Perhaps one lesson we learned the hard way from the Great Famine was not to put all our eggs in one basket, writes Eoin Lowry, editor of the 2015 KPMG/Irish Farmers Journal Agribusines report. The same is true today – we must develop diverse markets that secure sustainable growth for the sector, agribusinesses and farmers alike.
The underlying fundamentals are strong. If today is Monday, then by Friday there will be approximately 700,000 additional mouths to feed. Such is the rate of expansion of the world’s population as we head towards nine billion people by 2050. This is challenging every aspect of how companies do business and how we will feed the world in the future.
But, what do we know about this new world? By 2050, more people will live in Asia than in the rest of the world combined. One constant throughout this year's KPMG/Irish Farmers Journal agribusiness report is China. It is dominating the discussion and driving the change.
While it is important for Irish agribusinesses to have a presence there, the real opportunity for Ireland may be in China’s ability to absorb food from the key exporting nations such as New Zealand, Brazil and the US. This provides an opportunity for Irish produce to command premiums in more established markets.
With 55% of our exports going to the UK, the greatest opportunity for Irish agribusinesses may be on our doorstep. The population of the UK is expected to grow by 10 million in the next 15 years to 70 million. Even though it is important to diversify, this is our core market and must not be forgotten.
Despite spending such a small percentage of income on food, the Western consumer is demanding more from it. Along with tasting great, food needs to be safe, traceable, nutritious, healthy and at the right price point. This presents possibly the greatest challenge for the industry.
Ireland is a high-cost economy of small scale producing premium protein. Are we doing enough to target the consumers who are willing to pay for the very best? Our beef and lamb could be sold as a luxury product, similar to the way Champagne and Rolls Royces are sold to the Chinese. Anything is possible in a market where a select whiskey can retail for upwards of $30,000 a bottle.
Technology is changing how we live. Established institutions such as the large fast-food chains and supermarkets are now struggling to adapt to the connected consumer. This is forcing them to re-evaluate their business strategies, which have been so successful in the past.
The status quo is being challenged as the consumer holds more power than ever before. No longer will bigger beat smaller, but it will be the innovative companies such as Chipotle and Shake Shack that will win in the future.
The full 2015 KPMG/Irish Farmers Journal Agribusines report will be available online from 10 pm on Wednesday 20 May and available with the Irish Farmers Journal print edition in shops nationwide on the morning of Thursday 21 May.
The key points from the 2015 KPMG/Irish Farmers Journal are represented in one graphic below: