Agriculture, Food and Fish Sector Profile - Ireland

March 2016

Contact: Ms. Gerry Mongey
Canadian Embassy in Dublin
Trade Commissioner
Dublin, Ireland


Contents


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The Government of Canada has prepared this report based on primary and secondary sources of information.  Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein.  Readers should independently verify the accuracy and reliability of the information.

Sector Overview

The agri-food industry is Ireland's oldest and largest indigenous industry. The industry ranges from primary agriculture, food and beverage production, fisheries to forestry. The sector is estimated to export up to 90% of its production to 175 countries worldwide. Agricultural output is dominated by beef and milk production (69% of total agricultural output). Total Irish exports to Canada are worth approximately €1 billion (13% are animal and food related) while Ireland imports €345 million of products from Canada (15% are animal and food related).

Ireland imported approximately €7.4 billion worth of food, beverages and live animals in 2015. The main categories of food and beverage imports include: vegetables and fruit (15.5% of total food, beverage and animal imports); cereals and cereal preparations (13.6%); meat and meat preparations (12.9%); animal feedstuffs (10.5%); beverages (10.5%); dairy products and eggs (9.3%); and coffee, tea, cocoa, spices etc. (7.3%). The primary sources of imports are Great Britain (42%) and the European Union (EU) (42%).

Farm and Land Base

Ireland has a total land area of 6.9 million hectares, 4.5 million of which is used for agriculture and a further 0.73 million hectares is used for forestry. Of the agricultural area, 92% is devoted to grass and 8% to crops. The main cereal crops grown are barley (70%), wheat (24%) and oats (6%). There are 6.9 million cattle (dairy and beef), 5.2 million sheep and 1.5 million pigs in the country. There are almost 140,000 farm holdings in Ireland with an average farm size of 33 hectares. However, 111,000 farmers received payments from the Department of Agriculture, Food and the Marine (DAFM) in 2014 which is a more accurate measure of the active farmers in the country.

The average age of farmers is 56 years, only 6.2% of farmers are aged less than 35 years while 51% are aged over 55 years (26% over 65 years). Based on DAFM payments data, 4.7% of farmers are aged less than 35 years and 30% are over 65 years (EU average is 10% under 35 years and 30% over 65 years).

Only 37% of Irish farms are considered as economically viable (mainly dairy and tillage). A further 31% are sustainable due to the presence of off-farm income (farmer and/or spouse have off-farm income from employment, pension or social welfare on 75% of farms) while the remaining 32% are economically vulnerable (mainly cattle and sheep).

Employment and Exports

Some 169,000 people are directly employed in the agri-food sector. Primary agriculture accounts for 5.7% and the overall agri food sector accounts for 8.5% of national employment. However, primary agriculture accounts for 8.1% of exports and agri-food sector overall accounts for 12.3% of exports. The multiplier impact of growth and investment in the agri-food and drink sector is four to five times greater in terms of direct employment than foreign direct investment. Half of the agri-food exports are from indigenous Irish companies. The agri-food sector spends €9.6b on raw materials, 76% of which is sourced in Ireland while €3 billion is spent on services (55% sourced in Ireland).

The most important export markets for Irish food are the United Kingdom (UK), France, Germany, Netherlands and China. The UK accounts for 40% of food and beverage exports while the rest of the EU accounts for a further 31%. The value of Irish food and drinks exports increased by 51% between 2009 and 2015 (compared to growth of 27% for all other exports). The UK, the largest export market provides significant opportunity where the population is expected to grow by 10m by 2030 (Ireland is the UK's largest supplier of food and drink). Ireland is the largest net exporter of dairy ingredients, beef and lamb in Europe and is the largest exporter of powdered infant formula in Europe.

The main categories of agri-food exports are: dairy products and ingredients (30%); beef (22%); prepared foods (17%); beverages (12%); other meat (12%); and seafood (5%). It is estimated that the total value of the food and beverage exports is €10.8b which highlights the high level of food production and self-sufficiency in the country. The level of self-sufficiency for the main agricultural products includes: 1082% for butter; 689% for beef; 687% for cheese; 330% for sheep meat; 276% for all meat; 207% of pig meat; 92% for the main cereals; and 77% for wheat.

Some of the main changes which occurred in the export market in 2015 include: exports to North America increased by 19%; trade to China increased by 16%; 12% increase in trade to the Middle East; 14% decrease in trade to Africa (mainly due to reduced dairy and prepared food exports); while exports to Russia fell by 70% due to trade suspensions.

