Golden era for Irish agrifood
Top food industry executives, banking strategists, and farming interests are gathered in Dublin today to explore sustainable investment options for the future growth and development of Ireland’s Agrifood industry.
The AgriFood Business Partners Conference is designed to frame a medium-term approach to sustainable investment in the Irish agri-food sector up to 2020. More than 400 delegates attended the event.
Speaking at the event, Cathal Fitzgerald, finance director of AgriFood Business Partners, said: “The growth potential forecast in various commentaries can have an extremely beneficial effect on Ireland’s economic growth, rural development, employment levels and national balance of payments, if managed correctly. However, if mismanaged it could lead to unrealistic expectations at market, primary producer and financial institution levels with Ireland not fully exploiting this wonderful opportunity.”
According to the organisers, the Agrifood industry is critically important as a domestic driver of economic growth. “It provides primary employment for 170,000 people or 8.8 per cent of Irish employment. There are 140,000 family farms with gross output of €7bn and 1,200 companies in the sector with a turnover of some €26bn. These companies spend 74 per cent of their input requirements on Irish sourced inputs compared to 40 per cent generally by manufacturing companies overall. Food and drink exports have increased by 40 per cent since 2009 to €10bn last year with 42 per cent of Irish exports going to the UK, 32p per cent to the EU and 26 per cent worldwide.”
Agrifood, fisheries and forestry represent Ireland’s largest indigenous industry and have a key role to play in Ireland’s economic recovery. This is acknowledged in the Government’s Food Harvest 2020 strategy which has set aggressive growth targets by 2020, it added.
“The value of primary output is targeted to increase by €1.5bn with value added outputs to increase by €3bn and exports overall targeted to increase to €12bn.
It is envisaged the growth agenda will be delivered across the key sectors: dairy, meat and livestock (beef, lamb, pigs, poultry), prepared ready meals, beverages, seafood, edible horticulture and cereals.
According to the organisers, Bord Bia is targeting a 50 per cent increase in output with the abolition of milk quotas in 2015 and the expectation that Ireland’s perceived competitive advantage in pasture based production can be profitably exploited.
“It is anticipated that the pasture based model, also the norm for both beef (and sheep), offers the potential for Irish in-market product differentiation based on genuine green credentials.”
“Long-term assets are required for long term resource development,” stressed Fitzgerald of AgriFood Business Partners. “Working capital sources are needed that reflect the risk nature of the sector and provide solutions for extended credit, taking into account the seasonality of production and product maturation.
“The investment required to deliver this growth potential is substantial at every level of the value chain. Farm debt directly related to farming activities is currently estimated at €1.9bn (Teagasc National Farm Survey, 2011), while total family farm debt is of the order of €4bn. This is against a background where financial markets, post the debt crisis, are less liquid and are much more risk adverse. There are also examples in the agri-sector where the financial markets are dysfunctional.
“There is a necessity to ensure that the mistakes made in the pre-crash celtic Tiger boom are not repeated in the agri-food sector as expansion gathers pace. Ireland must increasingly compete in the global marketplace where every facet of competitiveness – from land cost to manufacturing and marketing efficiency – are critical to sustainable investment and development,” he added.
More reports from the AgriFood Business Partners Conference to follow