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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 AND BEVERAGES Background
The agri-food sector continues to play an integral part in Ireland’s economic recovery and is our largest indigenous industry, contributing €26 billion in turnover and generating 12.3% of merchandise exports. The sector accounts for around 170,000 jobs or 9% of total employment, and makes a particularly significant contribution to employment in rural areas. Food & Beverage exports increased to a record value of €10 billion in 2013 representing an increase of 9% on the previous year and a 40% increase since 2009. The 2013 performance can be attributed to strong global prices and higher output in key agri sectors. Exports to the UK remained relatively stable while European markets notably recovered in 2013 following a difficult trade in 2012 due to slow economic demand The UK is estimated to have accounted for 43% of food and beverage exports in 2013, with 31% going elsewhere in Europe and 26% going to international markets. Food and beverage exports to China (and Hong Kong) trebled over the last three years, growing by 40% in 2013 to reach €390m.
Progress to date
Progress measured to date indicates that the Value of Primary Output has increased significantly and has effectively reached its target of a 33% increase. Export performance has also been strong and at end 2013 was more than halfway towards achieving the 2020 target of €12 billion. Value Added has increased to €7.5 billion, again more than halfway to its target increase of €2.5bn by 2020. Direct Employment within the sector has an extensive geographic spread throughout all regions of the country and is an important source of employment in rural areas. CSO Trade statistics for January - August 2014 were released in October. The standard published Food and Beverages categories (less tobacco) showed an increase of 7.2% in exports compared to Jan/Aug 2013 which demonstrates the continuing strong performance of agri-food exports relative to overall export growth. (The value of overall merchandise exports was €291m, an increase of just 0.5% above the Jan/Aug 2013 figures). If the current level of export growth were to be maintained for
the remainder of the year then Food and Beverages exports for 2014 would reach €10.7bn. With the addition of Forestry total agri-food exports would approach €11bn for 2014.

3 The agri-food industry is enjoying a period of strong performance. Food and drink companies currently account for a 30% share of the ISEQ index. Export growth has been assisted by a series of Ministerial led trade missions, and industry leaders, with assistance from state enterprise agencies, invested in capital and capability investments in strategic growth areas, notably dairy and whiskey. Delivering exports and FDI projects is underpinned by a Ministerial overseas events and strategic trade missions where key leaders in the agri-food industry are represented. The Minister also hosts incoming and outgoing trade visits and market access exchanges to aid investment in Irish companies and products. These initiatives help to build a solid pipeline of opportunities and to secure new projects and markets. In the dairy and whiskey industries alone, investment plans of up to €600million are being actively pursued by industry leaders. Enterprise Ireland has invested €150 million in over 70 significant projects with large companies that produce value added food exports. Origin Green, launched by Bord Bia in 2012, has provided companies with a programme to support Ireland’s journey to a leading global position on sustainability. By the end of 2014 it is expected that verified Origin Green members will account for 75% of Irish food and beverage exports.
Challenges to 2025
The food industry has shown great resilience during the downturn, growing exports through focusing on market insight and opportunity, embracing lean programme strategies, increasing leadership capability, building the industry’s talent base through Bord Bia Marketing Fellowship and other graduate marketing programmes, developing a Skillnets programme etc. Volatility in world prices and markets, relatively small scale of individual companies, the very competitive international and retail environment present major challenges. Competitor countries have advanced innovation capability at the manufacturing end. A challenges for the Irish agri-food ecosystem is to further raise its game in the innovation life-cycle and, building on the achievements to date on sustainability, to establish Ireland as a country to go to in relation to food innovation, market insight and capacity to deliver the food products, qualities, characteristics, packaging etc required by new generations of buyers and consumers in over 175 markets and to do this on a profitable and sustainable basis.

