review of the irish agri-food industry 2017 … pareto principle (also known as the 80-20 rule) is a...

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REVIEW OF THE IRISH AGRI-FOOD INDUSTRY 2017-2018

DIGITAL PRODUCT OF THE YEAR 2017

PUBLISHINGCOMPANY OF THE YEAR2016

PUBLISHINGCOMPANYOF THE YEAR2016

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The land area of the Republic of Ireland (RoI) is 6.9

million (m) hectares (ha), of which 4.4m ha are used for

agriculture and a further 0.73m ha are used for forestry.

Approximately 81% of agricultural area is devoted to

pasture, hay and grass silage (3.6m ha), 11% to rough

grazing (0.5m ha) and 8% to crops (including cereals),

fruit and horticulture production (0.36m ha). The average

land price in Ireland in 2015 was estimated to be €8,194

per acre (p/ac).

According to the Department of Agriculture, Food

and the Marine (DAFM), the agri-food and drink sector

accounted for 10.7% of Ireland’s exports and 8.4% of

total employment (2015 data). In 2016, Irish agri-food

and drink exports increased by an estimated 2% to

approximately €11.15 billion (bn), according to Bord

Bia, the Irish Food Board (2017 data).

In 2016, the Gross Agricultural Output (GAO) was

valued at €6.92 bn (DAFM, 2016 data).The beef and

dairy categories are the largest and account for 38.8%

and 29.5% of GAO, respectively. Other sectors to have

a share in GAO include pig (7.8%), sheep (4%), cereals

(3.9%), and other (16%).

The UK was the main destination for Irish agri-food and

drink exports in 2016, accounting for 37% of all exports;

32% went to EU markets; and 31% went to international

markets.

The distribution of Ireland’s agri-food and drink exports

in 2016, by sector, was as follows: dairy products and

ingredients – 30%; beef – 21%; prepared consumer

foods – 17%; beverages – 13%; pigmeat – 6%; seafood

– 5%; poultry – 3%; sheepmeat – 2%; edible horticulture

and cereals – 2%; and live animals – 1%.

Introduction


The Irish Farmers Monthly is a direct mail targeted publication aimed at top commercial farmers. Established in 1975, IFP Media published Irish Farmers Monthly as one of its flagship titles.

A target market is a group of customers towards which a business has decided to aim its marketing efforts and ultimately, its merchandise. A well-defined target market is the first element to a marketing strategy.

The Pareto principle (also known as the 80-20 rule) is a common rule of thumb in business, eg. “Eighty per cent of your sales come from 20 per cent of your clients”. The Italian economist Vilfredo Pareto, observed in 1906 that 80% of the land in Italy was owned by 20% of the population.

The United Nations Development Programme Report (2006), demonstrated that this was still the case as the distribution of global income showed the richest 20% of the population controlled 82.7% of the world’s income.

So, for success in agribusiness, if you are supplying farm inputs and services, then your advertising and communications should target the relevant farmer audience. As can be seen from the circulation of the Irish Farmers Monthly, this is the case when you analyse the following data. Targeting top commercial livestock and arable farmers are paramount to the Irish Farmers Monthly database.

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Irish food exports still growingThe Irish food and drink industry recorded its seventh

year of consecutive growth in exports during 2016.

Since 2010, the industry, as a whole, has seen a 41%

or €3.27bn increase in the value of exports, according

to Bord Bia. Figures from January to July, 2017, show an

increase of 12% in the value of food and drink exports.

The abolition of quotas and overall dairy expansion,

combined with the recovery in the market over the past

year, have led to an increase in dairy exports of 22%.

The meat and livestock industry experienced growth of

5%, while seafood exports were up 18% in the first six

months of 2017. A 13% rise in the prepared foods sector

was also noted, with the edible horticulture and cereals

industry recording a small increase of 1%.

So far this year, Africa has seen a 23% increase in Irish

exports. North America has seen a 20% rise, while the

Middle East recorded a 15% hike. There was also a 15%

increase in exports destined for Asia.

Other EU destinations recorded a 14% increase in Irish

exports. Ireland experienced an increase of 6% in the

value of exports to Britain in the first six months of this

year which was encouraging given all the pressures with

sterling.

Overall, 45% of the growth has come from international

markets; EU markets have expanded by 35%; and there

has been 20% growth in Britain. Germany is our sixth-

largest export market for food and drink with a value of

€600m during 2016.

Irish dairy, beef and prepared foods are Ireland’s top

three food exports to Germany. Export performance

to date for 2017 has been up 24%, driven by significant

increases in dairy and prepared foods.

Irish food and drink products are sold in 180 markets

worldwide – worth €11.15bn, to date. When the first

six months of 2017 are compared to the corresponding

period in 2016, every sector has seen some growth in

exported product.

Reduced farm machinery salesAccording to Ireland’s Farm Tractor and Machinery

Trade Association (FTMTA), tractor sales fell by 12% in

the first six months of 2017. There were 1,168 tractors

sold between January and June, 2017, compared

with 1,335 in the same period last year. However, the

increasing horsepower (hp) of the tractors sold is a

consideration here.

One in five tractors sold was in the over-150hp bracket,

and, typically, bought by contractors and large tillage

growers. Some 53% of the tractors sold were between

100hp and 120hp.

Sales of backhoes increased by 40% during the first half

of 2016, while sales of self-propelled forage harvesters

were also strong

Tractor prices have increased again with the latest

emissions regulations adding to cost. The average

price for a standard 100hp tractor is now approximately

€55,000, with higher-specification models costing up to

€80,000.

The latest registration figures from Ireland’s Central

Statistics Office (CSO) show high numbers of imported

tractors, but also a recovery in new tractor sales.

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Some 194 used tractors were imported in October, 48

more than the same month last year. This brings the total

so far this year to 2,114, a 35% increase on the first 10

months of 2016.

Meanwhile, there were 93 new tractors registered in RoI

last month. This is a major jump on the 69 registered in

October 2016, but still significantly behind 2015 figures.

There were 1,661 new tractors registered between January

and October, a 6.5% drop on the same period last year.

The top-five selling counties are Cork, followed by

Tipperary, Galway, Wexford and Kilkenny. John Deere is

the market-leader closely followed by New Holland with

Massey Ferguson in third place.

This year, 2017, has been unusual, as the number of

imported used tractors is significantly higher than new

tractor sales. This has been the case since mid-2016,

when the Brexit referendum in the UK caused the value of

sterling to fall, making used tractors from the UK cheaper

to buy for Irish farmers.

According to the National Ploughing Association (NPA),

the value of all equipment at the National Ploughing

Championship (NPC) last September was in excess of

€45m.

In a positive development for tillage farmers, TAMS II will

offer the opportunity to invest in global positioning system

(GPS) equipment and other sustainable farming machinery.

According to the Agricultural Engineers Association (AEA)

in the United Kingdom (UK), new tractor sales in Northern

Ireland (NI) during 2016 increased by 3.4% to 454 units.

Across the UK, as a whole, tractor sales fell by 2.2% to

10,602 units in 2016. NI was one of the few regions to

experience an increase in sales; however, this was from a

low base.

Other than in 2015, the 454 tractors registered last year

in NI is the lowest number in AEA records, which cover

the past 14 years. The highest number of registrations in

NI in recent years was in 2007, when 1,020 tractors were

registered.

The FTMTA’s Grass & Muck event takes place every second

year at Gurteen College, Roscrea, Co. Tipperary. This

event alternates with the FTMTA’s Farm Machinery Show

which takes place in Punchestown, Co. Kildare.

Last year, Grass & Muck attracted 11,000 visitors. While

it has numerous static exhibits, the event’s real attraction

comprises the working demos during which mowers,

tedders, rakes, harvesters, wagons, balers and wrappers

are put through their paces. Grass & Muck will return to

the Gurteen College site on May 17, 2018.

The first-ever FTMTA Farm Machinery Trade Auction was

held at Punchestown on Saturday, September 30, 2017.

It attracted more than 2,500 people and €1.2m worth of

machinery was sold on the day.

In total, there was over 250 lots on offer including tractors,

wrappers, balers, bale lifters, combines, seed drills, trailers

and teleporters. There were more than 500 registered

bidders on the day and a further 100 online.

In 2016, the market for self-propelled silage harvesters on

the island of Ireland was around 45 machines, representing

a drop of about 14% on 2015. This is an overall investment

of over €13m. The relatively strong market is driven by

attractive finance deals at a time when many agricultural

contractors have serious cashflow issues.

The Claas brand is number one, John Deere is in second

place followed by New Holland. Claas has the widest

range of self-propelled forage harvesters and accounts for

half of all forage harvesters sold worldwide.

Baled silage market still growingBaled silage has never been as popular on Irish farms

and with increasing livestock numbers, the market for

silage is growing. Preliminary CSO estimates for June

2017 show that the total number of cattle was 7,363,500,

an increase of 142,300 (+2.0%) on June 2016.

The number of cattle aged two years and over

(excluding cows and bulls) increased by 72,600

(+10.1%). Cattle aged one to two years increased by

60,700 (+3.3%) and dairy cows increased by 34,800

(+2.5%).

The need for low-height, high-protein grass has forced

many farmers into taking out more mature paddocks for

baled silage. The weather also has a big bearing on the

amount of bales wrapped in any year.

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So, due to the prolonged periods of wet weather this

has been a good year for making baled silage. The

expected shortage of forage next spring is also pushing

bales up to record price levels.

Over the last five years, the use of a wide polythene film

to bind bales before wrapping has grown significantly.

The McHale Fusion is the market leader in this area.

As it stands, at least 10 combi-wrappers have been

launched over the last five years, which are capable

of wrapping using this ‘film & film’ method, with other

manufacturers currently in development.

Forage in short supply for spring 2018It looks like it could be a very long winter for livestock

producers in the west of Ireland and in parts of Ulster.

