Monthly Archives: November 2014

THE WATER BUFFALO – AN ENTERPRISE MADE FOR IRELAND

The Water Buffalo – a genuine dual-purpose alternative to the dairy cow

The buffalo produces around 10% of the World’s milk but within Europe the buffalo has been primarily limited to southern Italy and Transylvania in the Carpathian Mountains. Wherever it has lived it has been a provider of milk, of meat and of draft power. It is truly multi-purpose.

Much more recently the water buffalo has found its way to the United Kingdom, the Netherlands, Germany and Ireland. In Europe the buffalo is synonymous with Mozzarella di bufala but that one product alone does not do the buffalo justice; its milk can produce superb yogurts, ice cream and blue cheese and its meat, steaks and burgers for a low cholesterol BBQ. The buffalo’s potential in Europe is still far from fully recognised.

The author came to know the water buffalo whilst establishing a herd of a few hundred buffalo in Transylvania. An information summary about the water buffalo is linked below.

AFS The Water Buffalo

The water buffalo is present in Transylvania and the Carpathians even though the animal is originally of Indian origin. They have adapted over the centuries but the cold winters are still extremely cold for an Asian animal. The other European home of the water buffalo is around Naples which is another climatic extreme. The author does wonder whether the best climatic compromise within the European Union for the buffalo is, indeed, Ireland.

Thankfully there is now some experience of farming the buffalo in Ireland.

The Toonsbridge Dairy

The Toonsbridge Buffalo Meats

The water buffalo can provide a range of premium food products. In the author’s opinion it is the kind of alternative enterprise that is needed in Ireland. It requires a high degree of animal husbandry skills and that is one of Ireland’s strengths. Its milk and meat is also ideal for the local, smaller-scale, artisan-style processing into luxury products that rural Ireland needs.

For those looking to make investment in dairy farming and who prefer the idea of producing milk whereby there is serious scope for adding-value to farm produce and operating outside the constraints of Ireland’s commodity-focused milk processing sector, the author would recommend taking a close look at the potential that the water buffalo offers.

Photo credit: With many thanks to former colleague Calin Calugar for the buffalo herd photo.

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AGRIFOOD SOLUTIONS’ FOOD HARVEST 2020 REVIEW

I arrived in Ireland on the 1st June 2013 at the start of a warm and long Irish summer and shortly after the end of an extended and arduous winter. The fodder crisis was to the forefront of everyone’s thoughts; as was the revision of the Common Agricultural Policy. It was, however, not long before I started reading and hearing the words ‘Food Harvest 2020’. FH2020 was clearly a key directional driver of Ireland’s agriculture and food industries. As a way to introduce himself to the Irish agri-food sector I chose to investigate and appraise FH2020. This personal and independent review is the result.

The Review is heavily weighted towards the dairy sector. Since it was published in March 2014 the author has focused on the evolving Irish beef crisis as can be seen by some extensive blog postings. I have also prepared a couple of beef strategy discussion documents which remain unpublished. The intention is that they will soon evolve into a series of project proposals that will focus upon the development of a top-end-beef-market action plan for that proportion of the beef industry which wishes to focus on traditional, premium-quality beef production.

Interestingly, if one reads the authors views on how the Irish agricultural industry needs to evolve, there is a common approach evolving between the dairy and beef sectors. It is that both need to develop a twin-track strategy for going forwards. At present the agri-food industry as a whole is far too committed to a single premiumized-commodities-to-global-markets route. It is a route-to-market that the author believes is inappropriate for a significant proportion of the Irish agricultural sector and especially its smaller-scale, family farms. This is a theme that will be taken further shortly in a posting on the need for an 80:20 strategy for Irish farming.

In the meantime, anyone wishing to read my thoughts on FH2020 can download the contents, the summary, the review itself and the original FH2020 strategy via the links below.

FH2020 REVIEW CONTENTS

AFS FH2020 Review contents only

FH2020 REVIEW SUMMARY

AFS FH2020 Review summary only

FH2020 REVIEW REPORT

AFS FH2020 Review complete report

FOOD HARVEST 2020

Food Harvest 2020 original

THE SMALL PRINT

The author accepts that his review of FH2020 was written with the benefit of hindsight and that to an extent events have moved on since the original Food Harvest 2020 document was prepared. As a consequence it is likely that the author will have contradicted the opinions of others who, with the passing of time, may have chosen to revise their viewpoint. Others he simply may have contradicted. This is, sadly, one inevitable result of writing a review or previously published work.

Although in some ways the author’s thoughts will disagree with others, in part this will be due to how the parties have understood the objectives of FH2020. The author believes that he is in general agreement with how FH2020 envisions the future of the Irish agri-food industry but his concern is more about how the objectives of FH2020 have been subsequently interpreted and presented and how some within the industry have since pursued the FH2020 objectives.

The authors underlying belief is that any food industry is founded upon its conglomeration of farming businesses. In Ireland that means its family farms. Apart from these being the bedrock of farming, they are also the foundations of Ireland’s rural communities. They have to remain so. Any strategic direction established has to be based upon the existing farming structures and the constraints that they place upon the industry. The author’s primary conclusion is that these constraints have not been fully appreciated within the strategic planning framework of FH2020 and this will have consequences. It is for this reason that the author feels obligated to publish the entirety of what was initially written as a personal review.