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Alcoholic Beverages Background
The alcoholic beverage industry in Ireland is broken down into different sectors; spirits (which includes the European Geographical Indications Irish Whiskey, Irish Cream and Irish Poteen/Poitín), Beer and Cider manufacture. In 2013, exports totaled some €1.095 billion. Beverages exports exceed imports and there is a high domestic content in alcohol exports. Ireland’s alcohol export performance reflects the strong performance in recent years of Irish Whiskey. There is further potential to increase alcohol exports and to diversify markets. Investment in the drink sector has been growing at a significant rate due to expansion in the whiskey sector and consolidation and investment in the beer sector. The whiskey and beer sectors will help stimulate continued growth in new FDI and expansion of the drinks sector into Ireland. From four distilleries throughout the island of Ireland, production has commenced in a further four distilleries and another seventeen are in varying stages of development and planning. In the craft beer sector a handful of micro breweries have expanded to forty with predictions of up to one hundred by 2020. The industry aims to invest 1billion Euros overall by 2020. Projects announced to date include Midleton (200m), James Gate Brewery (150m), Walsh Whiskeys (25m), Tullamore (35m malt distillery) and Teelings Dublin (10m). The drinks industry in Ireland is closely associated with the tourism sector with visits to visitor centres, such as the Jameson Distillery and the Guinness Hopstore, consistently featuring on the list of most popular visitors’ attractions. The experience of an Irish pub with traditional music is also very popular with tourists. The industry claims to support some 92,000 jobs with many of these in the wider sector including the hospitality industry. Manufacturing jobs amount to some 3,800. A key issue in considering the employment aspects of the industry is the location of the planned investments. With the exception of the whiskey distilleries planned for Dublin and the James Gate development, the projects being developed will be located outside Dublin in smaller rural areas where job opportunities are more limited and there are good opportunities to link distillery development with tourism themes such as the Wild Atlantic Way. The long established Scottish Whiskey industry is considered to add £30m annually to Scotland’s earnings from tourism.

5 DAFM has responsibility for the operation of the EU spirit drinks and wine regimes which are governed by EU and national legislation. Ireland’s key interest is in geographical indications regime which includes Irish Whiskey, Irish Cream and Irish Poteen/Poitín.
Sectoral Goals
There are currently two main vision statements for the Irish Alcohol industry; the Irish Whiskey strategy and the Bord Bia based Drink Futures strategy. In addition the craft beer producers have recently prepared a report outlining the importance of their sector. Irish Whiskey – During 2014 the Irish Whiskey producers came together under Food Harvest 2020 to draft a strategy and to set up a new Whiskey organisation. The vision for whiskey development is to continue its double digit growth sustainably and increase exports to 12 m 9 litre cases by 2020 and double that again to 24m by 2030. The sector aims to grow global market share from 4 % to 12 % by 2030, increase visitor numbers from 600,000 to 800,000 and increase direct employment from 750 to 975 by 2025. The industry has worked closely with DAFM, Bord Bia and Enterprise Ireland in developing the strategy. Bord Bia has developed an overall Drinks Future Strategy which aims to make Ireland the most recognised source for premium craft drinks in the world. Industry representatives are currently engaged with Bord Bia in this work in drawing up and implementing detailed proposals in this regard.
Current Sectoral Analysis
The Irish beverage sector put in a solid performance in 2013. Overall, exports are estimated to have declined marginally in 2013. Despite the ongoing competitive pressures exports to the United Kingdom performed reasonably well in 2013. Lower beer, cream liqueur and cider exports were offset by increased shipment of whiskey and mineral waters. This leaves the UK still as the largest single market for overall Irish beverage exports, accounting for around 32% of the total. Irish Whiskey’s main markets are USA, Europe and Russia. The outlook for Irish beverage exports in 2014 continues to be broadly positive helped by an anticipated further rise in whiskey sales, the ongoing development of emerging markets and an

