Agri-Business and Rural Development

School of Agriculture and Food Science.

Alan Renwick, Anthony O’Malley and

Doris Läpple

11th of June 2014

Innovation in the Irish

Agrifood Sector: Overview

Outline

• Background

• Highlights of

Findings

• Conclusions

• Recommendations

What is Innovation?

• Overused?

• Definition -

‘renewing, changing

or creating more

effective processes,

products or ways of

doing things’

Why Innovation is Important

• A small domestic market means that Ireland has to look

abroad for markets and growth, particularly with the

removal of dairy quotas

• Increasing trade and agricultural policy liberalisation mean

less support and more competition for Irish agrifood

products on international markets

• The domination of the sector globally by a few large

corporations means that firms need to innovate to maintain

and grow their position

• The need to move away from commodity markets and the

associated issues of volatility and price pressure

• The need to increase production but maintain the ‘green’

image that is seen by many as a key competitive advantage

for Ireland

Direct Demand of Innovation : Agri-food Supply Chains

Indirect Demand of Innovation

Research

Intermediaries

Input suppliers (e.g Goldcrop, Dairymaster etc)

Farmers Cooperatives (e.g. Aurivo, Dairygold etc)

Commodity traders (eg F.C. Stone)

Processors (e.g. ABP, Kepak, Dawn etc)

Haulage Wholesalers/Retailers (e.g. Dunnes, Musgraves etc)

Agri-food consumers Pharmaceutical market Energy market (e.g. renewable energy)

Policy-making agencies & funding bodies Social interest groups

Irish Government (DAFM) SFI/IRC

Enterprise Ireland EPA

Higher Education Funding Council

Universities - UCD, UCC etc Third level Institutes - DIT, ITT etc Research Organisations Teagasc Private companies (e.g Kerry, Glanbia)

Extension & consultancy Teagasc (consultancy & extension services)

Land Agencies: ACA

Industry associations/Lobbies with an active role in innovation

Irish Food & Drink Federation/IDB/ IFJ/IFA/ICSA/ICMSA/ Irish Exporters

Association

Financial Services

Bank of Ireland, Ulster Bank, AIB, Rabobank Grant Thornton, IFAC

TYPICAL INNOVATION

USERS

TYPICAL INNOVATION

CREATORS INNOVATION FACILITATORS

Skills Development

Innovation brokers Bord Bia /ICOS /ICBF/AHI

Education & training services UCD, UCC (education); Teagasc land-based colleges

NGOs & charities / Local councils

INNOVATION ACTORS (indicative, not exhaustive list)

Source: Derived from original concept by Lamprinopoulou

Fundamental

• The basic premise is that for Ireland to have a

successful Agrifood sector in the future, all parts

of the system have not only to work well

individually but also function collectively as well.

• For example, there is no point having world class

food manufacturers and processors if we have no

raw material supply from Ireland.

Linking the Innovation System

• In the report we

consider a range of

current activities/

initiatives

• Links created

through

– Stimulus

– AHI/ICBF

– FHI/APC/DPTC

Research Links Developed through

DAFM Stimulus Fund (2010-2013)

How well are they working?

• These pictures shows the extent of the

connections but not the strength/quality of these

connections and what they are doing in terms of

boosting the performance of the agrifood sector

• Through stakeholder interviews and data analysis

we investigate this further

• Following slides highlight stakeholder views

– Indicative not definitive

– Useful for highlighting level of agreement

How well is the system doing?

0 1 2 3 4 5 6 7 8 9 10

Development

Commercialisation

Viable

Jobs

Competitiveness

Collaboration

Environment

Average Disagreement

Overall Scored as 6.5 out of 10

Individual Components

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

R&D Food/Farm Org Public Private

Value Chain

6.4

5.8

7.6

7.0

6.1

1.4 1.1

2.0

1.3

1.7

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

1 2 3 4 5

Input supply

Production (farming)

Trading and

logistics

Processing/Manufact-

ure Retailing

By Sector

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Inputs Farm Processing

Axi

s Ti

tle

Beef

Dairy

Sheep

Tillage

What does the data tell us?

