Future of Food

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MICHAEL CREED T.D. Preparing for Brexit in the agri-food sector P2

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Future of Food

DAVID KINSELLA

Beef farmer from New Ross and member of Origin Green.

Bord Bia’s Michael Houlihan “As production increases, it is important that this is done in a sustainable way.”

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PHOTO CREDIT: BORD BIA

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IN THIS ISSUE

Bord Bia

Teagasc

Irish Exporters

Michael Houlihan discusses the importance of sustainability and how Ireland is leading the way

Professor Donagh Berry discusses how agri-tech solutions can boost production in the dairy sector P6

Diversification of export markets will help to prepare for an uncertain future

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Brexit preparation is key for agri-food sector

Brexit threatens to disrupt Ireland’s largest indigenous industry. Michael Creed T.D., explains what steps are being taken to prepare.

T

he agri-food sector is Ireland’s largest indigenous industry, which employed over 173,800 people, or 7.9% of total employment, in 2017, contributing 7.8% of GNI (Modified Gross National Income), and accounting for 11.1% of merchandise exports – a record €13.6 billion in 2017.

The sector is of critical importance to the Irish economy, and its regional spread means it underpins the socioeconomic development of rural areas in particular.

The decision of the UK to leave the EU has the potential to significantly impact on the sector.

In 2017, some 38% of Ireland’s total agri-food exports went to the UK, while 48% of imports were from the UK. This clearly reflects the highly integrated nature of agri-trade between the two countries, built up on the basis of trust, quality and

confidence over many decades.

Within these export figures almost 50% of our beef exports go to the UK, 22% of our dairy products, 47% of our cheddar cheese, over 60% of our prepared consumer food, and almost 100% of our mushrooms.

The initial impact of the Brexit vote on the sector has been the effect of sterling volatility on those businesses that have a significant trading relationship with the UK and this drop in currency value continues to have a negative impact. In the medium- to longterm, the threats from Brexit include the possible introduction of tariffs on trade between the EU and UK and potential divergences in regulations and standards between both countries post-Brexit.

These challenges are being addressed through a range of measures that I have introduced as

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Michael Creed T.D. Minister, Agriculture Food and the Marine

“Agri-food sector is Ireland’s largest indigenous industry.”

part of the Food Wise strategy to support the sector in preparing for the uncertainties of Brexit. The measures include: an intensified focus on developing new markets through trade missions, and other actions such as additional resources for Bord Bia; low cost loan schemes developed for farmers and food SMEs; new agri-taxation measures; increased funding under the Rural Development and Seafood Development Programmes; as well as additional investment in research and innovation.

Shortly after the Brexit Referendum result, I established a Consultative Committee of Stakeholders to ensure a full exchange of information on the potential implications of a UK exit from the EU for the Irish agrifood and fisheries sectors.

The work of this Committee is

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ongoing, as my officials and I continue to engage at a very detailed level with our stakeholders.

The engagements afford us the opportunity to get a full understanding of the actual and potential challenges likely to be faced by stakeholders in the event of a hard Brexit and an opportunity to fully update them on the negotiation process. It also enables me to have effective and relevant input to the negotiations through the ‘whole of government’ approach being coordinated by the Tanaiste and his Department.

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Agri-emissions: A taxing question?

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Of all the dairy and beef produced in Ireland, over 80% is exported each year.

The temperate climate and abundance of grassland makes Ireland the most carbon efficient milk producer and the fifth most carbon efficient beef producer in the EU. As production grows there is a risk that the emissions associated with agriculture will also increase. This has led to a call from some commentators to impose a carbon tax on agricultural emissions.

Agriculture is Ireland’s biggest indigenous industry, contributing 7.6% of the country’s total

Sasha Kerins Head of AgriFood and Tax Partner, Grant Thornton

Padraig Ryan Associate Director, Business Consulting, Grant Thornton

“Each year, Irish farmers produce enough food to feed almost 50 million people.”

GDP. Each year, Irish farmers produce enough food to feed almost 50 million people. However, the impact of agriculture on Ireland’s emissions should not be understated; the sector accounts for approximately one third of total emissions in Ireland.