Food and Beverage Sector

The food and beverage sector accounts for over €26 billion in yearly turnover or one-quarter of all manufactured products. The importance of this sector in the Irish economy is evident in the following statistics: 73% of Irish manufacturing raw materials are utilised by the food and beverage sector with the remaining 27% utilised by all other manufacturing sectors. The sector has approximately 1,200 enterprises ranging from small and medium-sized enterprises (SME's) to multinational companies. Some 72% of units employ 50 people or less and account for 16.5% of total employment which highlights the small scale nature of much of the sector. Over 70% of food and beverage businesses are Irish owned and these businesses account for over 60% of the employment in the sector. The non-indigenous companies tend to be large scale, for example, three of the main global infant nutrition producers Nestle, Abbotts and Danone operate production facilities in Ireland.

Seafood Industry

The industry comprises of the commercial sea fishing industry, aquaculture industry and the seafood processing industry. There are approximately 1,900 vessels in the Irish sea-fishing fleet, over 90% of which are less than 15m in length. There are 250 aquaculture operations and 170 seafood processers. The Irish fishing industry is concentrated in coastal communities where it plays a significant role in the local economy. Two thirds of the Irish retail market is fresh fish while the remainder is frozen fish. The seafood industry generated sales of €891 million in 2015 and provides 11,000 jobs. Some 62% of output is exported. The Irish fishing catch accounts for 4% of total EU catch. Irish seafood exports amounted to €560 million in 2015 (increase of 4% over 2014). Two thirds of seafood exports are to EU countries (France, UK, Spain, Italy and Germany) and the remainder to other countries (including Nigeria, Cameroon, Egypt and China).

Total seafood imports in 2014 amounted to €224m. Imports included fresh or frozen seafood (36%); consumer ready products (41%) and shellfish (22%). The main categories of fresh or frozen fish imports were whitefish (36%), salmon (31%), pelagic fish (16.3%) and other freshwater fish (16.3%).

Imports of consumer ready fish products are dominated by fish in cans/jars (53%), salmon (23%) and oven ready products (17%). Shellfish imports increased by 17% in 2014 mainly driven by increases in shrimp and prawn products. The majority of seafood imports are from Great Britain (71%) while other significant sources include: France (8.5%); Germany (7.1%); Norway (3.6%); and Iceland (1.8%).

Food Distribution

Similar to other European countries the main outlets for food products in Ireland include: multiple supermarkets (Tesco, Dunnes Stores, SuperValu, Aldi, Lidl); groups (Costcutters, Londis, Mace); independent retailers (including convenience stores); specialist shops; and the service sector (hotels, restaurants, corporate). The distribution options for food in Ireland are varied and include: own transport; contract transport; distribution centres (for retailer or food service companies); cash and carry (wholesalers); pooled/collaborative transport; regional/national distributors; and food service distributors. The ideal distribution channel is dependent on each producer and product. There are a wide range of providers in all of these categories and Bord Bia (Irish Food Board) provides a useful reference point for producers seeking distribution options in Ireland: www.bordbia.ie.

Research and Development

Much of the current agri-food research and development is ‘connected research' involving government, research institutions and industry (e.g. Food for Health Ireland, Dairy Processing Technology Centre). DAFM supports and encourages research and development in food through: Grant-in-Aid to Teagasc (Agriculture & Food Development Authority) and the Marine Institute (marine research and development institute); research funding programmes (agri-food and marine research); and Government laboratories. Others involved in research include Enterprise Ireland, Higher Education Authority, the Health Research Board and Science Foundation Ireland. Bord Bia and Bord Iascaigh Mhara (seafood development agency) also engage in consumer research and innovation programmes. In the education sector, 7 universities and 13 Institutes of Technology engage in research individually and collaboratively.

Key Players

Overall, the agri-food sector is characterised by Irish owned businesses with a low proportion of foreign ownership. Farmland is predominantly Irish-owned, while the processed food and primary production sectors include a level of foreign ownership. Some of the main industry players in the dairy and beef sectors are described in brief.

Three main beef processors (privately owned) control in the region of 70% of the market between them:

  • ABP Food Group has a turnover of €2.3 billion and 8,000 employees. The group has operations in Ireland, UK and elsewhere in EU.
  • Dawn Meats has a turnover €1.1 billion and has 3,300 employees. It operates in Ireland and supplies meat throughout the EU.
  • Kepak processes cattle, sheep and consumer foods, has a turnover of €850 million and employs 2,000 people.
  • Another significant meat processor is Dunbia which has a turnover of €930 million and 3,250 employees and supplying beef, lamb and pork to Irish, UK and international markets.