• Series of indicators

– Inputs (Expenditure on R&D etc)

– Outputs (Patents, Publications etc)

– Outcomes (Farm and Firm performance)

• Compare across Europe (where available beyond

Europe too)

• Focus on a couple

– University Publications

– Total Factor Productivity of Agriculture

Performance within EU: Inputs

0 0.2 0.4 0.6 0.8 1

Business Research

Research into Industry

Intensity

R&D Personnel

Tertiary Education

Research into Agriculture

GERD

Score of 1 means best performing in EU

Performance within EU: Outputs

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Citations

Co-operation

Co-opetition

Innovative Businesses

Patents

Patents Biotech

Marketing/Org Innovation

Score of 1 means best performing in EU

Performance within EU: Outcome

0 0.2 0.4 0.6 0.8 1

TFP

Gross operating Surplus

GVA Food and Drink

GVA Agriculture

GVA growth

Share of Exports

New Products

Score of 1 means best performing in EU

0.55 - 0.62 0.51 - 0.55 0.41 – 0.50 0.29 – 0.40 0.20 – 0.28 0.15 – 0.19

2

1

3 4 5

7

6

The world isn’t waiting….

Publications in Agriculture and Food

Science

0

5000

10000

15000

20000

25000

30000

35000

40000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Ireland United Kingdom New Zealand United States Brazil China

US

China

Brazil

UK

NZ

Ireland

Huge Growth

Hard to see but significant rise in Irish publications

over the period from 300 to >900

Source: Scimago

Growth in Agricultural Productivity (TFP)

Source:USDA

Barriers and Facilitators Score

Category Factors

< -2 Strong

Barrier Land Mobility, Age Structure, Farm Business Structure

-1 to -2 Medium

Barrier

Power of Supermarkets, Availability of Finance, CAP Support,

Chain co-ordination

0 to -1 Weak

Barrier

Structure of supply chain, Attitude to risk, Level of leadership

within sector

0 to +1

Weak

Facilitator

Finance Skills, ICT (rural broadband), University engagement with

industry, Employment Legislation, Private consultants

+ 1 to +

2 Medium

Facilitator

Government Support, Regulation, Advisory services, Training in

agrifood skills

>+2

Strong

Facilitator

Research capacity, Education levels, Physical infrastructure, Tax

regimes

Disagreement

-60% -40% -20% 0% 20% 40% 60%

Broadband

Legislation

Finance Skills

Risk

Supply Chain Structure

Leadership

% rating as Barrier % rating as Facilitator

Conclusions

• From the analysis undertaken a series of

conclusions are drawn concerning the state of the

Irish Agrifood Innovation System.

Ireland has a number of truly world class innovative companies, however the problem is there are simply not enough of them and there are too few new innovative

companies emerging from which world leading companies could emerge.

Conclusions

• Within Ireland there is a high

level of government support for

the agrifood sector and for

Science and Technology within

agriculture and food sectors in

particular.

• However, much of the science

and the efforts at encouraging

innovation are supply pushed

rather than demand pulled.

• In addition, Ireland lags behind

other countries in terms of

business investment in research

and development.

Conclusions continued

• Companies are finding it difficult to access the knowledge they

require. Much of the engagement that occurs is ad hoc in nature.

• Ireland is relatively strong at innovation that removes cost from the

supply chain (Lean principles), however it is weaker in terms of the

development of new products

• Evidence points to access to finance being a key constraint in the

innovation process.

• As as a small country can co-ordinate activity more easily than other

larger countries. However, more generally there is a lack of a

culture of collaboration across and between all components of the

Agrifood Innovation System.

• The structural issues in agriculture that are well known as more

general are also a significant barrier to innovation at the farm level.

• Through the discussions undertaken for the study, there is a

perception that a conservative mindset dominates organisations

with power and influence and that leaders in the agrifood sector

need to be more open to the benefits of co-operation, collaboration

and partnerships for innovation.

Recommendations

• Incentives for more R&D within Firms

• Incentives for more KTE within

Universities

• New Products – Adding Value

• Novel funding arrangements for

companies

• Education and Advisory – Redirection?

• Greater Collaboration – Industry

Forums

• Structural Change

• Fit for Purpose Structures

• Is it just about people?

Acknowledgements

• Sincere thanks to:

• All those that gave up

so much of their time to

be interviewed and help

with the study

• The Bank of Ireland for

funding the research

• Karen Keaveney for

map production