6 anticipated return to growth for some key categories. The ability of the sector to continue to develop new markets and innovative product solutions for developed markets will be critical. Key trends in the market currently are premiumisation and the travel retail sector.
Irish Whiskey
Irish Whiskey employs some 750 people and exports around €270m of whiskey annually to over one hundred countries globally. Irish Whiskey category is the fastest growing spirit category worldwide and is currently the fastest growing whiskey category in the important American market. Investment in the sector is expanding with new distilleries being set up throughout the island and there is great potential to further expand Irish Whiskey’s share of the global markets. In 2012 there were four distilleries on the island of Ireland. In 2014 eight are in production and a further 17 are at varying stages of preparation and planning. The existing distilleries include both large globally renowned beverage companies and small independent producers. Growth in the sector has led to the setting up of the Irish Whiskey Association to plan for the future development of the category.
Beer
The Beer market in Ireland is characterised by a market dominated by two players with scale; Diageo and Heineken. Guinness is the number one stout in the world with 10.9m litre cases produced. Heineken Ireland exports €23m and employs 550.
Craft Beer
There are 33 microbreweries operating in Ireland with at least 17 other microbreweries at development stage. According to an economic impact statement commissioned by the Independent Craft Brewers Association, throughput from micro-breweries in Ireland stood at 26,000hl in 2011 and is expected to reach 71,000hl by the end of this year. The craft beer phenomenon has been driven by increased demand from consumers for authenticity and localism. Bord Bia’s drinks strategy projects further growth in the category, expecting that there will be in excess of 100 micro breweries in Ireland by 2020. It is estimated by the Craft Brewers that at current (2014) production levels, microbreweries are employing 116 persons on a full time equivalent (FTE) basis. Employment in craft brewing has almost doubled since 2011. With continuing growth the total direct workforce in micro-brewing could reach 500 within six years.

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Cider
There is only one player of scale in the Irish Cider trade (C & C – Bulmers) The Irish cider market is estimated at €304m in 2013. The cider market has been declining and between 2009 and 2013 the value of the overall cider market on the island of Ireland declined by 4.4%, driven by the decline in sales in the on-trade segment of the business. An area with potential future development is the craft cider sector. According to Cider Ireland, there are 15 cider makers in Ireland, 9 of those in the state. Of the 9, two, Stonewall Cider and Orpens Cider, service outside their local community. Craft cider accounts for .8% of the Irish cider market, with a production level of just under 620k litres. This is however, an increase of almost 490% on 2012, when the volume achieved just 126k litres.
Future Market Prospects
Current market trends support the development of a “premiumisation” strategy for all sectors with a continuing focus towards authenticity and localism with consumers looking for quality, heritage and differentiation. The work under way by the industry and Bord Bia supports these trends. The continuing trend for brown spirits supports the future expansion plans for Irish Whiskey. The main markets for Irish Whiskey include the USA, Europe and Russia.
Specific Actions Planned
The Drink Futures Group set up as a result of Bord Bia market research aims to make Ireland recognised as the most recognised source for premiums craft drinks in the world. This group is working on several actions including; producing an overall structural report on the industry to provide all the information necessary to any individual starting or expanding their own brewery/distillery, research into third countries focusing in particular on the United States and the development of an electronic buyer resource (Drinks from Ireland). Participation in key trade shows (Prowein, Vinexpo, WSWA, ECRM and TFWA.) will be supported by Bord Bia. Site visits by buyers to larger multinationals will be developed. Another aspect will be the development with food experts of suggestions for food pairings. This will link in with the tourism offering of the Wild Atlantic Way.

8 The newly formed Irish Whiskey Association aims to implement its vision for growth and expansion and different sub-groups have been set up to progress the strategy recommendations. The Department’s Food Division, in conjunction with the industry will finalize the technical files for the three Irish Spirit Drinks and will, in partnership with the Revenue Commissioners and the FSAI set up a verification regime to underpin GI status.
Sustainability
To date the drinks industry has demonstrated its commitment to Origin Green with all of the multinationals in distilling, brewing and cider making signed up, and most of the SMEs also on board. Whiskey distillation and brewing place considerable demands on water and energy use. As these are costs for industry most companies are focused on sustainability programmes to help them reduce these costs. Long term the Drinks manufacturing process could come under increasing pressure in terms of natural resources. Climate change could impact the crop supplies available for beer and whiskey production, and therefore affecting the overall supply chain. As demand for food grows there could be pressure regarding the use of land to produce a non-essential consumer product.
Challenges to 2025
In addition to challenges facing the specific sectors there are a number of overall challenges facing all alcoholic beverages. All sectors need to be assured of high quality water supplies and have environmental requirements for waste disposal. Energy costs are also a key concern. A further challenge common to all is increasing concern around alcohol abuse in Ireland, and possible restrictions in marketing opportunities. In addition all sectors are affecting by ongoing high rates of excise. Irish Whiskey – key challenges for the sector will be managing the rapid planned expansion to ensure that production from the new distilleries meets the required standards. Although whiskey may be drunk at age three years in practice whiskey is usually only begun to be drunk at 4 years maturity at a minimum. With the large capital investment made it will be tempting for distillers to release

