2025 Agri- Food Strategy Background paper
EI Submission
Note: The views expressed in this background paper do not purport to reflect the views
of the Minister or the Department of Agriculture, Food and the Marine
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Food Industry Overview
Context: The Agri-Food sector is the cornerstone of Irish manufacturing with annual turnover in
excess of €26bn, employing over 42,000 in processing – up 2,800 over the last three years, and
with exports of almost €10bn - up 40% over the last 4 years. The industry is unique in that its
reach is into every corner of Ireland and, because the sector spends such a high proportion of its
revenues locally (74% vs 40% for all manufacturing) its value to Ireland is measurably higher than
all other industries - every €100 in exports from the bio-sector (agriculture, forestry, fisheries, food
and drink industries) contributes around €52 to GNP while the ‘non bio-sector’ equivalent
contribution is of the order of €19. In short, while the agri-food sector is the biggest indigenous
industry measured by output and exports, its wider economic impact is far greater.
Strengths
Grass Fed
The dairy and beef herd are predominantly
grass fed which has a number of distinctive
qualities and is also highly sustainable and
environmentally friendly.
Weaknesses
Scale
The industry is fragmented and is smaller in
scale than international competitors.
R&D Investment
Low investment by industry.
Raw material
The quality and integrity of the input ingredients Cost base
are world class.
Input-costs challenge competitiveness e.g.
energy and labour costs.
EU Access
Direct access to the EU market the largest and UK and EU markets
most affluent consumer market in the world.
Over-reliance on UK and EU markets
Benchmark industry leaders
Profitability.
Ireland has produced blue-chip enterprises
Beef production unprofitable compared to dairy
such as Kerry, Aryzta, IDB, Glanbia, Greencore and tillage, while are net margins are thin.
and ABP through its eco-system.
Skills Availability
High Regulatory Standards
Surveys indicate that there is an absence of
The regulatory infrastructure for food in terms
suitably qualified people at all levels in the food
of quality/safety is rigorous.
industry
State/enterprise integration
Integrated system from DAFM, Bord Bia,
Teagasc, FSAI and EI through to IBEC, ICBF
and the IFA.
Research Eco-system
Government investment in research
infrastructure is good, allowing for potential
world firsts, with food/agri a key priority.
Opportunities
World population growth.
New middle-class demographic driving demand
for sustainable, traceable, best-quality produce.
Reputation
Low levels of awareness of Ireland’s R&D
capability internationally
Finance
Cost-control and projection-planning skill-sets
are weak at senior management level.
Traditional banks still managing recession fallout.
Threats
Supply Chain
Compromise of the supply-chain through
contamination and disease. Some producers
unprofitable and over-reliance on large UK
multiples.
Green/Sustainable Brand
Origen Green provides an opportunity to build
the Irish “fresh, safe, sustainable” image Global price volatility & FX risk
abroad
System vulnerable to fluctuations in raw
materials, feed, chemicals and fuel can leave
New FDI
the sector exposed.
Arising from dairy and/or through leveraging
High GHG
research infrastructure
Increased demand for environmentally
Research and Innovation
sustainable products. Challenge of reducing
Well established R&D infrastructure (Teagasc GHG emissions by 20% while increasing
2
etc.) and novel models (EI Technology Centres) agricultural output by 50% by 2020.
presents world-first opportunities e.g.
Global competition
genomics
End of milk quotas
In 2015, huge opportunity to mine new milk for
high value add ingredients/functional foods.
Global competitors have significant scale
presenting competition as markets open.
Scaling.
Poor planned rapid scaling due to increase in
demand and price inflation can leave SME’s
exposed.
EI Actions
1. Co-invest in companies’ development plans for internationalisation.
2. Co invest in start-up companies to drive exports and jobs.
3. Develop leadership and management capability.
4. Develop innovation capability within companies through financial support for individual
R&D and for research collaboration between companies and the third level.
5. Support companies competitiveness through Lean principles and techniques.
6. Support the development of the national growth funding offer to support the industry.
7. Attracting foreign direct investment to Ireland.
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Dairy
Context: The dairy industry is one of Ireland’s most important indigenous industries and
comprises a vital part of the agri-food sector. It is an export driven sector with exports of dairy
products and ingredients valued at €2.9 billion and with huge opportunity.
Ireland enjoys a comparative advantage in the production of milk within the EU and the industry is
renowned both for its relatively high productivity and for being an early adopter of new
technologies at producer level. A major feature of production in Ireland is the seasonality of milk
supply, caused by farmers adjusting the date of calving to maximise the use of grazed grass in
the cows’ diet in an attempt to produce milk at as low a cost as possible. However this low cost
supplier production has a high cost in terms of the under utilisation of expensive processing
assets.
Ireland’s dairy product mix is weighted towards commodity output with recent Enterprise Ireland
investment focused on moving processor output up the value chain. Also in comparison to the
processing sector of our major competing dairy export countries such as Denmark, Holland and
New Zealand, Ireland’s dairy processing industry is both fragmented and comprises smaller scale
processors making competition difficult in world markets.
Goal: To improve processing competitiveness, scale and cost efficiency through consolidation,
where feasible, to encourage collaboration between co-ops and promote diversification of the
dairy product mix into higher value products.
Drinks
Context: The Irish Drinks manufacturing industry can be classified in three categories:
 Brewing (beer, cider)
 Distilled Spirits and Liqueurs
 Soft Drinks
The Sector is dominated by non-SME subsidiaries of Multinational Corporations. The Irish drinks
sector is showing growth in the whiskey and craft beer sectors. With both sectors targetted for
significant investment, both by established players and vibrant new entrants, this sector is poised
to achieve significant growth.