The spells of very poor weather in July, August and

September have severely hampered forage-making

operations in the region.

The poor weather has also left farmers with no option

but to start feeding from whatever fodder they already

have in store. This is, of course, good news for the

compound feed millers as they will be expected to

make up the forage gap with appropriately formulated

concentrates.

First-cut silages made in late April and in early May are

of exceptional quality but quantity is obviously an issue.

Given the break in weather after this period, most late first-

cuts deteriorated in quality and there was little opportunity

to take second or third cuts of silage on many farms.

So, the lack of forage stocks and lower feed quality will

make for a difficult winter on some farms. Straw is also

scarcer and more expensive this year so that makes

the problem worse as a tonne of straw incorporated in

a mixer wagon diet can normally replace one tonne of

silage.

Tough times for Irish cereal growersA deepening income crisis for tillage farmers, low prices

for a fifth consecutive year and poor weather, require a

Government-backed plan, an Oireachtas committee has

been told. In fact, there has been a 20% decline in Irish

cereal acreage over the past 10 years.

The acreage of cereals was down again this year and, of

course, the wet weather conditions during the harvest

made baling straw even more difficult.

However, despite a lower acreage planted the cereal

production was up on 2016 at 2.3m tonnes (t), as spring

barley reached record yields. According to Teagasc,

spring barley yields were a record high at

7.8t/ha, while yield (t/ha) for wheat, barley and oats –

both spring and winter – were all higher than the previous

year.

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Preliminary CSO estimates for June 2017 show that the

area under cereals fell by 8,900ha (-3.2%) to 272,200ha.

This was mainly due to a decrease of 9,700ha (-12.9%)

under winter barley and a decrease of 900ha (-1.3%) in

the area under wheat.

Teagasc estimates large decreases in the area of

land planted to the 2017 winter crops. It estimates

that 123,000ha of winter cereals have been sown – a

drop of 14.5%.

Delayed harvest, straw lying on fields and poor sowing

conditions have contributed to the decline in sowings

and, maybe in some cases, a poor price outlook for

2018.

However, there are some positives as lower conacre

prices have significantly reduced costs while higher

yields have compensated, to some extent, for lower

cereal prices. There was also a much higher price for

straw this autumn even if it was not all saved due to

poor weather conditions. Tillage farmers growing

malting barley and oats are getting a contract price so

they are not depending on world commodity prices.

Longer term, overstocked dairy farmers short of grass

and silage will need to purchase barley and straw, etc.

from tillage farmers, as renting or buying extra land is

not an option for them.

Already, many livestock farmers who use mixer wagons

have made arrangements with tillage farmers to supply

them with barley, straw, forage maize, brassicas and

fodder beet, etc.

Boortmalt currently has over 600 suppliers growing malt

barley from 60,000ha of land in Ireland, with plans for

this to increase next year.

Not surprisingly, combine harvester sales fell this year,

following several years of low grain prices. Some 25 new

combines were sold in 2017, down from 31 last year. It is

only a fraction of the 80 combines sold in 2012. Claas is

the top seller this year.

Bigger farm machines and higher-horsepower tractorsWith bigger dairy herds and less labour available, the

trend is to purchase bigger mixer wagons and bigger

slurry tankers. Of course, much of the slurry is spread by

farm contractors.

Recent research carried out by the Association of Farm

& Forestry Contractors in Ireland (FCI) indicates that

land-based contractors provide slurry spreading services

for up to 10bn litres (L) of slurry every year on Irish farms.

The FCI believes that the schemes currently in place to

promote low emissions-spreading technology are unlikely

to be sufficient to meet future ammonia targets.

These schemes should be extended to include land-

based contractors in order to achieve the levels of

ammonia emissions reductions being sought by the

Government, the national chair of the FCI, Richard

White, said.

Irish farm contractors in Ireland employ close to 10,000

people, offering a range of services to the wider

agricultural community.

According to the FCI, contractors use more than 500m L

of diesel annually and operate more than 20,000 tractors

– about one third of the national fleet.

FCI has confirmed that its next biennial conference and

exhibition, Confex, will take place at the National Show

Centre, Cloghran, Swords, Co. Dublin, on January 10,

2018. FBD Insurance is the lead sponsor of this one-day

event.

FCI says that it maintains a database of more than 1,000

farm and forestry contractors across the island of Ireland

– all of whom will be invited to participate in the event.

Education & Teagasc updateTeagasc income in 2016 was €187m, which is €12m

more than its 2015 income. There was an increase of

€5.6m in grant aid compared to 2015. Knowledge

transfer (KT) income increased by €6.6m (32%) and

research income was similar to the previous year. Over

400 A1 scientific papers were published

In KT, there was an increase in advisory services income,

which was achieved by delivering new schemes through

a partner, Farm Relief Services (FRS) Networks.

