Food Wise 2025

Chapter 5 - Growth Opportunities

c) Sectoral Growth

Dairy Sector Post Quota Regime

The abolition of the EU Milk Quota regime presents the Irish dairy sector with the freedom to realise its full potential in terms of output, export earnings, rural employment and investment but this growth must be undertaken in a sustainable manner and not at the expense of the environment and our natural resources.

The increased availability of high quality and safe raw material provides great potential for further developing the dairy processing industry and expanding its capabilities to deliver innovative product solutions to address the demand from global consumers. 

In particular the consumer driven added value component of the Irish dairy processing sector represents an area of great potential. There are multiple benefits to adding value domestically, including volatility mitigation and retention of the value added in the domestic sector. Industry will need to continually examine the scope for movement along the spectrum from a more commodity oriented product towards focussing on adding value domestically. Consumer products, ingredients or concepts that meet the consumer need in the marketplace in areas such as healthy ageing nutrition and sports will command a premium price and provide opportunities for new market development and these opportunities represent huge potential for this sector to contribute significantly to the future economic growth of the Irish economy.

Industry in conjunction with the research community must seek a collaborative approach in advancing near to market research and new product innovation to make progress in this area.

On export markets, the ongoing development and enhancement of a unique selling point for Irish dairy produce is a critically important element for the development of the sector, particularly in the context of the need to maximise market returns for increased production in competitive markets world-wide. It remains clearly evident, from engagement with potential customers for Irish dairy products that the sustainability message inherent to the sector in Ireland has a strong resonance.

Industry, in conjunction with relevant agencies must collaborate where possible in targeting such markets, focussing where appropriate on specific geographic markets with a view to broadening and deepening dairy export trade.

Meat Sector

Global forecasts for increased demand for protein, in particular protein from meat, and increased economic prosperity in many emerging markets present opportunities for increased exports of high quality, safe and sustainable Irish meats to international markets.

The strong reputation of Irish grass fed beef production in traditional markets is an asset which can be further exploited and leveraged in the period to 2025 to ensure greater penetration of high value markets both in the EU and in third countries.

The expansion of the dairy herd will have a knock on effect on the beef sector in that additional beef from that expansion has the potential to increase beef output by between 5% and 10%. It is important that the best available breeding technologies are used to ensure that the value of this output is maximised for the sector and for the economy.

It is, however, beef from the suckler herd that has principally driven our success on international retail markets.   There is considerable scope for growth in the value of that beef output, even with static breeding herd numbers, through the use of the best available technologies. Encouragement for the uptake of these technologies is, therefore, of great importance. It is equally important, however, to try to ensure that suckler cow numbers are at least maintained at close to current levels. This requires improved profitability at farm level through maximising returns from penetration of premium markets.

Growth in the pig and sheep sectors will come from improved technical efficiencies, while significant growth opportunities will also be offered by the sharp increase in consumer demand.

Prepared Consumer Foods

The PCF sector is emerging from a difficult period due to reduced consumer demand during the  recent economic downturn.  The recovery of the domestic and international economy is however creating opportunities for growth and despite the economic crisis exports estimated at over €2.1 billion have grown by 18% since 2009.  There are huge opportunities for this sector to expand its customer base over the next ten years through accessing new markets and continued innovative product development. 

Unlike the beef and dairy industries which are broadly export orientated, the PCF sector is also heavily reliant on the domestic market and there are significant opportunities for import substitution and to significantly increase the sector’s 40% share of the domestic market. Developing a strong domestic base with high market penetration at home is also an essential precursor to internationalisation.  Smarter, more strategic retailer-supplier relations are required if the Irish PCF sector is to achieve further growth and scale. To meet ambitious growth targets the PCF sector requires significant investment in new technologies, plant infrastructure, capability, R & D and innovation programmes. However current funding options are limited and restrictive.

The application of innovative solutions to address the financial and retailer issues will allow the sector to capitalise on its growth potential and increase exports and its share of the domestic market.

Seafood sector

In common with the broader food sector, the seafood industry will benefit from the projected increasing global demand for food produce over the coming decade.  Current FAO estimates are  that world consumption of fish will grow by an average annual consumption of 17 kg per person per annum resulting in a requirement for an extra 40 million tonnes of seafood by 2030. This industry will also benefit from the shift in global economic gravity towards the east where there is a strong cultural preference for seafood. In addition to benefiting from these economic trends, the growing health and wellness trends augurs well for increased seafood consumption.  Seafood has a marketing unique selling point as it is a versatile, convenient and protein source with specific and recognised health properties which resonate with the modern consumer. 

