Provision of food and agribusiness continuity amid the Covid-19 crisis needs isolation to work on farms and in food plants and then containers, storage and credit.
Clearly, overall human health and protection is the first priority and continuity of supply of food underpins this.
Looking at the impact of the coronavirus from an agri-food perspective, there are a number of interlinked supply and demand challenges.
Supply challenges
The first supply challenge is to make sure that farms can continue to operate and have milk and cattle collected when required.
A key challenge in this context requires following HSE protocols regarding farm procedures, lorry drivers, etc, while minimising essential visitors including non-vital inspections.
All of this may not be in the hands of individual farmers, so the Department of Agriculture, Bord Bia, Teagasc and vets must reduce on-farm inspections to an absolute minimum.
Across the food-processing industry, protocols are in place at this stage to minimise disruption and to ensure that product can move to supermarkets in Ireland and through export ports where possible.
However, there are bottlenecks in terms of availability of reefers and containers, mainly due to the knock-on effect of slower trade from China over the last two months.
Looking at the impact of the closure of pubs, restaurants and food service in Ireland, on balance, demand for food products will have shifted from foodservice to food retail.
The agri-food industry needs a combination of supportive storage schemes, where appropriate, and large scale extended credit underpinned by state guarantees
However, when this is mirrored across the EU and UK, it seems likely that while Irish food supply can be kept going through adherence to social isolation protocols and some luck, food demand for some products will diminish somewhat.
This is likely to lead to a situation where food processors, co-ops, meat plants, etc, could be paying for livestock and milk and other raw materials, but waiting quite a while for all product to move and in turn to be paid for.
This cannot continue for very long.
Very clearly, the agri-food industry needs a combination of supportive storage schemes, where appropriate, and large scale extended credit underpinned by State guarantees.
Substantial, indeed almost limitless, extended credit has been issued in Germany for large and small companies by the state bank KFW since last Friday.
Hopefully a significantly robust scheme can be introduced in Ireland, as soon as possible, which in particular recognises that 95% of all meat and dairy product is processed by companies categorised as large companies and not SMEs.
Generous supports
The key concern here is that while there is much talk from the EU commission of 'generous supports', state aid constraints, such as confining supports to SMEs, won’t wash in terms of meaningfully tackling this pandemic.
Aids to private storage (APS), providing they meet the full financial cost of delayed sales, can clearly work where product sales are delayed in dairy, for butter, cheese and SMP, and must be introduced as soon as possible.
This could mean a universal top-up of direct payments for the cattle and sheep sectors
But APS is not as effective in the beef sector, where freezing product normally leads to a significant fall in value.
This means that more radical flexible measures may have to be examined to support continuing payments.
This could mean a universal top-up of direct payments for the cattle and sheep sectors or the introduction of slaughter premium payments based on indicative price levels.
However, stock build-ups due to diminished demand, given Ireland exports 95% of its beef and freezing down of product is problematic from a value perspective, will present a specific challenge as the pandemic evolves.
Thorny problem
An additional very real and thorny problem developing is the impact of the fall in the value of sterling impacts on Ireland in particular.
Here again, economic prejudices that prohibit EU state aid supports for currency impacts must surely be looked at.
As was experienced grimly in the 2008 economic crash, having to deal with major economic disruption without having recourse to currency devaluation is a huge challenge.
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Provision of food and agribusiness continuity amid the Covid-19 crisis needs isolation to work on farms and in food plants and then containers, storage and credit.
Clearly, overall human health and protection is the first priority and continuity of supply of food underpins this.
Looking at the impact of the coronavirus from an agri-food perspective, there are a number of interlinked supply and demand challenges.
Supply challenges
The first supply challenge is to make sure that farms can continue to operate and have milk and cattle collected when required.
A key challenge in this context requires following HSE protocols regarding farm procedures, lorry drivers, etc, while minimising essential visitors including non-vital inspections.
All of this may not be in the hands of individual farmers, so the Department of Agriculture, Bord Bia, Teagasc and vets must reduce on-farm inspections to an absolute minimum.
Across the food-processing industry, protocols are in place at this stage to minimise disruption and to ensure that product can move to supermarkets in Ireland and through export ports where possible.
However, there are bottlenecks in terms of availability of reefers and containers, mainly due to the knock-on effect of slower trade from China over the last two months.
Looking at the impact of the closure of pubs, restaurants and food service in Ireland, on balance, demand for food products will have shifted from foodservice to food retail.
The agri-food industry needs a combination of supportive storage schemes, where appropriate, and large scale extended credit underpinned by state guarantees
However, when this is mirrored across the EU and UK, it seems likely that while Irish food supply can be kept going through adherence to social isolation protocols and some luck, food demand for some products will diminish somewhat.
This is likely to lead to a situation where food processors, co-ops, meat plants, etc, could be paying for livestock and milk and other raw materials, but waiting quite a while for all product to move and in turn to be paid for.
This cannot continue for very long.
Very clearly, the agri-food industry needs a combination of supportive storage schemes, where appropriate, and large scale extended credit underpinned by State guarantees.
Substantial, indeed almost limitless, extended credit has been issued in Germany for large and small companies by the state bank KFW since last Friday.
Hopefully a significantly robust scheme can be introduced in Ireland, as soon as possible, which in particular recognises that 95% of all meat and dairy product is processed by companies categorised as large companies and not SMEs.
Generous supports
The key concern here is that while there is much talk from the EU commission of 'generous supports', state aid constraints, such as confining supports to SMEs, won’t wash in terms of meaningfully tackling this pandemic.
Aids to private storage (APS), providing they meet the full financial cost of delayed sales, can clearly work where product sales are delayed in dairy, for butter, cheese and SMP, and must be introduced as soon as possible.
This could mean a universal top-up of direct payments for the cattle and sheep sectors
But APS is not as effective in the beef sector, where freezing product normally leads to a significant fall in value.
This means that more radical flexible measures may have to be examined to support continuing payments.
This could mean a universal top-up of direct payments for the cattle and sheep sectors or the introduction of slaughter premium payments based on indicative price levels.
However, stock build-ups due to diminished demand, given Ireland exports 95% of its beef and freezing down of product is problematic from a value perspective, will present a specific challenge as the pandemic evolves.
Thorny problem
An additional very real and thorny problem developing is the impact of the fall in the value of sterling impacts on Ireland in particular.
Here again, economic prejudices that prohibit EU state aid supports for currency impacts must surely be looked at.
As was experienced grimly in the 2008 economic crash, having to deal with major economic disruption without having recourse to currency devaluation is a huge challenge.
Read more
Coronavirus: feed mills ‘close to full tilt’ but no reason for panic
Teagasc to process BPS applications and derogations over the phone
Coronavirus: mart and farming updates as they happen
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