IRISH BEEF AND THE NEED FOR A PARTING OF THE WAYS

It was some 25 years ago that we at Wye College, University of London moved to develop the food industry management group to work alongside those of us working in agricultural and farm business management. It was a recognition of how important the business of vertical supply-chain management between the farmer and the rapidly developing food retailers had become. Sainsbury’s provided sponsorship and the Professorial Chair was filled by Prof. David Hughes; still a World-leading commentator on the international food industries.

I mention the above because it illustrates how early we had recognized the importance of the linkages between farmers and the emerging modern food retailers. The retail sector was rapidly evolving and it was critical that all those within its complicated supply chains was aware of what was happening. It has been said that a supermarket has about 15,000 product lines [although that will have change with the format variants that now occurr] but of those the most complicated to supply are short-shelf-life, perishable fresh produce. One of which is beef.

It was and still remains challenging to this day to supply fresh products to specifications [that relate not just to the physical characteristics of the product but also to the timing of delivery and the location of supply]. The retailers have become multi-outlet chains with, often, long supply-chains that operate through vast distribution centres. They are a fact of life in modern urban-orientated life and in most ‘developed’ countries. They are the retail outlets supplying, maybe, three-quarters of food supplies. For those wishing to sell quantities into the upper-priced segments of the food market, being a part of the supply-chain of a major retailer is often the only answer.

In addition to the operational wants of the supply chain, as most readers will well know, traceability is a further necessity that seems to only gain in importance. In the UK, it originated in the salmonella-in-eggs food scare of the Eighties and ‘Mad Cow Disease’. The need for retailers to have traceability in place was then embedded into a legal requirement within the UK’s Food Safety Act 1990. This made it a legal requirement to show ‘due diligence’ in ensuring the safety of food supplies. The proliferation of farm assurance schemes since has been the result.

The above relates to the UK but traceability has become a widespread necessity for supplying supermarkets. Even so, even with farm [or so-called quality] assurance schemes in place problems still arise. The far-reaching supply chains seeking cheap raw materials for processed products have shown the supply-chains to still be fallible. The most recent example has been the so-called ‘horse-gate’ scandal whereby meat of equine origin had been found to be have been passed off as beef. In an Irish beef context, horse-gate has been critical as it has stimulated a further drive by the UK retail sector to source and sell only beef that is born and reared in the United Kingdom.

One has been able to follow a number of specification tightening in the UK beef sector over recent months. The ‘we only want British beef’ has been evident at the retail level with only British being included at the premium level of all supermarkets; with the breed-specific Angus and Hereford schemes taking precedence [similar has happened with Irish beef in the Republic of Ireland]. It is only within Tesco, Asda and Sainsbury that Irish beef can now find a home, and then only as an alternative source in the retailers’ budget and standard lines.

In the context of the above, it is surprising that Irish processors are still demanding UK supermarket specification from their Irish beef suppliers. One does, however, have to realize that similar specs are likely to be in place for the domestic Irish market. One should also be aware of the group ownership across many Irish and UK processing plants and it may be the case that pressure from the UK retailers to ‘backstop’ UK supplies with Irish farm-assured [quality-assured in Ireland] beef means that specs in Ireland are often in ‘excess’ of market requirements.

There is currently pressure being placed on Irish beef processors by the nation’s farmers to lower specifications. It now appears to be apparent that only 1/6th of Irish beef exports are destined for three, major UK retailers and it is, therefore, logical to ask whether it is appropriate to demand high UK supermarket specifications when so little of Irish beef is finding itself onto UK supermarket shelves, let alone within the premium retail market segments.

At a time when the Irish beef farmers’ representatives are asking for price parity with the UK [even though it is becoming evident that Irish beef is not sold within the premium segment], there may well be a relaxation of the specifications demanded in Ireland by processors. Will this, however, be a success for the farmers? Or will it be a de facto acceptance that Irish beef can no longer achieve premium status within its main export market. Will it be an acceptance that Irish beef is destined for food processing or for retailing as standard-at-best burgers, meat balls, mince, diced beef and stewing steak? Is it a signal that Irish beef has been relegated from the Premiership?

The Beef Industry Newsletter [www.rforster.com] has made several references recently about the tightening of buying specifications in the UK. It is not an Irish phenomena. It is likely that the ultimate demands have come from the retail sector but one can also ask whether this has not been supported by the processors? After all, are they also not saying that tighter specifications means improved processing efficiency and lower overall supply-chain costs. This, they say, means that higher prices can then be paid to farmers [see below]. There has also been a suggestion that UK-based processors [even those who operate as UK/RoI groups] would prefer UK retailers to focus on British beef so to increase the throughput of their UK-based processing plants [thus raising efficiency].

As a note; the question to ask is, how great can this gain be when placed in the context of improving the margins made by the farmer. Processing is a high-throughput, lower-margin activity whereas so much of Irish beef farming is a low-throughput operation that needs high margins. They have contrary objectives; a point that illustrates just how out of kilter so much of Ireland’s consolidated-processing / fragmented- farmer beef industry actually is.

