Product failure rate is ‘too high’
He said there are many reasons for this high failure rate. Surveys highlight the fact that the majority of companies engaging in new product development do not have an explicit strategy.
“Also, although new product development is a very expensive business, most companies do not usually approach it in a market-oriented fashion.
“Clearly, the agri-food sector must improve its level of consumer innovation, focus on developing value-added food products, develop the potential of small food firms and develop strategic partnerships along the food chain,” he said.
Mr Walsh said innovation and new product development is the lifeblood of food and drink companies and is essential to ensuring profitability and survival. A steady stream of new products is vital to progress.
Regarding the market place, he said generally the farmer is at two removes from the ultimate buyer, the consumer. The farmer normally sells product to a processor who, in turn, sells it to a retailer, usually a multiple.
“The net result of the market power of these three forces determine the return to each of them. I have the instinctive belief, backed up by some anecdotal evidence, that the farmer is the weakest link in this chain,” he said.
Mr Walsh said there are no easy answers to the rectification of this situation. The dominance of the retail market by a few large multiples can be broken by the entry of additional retailers.
But no government has the power to command retailers into a market. However, governments can certainly remove any entry barriers to new retailers and should do so where they exist, he said.
Mr Walsh said society now demands safe food produced in an environmentally and animal friendly way. These expectations impose additional costs on farmers and society.
“Both taxpayers and consumers must be willing to meet these costs either in the form of higher prices or in the form of direct payments for these public goods,” he said.
