Impact of Middle East Conflict on Irish Dairy Exports

Bord Bia, the Irish food board, has highlighted potential challenges for Irish dairy exporters in the Middle East as regional conflicts continue to escalate. The current geopolitical situation, which has reached its 79th day, poses significant risks to the logistics and cost structures critical to sustaining Irish exports.

According to Kieran Fitzgerald, Bord Bia's manager for the Middle East and Africa, while business operations continue, they are increasingly hampered by complex logistics. Sea freight disruptions are notably severe, with many shipments being rerouted around the Cape of Good Hope, which prolongs transit times and inflates costs.

Alternative ports in countries such as Saudi Arabia, Jordan, Oman, and the UAE are operating beyond their capacities, resulting in delays of up to ten days. These logistical challenges are compounded by elevated freight costs, influenced by higher energy prices that contribute to inflation in the supply chain.

Last year, Irish food and drink exports to the Gulf region stood at €370 million. Despite a 7% increase in dairy exports over recent years, the Middle East's volatile climate may affect these figures if current trends persist. Bord Bia has warned of a potential 'tipping point' where sustained cost increases could materially weaken demand.

The UAE's foodservice sector is under particular pressure, with more than 13,000 outlets facing reduced demand. In contrast, demand remains relatively stable in Saudi Arabia, supported by its large population and social dining traditions.

Some markets, such as Saudi Arabia and Iraq, continue to show steady demand for dairy ingredients used in local production, supported by strategic stockpiles that help mitigate immediate supply shocks. However, consumer-facing sectors, including tourism and retail, remain vulnerable to shifts in consumer confidence.