Looking back, 2018 is a year that will live long in the memory, particularly for Irish farmers and the agri-food industry given the extraordinary variance we saw in weather over the course of the last 12 months.
In March, the Beast from the East rumbled into town and bombarded the country with snows and icy temperatures that brought many parts of the country to a standstill.
Enniscorthy Red Cross in snow collecting dialysis patients and doing emergency runs for the HSE. The tractor had to be used to knock down the larger snow drifts to collect one patient but for the most part the Land Rover Defender travelled under its own steam.
Food supply chains were pushed to breaking point during Storm Emma as supermarkets quickly ran out of staple foods such as bread, eggs, meat and vegetables. The snow highlighted the fragility of the modern food supply chain with Irish supermarket shelves resembling something from a warzone rather than a three-day weather event.
Storm Emma wasn’t the only seismic happening to hit the supermarket industry in 2018. In May, the second and third largest supermarkets in the UK, Sainsbury’s and Asda, announced plans to merge and create a new supermarket giant that would control almost a third of the £185bn (€210bn) UK grocery market.
Slightly further back from the supermarket aisles, Ireland’s dairy expansion continued apace with milk production set to break 7.4bn litres this year, thanks to very strong growth in milk production in the last quarter of the year.
There was a slight wobble in milk production in June and July as the summer drought severely hit grass growth on many farms in the south and east of the country. However, the feed industry reacted to fill the fodder shortage with sales of animal feed tonnages up 20% to 30% on normal years.
This incessant growth in milk supply is continuing to drive structural changes at the dairy processing level, with more co-op consolidation.
In March, Monaghan co-op LacPatrick found itself in financial difficulty as it struggled to pay a competitive milk price to its farmers.
This led to the co-op seeking out a merger with neighbouring Lakeland Dairies to form what is now the second largest co-op by milk supply in Ireland.
There was further dairy consolidation in 2018 when two of the smaller co-ops, Feale Bridge & Headley Bridge co-op and Newtownsandes co-op, announced they would merge with Kanturk dairy processor North Cork co-op.
Difference of opinion
At co-op board level, a major difference of opinion arose in October as Glanbia announced the launch of its Truly Grass Fed brand into the US market. For many in the dairy industry, this was seen as a threat to the Kerrygold brand, which has served the Irish industry so well for the best part of 60 years. You can expect this controversy to rumble on into 2019.
In the beef sector, we saw Kepak snap up the red meat business of UK-based 2 Sisters, which comprises four processing sites across the UK slaughtering 250,000 cattle and more than one million lambs.
The move by Kepak is the latest of a string of deals over the last two years by the big three Irish meat processors – ABP, Dawn and Kepak – which has seen them become the dominant players in the meat industry, not just in Ireland but also in the UK. Between them, ABP, Dawn and Kepak control 60% of the entire combined cattle kill in the UK and Ireland.
Kepak in Clonee. \ Philip Doyle
Since the Brexit vote in 2016, the strategy of the Irish beef industry has been noticeable in that the three biggest companies have all doubled down on the UK market by snapping up UK meat businesses to give them a processing footprint within the UK itself. This Brexit strategy is in contrast to the dairy industry, which has continued to diversify away from the UK and limit its exposure. Less than half of Irish cheddar goes to the UK market, where it was almost 70% in 2016.
On Brexit itself, there is as much uncertainty about the final outcome as there was this time last year. It looks set to go right down to the wire whether UK prime minister Theresa May can get her deal through the House of Commons, which is a disaster for businesses trying to plan.
UK prime minister Theresa May and European Commission president Jean-Claude Juncker.
Brexit was not the only issue causing uncertainty in the global trade picture during 2018. US president Donald Trump continued to tear up the rule book when it came to trade over the past 12 months and trade tensions between the US and China are now at an all-time high.
Trump angrily tweeted his way through 2018 as he sought to make global trade “fair” once more for the US. China was the target for much of the US president’s ire. During the year, President Trump slapped tariffs on $200bn worth of Chinese imports coming into the US. In response, the Chinese hit US soya bean imports coming into China with a 25% tariff. The move saw US soya bean exports collapse by 99% overnight and pushed soya bean prices in the US to decade-lows.
However, the US president did get some results in 2018. In August, the renegotiation of the old North America Free Trade Agreement (NAFTA), which was so despised by the Trump administration, was completed and a new trade deal between the US, Mexico and Canada was signed. Known as the US-Mexico-Canada Agreement (USMCA), there are wins in this deal for US farmers, particularly with better access to the highly protected Canadian dairy market. In Europe, the EU completed the signing of a new free-trade deal with Japan, which will be one of the most comprehensive trade agreements ever concluded. The deal is a major win for EU farmers, with Japan one of the most sought-after food markets in the world as the country is only 40% self-sufficient in food. In the deal, tariffs on imported European cheese will reduce from 40% to zero, and beef tariffs from 38.5% to 9.5%.
The year ended on a sweet note as we saw Beet Ireland roll out a series of meetings across Ireland in December to make its pitch to farmers for restarting the sugar industry in Ireland.
The company is seeking to raise an initial €1m from farmers to fund the pre-development stage of a proposed new sugar processing and bioethanol factory outside Castledermot, on the Kildare-Carlow border.
However, the total investment needed to revive the sugar industry in Ireland will be a significant €300m, which is the cost of building a new sugar processing and bioethanol factory that will have a capacity to produce 210,000t of sugar annually, 19m litres of bioethanol and 250,000t of beet pulp.
Beet Ireland has given farmers interested in putting money into the new venture until the end of this year to commit.
It will be interesting to learn in early 2019 what the farmer take-up has been like and whether we could see the first moves towards bringing back a sugar industry in Ireland.