So just how does one go about supplying the most premium of markets? Outside of the top-end niche and direct-to-consumer sales routes, Waitrose is the premium retail outlet in the UK. It only has little more than 5% of the UK grocery market but it is at the top end of the market. Waitrose’s beef supplies are nowadays entirely routed through a single processor, Dovecote Park. The following is a quotation from Dovecote Park’s own website:

“Dovecote Park is the dedicated beef supplier to Waitrose… Waitrose has a long history of support for and involvement with … British farmers, and only sells 100% British Beef in it stores… The supply chain … starts with membership of the Waitrose / Dovecote Park Beef Producer Group, which comprises over 1000 farms [note: it is still more than a few] throughout the UK. All these beef producers are farm assured and commit to raising stock to the highest possible standards of animal welfare and husbandry, strictly monitored by Dovecote Park’s own audit teams… The Producer Group can be seen as a club of members, with regular open days, fieldsmen visits, direct two way communication with the factories, and newsletters all reinforcing the importance of a genuine supply chain partnership between the farmer, the meat processor, and the retailer.” [Dovecote Park, 2014].

One has to ask where is the equivalent supply-chain to a premium market originating from Irish beef farms? It is probably an unfair question because there is no access to a retailer like Waitrose for Irish beef farmers. The quote does, nonetheless, illustrate the kind of supply-chain relationship that is needed to develop and supply premium markets be they in the EU, China, the USA…. Realistically, the Waitrose model is probably unattainable when working on the development of export as opposed to the domestic markets but it does not mean that very close supply-chain partnerships are the foundations needed for accessing high-value, premium markets.

At present, is the Irish industry moving towards or away from having a well-coordinated supply-chain in place?

Being within the supply-chain of a Waitrose is not available to all. So what are the other alternatives? One is well known within Ireland and that is to be a part of the breed-specific Irish Angus and Irish Hereford producer groups that supply the premium end of the Irish retail market. They are also the basis of some new markets elsewhere. Are they, however, the solution for an Irish beef industry that is so continental-breed orientated?

Returning again to the Beef Industry Newsletter, it was interesting to read commentary about McIntosh Donald [who slaughter 18% of Scottish cattle] who are seeking to tighten up on specifications and to increase the price differentials between in and out of spec. cattle [again it is not an Irish phenomena]. They are focusing on Scotch label [an EU protected regional designation] as their retail customers are insisting that 99.5% of beef supplied has to qualify under the Scotch Beef scheme [a part of which says that the cattle now have to be both born and reared throughout their life on farms that are assured under the Scotch Beef scheme]. Also one should add by direct quotation from the Newsletter; “It also emphasised that if more of its cattle met spec the company would be able to operate more profitably and then be in a position to pay more for cattle meeting its requirements – which meant a win-win for processor and producer alike”, (Beef Industry Newsletter, 7th November, 2014).

If one brings the points of the last paragraphs together, one could well suggest that accessing premium markets is about having strong supply-chain partnerships and products that have a designated, traceable origin that meet both the end retailers specifications and the consistency-for-processing-efficiency demands of the processor.

Does the above sound like today’s Irish beef industry, one where the beef farmers are protesting outside the processors’ gates? Is the blockade a sign of a strong farmer-processors relationship that is at the foundation of a supply-chain that enables Irish farmers to sell their beef to premium-paying, top-end, export markets?

Simply, is Ireland able to operate the kind of supply-chain that is attractive to the World’s premier beef buyers? Is Ireland’s consolidated processing structure and its mainly small-scale farmers just too disparate to succeed in today’s markets. Is it a model that can deliver for its beef farming community or does something have to change?

On offer is the suggestion of processor groups; essentially aimed at altering the trading weight of the farmers and the processors. But is this an old-fashioned solution that is, essentially, antagonistic? Will it help develop the kind of close supply-chain partnerships that are needed to deliver premium beef products to retailers according to the specifications they need; be they volume, quality, assurance or timing related [or most likely all of them]? And do not assume that these are just demanded by UK supermarkets; they will be needed for all premium markets.

As with Waitrose’s and other retailer-processor linked groups, producer groups need to be a fundamental part of a supply-chain that efficiently delivers products to the final consumer and, equally efficiently, returns a sustainable price to the primary producer. The author would suggest that producer groups should not be based upon trading, they should be based upon a specific supply-chain that delivers a particular food product to the final consumer.

Too often it appears that in the Irish beef farmer’s mind the supply-chain ends at the factory gate or at the livestock mart. Many may indeed be delivering a superb animal to the market or to the processor, but is it in a way that the farmer’s delivery is the first link in a dedicated supply-chain for a food product with a known destination?

More likely is that the trade is occurring in an environment where the farmer is solely focused on seeking the best price achievable. Market price information will be scoured and the beast dispatched to a mart, a processor or even for live export to gain the best price? There is a belief that keeping multiple sales options open is the only way to keep the buyers ‘honest’. Nevertheless is it an approach that enables the farmer to connect with the final beef consumer who is willing to pay the premium that a small-scale beef farmer needs to be financially sustainable?

