Transcript FDII Policy Asks – End of 2011

FDII Presentation to Joint Committee on Jobs,
Enterprise and Innovation
7th May 2013
The Irish Agri-food sector
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1 in 8 jobs in the Irish economy
690 enterprises (94% are SMEs)
Supplies the majority of Irelands €14bn grocery sector
€9bn exports in 2012
2/3 of indigenous exports
30% of net foreign earnings
€11.5bn purchases in the domestic economy and
€1.75bn payroll
 The largest net exporter of beef, lamb, dairy ingredients
in Europe
Economy Wide Impact of Agri-Food Growth
 Food Harvest 2020 has ambitious growth targets particularly
an increase in exports to €12bn by 2020
 Direct expenditure in the Irish economy is equivalent to 60%
of sales. This compares with 19% for the rest of
manufacturing
 Export growth in food has and will have a bigger impact on
the wider economy than any other sector
 FDII Report Sharing the Harvest estimates up to 30,000 jobs
if exports targets are achieved
FDII Policy Priorities – Alignment with Agri-Food
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Production Priorities
Processing Priorities
Marketplace Priorities
Consumer Priorities
The policy dichotomy in Ireland
Tax food
and
packaging
High input
costs –
energy,
waste
Restrict
marketing
Smart
Green
Growth
Unregulated
retail buying
power
Environment
Constraints
Financing
Difficulties
Financing Expansion and Renewal in the Food Sector
 High capital cost sector with relatively low margins over time
 Requires medium to long term financing facilities that are
currently not available
 Existing grant aid levels, constrained by state aid, are not
sufficient to build the capacity required for export growth
and enabling technologies to boost productivity
– State Aid Map 2014-2020 now being negotiated
– Food-sector specific funds (NPRF / EI)
– Innovative approach to Capital Gains Tax relief to
incentivise reinvestment in the sector
– Maintain R&D tax credit and strengthen for SMEs
Manufacturing Cost Competitiveness
 Food and Drink accounts for 25% of industrial energy
use
 Electricity 15 – 25% higher than UK sister plans and gas
differential is even higher
 15/20% increases last year and again this year
 There is a direct relationship between cost
competitiveness and jobs – maintaining existing jobs and
creating new jobs
– A focus on network / pass through charges
– Revisit the PSO levy and the Capacity Payment
Mechanism
FH2020 Growth Targets for Meat Sector
 Beef – 40% growth in output value
 Pigmeat – 50% growth
 Sheepmeat – 20% growth (Sector view is potential for 45%)
Irish Meat Export Performance
2010
€m
2011
€m
2012
€m
2012/2010
%
1,573
1,860
1,900
+21%
Pigmeat
336
396
457
+36%
Sheepmeat
163
191
205
+26%
Beef
Meat – Key Issues
 Growth in output volume (animal numbers) – jobs dividend
 Maintaining our specialist beef herds (sucklers) critical
 Marketplace differentiation – QA, grass-fed, sustainability
credentials
 International market access very important
 Policy: CAP, WTO, FTAs
 Real threat from upcoming Free Trade Agreements (FTAs)
 On-farm productivity (BETTER Farms, BTAP, STAP)
 NPD & EPD investment
Dairy: the potential for real growth
 Production has been limited by milk quota since ‘80’s
– But cumulative productivity gains throughout this period
– That cold not be realised
 Quota expires in 2015
– 30 years of productivity gains can now be realised
 Supply environment is positive
– Global population is growing
– Consumption of dairy products is growing by double digits
in developing economies
– Ireland can gain market share
What does growth look like
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Value of Dairy Exports € 2.7 bn
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Dairy products is 30% of Agri-Food Exports
–
27,000 people employed by industry
We produce 5.5 bn litres of milk
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From 1.1 million cows
EU 27 139 bn litres (3%)
EU 27
23.1 ml cows (4%)
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50% growth projected by 2020
2.75 bn litres extra milk
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50% extra processing capacity
New dairy sites under development
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200,000 extra cows
Increased farm productivity
Prepared Consumer Foods
Diverse, innovative & consumer-focussed
Value Added Food and Beverage Targets in FH 2020
Functional
Ingredients
Infant
Formula
Prepared
Consumer
Foods
Beverages
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Value-added Food and
Beverage sector ranges from
infant formula and functional
ingredients through to
alcoholic beverages and
prepared consumer foods
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“On the basis of available
data the Committee believes
that, working from a 2008
baseline, that growth of 40%
in the added value output of
the food and beverage sector
is achievable by 2020.” Food
Harvest 2020
Significant economic contribution
 Prepared Consumer Foods make a major contribution to
overall food sector.
 Entire contribution is not captured in CSO data
Industrial Local Units by Statistic, Year and Industry
Sector NACE Rev 2
2008
Companies
Persons Engaged
Gross output
Exports (excl beverages)
265
12,468
€8,981 m
€1,400 m
Growth Deliverables for 2020
Metric
2020 deliverables
Output Growth
40-45% (with targeted
support)
Employment Growth
+3,000 approximately
Business Expenditure +1% (2%)
on R&D
Overcoming challenges
 Increasing investment in PCF companies
– Sector specific funds
 Shaping the domestic grocery sector
– Competitiveness
– Grocery sector code
 Health, Obesity and consumer lifestyles
– Livewell
 Innovation and new product development
Conclusions
 Big and important Irish based sector with large domestic and
export markets and strong linkages to the wider economy
 FH 2020 is the national strategy for the sector and is
expansionary in nature
 The industry faces barriers to growth – these urgently require
faster policy implementation in certain instances and a
reconsideration in other instances
 Get this right and the growth potential will result in up to
30,000 jobs