Speaking Points

Speaking Points

Speaking Points

Mr. Simon Coveney, T.D., Minister for Agriculture, Food and the Marine

at The 2nd National Food and Agribusiness Conference

Wednesday, 6 June 2012

at Croke Park Conference Centre, Dublin

Contents

Introductory RemarksPage 1

Agri-Food OverviewPage 2

Contribution to Irish Economy Page 3

Contribution to Exports Page 4

Food Harvest 2020 Page 5

Food and Tourism Page 7

Consumer Focus Page 8

CAP Reform Page 8

Introductory Remarks

Thank you for inviting me to speak with you this morning at the 2nd National Food and Agribusiness Conference. I would like to take the opportunity to speak with you about the evolving and future contribution of agribusiness to the Irish economy. Ireland’s experience in modernising and scaling up agriculture and related business and technology is a success story. The Irish agri-food sector is moving to realise its full potential.

I am consistently struck and encouraged by the tremendous positivity around agriculture and the agri-food sector. There is a welcome and increasing realisation that the agri-food sector is one of those that will play a critical role in our economic recovery. It is one of these things at which this country excels and it is something on which we should concentrate and in which we should invest. We have an exciting story to tell – one full of enormous potential right across the various sectors. We should play to our strengths and promote Irish food all over the world. My recent visit by to China highlights the fact that we are global players and that we can make it in what may shortly be the biggest marketplace in the world. Two weeks we had a visit to Ireland by the Chinese Vice Minister for Agriculture, Gao Hongbin, to discuss plans for deepening co-operation in a number of areas.

Agri-Food Overview

Ireland’s economic recovery will be export-led and agriculture and the agri-food sector will play a key role in that recovery, in terms of both export generation and job creation.

This Government’s priority is job creation and putting in place the structures that will allow jobs to be created in the private sector. One of the main drivers for the Irish economy over the next five years will come from rural Ireland, in particular through the hundreds of indigenous food companies across the country.

The Government intends to drive a very ambitious growth agenda for the agri-food sector and to increase the value of exports from the sector to €12 billion by 2020. That means increasing the volume of food production in Ireland by a third over the next decade and adding value to our food production by 40 per cent. We intend to increase milk production in volume terms by 50 per cent over that period.

The agri-food sector has performed strongly in recent years with exports reaching an estimated €8.9 billion in 2011. This represents an increase of almost €1billion and follows a similarly encouraging result in 2010.

Exports in 2011 were 25% up on the levels recorded in 2009 boosted by high prices evident for most commodities and higher output in the dairy, beverages and pigmeat sectors.

The medium to longer term prospects for the sector are also bright, with the FAO/OECD indicating a generally positive global agricultural outlook up to 2020, helped by projected increases in global food demand.

In the medium term, global beef supplies are expected to tighten further, while the ending of milk quotas in 2015 offers a very significant opportunity for major expansion in that sector. This has resulted in a tangible sense of optimism at both farm and industry level with a strong buy-in to the Food Harvest 2020 strategy, of which I will speak about shortly.

But we should not forget that we are still in a global economic crisis. World commodity prices can fluctuate wildly as recent experience has shown. Economic downturns in key markets can affect our exports and so can changes in exchange rates. Our farmers are also challenged by high input prices. I don’t want anyone to think that the situation in the sector is perfect. Anyone in the business of farming knows that challenges of meeting global competition are stronger than ever.

Ireland’s Natural Strengths

  • Pre-existing global image of a “green” island
  • Sustainable, grass-based production system with its associated low-carbon footprint
  • Comparatively abundant resources in the context of global water, food and fuel scarcity concerns

Contribution to Irish Economy

The agri-food and drinks sector accounts for

  • 7.7 % of employment
  • 18% of Ireland’s total industrial output
  • Has an annual turnover of €22 billion
  • Represents 60% of manufacturing exports by indigenous firms
  • 7.0% of Gross Value Added [GVA is an economic measure of the value of goods and services produced. GVA is used by the Department as it reflects the contribution of subsidies better than other economic measures]

Primary production also performed strongly in 2011 with CSO 2011 estimate for agriculture output and income showing an overall 32.5% rise in operating surplus over 2010

  • Cereals + 52.5%,
  • Milk + 18.6%,
  • Cattle + 19.7%,
  • Pigs + 19.6%,
  • Sheep + 13.9%.

The agri-food’s sector makes an important contribution to the Irish economy. More than 75% of its expenditure is on Irish goods and services, compared to 42% for all manufacturing. In addition as it has a lower import content and a lower level of profit repatriation than other manufacturing industries - every €100 from the exports from the bio-sector (agriculture, forestry, fisheries, food & drink industries) contributes around €48 to GNP while the ‘non bio-sector’ contributes around €19.