9 product as soon as possible to achieve some return. The sector has recently come together and there is a need to ensure strong coordination to manage and market the overall brand. Protecting the brand is also a key issue. As its popularity grows, the opportunities for poorer lesser quality spirits to claim to be Irish Whiskey or make references to Irish Whiskey will increase. The introduction of the spirit verification process in partnership with the Revenue Commissioners will help to ensure a clear distinction between genuine product and possible imitations. Ensuring sufficient trained people is also a key concern in an expanding industry. Ireland does not have the benefit of university specialising in brewing and distilling such as Herriot Watts. Finally the issue of market trends is also a potential threat. Irish Whiskey is benefitting from the current popularity of brown spirits especially amongst younger drinkers in the USA. However trends can change.

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NUTRITION Introduction and Context
The increasing world population, the ageing demographic, the increase in diet related chronic diseases and the demand for health and wellness food products on the life-course from childhood to old age are key drivers for growth of Ireland’s agri-food industry. Consumers are willing to pay a premium price for food products with credible claims for health benefit. Scientific (from DAFM FIRM funding) and market research (Bord Bia study) has signaled an opportunity for the Irish agri-food industry to become a global leader in developing nutritious and healthy food products, especially for the ageing market, particularly in our main export markets. There is also an opportunity to develop products and processes for the domestic market – possibly by exploiting existing agency networks (i.e. EPA; National Dairy Council); applying innovative approaches to public procurement in our health services (public and private) or linking the dynamic of the food industry with Ireland’s capacity in the pharmaceutical and ICT sectors to develop foods for special nutritional uses and technologies that will keep people healthier for longer. The domestic market, a market in its own right, could also act as a test bed for export markets when a facilitating environment is in place. The Business Case Food Harvest 2020 sets out clear and achievable export targets for the sector. Food Research Ireland identified the need for sustained investment in foods for health research. The National Research Prioritisation Study also identifies specific priorities. Internationally, there is growing interest in the importance of nutrition in preventing many diseases. Currently Ireland has manufacturing capability in functional foods and foods for health in dairy and ingredients and Bord Bia has demonstrated a market for these products. Developing a strategy now for “Nutrition in Ageing” will allow Ireland to become a world leader, rather than a follower, in developing innovative food products and new business opportunities for this market category. At the same time, Ireland’s food industry can contribute to the global challenges of keeping the population healthy, for longer, thereby reducing future healthcare and insurance costs. By creating solutions that respond to the wider context of food consumption and the associated problems of under- and over-nutrition such as accessibility & distribution networks, information

11 systems & labelling, the link between social capital & rural economies, significant value can be added to the Irish agricultural sector and provide new routes for growth of Ireland’s agri-food sector both in terms of the supply of goods and the delivery of services. The proposed strategy is based on intelligence gathered from desk reviews of the literature/national and international policies (industrial, public health, research and innovation); meetings with agencies and interested parties; Bord Bia study and the National Research Prioritization Study and cross Departmental strategies on business and health. The outputs of the DAFM Research Funding Programmes could be further channeled through appropriate knowledge transfer mechanisms to stimulate application and commercialisation.
Future strategy could include
 Developing a public procurement policy that facilitates the purchasing of high quality   nutritious food products that will drive growth in indigenous companies and the domestic market; Strengthening existing relationships with other Government Departments and Agencies to ensure integrated approach to economic / industrial policy development; and as a consequence ensure Industrial policies/ commercial initiatives developed which enable commercial and business opportunities to be realised for the agri-food industry; Establishing strong working / collaborative relationship with D/Health to ensure integrated approach when developing agri-food and public health nutrition policies and as a consequence Public Health policies which take account of the importance of nutrition in ageing and which facilitate business / commercial opportunities for the food industry which positively impact on public health.