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Key digital developments:

• Online nutrient management planning tool (NMP)

rolled out by Teagasc to produce detailed nutrient

management plans for farms;

• Merger of Pasture Base Ireland and Agrinet grass

growth databases; and

• Public website powered by a new content

management system.

Key knowledge transfer & research outputs:

• 42,115 farmer clients serviced and 12,359 farmers in

Teagasc facilitated discussion groups;

• Teagasc trained over 170 tutors to deliver the

Beef Data Genomics Programme (BDGP) training

courses. Over 24,000 participants, in total, were

trained;

• 4,400 people took part in the adult Green Cert

education programme between autumn 2014 and

the end of 2016;

• New pig research facility opened in Teagasc

Moorepark, Co. Cork; and

• Research, education and conference centre opened

at Teagasc Ashtown, Dublin.

Key national and international events:

• Beef 2016 – National beef open day at the Teagasc

Animal and Grassland Research and Innovation

Centre, Grange, Co. Meath;

• Over 1,800 food scientists attended the

International Union of Food Science and Technology

Congress in Dublin organised by Teagasc;

• First ‘Energy in Agriculture’ event held in Gurteen

College, Co. Tipperary; and

• ‘Farming and Country Life’ event in Teagasc

Mellows campus, Athenry, Co. Galway.

Key collaborations:

• New joint dairy programmes established with

Arrabawn and Aurivo co-ops; and

• Memorandum of Understanding signed between

Teagasc and Sanyuan Foods, China.

The DAFM’s new KT scheme was opened to 5,000 dairy

and 7,000 beef farmers in 2017. Funding of €100m

under the Rural Development Programme has been

allocated for 27,000 farmers to participate, for three

years, in KT groups.

The Agricultural Consultants Association (ACA) currently

has 144 professional members with a further 271

professional, technical and administration staff employed

throughout Ireland. An independent survey conducted by

Irish Small and Medium Enterprises (ISME) of the entire

membership in 2010, estimated that its members now

advise in the region of 44,500 farmers.

Teagasc is the main provider of further education

(Level 5/6) in agriculture, food, horticulture, forestry

and equine studies. Higher level courses are delivered

in partnership with third level colleges. The Teagasc-

owned agricultural colleges are in Ballyhaise, Co. Cavan;

Clonakilty, Co. Cork; Kildalton, Co. Kilkenny; and at the

Botanic Gardens in Dublin. The education department

of Teagasc partners with Gurteen College, Co.

Tipperary; Pallaskenry, Co. Limerick; and Mountbellew,

Co. Galway (private agriculture colleges) in the delivery

of agricultural education. These colleges offer a range

of Level 5 and Level 6 courses in agriculture, machinery

and equine.

There are 15 institutions in the RoI offering a range

of agricultural and related third level courses. These

include four universities: National University of Ireland

Galway (NUI Galway); National University of Ireland

Maynooth (NUI Maynooth); University College Cork

(UCC) and University College Dublin (UCD) and 10

Institutes of Technology (Athlone, Blanchardstown,

Carlow, Cork, Dundalk, [Galway Mayo Institute of

Technology – GMIT], Letterkenny, Sligo, Tralee and

Waterford).

In NI, agricultural-related courses are available at the

College of Agriculture, Food and Rural Enterprise

(CAFRE) in Co. Antrim, with campuses in Greenmount

and Loughry, as well as at Queens University, in Belfast.

Good prospects for poultry industry post BrexitThe biennial Northern Ireland Poultry Industry

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Conference, which took place at CAFRE Loughry

Campus, last November, highlighted a bullish outlook

for poultry meat, with consumers increasingly choosing

it over other proteins. Export opportunities to Asia and

elsewhere also look positive.

Delegates heard how the sector had ‘remained resilient’

over the past year with total value sales in Ireland

estimated at £742m (€832m).

In NI, total value sales increased by 2%, from £253m in

2015 to £258m in 2016.

Total value sales in the poultry industry have also

increased in the RoI, by 3.15% to £465m (€521m) in

2016.

“Rising volume sales in the UK are likely to have a

stronger role than price inflation in driving value growth

within poultry, with 15.9% growth to £3.4bn by 2021

forecast,” according to Professor Geoff Simons from

Queens University.

“However, it is likely that the Irish and UK poultry

market will face some hurdles during the two-year Brexit

negotiations regarding trade agreements and tariffs,”

he added.

As regards global poultry production, Japan is the

world’s number-one poultry importer and Poland is

Europe’s number-one producer, followed by France and

Germany.

Declan Billington, CEO of John Thompson & Sons Ltd,

the largest feed compounder on the island of Ireland

cited Asia as a major potential export market for NI

poultry. He said: “We need to target Asia as a huge

potential market after Brexit, rather than Europe.”

In the RoI, the poultry sector supports around 6,000 jobs

and there are some 370 producers involved in poultry

production. The RoI exports 129,000t, with the UK

market accounting for 70% of shipments, which mainly

consists of processed product, while other key markets

include France and the Netherlands. Rivalled only by

pigmeat, poultry is the single largest category of meat

consumed in Ireland, accounting for some 37% of meat

consumption.

