Asia Matters

Asia Ireland Food and Agritech Forum 　

14 July 2015Cork Institute of Technology, Cork

@asiamatters_biz #AsiaIrlFood @asiabizweek

In Food We Trust

14 July 2015Cork Institute of Technology, Cork

Ireland’s Competitive Edge Through Innovation in the AgriFood Sector

Cathal O’Donoghue Head of Rural Economy and Development Programme, Teagase

(The Irish Agriculture and Food Development Authority)

Ireland’s Competitive Edge Through Innovation in the Agri Food Sector

Prof Cathal O’Donoghue

Head, Teagasc Rural Economy Development Programme

Ireland’s Agrifood Sector

Pastoral, Grass based Animal Production Grassland is mainly used for milk, beef and sheep production

Family Farm Based System 139,800 family farms, Average size of 32.7 hectares per holding

Large exporter Over 80% of production is exported

Exports

Largest Export Sectors Meat Dairy Products Misc.

(inc Infant Milk Formula)

Mainly EU trade, Asian markets are growing

Exports

Live animalsMeatDairy productsFishMiscellaneousBeveragesOther

Meat

Dairy

Misc

Recent Trend in Agricultural Income

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-600

-400

-200

0

200

400

600

800

1000

1200

Net Market Income

• Market Income (Operating Surplus-Subsidy)

Source: CSO

- Market Income wiped out in 2009

Food Harvest 2020

- Industry Solution – Smart Green Growth

Growth Impact

Output Exports Labour

2007 2008 2009 2010 2011 2012 201370

90

110

130

150

Food and Beverage ChemicalsMachinery Misc. manufactured

2009 2010 2011 2012 2013 20140

10002000300040005000600070008000 Gross Output

Eu

ro M

illio

ns

Exports (2009=100)

Source: CSO

2009 2010 2011 2012 2013 20140

10002000300040005000600070008000 Gross Output

Eu

ro M

illio

ns

2007 2008 2009 2010 2011 2012 2013708090

100110120130140150

Food and Beverage ChemicalsMachinery Misc. manufactured

Exports (2009=100)

Food Wise 2025: Local Roots Global Reach

New Agri Food Strategy Continued Growth

Increasing the value of agri-food exports by 85% to €19 billion. The creation of an additional 23,000 jobs across supply chain

Opportunities

Global Trends Population Growth Growing Middle Class Urbanisation / Localisation Need for Protein Food safety, traceability and

sustainability Staged Nutrition

Competitive Advantage

Price Quality Sustainability

Competitive Advantage: PriceDairy Cash Costs as % of output value in EU:

IE BE DK FR DE IT NE UK0

20

40

60

80

100

120

140

Cash

Co

sts

as

a p

er

ce

nt

of

ou

tpu

tPositive sign for medium to longer term competitiveness for larger Irish dairy farm

Average cash costs/output 71% versus 52% Irl

Source: FADN and Thorne et al. (2015) analysis (2008-2010)

Competitive Advantage: Price Dairy Cash Costs as % of output value outside EU

Source: IFCN and Thorne et al. (2015) analysis (2008-2010)

AR-400

AR-170

NZ-9

13

NZ-5

51

NZ-3

16

PL-147

US-2

000I

D

US-5

000

US-1

577N

Y

US-6

5WI

IE-4

8

US-6

6NY

0

10

20

30

40

50

60

70

80economic costs milk price

US

$ p

er

10

0k

g m

ilk

(E

CM

)

Positive sign for the larger Irish dairy farm in a non EU context

Competitive Advantage: Price Beef Cash Costs as % of output value outside EU

Cash costs higher than average non EU farm

BR-60

BR-360

AU-150

BR-800

AR-630AU-85

AU-540IE-40

AU-375

US-7200

CA-28K

CN-150

CN-20000

200

400

600

800

1000

1200

Cash cost Total Returns

US$

per

100

kg C

W

BR: Brazil; AU: Australia; AR: Argentina; IE: Ireland; US: USA; CA: Canada; CN: China;

Source: AgriBenchmark data (2013) and Thorne et al (2015) own analysis

Cash Costs average, however economic cost much higher

Competitive Advantage: Food Quality

Given importance of Food Exports, significant systems in place to quality assure Irish Food Systems first to identify traces of horsemeat in European beef

supply rapid resolution resulting in increased exports

Highest milk quality required for Infant Milk Formula (IMF) Ireland is the world’s largest exporter of IMF

Competitive Advantage: SustainabilityGreenhouse Gas Emissions per unit Dairy Output

Proving Green Credentials

Ireland is in a good starting position…

Source: EU JRC

Sustainability is a Market Opportunity: Origin Green

Sustainability

an Opportunity

The Teagasc model of knowledge innovation

Agricultural Knowledge Innovation System

Knowledge Innovation System across Value Chain

Farm

Processor

Consumer

Leading Farm Level Science and Innovation – huge improvements in Breeding Quality (EBI)

Source: Kearney (ICBF) and Berry (Teagasc)

Multi-Faceted-Food Research Programme

Food Safety

Need to Reach far-away MarketsDehydration - Powder TechnologyThermal ‘UHT’Safety / Stability

Global Exports of Perishable Products Require Technologies to Deliver

Joint venture between Irish Dairy Board (Ornua) and Teagasc ‘Science Based Innovation’

Launch: October 2013Partnership with Al Wazeen Trading LLC

ICT, Analytics and Big Data

Traceability Quality Assurance Systems Animal Genetic Improvement Earth Observation Grass Growth Soil Information Systems

Carbon Navigator Big Data based measures Supporting Farm Level Advice Incentivised by Market and Policy

Carbon Navigator helps farmers to identify distance to Carbon Targets

Teagasc Strategic Links - Building Partnerships in Asia

MOU with Chinese Academy of Agricultural Sciences Department of Science and Technology of Jiangxi Province

Joint research programmes with Chinese Universities Partnership with Chinese Scholar Council (CSC) in supervising

Chinese PhD students in Teagasc Joint Ventures with Ornua in Saudi Arabia

Active pursuit of other opportunities

Getting to Market

Getting to Market

Asia Not a homogenous market, e.g. historical context and thus culture different

Many cultural aspects we find hard to understand Significant differences within markets, 1st tier and 2nd tier cities in

China, Differences in attitudes

Sustainability does not mean the same thing in all countries, e.g. China sustainability= food safety

Absolutely essential to have local partner if doing business in these markets

Cross-Cultural Dairy

Significant cultural differences exists in relation to flavour perception,

Study proposes to understand differences in perception/acceptability based on taste (aroma and flavour) of Irish dairy produce

Consortium include the Sensory Food Network Ireland at Teagasc and UCC and Fujiang Agriculture and Forestry University (FAFU) in China

Capitalising on Know How

Not just about Selling Commodities Irish Know How in Food Production is Transferable

Strategic Planning Sustainability Farm Systems Food Innovation ICT, Analytics and use of Big Data Developing Civic Society Institutions across AKIS

Cooperatives, Farm Organisations, Farm Media etc Both to developing and developed countries

Potential for Internationally Traded Services

Thank You