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Presentation to Joint Oireachtas Committee on Agriculture, Fisheries and Food

8 December 2010


Professor Gerry Boyle, Director Teagasc

Dr Thia Hennessy, Rural Economy and Development Programme, Teagasc, Athenry

Video of Meeting of the Agriculture Committee, Wednesday 8th December 2010

Introduction

Chairman and Members of the Committee we appreciate the opportunity to meet with you today. I understand that some of the Members wished to hear from our colleague Dr Cathal O’Donoghue who is Head of our Rural Economy and Development Programme. Unfortunately Dr O’Donoghue had already planned a vacation prior to the invitation to attend today and he sends his apologies. Dr Thia Hennessy, who is a senior colleague of Dr O’Donoghue, is attending in his absence.

We have been asked to focus on four areas: the Advisory Service, Food Harvest 2020, Artisan Food and the Poultry sector. However, we will endeavour to deal with any other areas relevant to our remit that the Members may wish to raise.

The Future of the Teagasc Advisory Service

At end 2008 Teagasc had 340 permanent advisers and 65 fully-funded contract advisers (mainly REPS planners). Through a combination of the Moratorium on public recruitment and early retirement, today we have a total of 271 permanent advisers working in our local area offices and no contract staff employed as REPS planners. Since 2008 we have thus lost 69 permanent advisers and another 65 contract staff. Despite this reduction in frontline staff we have managed to retain client numbers at about 44,000 and a high level of services. The advisory service has responded magnificently to this challenge by a substantial increase in workload and productivity but the service is now under considerable strain, especially in some area units.

By end 2014 based on retirements at the normal retirement age we estimate that the number of permanent advisers will have declined to 237, or a reduction of 34 on current levels. However, there is a prospect that this number could decline further to about 200 as there is a possibility that a significant number of advisers that are due to retire between now and 2016 could choose to retire before 2012.

Even if the scale of early retirement as indicated were not to be realized there is considerable pressure on the advisory service in all area units but some areas are being particularly adversely affected, e.g., Cork East, Cork West, Kerry, Limerick and Waterford-Kilkenny. This pressure is especially apparent in the spring period given the needs of commercial farmers and the coincidence of various scheme-driven deadlines.

Clearly if the numbers in the advisory service evolve as indicated over the next 4 to 5 years there will be major consequences for the operation of the service and indeed the level of service that can be offered. In the short-term we are prioritizing education and our service to commercial farmers. This will require advisers to be flexible in responding to needs as they arise. For instance, because of the Moratorium we were unable to replace two teachers at Mountbellew College who became seriously ill at the beginning of the recent college term. Thanks to the flexibility of our advisory staff we were able to assemble a number of advisers who were prepared to take on teaching responsibilities in addition to their advisory roles. However, should a similar problem arise in other colleges we may not be in a position to put in place a similar arrangement and as a consequence we will have to restrict student enrolments at a time of unprecedented demand.

In those area units that are already under a severe workload pressure, advisers from less pressurised areas may be required to temporarily re-locate to these areas to relieve the pressure. This stratagem will however only be feasible for a couple of years because many of the area units that are currently not under excessive pressure will become so over the next 3 to 5 years as retirements evolve.

More sustainable approaches are also being considered. We have a very well educated and dedicated administrative staff in our advisory service and we are exploring a variety of mechanisms whereby these staff can be trained to ease the pressure on front-line advisory staff. For instance, they are taking on the more routine tasks of an administrative nature that are being carried out at present by some frontline staff. We are currently piloting this approach in a selected number of area units.

Regrettably, without a relaxation of the Moratorium we have to also consider exiting from some activities. While the REPS workload will slacken substantially by end 2012, if we faced an exceptional level of early retirement in the interim, we would have to seriously consider off-loading this work to the private sector. Aside from REPS, our advisers are also heavily involved in servicing other scheme and regulatory requirements that are highly valued by farmers, e.g., the Single Payment Scheme, Nitrates Derogation Plans, etc.. We will also have to consider off-loading this type of work if the Moratorium is maintained in a rigid form over the medium term. This option is not without its severe downsides as we may lose vital contact with farmers in the process. The fact is that our involvement in schemes enables us to also progress technology transfer. This aspect of our work and its impact on the welfare of farm families could be severely damaged if we had to off-load a substantial amount of our scheme-support work.