Dairy processors are publicly owned; either co-operatives (with farmer shareholders) or public companies which were originally co-operatives. Kerry, Glanbia and Dairygold process approximately 70% of milk production. The main dairy processors include:

  • Kerry Group is a public company with a €5.8 billion turnover and 24,500 employees which is mainly involved in dairy processing and food production. They have locations in Europe, America, Australia, New Zealand and Asia.
  • Glanbia is a public company with a turnover of €3.1 billion and 5,200 employees. Its main activities are in dairy, food ingredients and nutrition. It has manufacturing and processing facilities in 7 countries and locations in 14 countries with significant joint ventures in United States (US), UK and Nigeria.
  • Dairygold is Ireland's largest cooperative whose primary activity is the production of dairy products. It has a turnover of €850 million and 1,150 employees. It is a major exporter of cheese to the UK market and supplies Danone infant formula production.
  • Lakeland Dairies is the second largest dairy processing co-operative, processing milk into a range of dairy products. It has a turnover of €625 million and employs 580.
  • Aurivo is a large co-operative which processes milk and exports milk powder products to Africa, the Middle East and the Far East. It has a €450 million turnover and 700 employees.
  • Carbery Group is owned by four dairy cooperatives and is involved in the manufacture of food ingredients, flavours and cheese. It has operations in Ireland, UK, US, Brazil and Thailand, has a turnover of €320 million and employs 530.

Other significant companies include Ornua, Origin Enterprises and Greencore. Ornua is a cooperative with a turnover of €2.1 billion and 3,100 employees which was formerly known as the Irish Dairy Board. It exports dairy products to over 90 countries worldwide. Key brands include Kerrygold, Dubliner and Pilgrims Choice. Origin Enterprises is a public company which provides inputs, value added services and technologies (e.g. feed and fertiliser) to the agri industry and also has joint interests in consumer foods and proteins. It has a turnover of €1.4 billion and 1,400 employees and has operations Ireland, UK and other countries in the EU. Greencore is a public company which manufactures convenience foods (chilled, frozen and ambient foods) for Ireland, UK, EU and US markets. It has manufacturing sites in the UK and the US and has a turnover of €1.4 billion and employs 9,800 people.

Market and Sector Challenges

Sector Performance

The value of Irish food & drink exports increased by 3% during 2015 to €10.8 billion (6th successive year of export growth). Exports have grown by 51% (€3.7 billion) since 2009. Currently 41% of food and drinks exports are to the UK, 31% to other EU markets and 28% to international markets. The main reasons for the growth in food and drink exports include increased output in key sectors (dairy and pig meat), favourable exchange rates, better prices for some products, relatively stable consumer price inflation and Ireland's improved competiveness.

Expected Sector Growth

Bord Bia expects that in the short term: dairy prices will remain under pressure; beef export volumes are expected to grow; and the market for pig meat is expected to improve. Opportunities are anticipated in the premium prepared foods and beverages sectors, but there are also competitive pressures which could limit those opportunities. A growth in global consumption of dairy products and more modest supply growth is expected to contribute to improved returns for the sector in the longer term.

The DAFM FoodWise 2025 strategy projects the value of primary production to grow by 65% to €10 billion by 2025 and an 85% increase in agri-food exports by 2025 to €19 billion per year. This is expected to be achieved by growth in dairy, beef, seafood, food and drinks exports. The strategy predicts that direct employment will increase by up to 23,000 with further potential for an increase in indirect employment.

Common Agricultural Policy Reform (CAP)

The EU CAP dominates Irish agriculture in terms of broad policies, specific measures and financial supports. In 2014, total DAFM public expenditure on the agri-food sector was €2.4 billion. Payments to farmers totalled €1.75 billion including Single Farm Payment, Rural Development, Structural and Forestry payments.

Under the most recent CAP Reform Agreement, EU member states were given flexibility in the implementation of the reform under both Pillar 1 (direct payments and market supports) and Pillar 2 (rural development). The new programme (2014-2020) involves €12.5 billion of expenditure in Ireland including €8.5 billion in EU direct payments, €2 billion of EU funding for rural development and €2 billion of national budget funding for rural development. ‘Partial convergence' of EU direct payments allows payments to farmers to move towards a national average with all payments reaching a minimum of 60% of the national average by 2019. Some 2% of national direct payments will be available for allocation to young farmers to provide a top-up on their existing payments and a higher level of aid for capital investment is also available for young farmers.