There are almost 240 producers involved in egg

production in the RoI and over 3.3m laying hens. The

retail sales of eggs in Ireland are valued at €100m with

the average consumer eating 169 eggs a year. Most

of the recent growth in egg consumption is in the

younger demographic where the frequency of purchase

continues to increase.

There are 14 feed millers and premix suppliers approved

by Bord Bia, the Irish Food Board. Last June, the

Swedish chicken processing company, Scandi Standard,

announced that it has entered into an agreement to

acquire Manor Farm, the largest chicken processor in

Ireland in a €70m deal.

The Manor Farm processing plant is in Shercock, Co.

Cavan. It has approximatley 130 farmers contracted as

growers and 43 contracted as breeders. It employs 850

people and operates a feed mill, which has sales of

€80m and produces solely for its contracted growers.

Pig producers doing wellThe first half of 2017 was a relatively positive period for

Irish and EU pig producers. As of March 2017, the EU is

the world’s largest exporter of pigmeat, followed by the

US and Canada.

The biggest global importer of pig meat is China

followed by Japan and Mexico. The rate of pigmeat

consumption in most countries is relatively stable from

year to year.

However, rising Chinese income levels and resultant

increased buying power has generated a rapid increase

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in pigmeat consumption. It has grown from 12kg per

head in 1980 to 40kg today in a market with 1.4bn

people

Currently, the pig industry employs about 7,000 people

(on-farm, slaughtering/processing, feed manufacture,

transport, services, supplies, buildings and equipment)

mostly in rural areas and small towns.

Commercial pig production is carried out in fewer

than 350 pig units which produce about 98% of our

production. Typically, units are large and specialised

with skilled staff who utilise the latest technology.

JMW Farms is Ireland’s biggest pig producer with about

300,000 animals, selling 7,000 a week (5,000 in Ireland

and the balance in the UK). Based in NI, JMW Farms is

investing in a €2.5m ‘finishing’ farm in Co. Louth after

spending three years securing planning permission.

The farm will handle 10,000 pigs at a time, where they

will spend 12 weeks before being sent to slaughter.

JMW Farms’ Jim Wright was a finalist in the Ernst &

Young (EY) Entrepreneur of the Year.

The company has annual turnover of £40m and was a

‘bit better than breakeven’ last year. Mr Wright said,

2014 was its ‘best year’ when it made profits of €3m but

the market has turned since then.

JMW’s Farms’ business model involves buying old farms,

securing planning permission and building out new

facilities. The company makes all its own equipment,

all its own feed, generates its own electricity, and

transports the animals itself.

It has 15 company-owned farms and 50 operated

by contractors. This includes two breeding farms

in counties Offaly and Monaghan with Louth

coming on stream. It also has farms in Dorset

and Cornwall in England. Sainsbury’s is its biggest

customer in the UK and it exports ribs to the US and

feet and heads to China.

Other large pig producers in the RoI include the Kiernan

family based in Co. Cavan who have many units in the

north midlands. At the Teagasc pig conference last

October, a survey was published comparing 28 large pig

units (c.800 sows) who manufactured their own feed with

71 who purchased their feed requirements (c.700 sows).

The cost per kg dead weight was €1.02 for home milling

versus €1.04 for those who purchased their feed. The

feed cost per pig produced was €85.08 for home milling

versus €86.75 for those who purchased their feed. The

number of pigs produced per sow per annum was 26.1

for the home feed millers versus 25.2 for those who

purchased their feed.

Billy Costello, who has a large pig unit and an anaerobic

digester in Nurney, Co. Kildare, also has large pig units

and anaerobic digesters in Britain and Germany.

Excellent prospects for renewable energyThere are nearly 9,000 biogas – or anaerobic digestion

– plants in Germany. They are, typically, operated by

farmers, and turn renewable energy crops like maize or

turnips, plus manure, into a gas constituting of roughly

50% methane and 50% CO2 .

Anaerobic digestion can be used to generate electricity

and heat, or can be processed into renewable natural gas

and transportation fuels. This process could certainly help

us to meet our EU targets for renewable energy and help

us avoid a potential fine of €360m per annum.

Ireland, along with Denmark and Luxembourg, has the

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most challenging target for greenhouse gas (GHG)

emissions reductions in the EU; a 20% reduction on

2005 emissions levels by 2020. Emissions targets also

include emissions from agriculture and waste disposal

which currently account for 34% of Ireland’s total GHG

emissions.

At present, the RoI is only halfway towards meeting

its EU targets, with just 8.6% of energy consumption

derived from renewables.

Today, more than 250 windfarms power Irish businesses

and communities across the all-Ireland energy market.

Their total capacity now exceeds 3 gigawatts (GW),

which is enough to power almost 2m homes. Just over

20% of our electricity is now generated by wind energy.

