Saturday 25 March 2017

Agri-business no longer happy to stay in the shade

IRISH business has taken a severe beating over the past two to three years. The construction and financial sectors' struggles have been well documented and most market watchers agree it will be some time before those sectors recover.

One business that has been able to weather the downturn and come out in pretty good shape, however, is the food and agri-business sector.

Long a staple of Irish commerce, it would be fair to say that the focus on the sector fell away during the boom, as the newer, trendier sectors took precedence. That is most definitely no longer the case.

With exports now being seen as key to driving the recovery, the agri-food sector is very much front and centre again. According to the Irish Exporters' Association, agri-food exports increased by 8pc last year to €6.8bn. Only the chemical and pharmaceutical industry exported more.

And, according to Glanbia chief executive John Moloney, the agri-food sector is looking east for growth.

"Real growth will come from countries and regions other than Europe," he told a recent IFA conference.

"There is some opportunity in Russia while China has hugely increased its imports of whole milk powder," he said.

Kerry Group has been one of the stars of the Irish Stock Exchange in recent years and while it has morphed into the biggest ingredients and flavours business in the world, it still generates about a third of its €5bn annual revenue from the agri-sector, much of which is sent overseas.

The previous Government recognised the value of the food sector and in its 'Food Harvest 2020' document published last year it targeted exports from the industry for a 42pc increase by 2020.

"Irish companies need to recognise that in an environment of reduced Exchequer funding, the research, creativity and innovation that are fundamental to growing high-value exports require new ways of working together at industry level.

"These will prove fundamental to ensuring the industry generates increased employment opportunities in processing and production, improves income stability and secures reasonable returns for primary producers and for business," the document said.

While 'Food Harvest' was by necessity a high-level document, it demonstrated the renewed emphasis on an industry that has driven the Irish economy for generations.

Not all agri-food businesses have remained exclusively in the sector, however. Like Kerry, Glanbia has looked to diversify (with the recent acquisition of a US food supplements company the latest move by the Kilkenny company), while Greencore has moved far away from the state sugar company to become a major player in the own brand sandwich and ready-meal business. If you buy a ham sandwich from Marks & Spencer today, there's a good chance Greencore made it.

Greencore morphing into one of the biggest sandwich makers in Europe is evidence of the changing face of the agri-foods sector. It is now a sector that exports more and more of its product but pays its taxes and employs staff here, much like the rest of the sector.

The agri-food sector is one that will be vital to the Irish economy as it finally begins to move from stability to growth.

Agri-food exports from Ireland increased by 8pc last year to €6.8bn

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