The potential growth in total emissions have led to recent calls for a carbon tax on the agricultural sector to tackle the issue. Such

a tax would see the Irish agri-food sector held accountable for the emissions associated with all production, including exports.

With the global population set to reach nearly 10 billion by 2050, there is increased pressure on the earth’s natural resources to produce more with less. Climate change is a global issue, not a local issue. In order to feed 10 billion people, regulatory bodies

should be seeking to produce a disproportionate amount of food from regions with a sustainable base – like Ireland.

While a carbon tax might reduce Ireland’s emissions, it may not prove cost-effective and it may drive food production to less carbon-efficient regions, thus resulting in higher global emissions.

Locally, the costs associated with an added carbon tax could have a detrimental impact on Ireland’s small- and medium-sized food producers and farmers, who may be unable to meet rising costs.

A similar government initiative in 2010, imposed a carbon tax on fossil fuels (petrol, diesel and home heating fuels). However, this fossil fuels carbon tax is applied at the point of consumption rather than the point of production. This €400 million per annum fossil fuel tax bill is spread over a large population of consumers. Given that Ireland exports 80% of it’s beef and dairy produce, one would have to question the fairness of enforcing a

similar tax on the agricultural community despite the undeniable fact they are already producing in a highly efficient manner.

Incentives to encourage more sustainable farming practices – such as sowing clover and calving younger or investing in foresty, biofuels and solar farming – may well be a better long-term solution for all stakeholders.

It is undeniable; demand for sustainable food has never been greater, but margins across the entire supply chain remain tight.

The proposed carbon tax could make Irish agricultural products less competitive in international markets and undo much of the good work being carried out by Bord Bia in raising the profile of sustainable Irish agriculture.

We are certain that Ireland’s agriculture sector can continue to grow while increasing carbon efficiency but more creative solutions are needed.

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Sustainability is everyone’s responsibility Sustainable food and drink production reduces environmental impact and increases profits.

What is Origin Green?

An initiative from Bord Bia, Origin Green is Ireland’s national sustainability programme for the agri-food sector. It unites the full supply chain in a single effort to become a more sustainable source of food and drink. Farmers, food manufacturers and retail and food service companies have a shared objective that sees them work within the scope of their own operations to have an impact on sustainability issues of real relevance to them. Their efforts are supported by central government, its agencies and other industry groups and it is all independently verified, ensuring those participating in the programme are delivering on commitments made.

Why is sustainability so important?

Sustainability is important for a number of reasons. Firstly, there is a responsibility on us all to recognise the challenges that exist in relation to issues like climate change, increasing greenhouse gas emissions, among others. Acknowledging that we need to respond to these challenges for the security of future generations is the first step in putting sustainability at the centre of our plans. The environmental aspect is only one reason to focus on sustainability and it is a wide and varied subject area.

From resource availability to impact from agriculture and industry pressures, there is a need and an opportunity to respond to and

Michael Houlihan Sector Manager Quality and Environment Assurance – Dairy, Beef and Lamb, Bord Bia

“Consumers are more interested in the provenance and systems underpinning the production of the food they buy.”

improve on the current situation.

There is also a market opportunity. Increasingly, consumers are more aware of how food is produced and they are more interested in the provenance and systems underpinning the production of the food they buy. By explaining the sustainability credentials of Irish food production systems at farm and manufacturing level and highlighting the achievements of the Origin Green programme, Bord Bia has a means to address consumers’ interest and queries in relation to the sustainability of Ireland’s agri-food industry.

What are the biggest challenges facing Ireland’s sustainable food and drink production right now?

This spring, we experienced difficulties at farm level due to a very cold and wet few months. It set production back and put serious pressure on feed reserves as turnout was delayed in large parts of the country. While this may have been an exception, there are those that consider it to be part of an increasing pattern of irregular weather events. If this is the case, more considered planning will be required at farm level to ensure security of fodder supplies.