Ireland is still heavily reliant on fossil fuels, the bulk of it

imported. Ireland imports 85% of our energy, at a cost of

€5.7bn, or about €15m every day. About 97% of imports

are fossil fuels; oil (56%), natural gas (31%), and coal

(10%), according to the Sustainable Energy Authority of

Ireland. The remainder is electricity (2%), and biofuels

(1%).

More than 20,000 acres of land owned by Irish farmers

are now under solar energy contracts as solar energy

development companies are chasing the lucrative rural

renewables market.

Gas Networks Ireland is in talks with 12 separate farming

entities, including one potential co-op, with a view to

establishing digesters and purification plants to capture

gas from slurry and pump it directly into the national gas

network.

The potential is that 20% of the gas demand in Ireland

could be met by renewable gas by 2030 so this could be

a great boost to farm incomes post Brexit. This could be

easily ramped up from feedstocks that are already close

to the gas network.

Dairy industry in Ireland is boomingThe dairy industry in the RoI is on track to increase milk

production from 5bn L of milk per year in 2015 to more

than 7bn L in 2018. There has been more than 600 new

entrants to dairy farming in the last three years.

Milk price in the RoI has risen from a base price close to

22c/L up to 32c/L in the last two years. Over half of the

milk in the country is produced from herds with over 150

cows. The proportion of dairy cows in herds of 100 cows

or greater increased from 13% in 2005 to 47% in 2016.

Average herd size in the ROI is now approximately

90 cows, the production per dairy farm is 370,000L and

the average yield per cow is quite low at only 5,000L.

The dairy industry is facing a severe shortage of new

recruits. The average dairy farmer is currently 58 years of

age, so we will need approximately 6,000 new entrants

over the next decade to replace retirees and meet the

requirements of expanding herds.

However, Irish dairy farms have the potential to double

the average milk solids produced by their dairy cows

within the next 20 years, according to Donagh Berry of

Teagasc.

According to Irish Cattle Breeding Federation (ICBF)

data, Cork has 367,556 dairy cows, Tipperary has

161,921, Limerick has 118,461, and Kerry has 107,050.

So, these four counties account for 52% of all the cows

in the country, which has around 17,000 active dairy

farmers.

In September 2017, the volume of raw milk produced

was 159.67m L. This was 5.5% higher than the

corresponding month in 2016. Eurostat data for May and

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June 2017 show a 2.5% rise in the number of Irish dairy

cows, compared with 2016. This is in contrast to a 1% fall

in the EU as a whole.

There are only 2,684 dairy farms in NI and 315,800 cows.

The average herd size is almost 120 cows. Average yield

is around 7,000L and cows in NI receive at least twice

as much compound feed as those in the RoI. The dairy

industry in NI employs more than 2,000 people.

NI Agricultural CensusPreliminary results of the June 2017 Agricultural

Census in Northern Ireland have been released by the

Deptartment of Agriculture, Environment and Rural

Affairs for Northern Ireland.

The area of cereals grown decreased by 2% to 32,600ha

with winter wheat, winter barley and oats all decreasing

in 2017. The area of spring barley grown is similar to the

previous year and remains the most popular cereal crop

with 14,700ha planted across NI.

The area of potatoes increased by 9% to 4,100ha,

building on last year’s recovery from the record low of

3,800ha grown in 2015. The area of arable crop silage

increased by 4% to 3,500ha whereas, the area of forage

maize increased by 12% to 1,400ha.

For forage maize, this ends the downward trend since

the peak of 3,500ha grown in 2008.

Cattle: Total cattle numbers were unchanged from June

2016. From its all-time high in 2016, the number of dairy

cows decreased slightly to 315,800 head. The number of

beef cows decreased by 1% to 267,100 head.

Sheep: There was a 2% rise in the number of breeding

ewes compared with 2016. Numbers have fluctuated

in recent years, falling to a 20-year-low of 876,000 in

2010 before increasing to 972,000 this year, which is the

highest level since 2006. Overall, the total number of

sheep recorded was almost 2.1m, a level not seen since

2006.

Pigs: In comparison with 2016, sow numbers increased

by 3% to 41,400, whereas, the overall pig herd was 8%

larger. Most pig categories are showing an upward

trend.

Poultry: Laying birds recorded for June 1, 2017,

increased by 10% to 3.9m birds, while broiler poultry

numbers increased by 9% at that date. The laying bird

population has shown strong growth since 2013 and this

is partly due to new producers who have entered the

industry.

The size of the agri-labour force is relatively unchanged

from the previous year with 47,800 workers. There has

been a small decrease in the number of full-time farmers

but this was offset by an increase in the number of other

regular workers both paid and unpaid.

Impact of Brexit on agri-businessOur dairy products and pigmeat exports are well

diversified and world markets are growing in line with

higher income and an increased world population, so

Brexit will have little impact longer term.

With modern IT technology, the increased bureaucracy

necessary, post Brexit, for cross-border trading should

be minimised. A huge volume of milk from NI is

processed in the RoI, so some problems may arise for

food quality assurance schemes where, for example, the

same manufacturing facility is processing milk from the

RoI and NI.