Does the phrase ‘keeps the buyers honest’ an indication of how serious the crisis is in the Irish beef industry? An observer does not have to have the intelligence of Einstein to realize that the relationship between the farmer and the processor is at a low. One suspects that as the disparity in scale between the two has increased the level of trust and degree of communication has fallen. Just hearing the word ‘negotiations’ is never a good sign.

It is also interesting to note that the current crisis has come after a period of high ‘farm-gate’ prices and it is actually the disparity between the UK beef price and the Irish beef price that has been one trigger for the current conflict. So long as there was near price equivalence, one could have imagined that the Irish beef farmer would have tolerated the changes in specifications [driven from the UK market] and the demand for blanket ‘quality’ [farm] assurance. This has, however, occurred whilst Irish beef has been marginalized in the UK retail sector with a consequential fall in price. What is evidently dangerous for the future of Irish beef is that the farmers have not been kept well informed about the detail of market changes and have concluded that the differential in price reflects massive profiteering on the parts of Ireland’s beef-processing oligopoly. Sadly, a lack of well researched and presented information across all parties [including government agencies] is then just fuelling the crisis.

One has to ask whether the Irish beef industry also has the right strategic approach. All too often it is about the consolidation of the processing industries; it is as if volume in processing is the panacea for all ills. Can Ireland even ever achieve a scale of processing that is going to have a sufficiently low cost-base to compete with the vast scale of other players on the global agri-food markets? Could even absolute consolidation achieve this? And even then will it mean just mean having a single processing unit? It is also so easy to forget that dis-economies of scale also occur; be they, for instance, in managerial proficiency or raw material transport costs. Also, was it a lack of dynamism within its leadership that eventually led to the demise of the World’s command economies?

It is fascinating to research the operational structure of Ireland’s agri-food industry. In this case, and without passing comment on the Irish Angus and Irish Hereford producer schemes, one does wonder how Ireland can access the World’s premium markets with the beef industry as it stands. As illustrated earlier, supplying premium markets is about supply chain partnerships and very good communication between the primary producer, the processors, the distributors [if they are separate entities] and the retailer. Just where does this exist in Ireland?

The impression one has is that the processors are required to ‘impose discipline’ upon the primary producer. It is the processors who have to ‘homogenise’ a varied cattle supply into what becomes Irish beef. It is then the role of the marketeer to convince the consumer that it is a premium product that they will buy time and again. Within this Teagasc offers it advise to farmers on how to produce the processors’ raw material efficiently [cheaply]. One suspects that few of its discussion groups get into talking about the detail of the final consumer markets and how they are the primary link in a food supply chain [with the way the supply chain currently works, why should they]. One can then ask if the Beef Genomics Scheme is focused on lowering beef production costs or improving the characteristics of the beef with respect to what the final consumer reads on the label, sees and tastes?

To summarise, are the quality characteristics of generic Irish beef insufficient to occupy the top-end market place? It is too variable in quality from the very beginning of its production life? One does not question the fact that over the last decade or so the Irish beef industry has moved from selling frozen commodity beef to the rest of the World to selling fresh beef to the European Union. Is, nevertheless, the structure of the sector now the right one to place at least some Irish beef at the top of the World’s markets? And I say ‘some’ as, shown by the Angus and Hereford schemes, it is likely that breed-specific is likely to play a future differentiating role in the market; albeit that at the moment it appears that 50% breed-specific is sufficient for the supermarkets’ ‘premium’ definition.

One would suggest that there needs to be clearer stratification within the industry. The mainstream already exists within Ireland and that is successfully handling the cattle from the vast array of cattle farmers in Ireland and from both the dedicated beef sector and the dairy sector. Its success is, however, apparently limited when one looks at it in the context of the processors ability to process and market beef and return a price to the farmer that meets the farmers expectations. The traditional Irish beef farmer clearly believes that they can breed and rear the best beef cattle in the World. If they can, they consequently need a route to market that rewards them for doing so.

There are, therefore, two issues that suggest that change is needed. On the one hand one has to ask whether the breakdown in relationship between processor and farmer has gone too far? Is the situation only resolvable by creating new routes-to-market that are farmer owned and that offer the farmers a chance to sell outside of the current oligopolistic structure? Is this needed to create the closely coordinated farmer-processor-distributor-seller relationship needed to access the real premium markets? Given the power of the current processing entities just how realistic is it to expect a new mainstream, route to market to occur? It is unlikely, so a fresh, better informed, non-antagonistic approach needs to be found for the current players to find an accepted-as-fair way forward.

On the other hand, do many of Ireland’s small-scale, traditional beef farmers need a new route to market simply because they are not suited to producing cattle which are the raw material for large-scale processors who are focused on competing for, say, the 60-80% market segment? A question that should definitely be asked by those within the governance of the Irish agricultural industry is whether an over-consolidated processing sector actually offers the routes to market to reach the real premium 10-20% market segment? Further, given the need for a highly-cohesive supply-chain, is it possible for processing entities to supply across all market segments? Maybe it a case that the Irish beef industry and especially its farmers needs to have the right horses for the right courses.

