Money needed on the table
Money has been missing from the ambitious Food Harvest 2020 plan to increase exports by 3.5bn.
Food-and-drink industry leaders recently made their case for putting the sector at the heart of Ireland’s economic-renewal strategy, and they moved the elephant out of the corner, saying Irish agri-food is a high-capital cost sector, with relatively low profit margins.
Therefore, it requires medium- to long-term financing facilities, which are currently not available in the Irish economy.
This lack of suitable finance restricts the capability of existing processors to expand production capacity, and is a barrier to entry for new companies.
The Food and Drink Industry Ireland (FDII) said the Government must work on the EU state-aid regime, to allow significant and meaningful levels of State co-investment — as a starting point.
Further innovative funding models and personal investment incentives can, and should, then be put in place.
Without the State support, the industry can’t introduce technologies to improve its competitiveness, respond to consumer demand, and scale up from small to medium.
Lack of competitiveness is reflected on our own doorstep, by the food imports displacing Irish produce in our shops — which is happening in overseas markets, too, because we are up against lower-cost economies.
That could leave Ireland unable to take advantage of the removal of EU milk quotas, new product innovation, increased global demand, and rising commodity prices.
But industry leaders say they will deliver a high rate of return to the State and its citizens, given the right government supports and policies.
They say investment — and a favourable investment environment — will enable the industry to make the most of its deep linkages to the rest of the economy and strengthen export growth prospects.
For example, achieving the Food Harvest 2020 growth targets can deliver 30,000 jobs by 2020, throughout the economy and across the regions, in the supply of farm inputs, within farms, in distribution, collection, processing, sales and marketing, and research and development. Significantly more jobs can be created from food-sector exports than from similar growth in the rest of manufacturing.
It has always been the case that an additional €100m of food-and-drink output generates another €115m of output throughout the rest of the Irish economy.
Reaching the Food Harvest 2020 target of increasing exports by €3.5bn would generate another €4bn of activity in the wider economy, supporting Irish-based firms.
