Alan Renwick, University of Dublin

1. Agri-Business and Rural Development
School of Agriculture and Food Science.
Innovation in the European
Agrifood Sector
Alan Renwick
Danish Food Cluster
19th March 2015

2. Background and
Motivation
• Whilst working for SAC in Scotland which is
undertakes Research, Education and Consultancy
became interested in the innovation system and
our role in it.
• Undertook a study in Scotland and linked with
researchers in Netherlands who had undertaken
similar work to compare the two countries
• When moved to Ireland thought it would be
interesting to extend the work to include Ireland
but also to look at it more quantitatively and
compare across Europe

3. • The basic premise is that for a country to have a
successful Agrifood sector in the future, all parts
of the system have not only to work well
individually but also function collectively as well.
• For example, there is no point having world class
food manufacturers and processors if there is no
raw material supply.

4. Innovation Systems
• As the World Bank (2006) states “The innovation
systems concept embraces not only the science
suppliers but the totality and interaction of actors
involved in innovation. It extends beyond the
creation of knowledge to encompass the factors
affecting demand for and use of knowledge in
novel and useful ways.”

5. Direct Demand of Innovation :
Agri-food Supply Chains
Indirect Demand
of Innovation
Research
Intermediaries
Input suppliers (e.g Goldcrop, Dairymaster etc)
Farmers
Cooperatives (e.g. Aurivo, Dairygold etc)
Commodity traders (eg F.C. Stone)
Processors (e.g. ABP, Kepak, Dawn etc)
Haulage
Wholesalers/Retailers (e.g. Dunnes, Musgraves etc)
Agri-food consumers
Pharmaceutical market
Energy market (e.g. renewable energy)
Policy-making agencies & funding bodies
Social interest groups
Irish Government (DAFM)
SFI/IRC
Enterprise Ireland
EPA
Higher Education Funding
Council
Universities - UCD, UCC etc
Third level Institutes - DIT, ITT etc
Research Organisations Teagasc
Private companies (e.g Kerry,
Glanbia)
Extension & consultancy
Teagasc (consultancy & extension services)
Land Agencies: ACA
Industry associations/Lobbies with an active
role in innovation
Irish Food & Drink Federation/IDB/
IFJ/IFA/ICSA/ICMSA/ Irish Exporters
Association
Financial Services
Bank of Ireland,
Ulster Bank, AIB,
Rabobank Grant
Thornton, IFAC
TYPICAL
INNOVATION
USERS
TYPICAL
INNOVATION
CREATORS
INNOVATION
FACILITATORS
Skills Development
Innovation brokers
Bord Bia /ICOS /ICBF/AHI
Education & training services
UCD, UCC (education); Teagasc land-based
colleges
NGOs & charities / Local councils
INNOVATION ACTORS
(indicative, not exhaustive list)
Source: Derived from original concept by Lamprinopoulou

8. How well are they working?
• Pictures show the extent of the connections but
not the strength/quality of these connections and
what they are doing in terms of boosting the
performance of the agrifood sector
• Through stakeholder interviews and data analysis
we investigated this further

9. Capturing Innovation
• Interviews/ Workshops (Scotland,
Ireland and Netherlands)
• Series of indicators developed
– Inputs (Expenditure on R&D etc)
– Outputs (Patents, Publications etc)
– Outcomes (Farm and Firm
performance)
• Compare across Europe (where
available beyond Europe too

10. • An initial study undertaken at Wageningen using
secondary data on Food and Drink companies for
8 European countries
• We extended to more European Countries
including Ireland
• Also extended to include agricultural sector rather
than just food and drink manufacturing

11. Interview process
• Step 1 – Who are the key players in the agri-food
innovation system?
• Step 2 – What roles(functions) do they perform
and how well do they perform them?
• Step 3 – How strongly is the innovation system
performing?
• Step 4 – What are the key barriers or enabling
factors determining the level of performance?
• Step 5 – What could/should be done to improve
the performance?

