Justin McCarthy,Irish Farmers Journal. Nov. 2013

1. Harnessing the opportunity
Justin McCarthy
Editor, Irish Farmers Journal

2. SWOT analysis of Irish Agriculture
•
•
•
•
Strengths
Opportunities
Weaknesses
Threats

3. What are our strengths?
• Dairy cows grazing quality grass

4. Ireland’s Grass Advantage
Grassland Area
Ireland
Europe
80%
40%
Production (t DM/Ha)
Ireland
Europe
15
11

5. Ireland’s sustainable production system

6. A myth or a reality
• Inset slide showing how much food we
produce compared to population

7. Where dairy Ireland ranks globally
•
•
•
•
28 in global milk output league
Rank 10th globally in dairy exports value
Value 2012 €2.66 billion
Top 5 achievable post quota abolition with volume
and value growth

8. Premium market penetration across Europe
An expanding
portfolio of high-end
retail and foodservice
businesses

9. World leading food processors and
marketing bodies
• Glanbia, Kerry, Dairygold, Lakeland, Aurivo, ABP
Dawn Meats, Kepak, Bord Bia, Irish Dairy Board
Independent research and advisory function
• Teagasc / UCD

10. Independent research & advisory function
• Glanbia, Kerry, Dairygold, Lakeland, Aurivo, ABP
Dawn Meats, Kepak, Bord Bia, Irish Dairy Board

11. What are our weaknesses?
• Large cohort of farms not financially viable –
particularly in the beef sector

12. Gross margins €/ha

13. What are our weaknesses?
• Large cohort of farms not financially viable – particularly
in the beef sector
• Land fragmentation
• Age profile of farmers
• Concentrated network of suppliers and buyers

14. Weaknesses at processing level
1.
2.
3.
4.
5.
Lack of scale reducing efficiency
Competing against ourselves
Losing the value added
Duplication eg transport, 15 milk testing laboratories
Low R & D/NPD investment

15. Opportunities for Irish Agriculture?
• We are in the business of producing premium proteins
• Demand for these proteins is set to rise
• Our consumer is no longer European

16. Irish farmers are now producing premium
proteins for a global market place

17. Projected Population Growth
(U.N. medium projections)
•
•
•
•
•
•
Region
2012
World
7,053
Africa
1,072
Asia
4,216
Latin America 596
North America 346
Europe
740
2050
9,150
1,998
5,231
729
448
691
+
+
+
+
+
30%
86%
24%
22%
29%
- 7%

18. The Global Market
• The Global market as a village of 100 people
–
–
–
–
–
–
–
–
12 EU
60 Cities
67 illiterate
50 malnourished
16 live on less than $1 per day
80 Live in standard housing
33 do not have access to safe water
1 in higher education

19. Opportunities will be outside of Europe
• 25% of Indian population with the highest IQ
• Higher than the total population of US
• China is now the largest English speaking country in the
world

20. Population growth & economic growth
to drive demand
• 25-30% demand growth from increased population
• 70-75% driven by economic growth
• 40% of the worlds population living in countries that are
recoding economic growth of 8% per annum.
• The number of middle class in China and India forecast to
increase by 1.2 billion over next 20 years

21. Economic growth effects
Income level per
capita
Effect of economic growth on food consumption
<$2 per day
Eat more (increase calorie intake)
$2-$10 per day
Switch from grains to meat and dairy
>$10 per day
Increase spending on services/quality (convenience, brands,
fresh/cooled)

22. Economic growth effects
• Increase demand for dairy products will require a
New Zealand every 10 years
• 10% increase in income equates to a 5% increase in
beef consumption

23. WORLD
BEEF MARKET
E.U.
EXPORTS
BEEF MAIN EXPORTERS
Main Importers of BEEF Products (up to February)
Turkey (up to Jan 12)
Canada
EU
60
40
Qty in 1000 Tonnes
80
South Korea
Mexico (up to Jan 12)
Japan
Russia
100
.
120
United States
Turkey (up to Jan 12)
Canada
EU
South Korea
Mexico (up to Jan 12)
Japan
Russia
China + H. Kong
United States
China + H. Kong
* Excluding live animals (0102), fats, preparations of several types of meat (0209, 0210 99 and 1602 90)
20
0
2012 (up to February)
2013 (up to February)
No 2103 figures available for : Mexico, Taiwan, Chile, ...

24. Economic growth effects
• 50% of population in China now in Urban areas
– Growing at a rate of 10 million per year
– High level of disposable income
• Relaxation of the one child policy

28. Opportunities at farm level
• Abolition of milk quotas post 2015
– Opportunity to increase efficient production bases

30. Opportunities at farm level
• Improved efficiency at farm level
– Increased global competiveness
• Shift in land use policies

31. Potential threats to future profitability
• Availability of shale gas in the US
– Lower the base line protein price
– Increased global production of premium protein at
a lower cost

34. Potential threats to future profitability
• Price volatility
– Global market much more volatile
• Weather
• Food scares
• Government policies
– Limited range of cushioning measures applicable for
family farms
– Government intervention logical – Australian model

36. Potential threats to future profitability
• Farmers failing to respond to the new challenges
– Debt management
– Risk management
– People management

37. • Increased costs of NZ dairy production

38. Conclusions
• Ireland is ideally positioned to continue to grow agrifood exports from a profitable production base
• Irish farmers are in the business of producing luxury
proteins for a global consumer
• Population growth and economic growth will drive
demand for luxury food proteins
• At farm level focus must remain on cost competiveness
• All stakeholders must engage to address the issue of
price volatility