Growth of the agri-food industry is a positive thing but it will also bring challenges. As production increases, it is important that this is done in a sustainable way, without negatively impacting on resources, the environment or local commu-

nities.

The agri-food industry can contribute significantly to the sustainability of rural communities and this will be increasingly important into the future as populations become more urbanised and less connected with primary production.

Possibly the biggest challenge facing the industry is around greenhouse gas (GHG) emissions. Ireland has a target of reducing GHG emissions by 30% on 2005 levels by 2030.

Agriculture is the largest contributor to Ireland’s total GHG emissions and, as a result, agriculture is a focus for much of the effort in terms of meeting the 2030 target. This poses a challenge in the face of expanding production in the dairy sector and associated emissions and finding ways of dealing with this will be a key challenge in coming years.

What makes Ireland so wellsuited for sustainable food and drink production?

If you take Ireland’s two biggest sectors for food production – dairy and meat – the production systems we have here give a natural advantage when looking at them from a sustainability perspective.

Our dairy and beef production systems are heavily grass-based.

Our climate means we can grow large volumes of grass and maximise production from this without having to rely on concentrate feed to any great extent. There is good scope for increased efficiencies in both the dairy and beef sector. Adopting new tech-

nologies and implementing improved management practices will increase carbon efficiency and will build towards reduced GHG emissions. Ongoing research

by Teagasc and UCD, for example, is identifying methods of reducing GHG emissions while also improving production performance.

How has Origin Green impacted the local farming industry?

Origin Green has become a point of differentiation for the farming sector. Through the Sustainable Dairy Assurance scheme and the Sustainable Beef and Lamb Assurance scheme, the Origin Green programme aims to highlight the efforts of farmers through information captured in our farm sustainability assessment.

The farm programme delivers feedback to farmers in terms of their sustainability performance and it points to opportunities that exist to improve that performance. These opportunities centre on changes in management practices to increase profitability.

This is linked to a decrease in GHG emissions as a result of achieving these changes and includes a guideline economic benefit, which is something that engages farmers and encourages a move towards more sustainable farming.

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Passion drives progress on sustainability

Origin Green enables Ireland’s food industry to set and achieve measurable sustainability targets that respect the environment and serve local communities. Some retailers have taken action and have signed up as verified members to set clear goals and measurable targets to achieve sustainability aims within their businesses over the next five years.

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Working in partnership with local suppliers to sustainably source the best quality Irish food and drink is invaluable to consumers and the wider network of suppliers,” says Tracey McDermott, Head of Trading Law and Technical at Tesco Ireland.

Leading by example In working with local producers, large retailers, in particular, can become some of the biggest supporters of the Irish agricultural and food business sectors in the country. Sustainably sourcing from Irish food and drink suppliers and supporting farming families forms one part of the membership of Origin Green.

The Origin Green programme is one of the only such programmes worldwide that brings together the national government, the private sector, food producers and food retailers. It provides independent verification to retailers and the food production industry against set objectives.

“Building strong, trusted partnerships is essential to achieving sustainability targets, but it’s not

a new thing for Tesco. Many of our local suppliers in Ireland have helped us serve Irish shoppers for almost 20 years. It’s incredibly positive to work collaboratively to make our businesses more sustainable in the long-term,” says McDermott.

Perfectly imperfect produce supports local farmers One of the ways retailers can work with their supplier base to achieve sustainable sourcing is by supporting farmers through buying bumper or flush crops. As all crops yield ‘perfectly imperfect’ fruit and vegetables, retailers can support their supplier if a crop is impacted by weather by selling misshapen produce rather than throwing it away when it fails to meet the picture-book ideal.

“Perfectly imperfect vegetables are still edible so, one solution, in the case of mushrooms, for example, is to slice them up and sell them as pre-prepared products for customers,” says McDermott. “In one year alone, 62 tonnes of food was saved from going to composting or waste this way. Late last year, working with Country Crest, (a potato and onion supplier) 300 tonnes of perfectly good-quality onions were salvaged.”