12. FINDINGS

13. Source: Cornell University: Global Innovation Index

14. Inputs: Public Investment in Research
8th
3rd
0
0.02
0.04
0.06
0.08
0.1
0.12
proportionofGDP
8th
8th
Industry
Agriculture
Source: Eurostat

15. Inputs: Business Research Intensity
1st
Source: Own estimates based on Eurostat

16. Outputs: Innovative Businesses
4th
1st
0
10
20
30
40
50
60
70
80
90
percentageofinnovativebusinesses
2008 Year 2010 Year
15th
12th
Source: CIS (2008 and 2010)

17. Outputs: Firms involved in any form of
co-operation
12th
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
4th
Source: CIS (2010)

18. Outcomes: New Product Development
4th
Source: CIS (2010)

19. Outcomes: GVA per Employee Food and
Drink Firms
5th
Source: Eurostat

20. 0 0.2 0.4 0.6 0.8 1
Business Research
Research into Industry
Intensity
R&D Personnel
Tertiary Education
Research into Agriculture
GERD
Denmark vs Europe
Inputs

21. 0 0.2 0.4 0.6 0.8 1
Citations
Cooperation
Co-opetition
Innovative Businesses
Patents
Bio Patents
Marketing/Org Innovation
Denmark vs Europe
Outputs

22. 0 0.2 0.4 0.6 0.8 1
TFP
Gross operating Surplus
GVA Food and Drink
GVA Agriculture
GVA growth
Share of Exports
New Products
Denmark vs Europe
Outcomes

23. 0.55 - 0.62
0.51 - 0.55
0.41 – 0.50
0.29 – 0.40
0.20 – 0.28
0.15 – 0.19
2
1
34
5
7
6

24. 0 0.2 0.4 0.6 0.8 1
Business Research
Research into Industry
Intensity
R&D Personnel
Tertiary Education
Research into Agriculture
GERD
Citations
Co-operation
Co-opetition
Innovative Businesses
Patents
Patents Biotech
Marketing/Org Innovation
TFP
Gross operating Surplus
GVA Food and Drink
GVA Agriculture
GVA growth
Share of Exports
New Products
IUS Score
Doing Business
Ireland
Denmark

25. Denmark vs Ireland
• The comparison appears to show a relatively clear picture -
Denmark is investing more in business research (both by the
government and by industry), this is leading to more patents
and new products being introduced. In general firms appear
more collaborative, agriculture is more productive and the
overall environment is more conducive to innovation.
• Ireland does have a greater proportion of innovative
businesses, but this seems to be more around
marketing/organizational innovation than new product
development. In addition Ireland does have a higher level
of value added and operating surplus in the food and drink
industry, but again this is likely to be skewed by the relative
importance of the alcoholic drinks industry in Ireland.

26. SOME REFLECTIONS

27. The world isn’t waiting….

28. Publications in Agriculture and Food
Science
0
5000
10000
15000
20000
25000
30000
35000
40000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ireland United Kingdom New Zealand United States Brazil China
US
China
Brazil
UK
NZ
Ireland
Huge
Growth
Source: Scimago

29. Growth in Agricultural Productivity (TFP)
Source:USDA
China

30. US view
• “To maintain this leadership moving forward, we
need to recalibrate our federal agencies to
support innovation, develop a globally
competitive workforce, and engage frontier
markets. There are numerous gains to be made
by tackling trade and regulatory challenges and
leveraging the strengths of universities,
businesses, and other players ….And if history is
any indication, America is up to the challenge.”
• Dan Glickman

31. Barriers and Facilitators to Innovation:
Examples from Ireland
Score
Category Factors
< -2 Strong
Barrier Land Mobility, Age Structure, Farm Business Structure
-1 to -2 Medium
Barrier
Power of Supermarkets, Availability of Finance, CAP Support,
Chain co-ordination
0 to -1 Weak
Barrier
Structure of supply chain, Attitude to risk, Level of leadership
within sector
0 to +1
Weak
Facilitator
Finance Skills, ICT (rural broadband), University engagement with
industry, Employment Legislation, Private consultants
+ 1 to +
2
Medium
Facilitator
Government Support, Regulation, Advisory services, Training in
agrifood skills
>+2
Strong
Facilitator
Research capacity, Education levels, Physical infrastructure, Tax
regimes

32. Supply Chain Co-ordination
‘We all talk of "Brand Ireland", but
it's all around price, cost and
commodity, not a premium brand.
Race to the bottom on price,
especially in beef.

33. Cattle Chain:Reality
29 active
export approved
slaughter plants
Slaughterings at
Export Plants
1.4 m head
Local Authority
Abattoirs
70,000 head
~195 LA Abattoirs
20% retail
40% foodservice
40% manufacturing
75% retail
25% foodservice
47% retail
25% foodservice
28% manufacturing
% of Volume:
(Bord Bia Estimates)
Live Exports
160,000 head
Beef Imports
46,700 t
68,000 specialist
20,000 mixed
~42 export points
~87 Auction Marts
30 markets
531,000 tonnes
Lack of
innovation
Genetics
Health
Welfare
35% missed weight
specification
33% failed to meet
the carcase
conformation and
fat specification
Inefficiency
Transport and
logistics
Termination
of contracts
Poor flow of
information
back
Horsemeat
Scandal
Power
40% of farms
unviable
Production
driven
systems:
Bull Beef
Blockades
Overcapacity

