FDII Presentation to Joint Committee on Jobs, Enterprise and Innovation 7 th May 2013

1. FDII Presentation to Joint Committee on Jobs, Enterprise and Innovation7th May 2013

2. The Irish Agri-food sector 1 in 8 jobs in the Irish economy 690 enterprises (94% are SMEs) Supplies the majority of Irelands €14bn grocery sector €9bn exports in 2012 2/3 of indigenous exports 30% of net foreign earnings €11.5bn purchases in the domestic economy and €1.75bn payroll The largest net exporter of beef, lamb, dairy ingredients in Europe

3. Economy Wide Impact of Agri-Food Growth Food Harvest 2020 has ambitious growth targets particularly an increase in exports to €12bn by 2020 Direct expenditure in the Irish economy is equivalent to 60% of sales. This compares with 19% for the rest of manufacturing Export growth in food has and will have a bigger impact on the wider economy than any other sector FDII Report Sharing the Harvest estimates up to 30,000 jobs if exports targets are achieved

4. FDII Policy Priorities – Alignment with Agri-Food Production Priorities Processing Priorities Marketplace Priorities Consumer Priorities

5. The policy dichotomy in Ireland

6. Financing Expansion and Renewal in the Food Sector • High capital cost sector with relatively low margins over time • Requires medium to long term financing facilities that are currently not available • Existing grant aid levels, constrained by state aid, are not sufficient to build the capacity required for export growth and enabling technologies to boost productivity • State Aid Map 2014-2020 now being negotiated • Food-sector specific funds (NPRF / EI) • Innovative approach to Capital Gains Tax relief to incentivise reinvestment in the sector • Maintain R&D tax credit and strengthen for SMEs

7. Manufacturing Cost Competitiveness • Food and Drink accounts for 25% of industrial energy use • Electricity 15 – 25% higher than UK sister plans and gas differential is even higher • 15/20% increases last year and again this year • There is a direct relationship between cost competitiveness and jobs – maintaining existing jobs and creating new jobs • A focus on network / pass through charges • Revisit the PSO levy and the Capacity Payment Mechanism

8. FH2020 Growth Targets for Meat Sector Beef – 40% growth in output value Pigmeat – 50% growth Sheepmeat – 20% growth (Sector view is potential for 45%) Irish Meat Export Performance

9. Meat – Key Issues Growth in output volume (animal numbers) – jobs dividend Maintaining our specialist beef herds (sucklers) critical Marketplace differentiation – QA, grass-fed, sustainability credentials International market access very important Policy: CAP, WTO, FTAs Real threat from upcoming Free Trade Agreements (FTAs) On-farm productivity(BETTER Farms, BTAP, STAP) NPD & EPD investment

10. Dairy: the potential for real growth • Production has been limited by milk quota since ‘80’s • But cumulative productivity gains throughout this period • That cold not be realised • Quota expires in 2015 • 30 years of productivity gains can now be realised • Supply environment is positive • Global population is growing • Consumption of dairy products is growing by double digits in developing economies • Ireland can gain market share

11. What does growth look like • Value of Dairy Exports € 2.7 bn • Dairy products is 30% of Agri-Food Exports • 27,000 people employed by industry • We produce 5.5 bn litres of milkEU 27 139 bn litres (3%) • From 1.1 million cows EU 27 23.1 ml cows (4%) • 50% growth projected by 2020 2.75 bn litres extra milk • 50% extra processing capacity New dairy sites under development • 200,000 extra cows Increased farm productivity

12. Prepared Consumer Foods Diverse, innovative & consumer-focussed

13. Value Added Food and Beverage Targets in FH 2020 • Value-added Food and Beverage sector ranges from infant formula and functional ingredients through to alcoholic beverages and prepared consumer foods • “On the basis of available data the Committee believes that, working from a 2008 baseline, that growth of 40% in the added value output of the food and beverage sector is achievable by 2020.” Food Harvest 2020

14. Significant economic contribution • Prepared Consumer Foods make a major contribution to overall food sector. • Entire contribution is not captured in CSO data

15. Growth Deliverables for 2020

16. Overcoming challenges • Increasing investment in PCF companies • Sector specific funds • Shaping the domestic grocery sector • Competitiveness • Grocery sector code • Health, Obesity and consumer lifestyles • Livewell • Innovation and new product development

17. Conclusions Big and important Irish based sector with large domestic and export markets and strong linkages to the wider economy FH 2020 is the national strategy for the sector and is expansionary in nature The industry faces barriers to growth – these urgently require faster policy implementation in certain instances and a reconsideration in other instances Get this right and the growth potential will result in up to 30,000 jobs