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DUBLIN (Reuters) - Uncertainty arising from Brexit led to an 8 percent fall last year in Irish food and drink exports to the United Kingdom, by far their biggest market, but the drop was offset by growth elsewhere.
The UK is Ireland's largest single trade partner, accounting for about 17 percent of exports. For food and drink, that share leaps to 37 percent, leaving the jobs-rich sector vulnerable to neighbouring Britain's departure from the European Union.
Exports to the UK fell by an estimated 8 percent in 2016 to 4.1 billion euros as a weakening of sterling against the euro and resulting competitive pressures impacted trade, Bord Bia, the Irish Food Board, said in its end of year report.
Total food and drink exports still rose 2 percent year-on-year, marking the seventh successive year of growth for the sector which, according to Bord Bia, employs around 160,000 or one in eight Irish workers.
Sales in other European markets, which account for 32 percent of food and drink exports, increased by 3 percent and trade to the rest of the world rose by 13 percent, including a 35 percent jump in China, which now accounts for close to 8 percent of exports, almost as much as North America.
Ireland's government has encouraged UK-focussed exporters to diversify into other markets, particularly with the potential that a "hard Brexit", where Britain would make a clear break with the EU's single market in order to control immigration, could end tariff-free trade.
Bord Bia said ongoing market uncertainty meant the outlook for exporters was set to remain challenging in 2017, when the British government plans to trigger Article 50 of the Lisbon Treaty to kick off two years of EU divorce talks.
"One of the notable features of the achievements (in 2016) is the impact of market diversification in the year in which the UK decided to leave the European Union," Agriculture Minister Michael Creed said in a statement.
"The UK will continue to be a critically important market for Irish agri-food products. The triggering of Article 50 and the continued uncertainty around Brexit will present significant challenges for the sector."
Reporting by Padraic Halpin