However, Brexit will have a severe impact on the beef

industry. Just under 50% of all beef exported from

13


Ireland in 2016 was destined for the UK, 40% went to the

rest of Europe and the remainder, approximately 10%,

was shipped to non-EU markets.

Post Brexit, if Ireland is granted access to the UK market

under a free-trade agreement, it would mean that Irish

beef would have to compete with lower-priced product

from South American countries.

The Brazilian beef price, based on the year-to-date, is

33% beneath the Irish R3 steer price. In addition, the

UK’s departure from the EU could see the Common

Agricultural Policy (CAP) budget decline by 10%.

This, along with lower beef prices, would see the

average Irish beef farm experience an income drop of

over 35%.

For cattle-rearing farms, this would be a drop of €4,000;

income of other farms could decline by €5,000 per

annum.

Good year for cattle industryThis year, 2017, has been a positive year for live exports.

So far, 100,000 young calves have been exported to the

Netherlands, Spain and Italy. To date, almost 17,000 Irish

cattle have been exported to the Turkish market, and

this follows shipments of almost 20,000 head in autumn

2016.

According to the Irish Farmers Association (IFA), Turkey

has an annual import requirement of 500,000 head of

live cattle and the RoI could supply up to 100,000 head

of this requirement each year.

Cumulative throughputs for cattle to meat plants, as of late

November 2017, are up 6% or over 86,000 at around 1.54m

head. The largest increases were for steers and heifers, up

by 9% and 7%, respectively, while cull cows are up 4%.

As of late November 2017, the beef trade continues to

be dominated by a strong factory appetite and high

levels of throughput. At the top of the market, regular

sellers are securing a base of €3.90/kg for steers and

€4.00/kg for heifers, with most cattle are selling at

around €3.85/kg for steers and €3.95/kg for heifers.

The cattle kill to date this year, is running 81,500 head

ahead of the same time last year and the annual kill is on

track to be the highest in more than 10 years. Demand

at home is being bolstered by a thriving manufacturing

trade and growth in exports outside of the Eurozone.

Exports to Hong Kong have increased taking 2,935t of

beef in September. Indeed, Hong Kong took more Irish

beef than Italy, Germany or Sweden. The Philippines

took 1,532t in September, bringing its total purchases of

Irish beef to almost 16,000t for year to date.

However, the wet weather this autumn and an early

winter has forced many livestock farmers to house cattle

early due to poor grazing conditions. This will increase

winter feed costs and force some farmers to reduce

stock levels and sell for a lower price.

14


Teagasc estimates that only one in five of the 35,000

farms with suckler cows will be economically viable in

the long term. In 2015, 45% of suckler farms were only

sustainable due to off-farm employment.

Ireland’s Beef Data and Genomics Programme

(BDGP) was launched in 2015 to inject up to €52m

per annum, for six years, into the suckler beef sector,

while accelerating genetic improvement and improving

environmental sustainability.

However, fewer than 24,000 of the original 30,000

applicants have been able to qualify for payments.

Latest figures from the ICBF show that the suckler herd is

continuing to decline as dairy cow and calf numbers grow.

According to ICBF suckler cow numbers are at their

lowest in a decade, as the dairy herd expands at a rapid

rate. There are 1,004,334 beef-bred cows in the RoI

currently, a drop of almost 80,000 on the 2009 peak,

the latest figures from the ICBF show. This is the lowest

number of suckler cows since 2007, when there were

993,889 beef-bred cows.

So, the meat industry will be depending on beef-cross

calves from the dairy herd for an increasing percentage

of their future supplies.

Indeed, ICBF statistics have shown a significant increase

in the use of beef-breed bulls on the Friesian dairy herd

in Ireland over the last four years. Beef-breed sires were

used on 39.25% of the Friesian dairy herd of 1,205,941

cows in 2016.

Angus sires were used on 235,502, or 19.5% of all

Friesian cows, while Hereford sires were used on 157,688

Friesian cows, or 13.07% of the total.

Limousin sires were used on 4.7% of all Friesian cows,

being used as the sire for 57,756 cows. Belgian Blue

bulls were chosen by farmers for 23,972 Friesian cows,

accounting for 1.98% of the total.

A beef-cross calf is worth over €100 more than a dairy

bull calf from the same cow or the equivalent to 1.6c/L

so we can expect to see more farmers using beef cross

on dairy cows not being bred for replacement.

Feed trade doing wellWith greatly increased milk prices, dairy farmers in

particular have been feeding extra compound feed

this year. In addition, with a shortage of forage the

compound trade can expect extra sales this winter and

next spring.

The CSO data for feed, fertilisers and energy/lubricants

purchased is as follows:

As can be seen due to increasing livestock numbers,

compound feed sales are increasing and are likely to

increase further due to bigger dairy herds and improved

milk prices. Fertiliser sales have not changed much in

volume terms but have been impacted by the decline

in the tillage sector. However, they are likely to increase

due to a higher demand for forage from the dairy herd

and improved milk prices.

