent in 2015.
Of the main items in an Ulster fry, pork sausages (7.1 percent) and tomatoes (6.8 percent) have seen the biggest price increases in the past year. Margarine is up a whopping 29.2 percent in the year, with butter seeing a price increase of just 1.4 percent.
Eggs are the only item to have fallen in price in the 12 months to the end of March – according to CPI, the price of eggs was down 5.8 percent.
The price change in the various items in a traditional breakfast are contained within the accompanying infographic.
Despite the recent price increases, which are set to continue, the Ulster Fry Index is still almost 12 percent lower than it was in 2014. Over the longer-term, though, it is over 25 percent higher than it was 10 years ago and 47 percent higher than in April 1998.
Richard Ramsey says that the Ulster Fry Index is a bit of fun but contains an important economic message.
“Food makes up a significant proportion of household spending. Food and drink is also a key sector of the Northern Ireland economy. So, understanding how the price of food stuffs are changing gives us some insight into both the current state of consumer finances, and also some of the challenges facing the agri-food industry,” Mr Ramsey says.
“There are a wide range of alternative indices around the world – from the Big Mac Index to the Cappuccino Index – which are intended to put economics into layman’s terms, and to shed new light on important economic issues. Ours is the Ulster Fry Index, and it hopefully gives the man or woman on the street a clearer idea of why their household finances currently are the way they are.
“Looking ahead, we only see the Ulster Fry Index going one way; up. Consumers are going to feel an increasing squeeze as the price of food rises in the months ahead. And of course cafes and restaurants also have to factor in rising energy and labour costs, for instance, in the prices they charge. The National Living Wage and the rising cost of gas and electricity will be key factors in their cost-base, and the prices they charge,” he adds.