To reduce in-store food miles, stocking fresh meat and dairy products from local suppliers is an initiative that, as well as reducing its environmental impact, will also provide more support to the Irish

Tracey McDermott Head of Trading Law and Technical, Tesco Ireland

“We are working with suppliers to redesign and remove hard-to-recycle material from our stores,” says McDermott. “From 2025, all our packaging will be fully recyclable or compostable, and we are clear in our objectives to minimise use of plastic.”

When it comes to tackling food waste, though, McDermott is clear that time is of the essence. “It is simply not right that perfectly edible surplus food should go to waste when there are people in our communities who need it,” she says.

food and agricultural sectors.

“All of the fresh beef, lamb, pork, chicken, milk and eggs that Tesco sells in Ireland is Irish,” confirms McDermott.

Retailers can help to tackle food waste. For example, Tesco has made a commitment that no food suitable for human consumption will go to waste by 2020. It is an ambitious but achievable target .

Publishing data on food waste efforts ensures full transparency in the bid to reduce the impact on the environment, with Tesco Ireland the first retailer in the Irish market to publicly declare their level of food waste in 2017. Cutting back on packaging is a key area of focus, too.

Leading the way on tackling waste By working in partnership with FoodCloud (a social enterprise that teams food retailers up with local charities and community groups) stores are able to redistribute surplus food on a daily basis to people in Ireland who are in need of it most in their local community.

“The premise is simple but incredibly effective,” says McDermott. “Staff in store share details of the surplus food they have available each day through the FoodCloud app, which is built into an internal system. Every evening, local causes collect the perfectly good food that would otherwise be thrown out.”

The initiative has enabled the charitable sector in Ireland to save over €7 million on food, as verified by FoodCloud, since the

programme first launched in 2014.

The future generation of farmers “For the past two years, Irish farmers have been welcomed on the Future Farmers programme, an initiative to help bright, talented, determined young people make a confident start in the world of agriculture; whether they are looking to take over the family farm, embark on a new farming venture, or to improve their knowledge of the industry.”

By providing participants with the opportunity to be exposed to all parts of the industry and supply chain, the Future Farmer Foundation has already helped to create a new generation of customer focused entrepreneurs in a fast moving and global industry.

Embedding sustainability at the heart of business must be of high importance to retailers, with a focus on working in partnership with stakeholders to make a real difference. “Sustainability should be at the heart of every business; not just to achieve targets set for the near future, but to continue working collaboratively with suppliers to innovate and create real change in the food sector long into the future,” says McDermott.

Victoria Briggs Find out more on tesco.ie

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Agri-tech: a solution to challenges facing milk production

Professor Donagh Berry Principal Investigator in Quantitative Genetics, Teagasc Dairy production is facing challenges globally. What is Ireland’s role in meeting the demand?

Globally, agriculture is undergoing seismic disruptions due to the competing challenges of food security, the environment, and societal needs. The dairy sector is not exempt from this disruption as it faces challenges, such as the rapidly expanding global demand for dairy products, the growing concern for the impact of cattle production on climate change, and the long-term volatility of global dairy markets.

Fortunately, the solutions to these challenges are emerging from a parallel revolution in smart and precision agriculture. Though still at an early stage, recent advances in precision agriculture, linking novel sensors, networking, and data analytics technologies suggest that successful solutions are imminent.

Irish dairy farmers can exploit their competitive advantage For Ireland, this disruption presents major threats and opportunities as traditional dairy production needs to quickly transform itself using these new technologies.

Since the abolition of EU milk quotas in 2015, Irish dairy farmers can, for the first time in 30 years, exploit Ireland’s international competitive advantage in milk production from low-cost grazed grass. However, the abolition of milk quotas also exposes the sector to global volatility in milk prices, creating a competitive environment necessitating improved farm efficiency, improved processor efficiency and a strategic transition to higher value-added products.

A pressing need to expand the national herd The increased production in the Irish dairy sector will be achieved through expanding the national herd (currently growing at 3% per annum) but also through the development and deployment of new knowledge, technologies and decision support tools to maximise the efficiency and effectiveness of the entire production chain.