If one accepts the above situation, just how are some beef farmers going to create new routes to market. One would hope that the current processors do not see such a move as such a threat. Do they see Dovecote Park as a threat within the UK processing sector? A new route to market would be about finding solutions for the traditional Irish beef farmer to reach a premium market that is, in all probability, not of a size to justify the involvement of a major processing business. The real premium markets require products that have multiple characteristics that relate to the eating characteristics of the product, to how they are produced on farm, to the artisanal nature of their processing, to very high animal welfare standards and to the fair-trading nature of the supply chain [to name but a few possible criteria]. This is simply a different ball game and it is one that needs to be evolved.

This is first about realizing that so many of Ireland’s farmers are not suited to mainstream, commodity production for the supermarkets and consolidation of the processing side has only made the situation worse. For some within the Irish beef industry, it is a time for a parting of the ways and for a new direction to be found. A change of tack is urgently required and a good starting point is with the traditional, small-scale Irish beef farmers who are, as things stand, heading for the departure gate. Some would say that is inevitable, but the author would certainly question whether that it should be allowed to happen without a serious attempt being made to find an alternative.

If the reader is now expecting a long discourse on establishing new routes to markets for the traditional Irish beef farmer, they will be sadly disappointed. That will happen in due course, but first a prerequisite is required and that is the acceptance of at least a part of the Irish beef industry that there is the need for change and that it is willing to champion such an approach. Maybe it should come from government but in all likelihood it will [and needs to] come from within the Irish beef farming community itself as, to quote, Ann Fitzgerald’s headline in the Farming Independent of the 19th August 2014, “Farmers need to drive beef industry changes”.

Irish and British cattle price comparisons

It is fascinating to read in the IFJ a little about what Bord Bia presented to the Beef Forum last week. It was a variation of former comparative analysis of cattle prices in Ireland and in its main export prices. I then went to my spread sheets which I had set up to do a spot check on retail prices in the UK supermarkets to see if I could get an idea of the retail price comparisons between equivalent British beef products and Irish beef products. Ultimately it is the final retail price [and the price for other final market destinations] that matters as it is these prices that [should] translate through the supply chain to the farmer [one assumes that the processing cost of carcasses is unaffected by origin].

The different market analyses highlighted a major difference in approach. I am interested in the actual final market whereas others are focusing on cattle prices and then ignoring where the beef is ultimately destined for. It is the latter that counts.

It is actually very difficult to get a clear idea of what the British/Irish price differential is because there are so very few clearly marked Irish beef products in the UK fresh-beef market [less than 0.5% when I did my spot check – yes, that is one-half] so one is trying to compare products that are definitely of British with ones that may be Irish [at a guess the British premium is likely to be of the order of 10%, maybe a little more]. Comparing quality cuts [i.e. steaks] and beef in the supermarkets premium lines is much easier; simply Irish has ceased to exist in the market.

A famous name in the Irish beef industry said a few months back something along the lines that; ‘Irish beef is treated as a filler by the UK retailers when British beef is not available’. Shock, horror in Ireland and retractions from all concerned but two words do spring to mind; ‘bag’ and ‘cat’. It appears that an accidental fore-warning has been ignored because a look at the retail shelves seems to provide ample testimony to this situation. ‘British’ has been on the rise for a number of years but more recently has ‘horse-gate’ given it the one final push in the supermarkets that has seen ‘Irish’ marginalized across the retail sector and ousted it completely from the premium retail sector?

It would be interested to ‘rebuild’ a carcass of Irish origin and another one of British origin destined for Tesco, Asda or Sainsbury to see what the retail sales income for each looked like [although one may find that they are not selling premium cuts of Irish origin]. One should also note that at the top end of the UK market, Waitrose is exclusively British and , I suspect, the same goes many quality-orientated independent butchers [who want to sell ‘local’]. On a similar line of thinking, I recently coined the phrase ‘reverse traceability’ and suggested that this may just be a good idea as tracing the destination of a few carcasses [albeit that in the end it would be their components] would offer both transparency and indicate to farmers exactly where their so-carefully reared prime cattle were going to. The results would be fascinating.

In the meantime and before any real in-depth market analysis is done, what does this say?

I would expect that analysis would show that there is a significant end-market differential between British and Irish beef and that this will translate through the supply-chain to cattle prices. That I am afraid is certainly not what Irish beef farmers or their representatives want to hear. But then they should want to read and hear the findings of proper market analysis as that is what their real world is about. And then do not shoot the messenger.

If we then knew a little more about the market detail we would have a clearer idea of whether the problem in Ireland lies with the profiteering of the country’s processing oligopoly or Irish beef’s declining, or already declined, position in its main export market. Simply, it is difficult to find a solution for a problem until the problem is first recognized and accepted as such.

If it is indeed the latter, then Irish beef farmer can then start to focus on how to improve their lot undistracted by others around them trying to avoid carrying the buck for not having seen the market changes coming and reacting to them so as not to leave the farmer paying the price.

Ultimately, as I have said before, for many of Ireland’s, traditional beef farmers it is be about selling premium beef to premium international markets populated by consumers willing to pay a premium price. To do that, however, they have to ask themselves whether they currently have right routes to markets in place to allow it to happen and, if they do not, the issue then becomes one of what are they going to do about it.

