Foodwise 2025, a ten-year vision for the Irish agri-food industry, was launched by Agriculture Minister Simon Coveney last week.
Ambitious objectives include a plan to increase the value of agri-food exports by 85%, increase “value-added” by 70%, and increases the value of primary production by 65%.
The document outlines that Ireland has already had huge growth, with food and drink exports having out-performed other sectors of the economy — in effect, the agri-food sector has been recession-proof, with 45% exports growth over the 2009-2014 period.
I’m not to put a damper on these figures, but measuring growth over this specific five-year period could be unrepresentative of the long-term underlying trend.
Take 2009 for example, when the milk price averaged 24 cent per litre, as dairy markets slumped, and cattle prices in 2009 stood at 291 cent per kg. Of course, these prices directly reflected the relatively weak value of exports in 2009.
Take 2014, when milk prices averaged somewhere in the region of 38 cent a litre, and beef prices averaged closer to 4 per kg, and it’s easy to see how the value of our exports has risen sharply.
The point here is that quoting a 45% increase in exports over the past five years is a sweeping statement which fails to differentiate between either the increase in our exports wholly attributable to the increase in world commodity prices or indeed the increase in quantity shipped, neither does this take any cognisance the relative drop in the value of the euro against the US dollar, which directly increased the value of our exports.
As for farmers, the document outlines that our future profitability and viability is dependent on becoming more productive, “through the adoption and application of cutting-edge sustainable processes and technologies“, with an added need for improvement through economy of scale.
The need to strive for efficiencies is as true for 2015 as for 2009 or 2014 — when the flip side of relatively high sales prices was a rise in the cost of farm inputs which eroded much of the gains for farmers.
This is nowhere better reflected than in the recently published Teagasc National Farm Survey, which showed the farm income of beef, sheep and tillage farmers is almost without exception still wholly dependent on the receipt of the Single Farm Payment support.
Meanwhile, the report outlines that measures to support land mobility and consolidation will be needed in order that us farmers can achieve these economies.
On the future prospects of Irish farming, the report doles out a strong dose of realism, suggesting that the prospect for growth in demand coming from increased income in developing countries is markedly tempered by the need for Irish agri-food companies to be competitive in terms of value and price.
The Foodwise 2025 report includes a SWOT analysis of the state of Irish agriculture, this being a review of our strengths, weaknesses, opportunities and threats.
Our main strengths include our almost unique grass-based production system, our favourable animal health status, unlimited access to the EU Single Market, and our existing benchmark industry leaders.
The opportunities available to us include the expected increase in global demand for nutritious food, together with growth in demand for new products associated with latest consumer trends.
Our green and sustainable reputation offers us a unrivalled opportunity.
Lack of scale, lack of access to land by productive farmers (land mobility), lack of access to finance, and cost competitiveness, are outlined as weaknesses which should be addressed.
Meanwhile the threats to future prospects for growth in Irish agriculture include price volatility and lack of profitability, currency fluctuations, the risk of disease or food safety concerns, challenging greenhouse gas targets, and global competition.
In terms of volatility, the document suggests that volatility needs to be addressed at all levels, with farmers themselves needing to implement volatility mitigation tools, while processors need to engage with more fixed price contract arrangements.
The Department of Agriculture as a key stakeholder is tasked with pursuing a continuation of base price supports through the Common Agricultural Policy (CAP).
From a tax perspective, the report suggests that attention should be given to consider what new actions will help deliver increased land mobility and productive use of land and improved farm succession including intergenerational partnerships.
The Foodwise 2025 report is available on the Department of Agriculture website.
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