The agri-food and drink sectors account for 7.6% of Ireland’s economy-wide gross-value output, 12.3% of Ireland’s exports, and 8.6% of total employment.

A new SFI Research Centre is due to launch in late 2018, which aims to be an agent of growth for the Irish dairy industry. The centre aim to be a world leader in fundamental and translational research for precision pasture-based dairying.

Positively impacting consumers, the environment and animal wellbeing Internationally, the advances developed in the centre will apply to dairy systems in many countries and will be a catalyst for global growth in the agri-tech sector. This represents a unique collaboration between agri-food and ICT research institutes and leading Irish/multinational food and ICT companies. Ireland is placed to be a world leader in the agri-food technology sector through innovation and enhanced sustainability across the dairy supply chain, positively impacting the environment, animal wellbeing and the health of consumers.

This will be achieved by greatly improving the soil-to-gut supply chain connectivity; thereby improving resource efficiency, better meeting consumers’ expectations and improving profitability and resilience. The opportunities that arise at the interface between agri-food and ICT will be the basis for our competitive advantage and international reputation.

Brexit-proofing by diversification In the days following the UK Referendum in June 2016, the Irish Exporters Association (IEA) surveyed our members on Brexit’s impact on their business.

In January this year we performed the same survey and compared the two snapshots to see changes and trends over the previous year and a half.

What our analysis shows is the resilience of the Irish export industry. Our members are increasingly looking to new markets and to diversify their exports, which shows an adaptability and an emerging preparedness to rebalance the over-reliance on the UK market. Sixty-six per cent are planning to diversify their export markets over the next six months, up from 54% directly after the referendum.

These figures complement the CSO figures on external trade for 2017. Both tell the story that the Irish export industry is performing very well. Despite global uncertainty and despite our biggest trading partner heading towards the exit sign of the EU, we are driving forward! Irish export figures for 2017 were the highest on record, up 2% on last year.

Exports to the EU and USA both increased by 4% and exports to the UK were up 9%.

We are seeing an increasing interest in Germany, with 29% of members looking to diversify here. This is reflected by the CSO data, which showed exports to Germany increasing 25% in 2017.

Germany was the top destination for diversification with other

Simon McKeever Chief Executive, Irish Exporters Association (IEA)

“66% of our members are planning to diversify their export markets over the next six months, up from 54% directly after the referendum.”

EU markets featuring prominently; France being third with 23%, Spain fourth at 19% and the Netherlands, Belgium, Italy and Sweden all appearing in the top 10.

There is also a growing interest in English-speaking, further flung markets, with the USA (27%), Australia (17%) and Canada (16%) all gaining popularity. Our members are looking more towards high growth markets like China (10%), Japan (8%) and ASEAN nations (8%), which are vital to becoming less dependent on trade relationships with the EU, US and UK. We launched a new initiative for 2018, the IEA Markets Network, aimed at supporting exporters to access overseas market opportunities and support them to better understand the opportunities and challenges as

they explore, enter or expand overseas. The format of events will include knowledge briefings with Irish Ambassadors overseas and Ambassadors in Ireland, as well as case studies to provide the export community with insights into business opportunities in specific markets.

The IEA has also refined its training offering to support the industry in diversifying and preparing for new market access. IEA training courses that prepare Irish businesses1 for Brexit now qualify for financial support from InterTradeIreland. The IEA has recently launched a new training initiative on Authorised Economic Operator (AEO) status to support importers and exporters to comply with the Union Customs Code and to modernise and enhance the way in which goods flow across the international supply chain.

AEO is a standard issued by customs administrations in the EU to businesses involved in the import and export of goods. AEO status certifies that businesses have reached certain standards in relation to their security arrangements, management systems, compliance with customs rules and procedures and on-going solvency. Being AEO-certified will provide companies with very attractive benefits such as: a low security risk; customs simplifications; very low examination rates; priority clearance of goods; and significant financial savings on various customs bonds.

Applications must be from an SME (250 employees or less) and Turnover ≤ €50m ( equivalent); other eligibility criteria apply, see: http://www.intertradeireland.com/brexit/vouchers/

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