THE TRANSATLANTIC TRADE & INVESTMENT PARTNERSHIP

A while ago I found myself at a round table discussion hosted by the Kennedy Summer School in New Ross on the proposed Transatlantic Trade and Investment Partnership. The round table was addresses by Barbara Nolan, the Head of the European Commission’s representation to Ireland. Whilst being supportive of TTIP she made it clear that there was to be no acceptance of a reduction in, for example, food safety standards as a result of TTIP. This be of no great surprise as some of the major hurdles facing the adoption of TTIP will be concerns amongst some of the EU populace with regard to foods derived from GMOs and the use of growth hormones in beef in the USA.

In turn, the USA was represented by its Embassy. Their core message was that TTIP was not about working to the lowest common denominator in terms of standards. It was more about standardizing the standards to facilitate trade. It, however, came with the rider that there should be an agreement based on an acceptance of the science.

TTIP – CONSUMER CONCERNS VERSUS ACCEPTING THE SCIENCE

One suspects that the future of TTIP will come down to whether those within the EU are willing to ‘accept the science’. Indeed one recalls a senior individual within the Irish food safety hierarchy saying something similar not so long ago; that the adoption of technologies like GMO should take precedence over consumer concern.

Has, however, the GMO debate moved on. The pro lobby still argues that there is no evidence to say that foods derived from GM plants are harmful. But has the issue been metamorphosing? Are the GMO issues now no longer than just about the consequences of eating GM-containing foods? If so, it raises one fundamental question; when it comes to trusting the science, do we also accept that the scientists have been asking the right questions.

From a farming perspective the issue is now about how serious is glyphosate resistance in weed populations? Has the routine use of a single herbicide now left the farmer with the problems of how to control glyphosate resistant weeds? For food consumers there is now concern over the impact of glyphosate residues on human health. Were these issues recognized and given due consideration before glyphosate-resistant soybean was introduced or were they outside the parameters of what was being assessed as neither was directly related to eating the GM foods? The problem with science, as with economics, is that the results are only as good as the questions being asked or the model being used. One has to ask the right questions or set the right parameters to get the right results.

If there are unforeseen consequences arising from this first widely used GMO, will it further undermine consumer confidence in the science and lead to greater scepticism amongst an already wary EU population? If so, it will not bode well for the future of TTIP; certainly if the USA persists in its determination that the EU consumer should ‘accept the science’. Ultimately, one feels that food safety, GMOs and hormones in beef will make or break TTIP.

Further, one cannot see a great future for a ‘you-must-trust-the-science’ position. Will this type of argument be overtaken by, for example, health concerns related to the excessive inclusion of sugar in prepared foods and drinks? Are they not the creations of food science? Are not all of the high-sugar-content products tested and approved and ‘safe’? As these issues evolve, is it more or less likely that the EU consumer will trust the science?

TTIP AND THE FEARS FOR IRISH AGRICULTURE

To move on to TTIP and Irish agriculture. It is fair to say that the Irish agri-food sector is heavily weighted towards commodities; albeit ones that are now ‘premiumised’. A decade ago the country’s food policy was emphasising the development of premium food products as opposed to commodities but it appears that agri-food policy has now defaulted back to the industrial-scale processing of commodities. It is all about factory-based innovation and technology, although one wonders just what comparative advantage this gives Ireland when success within the global premiumised commodity markets still requires access to a low-cost raw material supply base. And that is something that Ireland certainly does not have and is unlikely to find itself possessing any time soon.

Without appearing to be impolite to our American cousins, greater agricultural and food trade between the USA and the EU will most likely mean access for US exporters to the mainstream and lower ‘commodity-foods’ end of the EU market whilst the EU exporters will be seeking to access the top end of the food markets in the USA. This, in part, reflects the relative operational scale of the EU and US agricultural industries and their associated costs of production. It is these factors that are a reason why TTIP is creating fear amongst EU food producers. Anyone who is producing and selling ‘commodity’ foods should be concerned about cost-based competition.

There should be fear in Ireland about TTIP according to Mairead McGuinness and Luke Ming Flanagan [MEPs quoted in the Farming Independent on 9/9/2014] as unregulated trade with the USA would be disastrous for the Irish suckler beef sector. To quote the latter; “we have to look at Irish beef situation in the long term, but if you think you have a problem now, you have hell on the way if TTIP happens”. This contrasts to the Irish Minister of Agriculture who is quoted [26/9/2014] as being highly supportive [with some reservations] of the TTIP.

THE OPPORTUNITIES FOR EUROPEAN AGRICULTURE FROM TTIP

It is probably fair to say that the opportunities in the USA are most available to Italy, France and, for organics, the likes of Austria. EU designated origin status will be important [although broad geographic PGI’s may be less protectable within the negotiations]. The top of the markets are also about diversity. Consumers first want cheese, then they want better cheese and then they want a diversity of choice amongst their high quality cheeses. It happens as their incomes rise. France is well able to provide both choice and premium quality. It is a country that produces 70% of the quantity of Ireland’s cheese production; if you just count its sheep and goats cheese production! It is these kind of facts that enable France to dominate the World’s premium-priced, cheese markets.

