Data showing drink and food exports rose 9% in the first six months of 2013 should be carefully analysed.
This set of figures illustrates how the Republic is performing as a food and beverage production base, and should not be confused with the stellar performance of food and beverage companies based in Ireland. Understanding how both constituents of our food and drink miracle work is key to policymaking for the future.
Let’s assume that the figures produced by Bord Bia for the Jan-June period were those of a giant food business (Emerald Foods) whose production facility is the Republic. In the six months to June it produced €1.7bn of meat and live animals, €1.4bn in dairy and ingredients, €730m in prepared foods, €555m in beverages, €275m in seafood, and €108m in horticulture and cereals.
Emerald generated sales of €4.7bn during the first half of the year, up 8.6% year-on-year.
Those sales were destined for the UK (41%), Continental Europe (33%), Asia (15%), and 11% to the rest of the world. Not only has Emerald a well-balanced portfolio of products, it also serves a global marketplace. Emerald employs 250,000 and is the fourth largest exporter in the world. Pretty neat numbers, right?
Of course, food and beverage companies based in Ireland account for the produce manufactured here but their story goes far beyond our shores.
A mix of listed PLCs, privately owned companies, and co-operatives developed enormous global footprints during the past three decades. Building from solid domestic foundations, they travelled far and wide to establish manufacturing and sales capabilities across a range of countries. The listed companies alone have a combined market value of over €14bn and, together with the privately owned companies and co-operatives, produce annual sales of at least €20bn
These assets — composed of products manufactured in Ireland and corporates based on the island — are an opportunity for the Government. A twin-track strategy that creates the conditions in which corporations and home-grown producers can flourish is an essential part of any plan to bring Ireland out of troika control.
Here’s how we do it:
*Encourage the development of global food and beverage R&D investment in Ireland by using the combined skills of the IDA and Enterprise Ireland to link commercial facilities, third- level education linkages and competitive living costs to attract global and home grown corporations. Kerry’s new Naas product development facility is a template;
*Provide capital market mentoring to SME food and beverage companies by tapping existing skills in the larger listed companies;
*Develop investment funds for medium-term finance for grass-based beef and milk production supporting expansion post- 2015;
*Organise a focussed, Government-led private brainstorming session with the CEOs of the 10 largest food and beverage companies in Ireland to shape policy decisions.
The answers to Ireland’s many challenges are often sought from suitcase investment bankers and high-falutin’ consultants. They charge inordinate amounts of money for their time, and implicit in their retention is a view that we Irish struggle for the right answers.
I usually develop a rash around such conversations, as Ireland has powerful leaders in the private and public sectors who know exactly what has to be done.
Moreover, many traded through the horrors of the 2008 global financial crisis and bettered their businesses in the process. Using their knowledge and asking for their advice should be a cornerstone of how we move forward the next phase of growth in food and drink.
Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal
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