Speech from President, Owen Brennan

New NIGTA President speaking at the Annual Dinner

Guests at the NI Grain Trade Annual Dinner included from left: Gerry Lavery, Permanant Secretary, DARD; Owen Brennan, President, NIGTA; Robin Irvine, Past President, NIGTA and David Small, Deputy Secretary, DARD.
Guests at the NI Grain Trade Annual Dinner included from left: Gerry Lavery, Permanant Secretary, DARD; Owen Brennan, President, NIGTA; Robin Irvine, Past President, NIGTA and David Small, Deputy Secretary, DARD.

To focus on food, we have seen more change of a fundamental nature in the last five years than we have in the previous 20. We have seen for example the closing price gap between Southern Hemisphere sources and our own for major commodities such as Beef and Lamb. In the case of Dairy, we have seen a closing of the cost advantage enjoyed by New Zealand in comparison to these islands. The global supply/demand dynamics are changing – and in our favour! However we also know that higher prices have in many cases been met with significantly accelerating costs, leaving net returns under pressure. In addition these general trends which are widely felt to be long term in nature have been accompanied by significant market volatility.

This week for example we have seen a 10 point fall in New Zealand Dairy auction prices.

While predicting the future remains as always a notoriously unreliable occupation best left to economists, there are some trends here on which a view can certainly be taken.

This week we have seen a company from our own trade and members of the IGFA, Connollys – Red Mills secure registration and a contract for supply of Horse Feed to China as part of a recently announced Chinese/Irish partnership in Thoroughbred Horse feeding. Well done to Joe and Bill Connolly who are leading that effort. The stated value to Ireland of this partnership over 3 years is €40m.

Newry man Jack O'Hare, left, the only person to be past President of both the NI Grain Trade Association and the Irish Grain and Feed Association with Bill Hodges, past Permanant Secretary, DARD at the NIGTA Dinner in Holywood. Photograph: Columba O'Hare
Newry man Jack O'Hare, left, the only person to be past President of both the NI Grain Trade Association and the Irish Grain and Feed Association with Bill Hodges, past Permanant Secretary, DARD at the NIGTA Dinner in Holywood. Photograph: Columba O'Hare

In the same week Kerrygold have announced a contract for UHT milk again to the Chinese market. I understand the annual sales of UHT milk in China are worth €8 billion a year.

In the UK and Republic of Ireland and in Europe generally there has been a significant change in perspective on the food industry. Over the last 20 years, it is fair to say that the UK and somewhat more surprisingly the Republic of Ireland has neglected and in some cases actively impeded its food industry through a combination of political and economic decision making, which saw a lack of interest in development and growth.

At a European level, this lack of commitment and interest was also evident in policy making which at times acted as if the status quo would always prevail, food would always be cheap and plentiful.

Europe also saw itself as being able to impose conditions on food production and supply which were at variance with policy and practise elsewhere in the world e.g. the opposition to new technologies which could reduce production costs.

So for example, we face the ludicrous outcome that a European farmer cannot produce meat or milk from a non-approved grain or soya variety, however, meat and milk products produced from the same non-approved varieties are free to flow into the European food market without restriction.

Indeed why should there be a restriction, as there is no proven risk nor indeed any capability to distinguish food produced from non European approved varieties from those approved, as the DNA does not pass the digestive system of the livestock consuming.

Even if the DNA did pass, there has not been recorded one single proven case globally of human ill health or mortality associated with the genetic modification of feed ingredients.

