The EU Agriculture Commissioner, Dr Franz Fischler, did some blunt talking in Brussels last week when he said that the Irish dairy industry was out of touch with what the consumer wanted and had failed to adapt to market realities.
The message can hardly have come as a surprise to farming organisations or to the industry, both of which have concentrated far too much on EU intervention storage and not enough on product development. The same can be said of the beef sector, where innovation has also been lacking.
Reform of the EU Common Agricultural Policy, at present under way, has sharpened the need for a radical change of direction within Irish agribusiness. The "decoupling" of payments from production levels has been proposed as a means of keeping costs down within an expanded EU and to avoid the creation of food mountains. Farmers will receive direct payments. And production levels and support prices will fall. In spite of stiff resistance, there is little doubt that a broad change in policy will be agreed in Brussels. This departure, however, offers an opportunity to concentrate on quality and added-value, rather than on traditional supports.
Dr Fischler, a long-term friend of this country, urged us to play to our strengths. We are the lowest-cost producers of milk and beef in Europe because of our climate and good grass growth. But we put five times as much butter into intervention as the Italians and three times as much as the French. Cuts in intervention prices would, therefore, seriously affect us unless we switched to the production of premium products such as milk desserts, yogurts and cheese. There were huge urban markets in Britain and on the Continent, Dr Fischler said, and they should be supplied with new and interesting dairy products.
Some progress has been made by the major co-ops in the areas identified. Ingredients for the fast-food sector have been successfully developed. But much more remains to be done if Irish agriculture is to grow and thrive.
Dr Fischler is not alone in advocating a radical overhaul of food production. A seminar organised by An Bord Bia (Irish Food Board) last week urged food and drink companies to target convenience stores in Britain. The business, worth €29 billion this year, is expected to grow to €35 billion by 2006 and offers outlets for confectionery, snacks, bread and sandwiches, soft drinks and alcohol, fresh/chilled dairy produce, fast foods and other materials. The same holds true on the Continent where convenience foods and new dairy products are experiencing growth.
There is no future for Irish agriculture in producing food for EU intervention at reducing prices. The challenge is to be innovative and creative. It can be done. The success of "Baileys" is a prime example. We must find what the consumer wants and sell it at a premium. Ireland has a green, clean image in Europe. We enjoy a low- cost production advantage. The beef and dairy sectors must capitalise on those strengths with new products.