Ciaran Fitzgerald: Crisis must mean opportunity for agri-food sector

It is an understatement to say that 2020 was a hugely difficult year both in terms of public health and economic impacts.

For the agri-food and drinks sector across the globe, maintaining on-farm outputs while coping with the restrictions and closures of the restaurant and food service sector represented huge human, logistical and marketing challenges.

For ‘agri-Ireland’ which exports 80% of its production, the management of Covid-19 impacts at processing level, the large-scale Covid-19-related disruption in markets combined with the tortuous finalisation of the UK Brexit deal and ongoing evolution in climate and environmental issues, were hugely challenging.

So delivering against all of these obstacles, Irish agri-food and drink export value of €13.2 billion to more than 150 countries across the globe, is by any manner of means an amazing performance, representing a huge capability by Irish food and drink processors to meet multiple challenges in multiple markets.

Scale of Irish economy

The fact that this remarkable export capability supports in excess of 250,000 jobs, or one job in eight in the Irish economy and equally importantly €16 billion in Irish Economy spend (source: CSO, DETE), further underpins both the scale of capability of Irish economic impact.

While, hopefully, the emergence of vaccines means that Covid-19 public health impacts will reduce as 2021 progresses, nevertheless the Irish agri-food sector clearly and unequivocally faces ongoing strategic challenges from Brexit, climate change, and Covid-19-related economic impacts.

A key question this raises, in my opinion, in addition to the management or offsetting of farm income pressures in the short and longer term, has to be the role and availability of investment in agri-food processing.

Very clearly the maintenance of income supports is a necessary part of sustaining resilience to what are serious economic headwinds; Covid-19 impacts, the trade diversification imperative from Brexit and the evolving consumer and regulatory response to climate challenges.

This must be matched by very significant investment in process and product innovation, new product development and enhanced market development capability.

Large-scale investment

Large-scale capital investment in agri-food processing is an unarguably necessary requirement to meet the combined challenges of Covid-19, Brexit and climate change.

A great example of the investment scale and the imperative for diversification in product profile, is the huge investment (€500 million +) in mozzarella and continental cheeses over the last three years across the Irish dairy sector.

This huge investment reflects not just the need to find different markets as a defence against Brexit but that these new markets in practical terms mean new product types, variations and processes.

Investment focus and opposition

There have been a number of discussions in the public domain and reflections over Christmas and the New Year about investing in Irish agriculture.

Some of this debate was sparked by the announcement by Enterprise Ireland and Department of Enterprise, Trade and Employment (DETE) of an investment scheme for the meat and dairy processing sector (Capital Investment Scheme for the Processing and Marketing of Agricultural products).

The announcement by Minister for Foreign Affairs, Simon Coveney, that Ireland is to receive over €1.05 billion form the EU’s €4.5 billion Brexit Adjustment Reserve, followed in January 2021 and again highlights the possibility of investing in the agri-sector as a response to evolving market challenges.

Views on investment

What these discussions and debates in the media and body politic have indicated is that there is significant questioning of the commitment of large-scale investment to agri-food processing from a number of sources within the Irish economy and broader body politic.

From the environmental lobby who have attempted, along with some mainstream media outlets, to represent Irish agriculture development solely as a blight on the Irish environment;
Government departments and modern economy policy think-tanks who have absorbed some of the anti-agriculture propaganda and also see agri-food only as a diminishing factor in the future Irish economy;
Some in the agri-sector who resent any support for investment to processors.

In terms of this opposition, the view of the modern economy ‘boffins’ is itself conditioned by the belief in an apparently unending pipeline of new inward investment projects and the single fact that agriculture constitutes 30% or more of total Irish economy emissions.

While there are a number of flaws in this viewpoint in my view, perhaps the biggest ones are for modern economy advocates to:

a) believe that the planning objection lobby won’t move on to new inward investment (don’t forget Apple Athenry);

b) not to understand the fact that new and existing inward investment will require access to sustainable indigenous green energy supply that can be best delivered only through a vibrant properly-invested grass-based Irish agriculture sector.

Moreover, proper development of on-farm grass sequestration capability in accord with new EU/IPPC (integrated pollution prevention and control) mitigation accounting allowances post-2030, will in itself dramatically reduce the highly distorted 30%+ figure for agricultural emissions.

Inward agri-food investment

The big point here, as has been the case for the last 30 years in my view, is that support for growth in the agri-food sector can be complimentary to Ireland’s inward investment policy.

Indeed it is worth remembering that Food Harvest 2015, which was finalised in 2010, captured the sense of relief across the ‘Irish political economy’ post the 2008 banking / economic crash, that there was an indigenous capability to boost employment and exports, in addition to the foreign direct investment sector which was, and is, controlled by decisions made outside of Ireland.

Environmental lobby opposition is more challenging not because of the increasing levels of regulatory and environmental requirements per se, which have emerged from a transparent and largely inclusive policy process, but because the chosen methodology of opposition by the environmental is the opposite of transparency frankly.

The ongoing attempts by An Taisce and others in the environmental lobby, to use the planning appeals system currently to block a range of agri-investment projects and thereby stymie essential investment in market diversification in the context of responses to Brexit, indicates both the thoughtlessness of this opposition; its lack of transparency; a lack of accountability and basic fairness, in my view.

Let’s be clear – Brexit impacts through trade disruption and increases in administration will be potentially devastating in terms of Irish farm incomes and jobs. Only though investment in processing capability to make product for alternative markets can this impact be avoided or offset.

Innovation, jobs, and farm incomes

Agri-food companies, as investors on behalf of Irish farmers and food industry employees, don’t enjoy the luxury of complaining about the unfairness of loading Covid-19 impacts onto an already packed agenda from Brexit or climate and environmental challenges.

As an exporter of 80% of its output to in excess of 150 countries across the globe, the Irish agriculture sector recognises that if we don’t act swiftly to reflect an ever-changing environment, we will become irrelevant very quickly.

The tremendous performance of the sector in 2020 and indeed since the 2008 recession demonstrates that this capability and commitment to adapt and invest delivers a huge payback to the Irish economy in terms of jobs exports and Irish economy spend.

EU state aid rule changes throughout 2020 are much more facilitating of state-supported investment. Investment in Irish agri-business is a huge opportunity.