34. Systemic Strengths and Weaknesses:
University Challenge?
• Scottish universities and research providers strong links
externally but weaker links with indigenous SMEs
• Only partial success in Scotland to overcome interactions–
very strong links Policy-Research but less so into industry
• Relatively few innovation brokers and intermediaries in
Scotland
34

35. Challenges for Universities: Scotland and
Ireland Findings
• Researchers and consultants – ‘intellectual
arrogance’ (Sc)
• Researchers low priority on communicating
findings
• Researchers need to learn a new language!
• "Doing the research is only one part of it, getting
it implemented is the more important.
Universities are doing the research, but is it
getting out into the market?”
• ‘All very interesting but I want
to know what are going to be
the products on the shelves
in two years time’

36. Companies Challenged
• Lack of ‘Absorptive Capacity’
• ‘Companies with a turnover of over €150 m have
no R&D Department’
• ‘Businesses are employing people with just an
undergraduate degree and making them head of
research’
• ‘At the farm level there is a weak demand for
innovation’

37. Barriers to Innovation: Finance
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Percentageofcompanies
Source: Derived from CIS (2010)

38. • "Banks are not in the innovation game. [They're
in the] lending money game and getting that
money back game.“

39. • Enterprise Ireland identify that the key
challenges for High Potential Start Ups
(HPSU) in Food and Drink at the early stage
include:
– high up front capital costs coupled to difficulties in
raising finance
– the need to validate the product in an approved
facility
– a lack of experience in scaling food production
– getting the logistics right
– long timelines in closing a listing with retailers
particularly overseas retailers
• Source personal communication with Enterprise Ireland

40. Characteristics of Successful Start-Ups
• On the other hand successful food HPSUs,
that have managed to scale and export
quickly, display common characteristics such
as:
– A promoter/team with expert technical knowledge
in the product sector.
– There is an innovative business model, innovative
product or Intellectual Property (IP) that provides a
competitive advantage in the market place.
– Expert market knowledge, ideally with access to
key customers and distribution and an
understanding of the real costs in the market place.
– Adequate finance and margins to fund and sustain
an export dimension.

41. Systemic Strengths and Weaknesses
• Hard Institutions
– Regulation; Regulation; Regulation
– Application procedures for innovation too
complex
– Tax breaks and R&D credits innovation
vouchers enabling but GM ban detrimental
– CAP funding a barrier to innovation?
– Levy funding more directed at research in
NL
41

42. Conclusions
• From the analysis undertaken a series of
conclusions are drawn concerning the state of the
Irish Agrifood Innovation System.
• Presenting them here as may have some
resonance with your situation in Denmark

43. Ireland has a number of truly world class innovative
companies, however the problem is there are simply not
enough of them and there are too few new innovative
companies emerging from which world leading companies
could emerge.

44. Conclusions
• Within Ireland there is a high
level of government support for
the agrifood sector and for
Science and Technology within
agriculture and food sectors in
particular.
• However, much of the science
and the efforts at encouraging
innovation are supply pushed
rather than demand pulled.
• In addition, Ireland lags behind
other countries in terms of
business investment in research
and development.

45. Conclusions continued
• Companies are finding it difficult to access the
knowledge they require. Much of the engagement that
occurs is ad hoc in nature.
• Ireland is relatively strong at innovation that removes
cost from the supply chain (Lean principles), however
it is weaker in terms of the development of new
products
• Evidence points to access to finance being a key
constraint in the innovation process.

46. Conclusions continued
• As a small country it can co-ordinate activity more
easily than other larger countries. However, more
generally there is a lack of a culture of collaboration
across and between all components of the Agrifood
Innovation System.
• The structural issues in agriculture that are well known
as more general are also a significant barrier to
innovation at the farm level.
• Through the discussions undertaken for the study,
there is a perception that a conservative mindset
dominates organisations with power and influence and
that leaders in the agrifood sector need to be more
open to the benefits of co-operation, collaboration and
partnerships for innovation.

47. Recommendations
• Incentives for more R&D within Firms
• Incentives for more KTE within
Universities
• Focus on New Products – Adding Value
• Novel funding arrangements for
companies
• Education and Advisory – Redirection?
• Greater Collaboration – Industry Forums
• Structural Change
• Fit for Purpose Structures
• Is it just about people?

48. ‘Summer is a state of mind’