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PREPARED CONSUMER FOODS (PCF)
Within the overall context of Food Harvest 2020, operators in the Prepared Consumer Foods Sector have developed a vision for the sector identifying a discrete range of opportunities, needs and challenges. A multi agency committee has been established under the chairmanship of DAFM to consider these issues. One of the challenges of considering and addressing the discrete development needs of the PCF sector has been to agree on a definition of the sector. In Food Harvest 2020, this sector was comprehended within the overall umbrella of the value added sector, with the CSO Census of Industrial Production (CIP) product range used to determine its scope. On the other hand, Bord Bia used different products to differentiate its Prepared Foods segment while the industry itself used yet another categorisation. Another issue, in terms of management and measurement, was the delay in getting up to date data on the sector, as frequently there was an 18-month time lag before CIP data became available. Industry felt that the lack of an agreed definition, a coherent sense of its value as well as the unavailability of timely and accurate data might have contributed to a perceived neglect of this indigenous manufacturing sector. This sector is emerging from a difficult period arising from reduced consumer demand. Domestic and international recovery is beginning to create opportunities for growth. So, to take full advantage of the upturn, industry leaders developed a strategy with 16 recommendations which in their view provides the basis for securing future growth and delivering quality products directly to consumers. Achieving the desired 40% increase will require a continuing focus on enhancing productivity, innovation, brand and product development. In February 2014 to deal with these issues the Department with industry representatives and a number of state organisations worked together and arrived at a grouping of 15 categories to define the scope and complexity of the PCF sector, i.e.   Biscuits; Breads; Cereal/Chocolate/Sugar/Fruit & Vegetable-based products;

13      Dairy/Meat/Other Food-Preparations; Extracts-Sauces- Soups; Frozen Confectionary; Fruit based Confectionary; Pizza-Quiche; Savoury Snacks; Waters/juices/Soft Drinks. Up to date trade data is readily available for these categories. Fat filled milk powder and infant formula were items removed from the previous PCF list. 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.
Future market prospects
The group submitted a report entitled “A 10 year Vision for Prepared Consumer Foods (PCFs)” to the Minister in September 2014 , and is accessible at
http://www.fdii.ie/Sectors/FDII/FDII.nsf/vPages/News_and_Events~Press_release_archive~coven ey-welcomes-industry-vision-for-prepared-consumer foods/$file/PCF%2010%20Year%20Strategy%20-%20Final.pdf
The report describes barriers to growth in the PCF sector (now re-defined to exclude fat-filled milk powder and infant formula) which is estimated to be worth €4.06 billion in gross output, €2.145 billion in exports, €1.915 billion (40% of home market) in domestic sales and to employ 20,600 people. Imports are estimated at €2.867 billion. The group considered policies to enable small (<€10m), medium (€10-50m) and large (€10-50m turnover) companies to create 1,700, 3,200 and 2,600 jobs by 2025. These jobs, exports (+74% to €3.74 billion) and domestic sales targets (€3.1bn) assume a 2% EU population increase, 2% EU inflation and 25% increase in domestic market share (from 40% to 50%) see attached table below. PCF 2011 (*2013) 2025

