Call for new emphasis on agriculture and food

ONE of the key players in the agri-food sector has called for a new emphasis on agriculture and food as a means of delivering sustainable economic growth.

“This current crisis presents a great opportunity to reflect the importance of farming and food in future government policy,” said Tom O’Mahony, chief executive of the agri services group, Origin Enterprises.

Speaking to the Irish Examiner, Mr O’Mahony said it’s forgotten that agriculture and food accounts for 14% of the economy, with the value of food production worth €25bn, including €8bn in exports.

Ireland is the lowest cost producer of milk and beef in the EU and with the abolition of quotas due at the end of 2014 milk output can be increased by between 30% and 50%.

In the past policy has been too skewed towards winning inward investment, while we have a domestic sector that is self-sufficient giving a “significant multiplier effect” from what’s produced in our economy.

“Future government strategy has to embrace agriculture and food as a key element of economic policy,” said O’Mahony.

In a trading statement issued yesterday, Origin said it expects to meet market expectations in the financial year 2011. In its first quarter update to the markets, ahead of the group’s AGM in Dublin yesterday, Origin reported a 5.3% rise in sales to €340m to end October 2010.

Agri services accounted for sales of €306m, compared with €252.9m in Q1 of last year — up 21%.

The food division, to be hived-off in a joint venture with Britain-based venture capital group, CapVest, generated sales of €34.6 million compared with €70.6. The drop in sales reflects the wind-down of the Masterfoods distribution contract.

Trading conditions continued to be extremely challenging in the sector, as consumer sentiment remains firmly value-focused, the statement said.

The setting up Valeo Foods with CapVest into a standalone group, provides the strategic platform required to strengthen its consumer brands, including Batchelors and Roma Foods. That deal should be cleared next month.

On November 10 Origin reached agreement with W&R Barnett to establish an all-Ireland grain and feed business, integrating Origin’s feed business in the Republic with the feed business of Origin and Barnett in the North. That will bring cost savings and a more focused business to serve the all-Ireland market, it said.

With the completion of the two deals, Origin will then be totally focused, supplying agronomy services and fertilisers to the farming sectors in Ireland, Britain and Poland.

Increased on-farm activity has boosted demand from Masstock and Dalgety, the group’s integrated agronomy services business, while demand for fertilisers, etc, returned to more normal levels.

The group also enjoyed good results from its marine proteins and oils joint venture while its overall cash generation was good over the three months.