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Minister Smith welcomes the preliminary findings from a report on the net contribution of the Agri-Food Sector to the economy

The Minister for Agriculture, Fisheries and Food, Brendan Smith TD, today welcomed the preliminary findings from a study commissioned by the Department that highlights the significance of the agri-food sector to the Irish economy. He thanked the author of the report, Brendan Riordan for his important work which "shows that the agri-food sector, more correctly referred to in the report as the 'biosector', contributes approximately one third of the net flow of funds into the economy generated by primary and manufacturing industries."

Minister Smith added that "this is at least double the sectors' contribution to exports" and emphasised that the findings, which will be published shortly, "underline the importance of the sector to Ireland's economy."

"Global price increases for food, feed and forestry products in the years since the 2005 data used in the report, may have further boosted the contribution of the 'biosector' industries and may well have strengthened their position as a major contributor to the future prosperity of Ireland," Minister Smith concluded.

Notes to Editors

The report was commissioned by the Department, and carried out by Brendan Riordan, Research Consultant.

It provides an estimate of the net inflow of funds to the Irish economy, associated with the agri-food sector and makes comparisons with other sectors in the economy. These net inflows are measured as the net value of exports, that is the inflows associated with exports, minus the associated outflows on importing materials and repatriation of profits by foreign export businesses.

In total, these industries comprise a large part of Ireland's natural resource based industries and are distinguished by the biological origin of their products. For this reason the report refers to this group of industries as the 'Biosector', to distinguish its coverage from any narrower definition of the agri-food sector. For comparison purposes, the contribution of the other industries producing merchandise exports, referred to as the 'Non-Biosector', were also examined.

The analysis of Ireland's Balance of International Payments (BOP) showed a surprisingly large net contribution from the 'Biosector'. In 2005 net foreign earnings of the sector, comprising agriculture, forestry, fisheries, food, drink and tobacco industries, amounted to 32 percent of the total net earnings from primary and manufacturing industries. This was double the sector's 16% contribution to exports in that year. These findings are consistent for the period from 2000 to 2005.

Reasons given in the report for the sector's disproportionately large net contribution to earnings from exports include the following:

  • The import requirements per euro of 'Biosector' exports were found to be lower than in the 'Non-Biosector'.
    In 2005 the import requirements for every euro of output averaged 38 cent in the 'Biosector' but 58 cent per euro of output in the 'Non-Biosector'.
  • Foreign ownership, and thus profit repatriation outflows, was lower than in other sectors.
    Profit repatriation by enterprises in the 'Biosector' was only 9 cent per euro of exports in 2000, although rising to 15 cent in 2005 due to the strong growth in the activities of foreign owned business in some of the food and beverage industries. In comparison profit repatriation by businesses in the 'Non-Biosector' was consistently greater than 20%, peaking at 26 cent per euro of exports in 2002.
  • Receipts of EU payments were almost entirely in support of agriculture and its exports.
    This is especially a feature of the 'Biosector', unlike the 'Non-Biosector' where they are negligible. EU payments grew at the same rate as exports from the 'Biosector' in the years from 2000 to 2005 and continued to provide an important addition to BOP inflows. The results are not, however, heavily dependant on EU receipts in any of the years from 2000 to 2005.

It should also be noted that the inclusion of the earnings of Irish companies operating abroad would result in an even larger contribution from the 'Biosector', due to the overseas achievements of Irish food firms.

The report will shortly be available on the Department's website at www.agriculture.gov.ie/publications2008

Date Released: 15 May 2008