Food Harvest 2020

FH2020 Targets

The high-level targets in H2020 are:

  • Increase the value of primary output €1.5 billion (33%)
  • Increase the value added by €3 billion (40%)
  • Achieve an export target of €12 billion (42%)

The main sectoral targets are:

  • Beef – 20% increase in value of output
  • Dairy – 50% increase in the volume of milk production
  • Sheep – 20% increase in value of output
  • Pigs – 50% increase in value of output
  • Poultry – 10% increase in the value of output

Teagasc research has focused on three key questions

  • The feasibility of growing the dairy sector by 50%
  • Achieving growth within our GHG constraints
  • The value of growth in the agri-food sector for the wider economy?

The Dairy Sector Targets

At present there are 18,294 dairy farmers in Ireland. Between 3 to 4% are exiting annually.

Teagasc research has established that based on the following assumptions:

  • No new entrants
  • Productivity per cow gains average 2% per year
  • Stocking rates increase to 2.6 Lu/Ha on the dairy platform
  • Only existing dairy land in use

There could be about 13,288 dairy farmers in 2020 and national production would increase by about 17%. To achieve the targeted growth of 50% the following will be needed:

  • Higher productivity gains (relative to 2% p.a.) per cow (return to pre-quota gains)
  • Increased stocking rates on existing farms
  • Improved efficiency and up-take of technologies
  • New entrants to dairying will be required
  • Improved restructuring of land

Green House Gas (GHG) Outcomes

Teagasc research has also explored the implications for Green House Gases (GHGs) should the H2020 targets be achieved. Ireland is currently committed to reducing its GHG emissions by 20% in 2020 relative to the 2005 level, although it should be noted that no sectoral targets have yet been set for agriculture or any other sector.

Our assessment is that relative to “business as usual” GHGs would be about 1 mt of CO2 equivalent higher than otherwise by 2020 relative to 2005 (the GHG base year).

The Wider Economy Effects

Our assessment is that if the €1,000 million primary sector output is achieved as set out in H2020 this would generate, via multiplier effects, an additional €1,500 million.

In the processing sector FH2020, if realized, would see the sector growing directly by about €1,400 million. Applying an appropriate multiplier would result in a further €3,200 million being generated throughout the wider economy.

Artisan Food

Background

A product labelled or categorized as ‘Artisan’ has no set-in-stone definition because essentially it is down to who you ask. Artisan for me is descriptive of a food that is unique, usually hand made, with a distinctive taste and flavour, and with it’s own ‘persona’ which can cover a range of products such as breads, meats, cheeses, preserves and produce.

Irish food writer John McKenna eloquently describes ‘Artisan Food’ as involving the 4Ps “… it is a synthesis of the Personality of the producer, the Place it comes from, the Product itself and Passion in the manner it is produced”.

The value of the sector is about €500m p.a. from a base of 340 producers with an estimated combined employment level of 3,000 people (Source: Bord Bia).

Almost 50 producers are involved in farmhouse cheese. Holland in contrast has over 100 cheese producers and New Zealand has over 2,000 speciality food producers. So there is considerable scope for further development of the sector. Currently in Europe the speciality and artisan food market is worth over €33bn (Bord Bia) and there is no reason why Ireland should have not acquire an increasing share of this lucrative market.

Over the next ten years the number of Irish farms is expected to decline considerably and in response to this Teagasc has introduced the “Options Program” to encourage diversity which can in turn help farm viability.

Artisan food offers a complementary diversification business opportunity for farmers in an area where there is significant growth potential and also helps to retain rural dwellers and improve rural prosperity.

The growth of “farmer’s markets” in Ireland over the past decade has been quite extraordinary and with the assistance of local enterprise boards and leader groups this now results in a turnover estimated in many millions of Euro, and reflects the diversity of products, our changing lifestyles and agricultural environment.

Teagasc’s Role

Teagasc through its network of offices and its Options Programme provides important support to this sector despite a reduction in our resources. We have at our disposal a key team of specialists not only with decades of experience in key areas of business, product and packaging development but also with linkages to our research teams around the country. We also actively cooperate with agencies such as LEADER, the County Enterprise Boards and Enterprise Ireland, in particular, to service the needs of the sector.