Common Fisheries Policy (CFP)

The EU CFP includes the setting of catch quotas for each type of fish for all EU member states and encourages the fishing industry through market interventions. The CFP has four main components: regulation of production, quality, packaging and labelling; encouragement of producer organisations; setting minimum fish prices; and setting rules for trade with non-EU countries. The most recent reform of the CFP came into effect in 2014. The industry may have issues with the quota limitations, but the policy promotes conservation.

Origin Green

In conjunction with the agri-food industry, Bord Bia has worked to develop ‘Origin Green' which demonstrates in a verifiable way, the high quality standards and sustainable production methods of Irish food. ‘Origin Green' operates at both farm and industry level. In 2014, 75% of food and drink exports were supplied by verified members of ‘Origin Green' and a further 20% have applied for verification. At farm level, farmers participate in the Beef and Lamb Quality Assurance Schemes and the Sustainable Dairy Assurance Scheme.

Comprehensive Economic and Trade Agreement (CETA)

CETA will eliminate 98% of tariffs between Canada and the EU when fully implemented which means that most agriculture and food products will be exported to and imported from Canada duty free. However, some preferential access quotas are in place for certain products including beef, pork and dairy.

Transatlantic Trade and Investment Partnership (TTIP)

The TTIP which is currently under negotiation between the EU and the US aims to remove tariffs, reduce bureaucracy and facilitate investment. It is anticipated that the agreement could bring new opportunities for food exports and competition in food imports (mainly dairy and processed food). However there are concerns about increased competition from US beef producers. TTIP is expected to increase Irish agriculture exports by 2-3% relative to 2013.

Strengths

  • Good reputation and image of Irish food;
  • High standards of animal health, food safety, traceability (from pasture to plate) and quality assurance in place, Origin Green, with high level of participation from both primary producers and industry;
  • Low cost sustainable grass-based systems of production provide competitive advantage;
  • Removal of milk quotas has provided potential for expansion in dairying, increased volume of milk for processors and opportunities for new products. Significant investment has occurred at farm and processor level in anticipation of milk quota removal;
  • High dependence on indigenous inputs reduces cost and dependence on imports;
  • Clean green image of Atlantic waters;
  • Proximity to key fishing grounds;
  • EU policies in place for agriculture and fisheries up to 2020;
  • Access to EU single market and in particular proximity to growing UK market;
  • Developing and growing markets in new countries;
  • Ambitious targets set in FoodWise 2025 with Government and industry focused on striving to achieve those targets; and
  • High class agricultural research and extension services.

Weaknesses

  • Small farm structure and poor viability on many farms (high dependence of EU direct payments) coupled with an aging farm population;
  • Low level of land mobility due to high attachment to land ownership and reluctance to release land to other active and younger farmers;
  • Relative high dependence on core products of beef and milk;
  • Increased seasonality of milk production (following removal of milk quotas);
  • Large number of small scale fishing vessels;
  • Small scale fishing industry with lack of large processing facilities and lack of continuous fish supplies;
  • Limited integration or supply linkages (apart from dairying) between primary producers and processors;
  • High level of self-sufficiency, small indigenous market coupled with a high dependence on export markets;
  • Exposure to volatility in export markets and fluctuations in foreign exchange markets;
  • Majority of food and beverage manufacturers are small scale resulting in inefficiencies and relatively high distribution costs;
  • Vulnerable to food scares and international crisis;
  • Potential increased competition from US beef producers; and
  • Agriculture is a significant contributor to green house gas emissions and is under pressure to reduce emissions.

Sub-Sector Indentification

Dairy Sector

In 2015, there were approximately 18,000 dairy farmers in the country with a total of 1.3m dairy cows. There are 19 dairy processing plants and the three largest processors, Glanbia, Dairygold and Kerry process in the region of 70% of the total milk pool. Expansion in the dairy sector in Ireland similar to other EU countries was limited by the Milk Quota System from 1983 to April 2015. It is expected that Irish milk production will increase by 50% on the pre-quota removal levels by 2020 however, low milk prices in 2015 and 2016 has tempered somewhat the level of expansion (but volume increased by 11% for first 10 months of 2015).

Irish dairy products are exported to approximately 130 countries worldwide and are worth over €3.2 billion (increase in value of 4% in 2015 despite lower prices). Irish dairy exports increased in value by 65% from 2009 to 2015. High global prices in 2013 and favourable weather conditions stimulated global production which coupled with reduced demand in China and the Russian import ban resulted in a subsequent drop in prices which remain low in 2016.

