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Conditions ripe to capitalise on soaring global demand for food

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AMIDST all Ireland's economic doom and gloom, one sector outperformed all others in the past 12 months.

Figures released by Bord Bia yesterday show that the value of our food and drink exports increased by 12pc in 2011 to reach €8.85bn.

This amounts to a rise of almost €1bn in the past year and follows on from a similar lift in 2010.

The figures clearly show that while the agriculture and food industry may have been in the doldrums during the Celtic Tiger era, the sector has now re-emerged as one of the country's leading lights.

While food companies here would like to take all the plaudits for this exceptional performance, a global shortage of food has been an equally important factor.

Volume growth in exports accounted for only 25pc of the rise in our food and drink exports last year, with the rest due to higher global food prices.

Global agricultural commodity prices are at record high levels, with food prices increasing by 26pc during the first 11 months of last year.

This trend has been driven by the continued growth in the world's population, which is expected to increase from six billion to 8.3 billion by 2030.

The key areas of global growth in food demand are India, China, south-east Asia, the Middle East and Africa. GDP growth rates of 7pc for the emerging markets of Asia and 4pc for the Middle East and Africa have been forecast.

As the buying power of the middle classes in these regions increases, their dietary habits will move away from staple foods such as rice and wheat, and towards higher intakes of protein from meat and dairy products.

For Ireland, as a major producer of both dairy and meat products, these will be key markets for a continued growth in our exports. Britain and Europe remain the main markets for Irish food produce but opportunities further afield are already being grasped.

Exports outside Europe grew by 20pc, or €350m, to reach almost €2.2bn in 2011. However, continued success in these markets will be necessary if Ireland is to realise the Government's ambitious target of expanding total food and drink exports to €12bn by the end of the decade. These targets were set out in the Food Harvest 2020 report, which was published last year.

The Minister for Agriculture Simon Coveney is to visit China this year to hold talks with his Chinese counterpart in an effort to increase Irish exports to this lucrative market.

However, other countries are already several steps ahead of us in attempting to woo the Chinese. New Zealand, for instance, has already recorded a 54pc increase in lamb exports to China last year and is growing its dairy exports to the Asian giant by the day.

The health market for food is another area that Ireland should be focusing on. Populations on every continent in the world except Africa are ageing, bringing with it higher rates of osteoporosis and other age-related diseases. This opens the door for higher dairy demand.

In India, more than 75pc of pre-school children suffer from iron deficiency anaemia and 57pc of preschool children have sub-clinical vitamin A deficiency. Increased dairy intake and red meat could reduce the incidence of those diseases.

While Bord Bia's figures show that Ireland is on track to achieve the Food Harvest 2020 targets, each additional €1bn in exports will be more difficult to achieve from now on.

Food markets have become notoriously volatile over the last decade and sharp price drops for dairy produce, beef and wheat in 2009 showed just how precarious global trade had become.

With Irish farmers now working at world market prices, increased production will be dependent on profitability. If farmers are not going to make money, they won't expand.

However, our industry has a number of advantages over our competitors. Ireland's sustainable grass-based production system, strong scientific and research base and thousands of young, skilled workers should be used to attract the attention of large food and health companies to the benefit of all.

The IDA could have a role to play in this regard. Its focus has mainly been on technology but, given the food industry's stellar performance and undeniable potential, perhaps now is the time to pitch Ireland as the ideal base for multinational food companies.

Irish Independent