Goal: To support beverage clients with export potential focused on whiskey and craft beer as well
as engaging in functional NPD in non alcoholic beverages.
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Beef:
Context: The beef industry is a vital part of the agri-food sector and accounts for substantial
exports with €2.1 billion recorded in 2013 and the output value of this sector projected to grow by
40% (Harvest 2020 Beef Activation Group target) using the average output figure for the years
2007 to 2009 as the baseline. The achievement of this target will be challenging and will require
the entire industry to invest in longer term capability development so that it can take advantage of
strategic opportunities.
Within the EU, Ireland enjoys a comparative advantage in the production of beef, commanding a
5% premium against the EU average sales price. The industry has a reputation for high
productivity and excellent environmental and animal husbandry practices.
While clear market & growth opportunities exist, the Irish beef processing sector operates in a
highly competitive global marketplace, often with tight margins, particularly when logistics costs
are factored in. This will further intensify with the continued liberalisation of the global beef trade.
Increasing competitiveness and maximising the market return from meat processing is critical to
the future success of the sector.
Goal: In order to maximise and exploit this growth opportunity and to compete more effectively in
the global marketplace, the Irish beef processing industry needs to have the relevant capabilities
and expertise in place to produce competitive and differentiated offerings. The focus must
be on innovation, sustainability and supply chain integrity.
PigMeat
Context: The Pig industry is Ireland’s third largest sector in terms of gross agricultural output
after Dairy and Beef, producing 235,000 tonnes of pigment in 2013.The sector exports reach
markets further than beef & sheepmeat and the added-value is more pronounced albeit,
managed by secondary processors.
•
290 Commercial Pig Producers, 147,900 sows and 3.52m pigs/per annum
•
Well established, mature Industry
•
28 Companies
•
Primary processing is dominated by 3 large companies, who between them are
responsible for 70% of the national kill.
•
4 dominant players in added value processing.
•
Tier of value add processors that are domestic orientated with little or no exports.
Goal: Enhance competitiveness, R&D investment and assist scaling agenda with senior teams.
Poultry
Context:
Brolier meat in particular, is manifesting an increase in consumption due to its competitive protein
proposition compared to beef, pork or lamb for consumers. Profits are low. Companies need
strong reserves to re-invest. The principle challenge to the sector’s profitability is competition from
imports from third countries with much lower input costs and scale e.g. Marfrig. Broiler prices
were 3% higher in 2013 at €1.95/kg, with retail chicken prices running at 80% of average retail
beef prices. The value of Irish poultry exports increased in 2013 by 4% to reach €230m.The UK
accounts for 83% of Irish exports. Bórd Bia forecast slower growth with poultry to remain the
preferred meat in Europe among cost-conscious consumers and a modest rise in broiler prices as
Brazilian output eases. Poultry is sold generally to neighbouring countries unless the country has
a deficit and has to import large volumes.
Goal: Enterprise Ireland should assist with competitiveness by encouraging the industry to invest
in innovation and the added-value option.
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Prepared Consumer Foods
Context
Prepared Consumer Foods (PCF) encompasses Frozen foods (e.g. ready meals, pizza), Chilled
foods (e.g. salads, soups, ready meals, cooked meat products) and Ambient products such as
bakery, confectionary, sauces, and snacks. The sector comprises a number of large global
companies such as Two Sisters/Green Isle, Kerry Foods, Aryzta/Cuisine de France and a large
number of SMEs.
Goal: That the Irish Prepared Consumer Foods Sector will be quality focused with innovative
offers tailored to meet the needs of premium and best value consumers and the SMEs will have
access to suitable and sufficient finance necessary to scale their businesses
Seafood:
Context: The Irish seafood industry generates an estimated 11,600 jobs, supporting the
economic viability of remote, rural and coastal communities. At production level it is estimated
that 4,987 people are employed in fisheries, 1,936 in aquaculture, 3,507 in seafood processing
and 1,185 in ancillary services.
Goal: To increase value-add exports across new markets driven by additional raw material, new
consumer led product development, strong brands (sustainable and traceable) and companies
collaborating to access new export opportunities.
Entrepreneurship
Context:
Enterprise Ireland is the lead agency in developing entrepreneurship in Ireland. Growing a
pipeline of entrepreneurs and sustainable start up companies with a strong export focus is a vital
tool to tackle unemployment.
Enterprise Ireland has a comprehensive toolkit for entrepreneurs at various stages of the start up
cycle that includes both financial and non-financial supports. Financial supports to new
entrepreneurs include the New Frontiers Programme which is run on a regional basis,
Competitive Feasibility Study, Competitive Start Fund and HPSU Feasibility Study.
The Global Entrepreneurship Monitor Ireland 2012 report has shown that the proportion of people
in Ireland who are early stage entrepreneurs has fallen (6.1% in 2012 from 7.3% in 2011) and
Ireland’s ranking against other countries has declined. Ireland is now ranked 18th among the
OECD countries, 14th of the EU-27 countries and 6th of the EU-15 countries;
In summary, we need to work closely with the promoters to improve their management capability
and to ensure that their projects are market fit at the earliest opportunity. EI’s Food Division has a
dedicated HPSU team focusing on food & beverage start ups and EI supported seven new HPSU
projects in the Food Sector in 2013 (85 new jobs)
Foodworks, an accelerated start up programme was designed by EI, Bord Bia & Teagasc to
address the particular challenges faced by ambitious and export focused food start ups and is
now going into its third year. Two Foodworks companies received HPSU funding in 2013 and a
3rd received Competitive Start funding. Two others are working with the local LEOs. A 2014
Foodworks graduate received HPSU funding in 2014. A 3rd Foodworks Programme will be
launched in late 2014.
The key challenges