The sector provides the main employment for around 140,000 people and provides the outlet for the produce of the country’s family farms.

We currently produce more than we consume

  • beef almost 7 times our needs
  • butter 10 times domestic consumption
  • cheese 5 times domestic consumption

The sector comprises over 1,200 enterprises of all sizes, with a wide geographical spread. The census of industrial production indicates that the food and drink sector comprises about 15% of manufacturing employment in the BMW region, 10% in Dublin and 17.5% in the SE area.

Contribution to Exports

The value of Irish food and drink exports increased by 12%, or €1 billion, in 2011 to reach €8,850m.

Exports food to 160 countries worldwide.

Ireland exports more than 85% of the food it produces.

In 2011 agri-food exports increased by 12% and exceeded an all time high of €8.85 billion bringing the increase in value over the last two years to €1.8 billion or 25%.

The dairy and beef sectors were the strongest performing categories, representing about €2.7 billion (30%) and €1.8 billion (20%) of total food and drinks exports respectively

Prepared foods accounted for €1.5 billion, or 17%, with seafood accounting for €420 million (5%).

The value of exports to the UK market increased by 6% in 2011 and accounted for 41%, or €3.66 billion, of total Irish food and drink exports.

The value of exports to other European markets increased by 16% or €400 million in 2011 to reach €3 billion. The share of exports to that region is now at 34%.

The value of exports outside Europe grew by 20% or €350 million, reaching almost €2.2 billion last year. Exports to Asia jumped by a third.

Ireland is Europe’s largest, and the world’s 4th largest net exporter of beef

Ireland exports over €1 billion worth of beverages every year

Food Harvest 2020

I am leading the implementation of Food Harvest 2020 which is the national strategy to achieve by 2020:

  • A 33% increase in the value of the primary output of the agriculture, fisheries and forestry sector
  • Improve exports and value added by over 40%;
  • Increase milk production by 50%;
  • Add 20% to the value of the beef sector.

During 2011, Food Harvest 2020 has moved from the high level national strategy for the agriculture, food and fishing sector into a shared blueprint to which all stakeholders, including industry, are working. I lead a High Level Implementation Committee, which comprises the CEOs of the main State Agencies, have been progressively working to ensure that the sector achieves or even exceeds the targets set.

I published the 1st progress report - Milestones for Success - last July. This gives a very good insight into the progress achieved in the first year as it illustrates over 50 specific actions which has been achieved.

2011 estimates for higher exports and primary output are a solid indication of real progress being achieved.

Examples of what has been achieved under Food Harvest 2020:

  • There has been significant industry and State collaboration on research initiatives as illustrated by the DAFM Research Call on FH2020 priorities, the Food for Health Ireland focus on functional ingredients, the Irish Dairy Board/Teagasc collaboration on new cheese development, and meat industry input into bull beef and dairy beef production systems.
  • Teagasc has provided practical science-based innovation support to over 300 food business clients to meet specific technological needs;
  • A growing number of companies have uses the Bord Bia forsight4food as well as their detailed consumer research to assist new product development;
  • Accreditation was secured from the UK Carbon Trust for an Irish beef production carbon footprint model and incorporating this into the Bord Bia Beef and Lamb Quality Assurance Scheme (BLQAS). This will be extended to other products over the coming year making it an important stepping stone in the Brand Ireland objective,
  • Participation in Dairy Discussion Groups increased by 3,000 to over 6,000 resulting in an average economic return of around €200 per hectare
  • A range of capacity building initiatives such as Leadership for Growth programme, Food Entrepreneurs Network, Dairy Discussion Groups and the LEAN Competitiveness programme
  • Significant steps were taken in Budget 2012 to provide stock relief and other incentives directed at encouraging farm partnerships. I particularly support farm partnerships because I believe that collaboration through partnership can improve farm structures generally, facilitate farms to operate more efficiently, increase scale on farms, and bring more innovative and energetic young prospective farmers into farming. More farming partnerships are required to increase productivity and meet the Food Harvest 2020 targets. They are particularly important to support dairy herd expansion to allow Irish farmers avail of the opportunity presented by the abolition of EU milk quotas in March 2015.
  • As we speak, Teagasc and my Department are running a nationwide series of information meetings on farm partnerships and other types collaborative farming methods to bring home to farming families the personal, economic, and social benefits which can accrue from working together in a structured way.

I and the High Level Implementation Committee have set over 40 actions to be achieved by July 2012 and as you may know I have been monitoring progress on a quarterly basis. I am very satisfied with the progress achieved through my proactive collaboration and interaction with the state bodies and industry and I will be publishing the outcomes in FoodHarvest 2020 - Milestones for Success 2 which I intend to publish towards the end of July or shortly afterwards.