Sheep trade improvingAccording to Bord Bia, cumulative figures for sales to

meat plants as of late November for year to date have

reached 2.57m head of lamb, up 10% or 234,000 head

compared to 2016. The long-term prospects for Irish

sheepmeat is for prices to, at least, hold steady and

possibly strengthen, according to Kepak, which is a

major exporter.

There has been impressive growth in Germany, Belgium

and Scandinavia where Irish sheepmeat has performed

well. In Sweden, demand has increased by 30% in the

year to date. The US market also has huge potential as

it only produces 45% of what it consumes. Kepak has

invested heavily in state-of-the-art facilities to provide

cooked and ready-to-eat lamb options such as lamb

burgers.

The December 2016 DAFM census shows the ewe flock

rising by 137,037 head to 2.64m ewes with total ewe

numbers rising 450,000 head since 2009. The greatest

increase occurred in counties Donegal, Mayo and

2014 2015 2016 Change

Compound feed €1,296.6m €1,317.4m €1,354.2mValue €+2.8%

Volume +4.1 %

Fertilisers €565.6m €565.1m €503.2mValue €-11%

Volume -0.8 %

Energy & lubricants €455m €400.3m €369.4mValue €-7.7%

Volume +0.2 %

15


Galway. If Kerry and Wicklow are included, these five

counties possess 50.6% of the national ewe population.

There are around 45,000 registered flock-keepers on the

DAFM database. On average, there were 108 sheep per

flock with only 31% above the average flock size.

According to the CSO, last June sheep numbers were

up by 73,700 (+1.4%) to 5,252,900 while non-breeding

sheep were up 2.5%.

Excellent long-term prospects for forestryDue to the likely impact of Brexit on cattle prices, an

ageing farming population and the attractive grants for

forestry, we can expect to see more livestock farmers

switching more of their land to forestry in the future.

Recent economic analysis from Teagasc confirms that

forestry is a better commercial land-use option than

cattle and sheep farm systems on marginal land, even

allowing for the long-term nature of forestry.

For 2017, a target of planting a total of 7,140ha of

forestry was outlined in the DAFM’s Forestry Programme

2014-2020.

However, only 4,259ha had been planted as of October

2017. So this means that approximately 40% of the

target has yet to be completed and planting is at a 60-

year low. During 2016, 6,500ha were planted, which was

98% of the target.

More than 13,000 Irish farmers received a forestry

payment in 2016, and the most popular planting option

attracts an annual guaranteed premium of €510/ha.

Currently, only about 11% of land here is under forest

compared to an EU average of 42%.

In the most benign EU scenario, whereby Ireland is

afforded a less stringent target of cutting emissions by

25% alongside a substantial carbon credit for forestry,

the State faces a significant challenge, involving an

annual reduction in carbon emissions of 11m tonnes,

from the current level at 46m.

According to the IFA, farmers are holding off on

planting until the DAFM removes restrictions on

planting productive marginal land and paying farmers

a premium on all land they are obliged to set aside for

environmental enhancement.

There is significant potential for wood fuel to displace

fossil fuel, particularly in the generation of heat in

industrial, commercial, domestic and institutional

markets. After wind energy, wood fuel is the largest

contributor to renewable energy generation in Ireland.

Timber supply in Ireland is set to increase significantly

over the coming decade. The total harvest of

commercial roundwood in Ireland in 2015 was 3.02

million m3. This is forecast to increase to over 6m m3 by

the mid-2020s and increase further still to 7.8m m3 by

the mid-2030s

Ireland exports 80% of its timber products – sawn,

timber and panel board. According to the Irish Forestry

and Forest Products Association (IFFPA), the total

value of forest product exports in 2015 was €355m.

The total export figure can be further broken down as

sawn softwood being €121m and panel board exports

amounting to €190m. In 2015, IFFPA reports that Ireland

was the second-largest exporter of oriented strand

board and particle board to the UK behind Germany

while it was the largest exporter of medium density

fibreboard to the UK.

All our major competitors in these product categories

are other EU nations. In relation to sawn softwood,

Ireland exported €67.13m to the UK in 2015. This

ranked Ireland at number four in the exporters list, with

Sweden, Finland and Latvia ahead in the list. The UK

sourced just 37% of their sawn softwood needs from the

domestic market so, post Brexit they will still need to

import our timber products.

Produced by De Paor Consultancy on behalf of Irish Farmers Monthly

www.irishfarmersmonthly.com

The De Paor Consultancy has the experience and contacts to help clients optimise the marketing of products and services, to enhance corporate communications, improve their corporate image or to recruit suitably qualified and experienced agribusiness personnel.

To date we have done work for Irish and multinational clients in the following sectors:

agri-food business, animal health, feed, equipment and machinery, charities, breed societies, construction and property, commercial publications and consultancy firms, IT, public service, professional and trade associations.

review of the irish agri-food industry 2017 … pareto principle (also known as the 80-20 rule) is a...

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