It was interesting that at the recent Agricultural Science Association conference, the same three countries faced criticism for their failure to adopt ‘modern’ agricultural practices [by a representative of the pesticide industry]. The problem is that feeding the global population is not so much about increasing production further in the EU, it is about increasing it elsewhere. For some countries the top of the market is also their natural focus. It is also unlikely that wealthy consumers will give up their premium foods so France, Italy and Austria can produce a little more food for the growing global population. The same population-growth argument is also being used by the agro-industrial lobby in Ireland to justify a focus on commodities as opposed to real, high-value, premium foods.

One should also remember that many modern farming technologies are focused on labour saving. Do we need more of them when there will be two billion more people on the planet? The assumption seems to be that they will all become urban poor whereas many will seek to ‘live off the land’ [if they can access it]. Many assume that it is industrial scale agriculture that will feed the world but as food prices rise and the economics of food production change, will we see a reverse in the urbanization trend? One should ask if, as labour costs fall and food prices rise, will there be a paradigm change in food production and its economics? There is certainly a school of thought that says that it will be up to smaller-scale, family-farms to feed the soon-to-arrive two billion people.

The USA is already highly competitive within the international markets and has the resource base to farm at scale. In contrast, most of the EU is smaller and has closely integrated urban and rural populations. From an agricultural perspective they are very different and it is scale that matters when exporting commodities onto global markets. Large parts of EU agriculture has scale and intensity but it will still struggle to compete head on with USA.

JUST WHERE DOES IRELAND’S AGRICULTURE FIT WITHIN A TTIP WORLD?

Ireland has neither scale or intensity. It also has a grass-fed model that is fine when cereal prices are high but it progressively weakens as cereal prices fall. A further problem is that, in Ireland, grass is too often seen as a cheap source of ruminant energy where it should be seen as the foundation stone of premium food products.

Ireland also appears to use few clovers within its pastures and is, hence, dependent on imported nitrogen fertilizer to fuel its ryegrass. As population growth puts pressure on global resources it is unlikely that they will get cheaper. There are also regions [including within the EU] that can use a higher forage-legume system and these may be more competitive than an Irish imported-nitrogen-fed, rye-grass system when it comes to ‘grass-fed’ farming.

To come back to Irelands TTIP position. Yes, there has been concern expressed by MEPs but the author would argue that the problem does not lie with TIPP per se but in Ireland itself. TTIP is many years away whereas major issues already exist for Irish agriculture and rural farming communities. The current beef crisis testifies to this.

An observation the author has long since made is that the Irish agri-food strategy is far too focused on trying to compete on the global premiumised-commodity markets and on creating the processing scale to do so. It appears to prefer to ignore the natural and farm-scale constraints that inhibit the capability of the Irish farming industry to produce the cheap raw materials that such a processing-selling strategy requires. Simply, Ireland is too small.

To put the above in context, All Ireland is a little smaller than the island of Tasmania. By production volume, its required-to-compete-globally dairy industry is only around 30th worldwide and its dairy farms are very small in size compared to, say, New Zealand. Also, how do they compare in scale to those dairy farms that are linked into commodity supply-chains as opposed to artisan-product supply chains? It is an interesting point because it is not just about averages. Simply, Ireland is seeking to compete with the ‘agro-industrial’ segments present in many competing countries with an Irish milk production structure that is akin to what others only use to produce artisan products. Irish agri-food strategy is pitching Ireland’s small-scale farmers against others’ agro-industrial giants.

DOES IRELAND HAVE THE RIGHT STRATEGIC DIRECTION TO BENEFIT FROM TTIP?

One cannot deny that processing consolidation in Ireland has provided launching pads for some corporate entities to successfully develop internationally. It has happened in the dairy and beef sectors. Is there, however, a tipping point whereby they start to focus more on overseas where there is a competitive raw material supply base? Was Glanbia plc in setting up its JV with the Glanbia Society [which left the latter to invest in new processing capacity] actually signalling that it preferred to invest its own capital elsewhere. The author recalls that it clearly stated when the JV was created that it preferred to invest [correctly as it is a plc] elsewhere where it could maximize the returns for its shareholders. This is, of course, was nothing other than proper corporate governance.

Ultimately, where is the evidence to say that the ‘premiumised’ commodities approach is going to deliver for Irish farmers; they have neither the scale or the farming systems to compete? It seems to largely go unsaid that along with the strategic consolidating-the-processing and exporting-premiumised-commodities recommendations are statements saying that farm scale must increase. Is it a de facto admittance that a strategic approach is being driven and adopted by the downstream processors fully in the knowledge that they do not have the appropriate raw material supply base in Ireland? Has this happened with beef? If so, it is a very strange and high risk approach; not least when it is well known that the key resource, the farmland base, is fragmented and that the land market is far from fluid. Should one ask whether this strategy is based on wishful rather than logical thinking?

