One of the jewels in our economy is the food and beverage industry, and a healthy debate is underway about how best to shape it for long-term growth and development.
There are two major issues to be addressed: How to develop Ireland as a physical location for the production of food; and how to foster a generation of companies and co-ops that can add value, economic wealth, and jobs for Ireland.
The development of a cluster of companies and co-ops that can conquer the world in a variety of sectors is already underway. We can see Kerry Group’s global reach, chiselled out after decades of hard grafting across international markets. It stands as the gold standard for other aspiring food and drinks producers.
By combining aggressive international growth and sustained internal investment in plant and equipment at sites around the world, Kerry Group has positioned Ireland as the home of a true global leader in ingredients and consumer foods. But that does not mean it has made Ireland a global leader in food manufacturing.
To make food production on the island of Ireland truly world class we must focus on areas where we have comparative advantage. At a recent Grant Thornton Food and Beverage conference, I trod on a few eggshells around this topic.
My perspective is that Ireland has only one true comparative advantage in the global food industry — grass.
If we want to strategise about food production over the coming decades, it should hinge around grass. We grow it better than anyone else, it develops on largely debt-free agricultural land, and we have become experts in producing quality milk and cattle on it.
I would go further and argue these sectors are the two pillars upon which we should plan food production here.
However, existing systems, at farm and factory level, are far too small. We have to telescope the scale of farms and processing centres into world-class sites that can leverage seasonality to the hilt and outperform New Zealand, the benchmark for bulk dairy manufacturing.
This is a controversial view but I fail to see what comparative advantage we have in food production that relies on imported animal feed which has huge price volatility (prices rose 17% in three months) and must be converted to product that ends up shipping out the same ports through which the animal feed came in.
This vision is to be evolved while supporting and encouraging the development of global leaders in food and drinks.
The 900-job project thatKerry Group recently announced for Kildare is not to manufacture food in Ireland but rather is a product development, R&D, and customer-facing centre that plugs Kerry Group’s global know-how into its customers worldwide.
The actual manufacturing of the food that stems from those relationships may or may not be sourced in Ireland. By designing an incentive package that targets Kerry Group’s intellectual rather than physical property, Enterprise Ireland has played a clever card.
At a smaller, artisan level, you can also see energetic support for entrepreneurs and start-ups who are customer- and product-led instead of being a derivative of existing food manufacturing in Ireland.
These types of companies must be enthusiastically developed and given full support, even if they are small and source some of their product outside of Ireland.
If this potential can be harnessed, it is possible to envisage a future where we expand significantly the production of bulk dairy and beef product in scaled-up farms and processing facilities located on the island, while fostering a generation of dynamic and expansive food and beverage companies and co-ops that are headquartered in Ireland but may not necessarily manufacture product here.
That mix could rubberstamp our place as leaders in the food and beverage industry for decades to come.
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