Ireland produces 1% of global dairy production but supplies 10% of global infant formula. The volume of infant formula exported to China doubled from 2013 to 2014. Overall, China is now Ireland's second most important market for dairy (was 13th most important in 2008). Irish dairy exports to Asia continue to grow and now represent 17% of dairy exports. Irish dairy exports are also showing growth in the Middle East, Africa and North America.

Currently, the best performing dairy products include nutritional dairy powders and butter while dairy spreads, whey, chocolate crumb and yogurt are also performing well. The export performance of nutritional dairy powders reflects the significant investment which has taken place in the industry.

Beef Sector

The Irish national herd is just under 7 million head, 1.3 million of which are dairy cows. Over 1.6 million head of Irish cattle were slaughtered in 2014 composed of steers (38%), heifers (27%), young bulls (11%) and cows (23%). There are approximately 30 meat plants where beef cattle for the export market are slaughtered. Some 236,000 head of cattle were exported live in 2014.

Ireland exported €2.4 billion of beef in 2015. Beef accounts for 64% of all meat and livestock exports, while meat and livestock accounts for 34% of total food and drink exports. Beef is considered to be relatively highly priced in the EU and consumer demand favours the cheaper cuts. The UK accounts for over 52% of beef exports, with 46% going to primarily France, Italy, Scandinavia, Netherlands and Germany. While exports to international markets are small, they grew by over 10% in 2014 with most growth in the Hong Kong, Switzerland and the Phillipines markets. There is a positive outlook for Irish beef with increased access to international markets.

Prepared Consumer Foods & Prepared Foods

Exports of valued added food and drinks products increased by 7% in 2015 to €2.5 billion, the main growth was in bakery, chocolate confectionary, value added meats and seafood. Some 70% of the exports from this sector are to the UK. Further growth is expected with new markets and new products. Prepared foods include primary products which have been further processed and include ready to eat foods, confectionary and bakery products. The top 5 markets for prepared foods are the UK, Netherlands, Poland, Germany and Nigeria.

Seafood

Seafood exports increased by 4% in 2015 driven by increased product pricing. While exports are to almost 70 countries, over half (54%) of exports are to five key EU markets (France, Spain, UK, Italy & Germany). France is the largest market overall while a further 11% of exports are to other EU markets (non-EU exports increased by 20% in 2015). Over 20% of Ireland's seafood exports are now to Africa and this trade is increasing. Overall, there was a 77% rise in value of exports from 2009 to 2015. Salmon exports grew significantly (by 70% in value terms in 2015), the main growth was in the French and German markets. Ireland imports €224 million worth of fish annually (36% fresh or frozen; 41% consumer ready products; and 22% shellfish), 71% of which comes from the UK.

The prospects for the seafood sector are positive with increases in quotas for mackerel and whitefish which will increase volume while prices are also expected to be positive.

Useful Internet Sites

  • Bord Bia (www.bordbia.ie)
  • Teagasc (www.teagasc.ie)
  • Department of Agriculture, Food & the Marine (www.agriculture.gov.ie)
  • Irish Farmers Journal (www.farmersjournal.ie)
  • Ornua (www.ornua.com)
  • Central Statistics Office (www.cso.ie)
  • Bord Iascaigh Mhara (www.bim.ie)
  • Food and Drinks Industry Ireland (www.fdii.ie)
  • ABP Food Group (www.abpfoodgroup.com)
  • Dawn Meats (www.dawnmeats.com)
  • Kepak (www.kepak.com)
  • Dunbia (www.dunbia.com)
  • Kerry Group (www.kerrygroup.com)
  • Glanbia (www.glanbia.com)
  • Dairygold Coop (www.dairygold.ie)
  • Lakeland Dairies (www.lakeland.ie)
  • Aurivo (www.aurivo.ie)
  • Carbery Group (www.carbery.com)
  • Ornua (www.ornua.com)
  • Origin Enterprises (www.originenterprises.com)
  • Greencore (www.greencore.com)
  • Nestle (www.nestle.ie)
  • Abbotts (www.abbott.ie)
  • Danone (www.danone.ie)
  • Food for Health Ireland (www.fhi.ie)
  • Bord Iascaigh Mhara (www.bim.ie)
  • Marine Institute (www.marine.ie)
  • Higher Education Authority (www.hea.ie)
  • Health Research Board (www.hrb.ie)
  • Science Foundation Ireland (www.sfi.ie)
  • National University of Ireland (links to 7 Universities) (www.nui.ie)
  • Institutes of Technology Ireland (links to 13 Institutes) (www.ioti.ie)
  • Dairy Processing Technology Centre (www.ul.ie/research/content/dairy-processing-technology-centre)

Contacts

Canadian Government Contacts

Ireland Contacts

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