The author would personally prefer to see a much greater emphasis placed on the development of premium Irish products and the routes to markets for them. Yes, one can say that there is also little evidence to justify such a statement but at least it has some logical rational in that by so doing one can better match the actual farming resource situation in Ireland with the size of the targeted premium markets. It is also less about placing all of one’s eggs in one basket. And for evidence of that the author would suggest watching the current beef crisis unravel; the cause of which may well be an over-consolidated processing industry making the strategic decision to place too much of its sales focus on the UK retail sector at a time when the UK retailers were switching to the heavy prioritization of British beef in the British market place. It may well be that the decisions made by a very few have translated into widespread difficulties for their many Irish farmer suppliers right across Rural Ireland.

Hence, how much has been done in Ireland to encourage the creation of the premium products that can compete at the top of the US market [where they will compete with indigenous US and Italian and French products]. Are too many research, technical, advisory, sales and promotion resources funded by government being channelled, directly or indirectly [via their raw materials suppliers] into supporting the few major processing companies? If so, should the emphasis not be switched onto developing premium products that match Ireland’s actual, existing, farming resource base and which can also be produced from within the rural communities of Ireland?

CONSOLIDATED AGRI-FOOD PROCESSING VERSUS RURAL IRELAND

As an aside, the author would add that he finds it difficult to comprehend an agri-food strategy that deliberately focuses upon centralizing the processing of the raw materials produced by farmers. Simply, what are rural Irish people to do when their raw materials are ushered out of rural areas at such great speed? It is a strategy that creates a direct conflict between the profits of the agro-food industry and employment creation in Rural Ireland. It is a strategy that should be replaced by a rural/agri-food strategy that focuses on creating and selling products that are produced on-farm or within the local community; a strategy that is about real premium food products.

The author’s review of the Irish national agri-food strategy http://www.agrifoodsolutions.net unearthed a much clearer policy towards creating premium products in the 2003 strategy. Hence, Ireland should have already began the transition from commodities [‘premiumised’ or otherwise] to premium-quality food products; or at least began the lengthy but prerequisite process of developing a premium foods sector that can start to begin to compete with France and Italy. That it has not can be testified to by a visit to Waitrose [the premium supermarket in the UK]. Take a look at the premium cheeses and compare France with Ireland. The probability is that Ireland is represented by only two family-owned cheeses, St Killian and Cashel Blue. A third, Wexford Cheddar, is now replaced by a Ballyragget-produced Irish cheddar. Yes, Pilgrim’s Choice may be present in UK retailers but it may also be labelled ‘produced in Ireland, the UK, Australia or New Zealand’ [not how you sell a premium Irish cheese].

Is the dominance in Ireland of a few companies on the processing side a problem? Does their dominance extend to influencing the direction of the nation’s agri-food strategy? If so, has this led to too little development of the alternative routes to market needed to enable a diverse premium-quality product range to evolve? Recent research into the beef crisis suggests that, short of live export, what alternatives do beef farmers have to get their cattle to a premium Continental-market? It is sad that live export has to happen as many consumers willing to pay a premium for their beef also have a welfare concern over live shipments. Would it not be better to slaughter the cattle as close to home as possible and to add value in Ireland [as is stressed within the current FH2020 strategy]? But to do so means the farmer needs access to both alternative processing facilities and routes to market.

AGRIFOOD SOLUTIONS CONCLUDING COMMENTS ABOUT THE TTIP

In conclusion, there are actually major opportunities for Irish farmers from TIPP in that it could open up access to the premium markets in the USA; a market that has a strong natural affinity for ‘Irish’. It does, however, require a significant change in Irelands’ agri-food policy [and with it the way the government allocates its own resources to the agricultural and food industries support services]. Ireland needs to prepare for TTIP by starting to create the products that will compete at the top of the market in the USA. An approach that will also have another benefit; it will also focus creative resources on those products that can find a home in the premium foods markets around the World, be they in the Far East, the Middle East, North or South America, the EU, or even the United Kingdom.

Instead current agri-food policy has left Irish farmers [and hence Rural Ireland] very vulnerable to TIPP in that TTIP will open up the mainstream EU and UK markets to lower-cost US production. It is not the market segment where Irish products need to be in but, sadly, not only have they not evolved out of it; they have become embedded into the segment by government policies that focus on consolidating processing and generic Irish marketing. And this is despite Ireland not having the farming structure to compete long-term in this market segment. Resisting the impacts of TTIP has to start at home and that means recognising that TTIP means a change of direction now.

Ultimately, TTIP is a threat to Irish family farms and Rural Ireland, but the threat is still some way down the road. It will only become such after TTIP is agreed and implemented. An Irish agri-foods policy that is too weighted towards consolidated processing so as to export premiumised commodities onto global markets is, by contrast, already in place and being implemented. It is a policy that may just do more damage to the future well-being of traditional-scale, Irish farms and rural communities than TTIP ever will. And it is also a policy that places Ireland’s farmers four-square in the path of the juggernaut that is the USA’s agro-food industry; with or without TTIP.

Conversely, TTIP could offer an opportunity for Rural Ireland and its family farms; but only when Ireland starts to focus more resources on creating the genuine, premium-quality foods products that will allow it to compete with premium French and Italian products for the upper echelons of the US [and other international] food markets.