Examples of our involvement with the sector over the recent past include:

  • Drumshanbo Food Hub
  • Rearcross Food Hub
  • Moorepark Farmhouse Cheese Courses
  • Ashtown Butchery Skills Couses
  • Ireland’s first Sea Salt producer – Michael O’Neill with his Atlantic Sea Salt product in west Cork
  • Eddie O’Donnell of “O’Donnell’s Crisps” produced from Irish grown potatoes in South Tipperary
  • Simon Cooper’s “Featherbed Farm” range of ice creams in Co. Wexford
  • Guidance Note for direct ex-farm sales of liquid milk

Future Opportunities

  • Artisan food represents a significant opportunity for diversification.
  • It has a competitive advantage in terms of superior price differentiation compared to commodity food products.
  • CAP reform, environmental challenges and our response to adversity, can be the catalysts needed to propel this sector into the future.
  • Small food companies represent a realistic alternative to low lost commodity production.
  • The rate of market growth is far outstripping Ireland’s ability to supply - we need to start playing “catch up”.
  • Superior taste can be achieved by developing artisan-food-making skills.
  • Irish Artisan food currently commands an international reputation at the premium end of the market.
  • The reputation needs to be developed and nurtured if we are to benefit from an ever increasing market.

The Irish Poultry Industry

Background

The Poultry sector is worth about €150 million annually.

It comprises two sectors:

  1. Poultry meat (rearing birds for meat) – Value €120 (65m broilers annually, 3.5 m turkeys)
  2. Eggs (keeping table egg laying flocks)- Value € 30

These two sectors are supported by a network of breeders, hatcheries, slaughter/processing plants and egg packing centres.

The sector comprises about 850 commercial farmers and 10 poultry slaughter plants approved to EU standards.

The broiler industry is vertically integrated. Processors supply chicks and feed to farmers/growers and the farmers/growers supply labour and other inputs. This is a relatively low margin/fast turn-round business.

Teagasc’s Role

Teagasc has very few resources devoted to the sector at present. Nonetheless we have been involved in a number of important projects:

  • DAFF are required under EU broiler welfare regulations to have a training programme in place for broiler producers. That course was developed by Teagasc.
  • Technical assistance was provided by Teagasc in drawing up the specifications for the laying hens TAMS.
  • Technical advice has been provided by Teagasc to DAFF and Bord Bia on duck farm biosecurity and Salmonella control.
  • E-learning poultry courses are provided by Teagasc on free range egg and poultry meat production.

Current Issues and Challenges

  • Laying Hen Welfare Legislation: Cages to be replaced with colony system also known as enriched cages by January 2012. A €16 million Targeted Agricultural Modernisation Scheme (TAMS) for 90 existing producers involving 126 caged hen houses has been introduced. The uptake to date has been16 applications with 4 approvals.
  • There has been an outbreak of Salmonella in duck eggs since early Summer this year which afflicted backyard flocks. Up until now there was no regulation for the sale of duck eggs or for biosecurity or control of Salmonella on duck production units. As of 3rd December 2010 this has been rectified.
  • On the 30th June 2010 EU Broiler Welfare legislation has been transposed into Irish law.
  • Labelling of imported chicken portions – agreement reached with retailers on the labelling of sell-by dates of gas-flushed imported chicken portions. The original sell-by date cannot apply once the pack has been opened.
  • Margins have been adversely affected by the rise in feed costs.
  • Cost and logistical challenges continue to be presented by the management of poultry manure and IPPC licensing.

SWOT - Poultrymeat

Strengths Weaknesses
Local marketplace for fresh product
Consumer preference for Irish poultry
Quality Assurance Schemes
Good health status
Good value for money
Small scale ( 1% of EU production) and can’t benefit form economies of scale
Poor competitiveness compared to other EU countries
Low profitability
Opportunities Threats
Expected growth of 2% annually
Competitive price of poultry compared to other meats
Significantly increasing feed costs
Risk of avian influenza
Cost and complexity of compliance with legislation on environment protection and bird welfare

SWOT - Eggs

Strengths Weaknesses
Good health & quality standard
Strong public image
Excellent nutritive value
Low profitability and poor competitiveness
Stagnant growth, investment and innovation
Opportunities Threats
Increasing consumption
Value for money
Growing preference for locally produced food
Feed, environmental and welfare costs
Power of multiple retailers