So there you have it, a policy at European level faithfully implemented at UK and Republic of Ireland level to protect consumers from a risk which does not exist, but which damages UK and Irish food producers and processors and exposes them to unnecessary and serious business risk. Lest there be any doubt as to the consequences in real terms of this process, consider in 2007 the loss of maize and maize by-products in the UK and Irish feed market. In Northern Ireland these accounted for approximately 15% of the feed supply and the good news was that it was possible to replace these products with grain and soya. The less good news was of course that grain and soya were already very expensive and in short supply and these additional costs were ultimately passed back to already hard pressed primary producers and processors. In Northern Ireland alone the grain trade estimate of the costs involved were £15m. This is in an economy where the total income from all Agricultural production is typically in the range of £150m and this only after the receipt of single farm payment. An argument is sometimes made that these policies benefit European cereal producers but a benefit which results in making the customer for locally produced grain significantly uncompetitive is unlikely to be good business. It is also important to observe that bad as this situation was in 2007, it was at least soluble. If the problem had affected Soya, it could not have been solved as the EU is and is likely to remain for the foreseeable future a deficit area for protein. Since 2007, we have also had the introduction of the so called technical solution where a 0.1% tolerance has been introduced for non-approved varieties. This small though critical concession on which the lobbying of our own industry had a significant influence, helps to reduce the business risk and cost earlier referred to, - however it does not eliminate it.

The opportunity for our sector was further highlighted in Northern Ireland in March with the launch of the NIFDA Appetite for Growth report which highlights the contribution made by Agriculture and Food to the local economy, almost £4 billion in sales and almost 100,000 people employed directly and indirectly, combined with significant opportunities for further growth over the next 10 years.

Features of this report that I would highlight are its independent preparation which gave it significant added credibility, combined with the clarity of its conclusions and recommendations.

This initiative, and others before it, have been taken in many cases by customers of NIGTA and are I believe worthy of our attention and support. Michael Bell has promised to make copies of this report freely available to all who require it.

It makes good reading and is highly relevant to our business.

Apart from its independence, the report makes clear the significant prospects of growth and this in sectors of direct interest to NIGTA including Dairy, Poultry, Beef and Lamb. To achieve this growth will require significant co-ordination between our sectoral interests and our political and public sector institutions. This is in the context of an economy in Northern Ireland which has a clearly enunciated policy to grow private sector employment and has identified food and agriculture as a highly significant focus for this growth.

In addition, we have seen the publication of a strategic plan for our sector, “Focus on Food”, which was authored by Industry and Government working together. Once again the opportunity is highlighted with a clear pathway for implementation, NIGTA applauds these efforts, the Appetite for Growth Work under the Chairmanship of Tony O’Neill of Moy Park who is our guest this evening and supported by the team at NIFDA. The Focus on Food work, chaired by Trevor Lockhart of Fane Valley, supported by the members of the Industry Advisory Panel with DARD, DETI and Invest NI again many of whom are our guests.

You have all given very generously of your time and we realise the importance of this to our industry and wish to do our part in continuing to support your efforts.

To that end, the Northern Ireland Grain Trade continues to develop in conjunction with AIC and IGFA the position of feed assurance to reduce business risk in the supply chain, to ensure that our industry meets best international practise and to assist in the promotion of the sales of the food industry into better paying - more premium markets wherever they can be found. We recognise the unsustainable nature of the returns in many of the markets currently being supplied and as highlighted in the Appetite for Growth report.

We have also drawn on independent guidance and support from Professor Patrick Wall of University College Dublin and Professor Chris Elliott of Queens University and his team. Professor Elliot is our guest this evening and will assist NIGTA in conjunction with AIC in communicating the steps we can take locally to deliver on these feed assurance objectives in a timely manner. As suppliers of the food industry, NIGTA recognise the fiercely competitive nature of the business and the volatility and shocks that afflict it. Despite the generally more favourable perception and outlook for the food industry locally and internationally, we also recognise the sheer scale of the challenges, a regulatory environment not always fit for purpose, a market providing in many cases sub-optional returns, a lack of a joined up approach both at industry and government level. We however fully support the approach of the food industry on these islands and as enunciated locally by NIFDA to plan for a better outcome. We fully recognise that a failure to plan would in itself be an explicit plan to fail.

Finally I would like to extend my appreciation on your behalf to our outgoing President, Claudine Heron of Barnetts. Claudine broke new ground for our association in so many ways and was outstanding in her efforts and represented our association very well.