14 Employment Gross output Exports Domestic sales 20,600 €4.06bn €2.145bn €1.915bn (40% domestic market share) 28,100 €6.87bn €3.74bn €3.12bn (50% domestic market share) Imports €2.867bn (60% domestic market share) €3.02bn (50% domestic market share) Sources: CSO Specific actions for the sector The five principal recommendations from the Prepared Consumer Foods Strategy were: 1. Improving the funding environment for PCF companies to grow by establishing a €500m from the Irish Strategic Investment Fund €500m, plan now for the 2016 mid-term state aid review, expand the Employment & Investment (EIIS) and Capital Seed Schemes, 2. Introducing a suite of competitiveness improvement measures by reducing costs such as energy costs, charges (e.g. local authority), to support a ‘lean’ competence centre, study to improve transport links with the UK, 3. Leveraging the retailer relationship to grow domestic and international market share – ( e.g. Bord Bia- Tesco supplier programme). 4. Establishing a new PCF-specific focus on R&D and innovation, including increasing vouchers from €5,000 to €100,000 with a competitive selection process, 5. Enhancing the skills and capabilities in the sector by establishing a PCF-specific focus on R&D and innovation Enhancing skills and capabilities – increased funding to state agencies to help companies. The IBEC/FDII Skillnets is a recent example. The Manufacturing Forum has emphasised the value of apprenticeships and projecting the importance and excitement of manufacturing/engineering.
Challenges to 2025
Meeting the employment, market share and export targets set out in the PCF strategy document will be a significant challenge. Scaling of small and medium sized businesses is a particular challenge. Operators in the sector have high capital investment requirements combined with the kind of low margins that make it an unlikely candidate for venture capital and difficult to attract sufficiently

15 flexible finance at reasonable rates. PCF sector stakeholders have also identified under investment in product and process innovation, the need to attract talent to the sector, and supply chain inequalities as issues.

SPECIALITY/ARTISAN Background
The artisan or speciality food sector in Ireland was valued at approximately €615 million in 2012, with about 350 producers employing more than 3,000 people
1
. Evidence suggests that the sector can have significant impact on local economies. The emergence of Ireland’s artisan food sector, supported by growing consumer demand for niche products and a strong entrepreneurial spirit, has produced an increase in small food companies; however Food Harvest 2020 identified the need for improved marketing of local food. Most of these companies are owner managed, in many cases have a strong farming basis, and produce a diverse range of products, demonstrating a high potential for innovation. Artisan food also offers the potential to enrich Ireland’s tourism while, in turn, tourism can be a vehicle to enhance the image of Ireland and Irish food production internationally. Innovative programmes have been stimulated by the Food Harvest 2020 process such as Food Works and Food Academy, which focus on helping small producers achieve potential and capability to scale up to medium sized enterprises. Specific measures taking into account particularities of particular specialty sectors are also recommended. 1 CEDRA, “Energising Ireland's Rural Economy” Report, 2014 16

Case studies – Farmhouse and specialty cheese, food markets
The total cheese market in ROI is currently valued at €177.5m, accounting for 17% of total dairy and is the second most important category after milk. Within this, Speciality Cheese is valued at €40m, and the Irish Farmhouse Cheese market is valued at €12m
2
. Whilst speciality cheese sales are up (+4.5% yoy, as of January 2014), the total cheese market declined 2.2% yoy, with Irish farmhouse cheese sales declining further, (-6% yoy). Therefore promotion is needed in the farmhouse cheese sector to drive product awareness. Bord Bia research has identified over 150 food markets in Ireland, with a diversity of backgrounds. The resurgent interest in, and receptiveness to locally sourced foods, local food networks and short supply chains has led to an evolution of food markets now taking place in Ireland. Ranging from traditional country and farmers markets to lunch-time or weekend city markets, they largely share a common aim which is to allow producers to sell their (usually local) produce directly to consumers in a traditional market environment. Importantly however, food markets often act as incubation units for start-up food and drink businesses and dynamic artisan producers who begin trading at their local market. Sectoral goals 2 Bord Bia, data to January 2014 17

