Ireland’s stellar export performance in terms of agri-food exports, is a key true strength of the agri-food economy.
Ireland exports over 85% of the food it produces to 130 countries across the globe.
This is a huge achievement based on both a comparative advantage in the production of meat, dairy and iconic drink brands, and crucially a huge commitment to assessing and fulfilling consumer tastes and preferences across the globe.
As per the chart below, the delivery of a €13 billion euro export performance in 2020, despite the Covid-19 public health and economic impacts, and its particular impact on closing food service markets locally and globally, is surely a phenomenal testimony to Irish agri-food’s resilience and capability.
Bord Bia 2020 exports:
And yet, one of the constant tropes of the environmental pillar, and indeed the Green Party, is that Ireland should stop exporting and concentrate on just feeding its local population.
Agri-food exports and jobs
There was a lot of misinformation around global food exports and carbon emissions in the early 2000s.
However the Intergovernmental Panel on Climate Change (IPPC) / United Nations (UN) measurement protocols indicate that over 90% of global food emissions come from on-farm activity.
In reality, there are a number of significant problems with this view of local self sufficiency and reduced agri-food exports. The first, in practical terms, is jobs and economic output.
We currently produce meat and dairy products for the equivalent of 45 million people.
In employment and economic output terms, the Irish agri-food sector supports 260,000 jobs according to the Central Statistics Office (CSO), or one job in every eight in the Irish economy.
Our 26 county population is just shy of 5,000,000, so a shrunken locally-based food sector would support, at best, 30,000 jobs i.e. 5,000 on farms and 25,000 across the economy.
Reducing agri-food exports
The huge catastrophic shock to the Irish economy from such an outcome has already been alluded to in many of the Brexit reports prepared by the Economic and Social Research Institute (ESRI), Central Bank and Department of Finance.
With great respect to the wishful notion that these jobs would be replaced with inward investment jobs, this is not happening.
The very harsh reality is that Foreign Direct Investment (FDI) companies have favoured Dublin, Cork and clusters in Galway and three other counties, and have a very slight presence in the other 22 counties, despite no barriers to invest.
One of the great lessons out of the globalisation impact of the last 20 years, has been the exposure of wishful thinking that local manufacturing jobs lost to outsourcing, would be automatically replaced with new shiny jobs in services – it just did not happen.
Also our current competitive corporation tax, which drives inward investment, is now under challenge from G7 and the Organisation for Economic Co-operation and Development (OECD).
Grocery companies control supply and demand
The 30,000 jobs I referred to earlier, is a very important point, in that there is absolutely no guarantee that if we suppressed or shrunk Irish agricultural output, that we would have a largely captive local market.
We sit in an EU, that since 1993 is a single market; there are no barriers to trade between Ireland and the other 25 countries still in the EU.
More practically our current grocery market supply is controlled by five companies: Dunnes; Tesco; Super Valu; Aldi; and Lidl.
Tesco and Aldi or Lidl are clearly non-Irish-owned international grocery businesses whose core capability is efficiency in international distribution of food and grocery products.
Given that the five biggest account for 93% of grocery shopping in Ireland (according to Kantar), the reality is that what Irish consumers consume over the next 10 years will be based on the efficiencies that these business models require i.e. efficiencies based on global distribution capability.
So suppressing our large agri-foods export capability will not just kill off in excess of 230,000 jobs, it will undermine our scale and comparative advantage in production and processing of food and drink, making the import of food more economically attractive.
Open economy export focus has been the key to Ireland’s prosperity.
According to the Department of Enterprise, Trade and Employment (DETE) Annual Report, total sales from the multinational sector in 2020 were 270 billion, of which 260 billion or 97% were exports outside Ireland.
A major realisation, originally associated with TK Whitaker in the 1950s, was that Ireland needs to embrace exports and openness to survive as an economic and political entity.
The next phase in this embrace of openness was joining the EU in 1972, gaining access to a market of 300 million people (now 550 million), rather than a dependence on Anglo-Irish free trade agreements (FTA), as was the case up to then.
So the reality of a functioning Irish economy and Irish jobs, for the multinational sector, as with Irish agri-food and drink companies, is that the Irish economy itself is tiny and effectively not a viable proposition for manufacturing or services.
It’s also not viable for the multinational grocery companies, who in practical terms, control our food supply and availability.