John Moloney, chair of the Food Wise 2025 agri-food strategy committee, and Kevin Bellamy, senior global analyst with Rabobank Europe, addressed the first session of the ASA conference in Kilkenny’s Lyrath Hotel today.

Bellamy said a closer look at trends across the milk and oil markets could indicate that milk prices will not rise again until oil prices do. “Oil prices are now at levels seen in 2009, the same year that milk prices witnessed a fall,” he said. “Milk export markets are dependent on developing countries’ emerging markets, but these are also the oil-producing nations. We need to keep an eye on how oil affects those countries.”

He also pointed out that extra shipping costs for liquid milk balance out the drying costs when oil prices are higher.

Bellamy believes that as China becomes less important to the global milk market, we will see more balanced growth. “The high prices China was willing to pay forced some people out of the market, but growth in China has been slowing for some time now. China has still got 200,000t of milk powder in storage,” he said.

“While supply contraction is expected, the need for farmers in Europe to pay back post-quota investments will still support growth,” said Bellamy. “Quota fines at the beginning of this year caused shrinking in supply but farmers in Europe need cash so they carry on producing.”

According to Bellamy, the next stage in dairy volatility will be when the tightening of supply in dairy, adjustments and demand evolution come to pass next year.

Beef markets more reasonable

The Rabobank analysis of beef markets shows them to have been much more reasonable over the last number of years. “Beef has been in short supply and has benefitted from substitute products rising in price,” said Bellamy. “Irish beef prices have remained buoyant this year due to 44,000 fewer animals being slaughtered. The way the euro has moved against sterling makes it an ideal market in England.”

In terms of climate change, Bellamy believes that while carbon is a global problem, water is a regional one. To deal with it, we must put together sustainability programmes that suit each area. Things that affect some farmers in Saudi Arabia, Australia or California do not necessarily affect us in Europe.

Moloney: skills and people key to industry growth

John Moloney, outlined the importance of exports for Ireland. The group’s report aims to grow the value of agri-food exports by 85% to €19bn and increase the primary output value to €10bn.

According to Moloney, the drivers of success are global economic growth, development of human capital, competitiveness, market development, innovation and sustainable competitiveness.

“The key to it is the skills and having people with the right capacity to take it to the next level,” said the agri-food strategy committee chair. “Only then can we improve our return on investment. There is a 40% better marginal return from investment in human capital than in knowledge capital. To have a sustainable cycle here, we must build and continue to build great people who can have real market insights; competitive innovators who will drive market growth.”

He also pointed out the importance of the UK’s relationship with the EU and our need for a risk-management strategy should it become an issue. “Geopolitical issues are very important to the development of this industry,” he said.

To remain sustainable, the Food Wise 2025 strategy will focus on driving out costs that do not add value. “State resources need to be reorientated to developing new markets,” said Moloney.

“The one-Ireland approach should be used across all agencies,” he said.

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