Export markets for seafood are growing rapidly and many large markets have a supply deficit. Europe has a 70% dependence on seafood imports.  China is the world’s largest importer of seafood and is predicted to become a €15.5 billion seafood import market by 2020.  The United Arab Emirates imports 75% of its seafood products while the USA imports 90%, by weight.

Finally, the ability of the sector to capitalise on this growth potential is assisted by its natural advantage of being adjacent to some of the most productive fishing ground in the EU. Ireland ’s share of the 1.2 million tonnes of fish caught in these waters amounts to around 25% or 315,000 tonnes.

In summary, the growth opportunity in the seafood sector for the coming decade lies in developing  greater processing scale so as to capitalise on the expanded supply of raw material which will be available to Irish processors from the increased output from aquaculture and from the landing into Ireland of quota compliant catch from other countries fishing in the waters around Ireland. In addition, the intention is to reduce the level of seafood product which is exported in commodity form to significantly below its current 70% level and to  develop our advantage in the marine biotechnology field.

Whiskey and Craft Beer Sector

Exports for the beverages industry rose in 2014 to €1.2 billion driven by a continued increase in the exports of Irish Whiskey which has increased by 60% since 2009. The alcoholic beverage industry in Ireland accounts for 75% of total beverage exports and is broken down into different sectors; spirits (which includes the European Geographical Indications Irish Whiskey, Irish Cream and Irish Poteen/Poitín), Beer and Cider manufacture. Ireland exports drinks to over 125 markets worldwide. Alcohol beverage exports are high value, branded products and are not susceptible to the fluctuations of the global commodity markets. 

Investment in the beverages sector has been growing at a substantial rate due to expansion in the whiskey sector and consolidation and investment in the beer sector. One challenge that must be met is the significant working capital finance needed to fund the minimum 3 year maturation process in the whiskey sector.

There are huge opportunities for growth in the whiskey and craft beer sector with plans to double whiskey exports and increase the number of microbreweries to 100. Emerging markets in Asia and the explosion of the craft alcohol market in the United States provide Irish companies with enormous potential to expand.

The ability of the sector to develop new markets will remain a key challenge and the alcoholic beverage industry needs a strong base of dairy farmers and grain growers supplying inputs to both the brewing and distilling sectors.

Horticulture

The horticulture sector contributed over €400m to agricultural output in 2014. The sector makes an important economic contribution and generates significant ancillary employment in areas such as preparing, packing produce, distribution, retail, garden design and landscaping.

Technology and advances in plant genetic research offer the potential for new products, new production methods and new approaches to the market for horticultural products which will drive growth and opportunities for the sector.  There is a need to assist commercialisation and adoption of developing horticultural technology, to facilitate entrepreneurs to take advantage of the opportunities arising from these emerging technologies and the intellectual property associated with them.
The development and adaption of these technologies present the sector with the potential to grow its output value to over €500m in the medium term.

Forestry

Forests play an important economic, environmental and social role in Ireland making a significant contribution to the Irish economy, currently estimated at €2.3 billion and an increasingly important role in rural development not only through the diversification of farm income but also through the provision of rurally based employment both of which contribute to rural stabilisation and viability.

The Irish sawmilling and board manufacturing sector is competitive internationally and has  developed major export markets over recent years, including Britain and France but also much further afield. Demand for all wood products remains strong, further growth is anticipated in the years to come as overseas markets for Irish sawn wood and panel board products continue to expand.  
With increasing reliance on the export market, the importance of investment in innovation, research and development and added value will be crucial to realising growth opportunities. Ireland, with growth rates of certain species well in excess of those achievable in some European countries, also has a strong comparative advantage in the growing of wood fibre. It is vitally important that we continue to build this advantage by developing our forest genetic resources by the use of appropriate species and suitable site types.

Tillage Sector

Tillage crop production in is based on the provision of feedstuffs to the livestock sector and critical raw material to industries such as malting, milling, sugar, breakfast cereal and distilling.  Over the next decade there will be growth opportunities for the tillage sector in areas such as increasing demand barley and malt for distilling due to the planned expansion by Malsters and increased demand for oats due to their health and nutritional benefits. Outside of the cereals sector growth opportunities include increased support for protein crops as part of EU recognition of the need to develop native protein sources, increasing interest in the use of oilseed rape oil as a food ingredient for cooking and salads including potential for exports of the processed oil and in the case of sugar beet, industry to explore whether the likely development of the sugar and ethanol markets would justify farmer and industry investment.