Food and Tourism

The market for food tourism in Ireland is valued at over €2.2billion.

Food has a strategic role to play in positioning tourism and export growth in Ireland. All stakeholders are looking to innovation/reinventing/exploring new ways to sell Ireland to the global tourism market.

We have a great foundation to build on - our “Irishness” and our “Irish hospitality”. Tourism can only be driven by our visitors receiving a high quality experience during their stay, therefore, we need to be sure to deliver an authentic Irish food experience.

We have some amazing food and amazing food producers including master craft butchers who are winning awards here and in France for their traditional sausages and puddings. There are also over 50 farmhouse cheese-makers, some of whom are pooling resources or working with larger co-operatives to reduce distribution costs. Nearly every county has seen the development of speciality food businesses from chocolates to cakes, chutneys and jams. Local food festivals offer opportunities to showcase town lands and regions and further encourage a spirit of enterprise and ambition to innovate and to grow food businesses.

This sense of “Irishness” and “dúchas” in food and beverage is of immense importance to our tourism industry. By connecting visitors with the location/history of some of our premier foodstuffs and beverages we are creating memories and experiences for them to value when they are here, with many small farm enterprises subsequently benefitting from distance selling over the Internet on their return home.

Never underestimate the value of “word of mouth” or the “food story”. Tourism is built on reputation and tourists’ positive and personal experiences are paramount to our success. We have a foundation many countries envy - an agriculture producer of premium quality products and our innate hospitality. Our potential is limitless.

My Department recognises the need to protect the exclusivity of food or drink products characteristic of the locality. Under the EU system for protection of food names, four Irish products have been registered - Imokilly Regato, Connemara Hill Lamb, Timoleague Brown Pudding and Clare Island Salmon - and an application for a fifth, the Waterford Blaa, is currently being considered by the European Commission.

Consumer Focus

Over the last number of years consumers have become more conscious of the quality of products they are purchasing. Products that deliver on health and wellness are continuing to grow in importance. Environmental concerns reflect growing interest in issues of simplicity, authenticity, heritage and animal welfare. Consumers are demanding to be more informed regarding characteristics of foodstuffs.

There is also a rising demand for organic products. Therefore, it is imperative that Irish producers research their market and consumer needs. Bord Bia offers up to date accessible information on consumer trends and marketing advice on its website and its Vantage programme enables owner/managers to access best-practice resources, expertise and processes to help build your respective markets.

CAP Reform

All of these opportunities and challenges are presenting themselves against the backdrop of the latest reform of the Common Agricultural Policy. It may come as a surprise to many of you that the CAP is, in fact, 50 years old this year. The secret of its success as the single genuinely common EU policy is that it is an evolving policy that has adapted itself on numerous occasions over the years to changes in market circumstances, producer and consumer behaviour and wider societal needs. Nonetheless, the policy still adheres to the original principles established in the Rome Treaty in 1957 and reaffirmed in the Lisbon Treaty.

The outcome of the reform process this time around will set the policy framework for Irish and EU agriculture until the end of this decade, so it is important that we get it right.

In very broad terms, the challenge for the current round of CAP reform is to deliver, in good time, a Common Agricultural Policy that is fit for purpose, that is coherent with the Europe 2020 strategy for recovery and growth, and that supports the twin goals of competitiveness and sustainability.

These requirements in turn create further challenges in the form of crucial questions about how much money will be made available for the CAP in the period up to 2020, how these funds will be allocated both between and within Member States, and how the policy content will help to shape and serve the development of European agriculture.

Process and Timeframe

The first challenge is to deliver on time. Since their publication last October, the Commission’s proposals have undergone two rounds of detailed technical examination at Council Working Group level. The Danish Presidency has begun to produce revised texts in some areas, which reflect where it feels Member States are broadly in agreement on some issues, but which do not yet necessarily equate to final compromise texts.

In the meantime, key policy issues within the reform such as direct payments, greening, rural development and simplification have also been discussed by the Council of Ministers and by the Special Committee on Agriculture. Negotiations will continue at technical and political level over the next year or more, and it is very likely that the current texts will change considerably before final agreement is reached.

These issues are also being discussed in the European Parliament, and will be the subject of reports from rapporteurs on each of the four draft CAP regulations. It is very important to remember that the CAP reform is subject to co-decision, and therefore the Parliament will be a full partner in any final agreement that is reached.

In a parallel process, negotiations on the new Multiannual Financial Framework (MFF) for the EU budget for the period 2014 to 2020 have begun to gather pace. Early drafts of the MFF “Negotiating Box” (that is, the draft text of an agreement on the MFF) have been circulated by the Danish Presidency. Heading 2 of the MFF covers the CAP, and draft text on this heading has been discussed at the General Affairs Council as recently as last week.

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