Weak pipeline of new entrants: a booming artisan sector is not translating into export led
and scalable companies
Difficulty raising finance; the Irish investment community is more focused on technology
prospects rather than Food & Beverage and the banks are not lending to early stage food
companies
Lack of ambition; promoters reluctant to take an aggressive approach in growing the
company from the beginning, more inclined to choose lower risk incremental growth
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

Incubation Space; Lack of Food incubation/NPD space in Dublin city and the greater
Dublin area.
Me-too projects; many of the food & drink projects do not have an innovative business
model, innovative product or process that will provide a competitive advantage in the
marketplace.
Goal: To nurture and develop a vibrant food start up sector that encompasses new starts ups
across the regions, new scalable companies, companies spun out from our 3 rd level research
providers and from our multinational companies as well as new FDI HSPU opportunities.
.
Food FDI
Context:
Enterprise Ireland is responsible for the attraction of FDI in food and working with existing Food
FDI companies as they develop their activities in Ireland. In addition, EI is responsible for
attracting Greenfield FDI New Name manufacturing operations, RD &I and Joint Ventures.
The food sector in Ireland offers significant FDI potential, the opportunity to build on existing
investment wins from International and indigenous MNCs and targeting additional International
companies who are considering Food FDI investments in Europe.
Ireland’s has a strong food production and RD &I ecosystem offering natural ingredients, product
development, commercialisation, sustainable production and food science expertise. In addition,
a significant expansion of farm level dairy production of up to 50 percent by 2020 ensures Ireland
has potential to attract additional FDI investment in Dairy ingredients, Infant Formula and
Functional foods.
The opportunity for Ireland is in low volume / high value shelf-stable products, secure supply of
high quality raw materials, food safely and as a location for initiating RD & Product Innovation,
where Dairy ingredients are plentiful and product development potential exists with Irish JV
partners.
Target Sectors
 Dairy & Dairy Ingredients
 Animal Nutrition & Petfood
 Whiskey/Beverage
 Prepared Consumer Food
 Shared Services projects
Goal: To replicate Ireland’s successful track record in building self sustaining clusters of Foreign
Investing companies in Industry sectors such as Medical Device, Pharmaceuticals and ICT in the
Food sector.
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Challenges out to 2025
The agri food sector has the potential to be transformational – both in terms of building a strong
cohort of successful Irish companies and sectors of scale and in terms of its powering sustainable
regional development – leading to profitable growth in exports and jobs. Achieving this potential
requires ambition and leadership by all stakeholders and tackling the many challenges facing the
sector:

Innovation Levels as measured by spend on R&D are well below international best practice
and commitment to the broader innovation agenda, while growing, is still weak. At its most
basic level, this impacts NPD and the ability to add value – a factor particularly relevant in the
dairy sector given the scale of the opportunity there. The dove-tail between academic
research and industrial commercial activity is still underdeveloped characterised by the lack
of human capital infrastructure and process within companies

Jobs/Exports Enterprise Ireland’s focus is to optimise the number and quality of sustainable
jobs in the agri sector through growing profitable sales/exports. In an increasingly capital
intensive industry maintaining existing jobs will remain a priority as will the creation of new
jobs through new startups or expansions of existing operations

Developing Scale remains an issue, underpinned by the drive for growth and the capabilities
to deliver it on the one hand – and access to appropriate investment funding on the other.
Where consolidation is unlikely, greater collaboration, especially but not exclusively, in the
dairy processing sector, will be required to replicate some of the advantages of scale. Rapidly
scaling Irish companies risk loosing the inherent hidden craft and secret know-how that drove
their initial competitiveness. Defining and scaling that culture is an important process
facilitated through EI engagement.

Competitiveness – good progress has been made by companies via investment in lean
principles and techniques but continuous improvement in competitiveness at the firm and
sector level will remain an imperative for companies to succeed in increasingly global
markets. Global competitors especially in meat exhibit many multiples of scale representing
risk as global markets continuously open up e.g. Mercosur commoditising the offer. Energy
and labour input costs remain competitive challenges

Management talent & capability will continue to differentiate performance within the sector.
Senior management teams need assistance as their companies scale and need to consider
strategies for mergers and acquisitions. Skills availability and attractiveness of the sector for
graduates remains a challenge.

Macroeconomic Issues in addition to the primary strategic challenges including global
market forces such as price volatility and FX fluctuations will need to be managed more
proactively and creatively

Finance – engaging with enterprise and finance providers to stimulate growth, access to
capital and to address both opportunities and historical challenges.

Reputation – Promoting and maintaining our global reputation to underpin our exports, the
scaling of our businesses and to drive FDI opportunity.
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