18 Goals are outlined in the International Export Strategy for the Irish Farmhouse and Speciality Cheese which was developed by PWC in conjunction with Bord Bia. The strategy aims to maximise industry capability within the sector, currently at c. 40% capacity utilisation, whilst increasing exports to the main markets, currently the US and UK. Whilst no specific strategy exists for food markets, the general goal is to develop a growing, diversifying and evolving food market culture. This can be developed using a dual approach: By addressing challenges within the sector, such as the need for effective management structures and support from local government bodies. By building on opportunities such as a greater interest in and receptiveness to locally sourced foods, higher levels of awareness among consumers on the value of provenance and a growing interest in high quality street food in urban areas.
Current sectoral analysis
The production of artisan or speciality food in Ireland accounts for approx. €615m per annum from a base of 350 producers, of which approximately 50 are farmhouse cheese producers. The Irish Farmhouse Cheese sector is a contributor to the dairy industry's high quality and sustainable reputation, with over 50 farmhouse cheese makers producing in excess of 150 types of cheese. The total Irish artisan cheese sector produces c. 1,800 tonnes per annum and is currently valued at more than €12 million per annum at farm gate level since growing from a small base in the 1970's. Exports have become a focus for the sector in recent years due to the upcoming abolition of milk quotas in 2015 which is expected to increase milk supply by up to 50% in Ireland by 2020 and the number of dairy farms adding value on farm in the form of Irish Farmhouse Cheese. In Ireland, as each cheese is unique to each producer, this allows for innovation and creativity while respecting the values of traditional cheese making. This differs greatly to cheese available on the Continent where they are made by many farms and dairies under strict guidelines to ensure consistent standards such as Camembert. Our European counterparts see it as unique and unusual that each cheese is the result of the passion and dedication of one farm and family.

The sector is currently under performing in terms of capacity utilisation. Additional structural challenges exist in terms of diseconomies of scale and growth potential, food safety, marketing, market penetration, risk appetite (low), pricing, product positioning and profitability. In addition there is an identified need within this sector to facilitate access to export markets through greater cooperation and branding initiatives. Food Markets are sources of entrepreneurship, social exchange, local character and diverse local foods, as well as providing valuable income for the producers. According to previous Bord Bia research studies, annual sales of food and drink at Farmers’ Markets are valued at approximately €27 million
3
. In addition, well-organised and consistent quality markets can become a very valuable tourist attraction, bringing more foot flow into towns to the benefit of all retailers. Previous research has shown that €10 spent at a farmers’ market will result in a net income of €24 for the community. It has also been estimated that trade for other businesses increases, by up to 30% when a market is run in a town.
Future market prospects
It is projected that with the overall increase in milk production, farmhouse and specialty cheese output could increase to just over 4,500 tonnes per annum without incurring significant additional capital expenditure, at which level the output value of the sector would be in the region of €33m. 3 Exploring Attitudes to Farmers’ Markets, 2010 19

20 The industry is currently gearing up to fulfil this increase and the development of a strategy for FHSC is timely in this regard. With regard to food markets, given the greater interest in and receptiveness to locally sourced foods among consumers, two Bord Bia Periscope reports (2013) found that local foods are trusted by consumers, with ‘local’ having become a byword for quality and transparency to many. In addition, recent research indicates that seven out of 10 adults consider buying local produce to be important when they are shopping for food. However development is contingent on the sector being willing to take the actions necessary to address the issues that exist, per above, in addition to the perception that food markets are more expensive that conventional retailing, pitch charges, lack of training opportunities for stallholders and market managers and weather related problems. The Food Safety Authority of Ireland is developing a ‘Code of Practice on the Use of Food Marketing Terms’ such as farmhouse or traditional or artisan following a request of the Artisan Forum chaired by the FSAI. This will cover terms such as scale, such as ‘farmhouse’ and ‘traditional’ Any specific actions planned In general terms, the sector is supported by state supported initiatives such as FoodWorks, supplier development programmes and UCC’s Diploma in Speciality Food Production, designed for those who are starting or wish to further develop an artisan or specialty food business.
Strategy
A Micro Enterprise Programme has been established for new market entrants and smaller cheesemakers. This builds on Teagasc’s Certificate in Farmhouse Cheese Production, which has been enhanced with marketing modules to include finance and pricing, branding etc. A scaling programme is being developed by Bord Bia in partnership with Teagasc and Enterprise Ireland for growth and export oriented cheesemakers. It is expected that this will launch in 2015. Bord Bia is also reviewing the possibility of developing an EU promotional campaign for Farmhouse and Speciality Cheese in the US, this would be contingent on partners and resources.

21 In the food market sector, Bord Bia have published their ‘Guide to Food Markets in Ireland’. This Guide expands on previous work conducted by Bord Bia and sets out new information gathered as part of a review of food markets in Ireland and internationally. The aim of the Guide is to meet the changing needs of the consumer, stallholder and market manager and it is envisaged that it will act as a catalyst for the continued evolution of markets in Ireland. The Guide is focused on meeting two objectives of identifying the changing food market models in Ireland and advising stallholders and market managers on how to set up and manage markets based on best practice
Sustainability considerations
The Irish dairy sector has a unique advantage in the form of an environmentally sustainable rain fed grass-based production system, which allows milk to be produced efficiently for much of the year. However Bord Bia’s Origin Green Sustainability Programme (which encourages food and drink companies to develop individual sustainability plans with clear targets in areas such as making better use of energy and water, enhancing biodiversity and promoting corporate social responsibility actions), presents a number of challenges for small producers characteristic of the speciality food sector, primarily time, costs and return on investment. In terms of food markets, the focus on ‘local’ ensures that consumers get access to in-season quality fresh food, there is a preservation of regional specialties, there are fewer food miles and a lesser carbon footprint.

Challenges up to 2025
Growth prospects for the sector are overall positive, driven by increased consumer interest in the provenance of food, environmental concerns, health and a desire to support the local economy in spite of high levels of unemployment and economic concerns
4
. However in terms of the FHSC and food markets a number of specific challenges exist. In terms of food markets, two Bord Bia Periscope reports (2013) concurred in their findings that local foods are trusted by consumers, with ‘local’ having become a byword for quality and transparency to many. In addition, given the fact that recent research indicates that seven out of 10 adults consider buying local produce to be important when they are shopping for food, real potential for the development of the sector does exist. However given the fragmented nature of the sector and the fact that many stall holders are small producers attending markets on a part time basis, an integrated agency approach may be required to ensure its continuing development. This could include the development of infrastructural support from local authorities, support for the development of fledging food businesses and ongoing training in market / stall design and presentation and product marketing. 4 CEDRA, “Energising Ireland's Rural Economy” Report, 2014 22

23
Geographical Indications (GIs)
In trade negotiations the EU seeks recognition for its system of protecting geographical the geographical indications with a specific link to the land. Food Harvest 2020 recommended identifying further designations. Under EU Regulation 1151/2012 foodstuffs may be registered as PDO (Protected Designation of Origin) with a strong link to the area, PGI (Protected Geographical Indication) where at least one production step has taken place in the area and Traditional Specialities Guaranteed (TSG) with a traditional mode of production (25 years min). The defined area can be a region, specific place or very exceptionally, a country. Ireland has five food designations: Timoleague Brown Pudding, Clare Island Salmon, Imokilly Regato cheese, Connemara Hill Lamb and Waterford Blaa and three beverage designations: Irish Whiskey, Irish Cream and Irish Poteen. The Department met the Taste Council, Bord Bia, BIM and Teagasc resulting in a cross-agency approach focused on collaboration and a specific programme of actions. A small GI development group was set up in the Department to develop awareness, to encourage applications through specific actions and to work with producers to ensure registration based on applications, supported by strong evidence and committed producers. The Waterford Blaa was registered in 2013. The Department has expressions of interest for five more food PDO/PGI/TSG designations, one is at national consultation stage.
Challenges to 2025
Expand GI Committee to operate as a more flexible, proactive group, Continue encouraging awareness of the GI schemes, Seek out applicants, renew promotion work carried out since 2012, Review previous applicants, Work with applicants to encourage successful applications, TSG scheme - examine traditional Irish recipes which could be designated such as Irish soda bread, Irish brown bread.