In the 12th edition of the Irish Farmers Journal – KPMG Agribusiness Report, Tom McEvoy and our Agribusiness team examine the future of food production on the island of Ireland, from inside the farm gate all the way to the very latest developments in consumer foods.
This publication's overall aim is to highlight the challenges facing the industry but also to show the resilience and opportunity for growth across the sector. The need for regulatory certainty, continued government support is clear and so too is the need for technology adoption to allow the ambition of everyone in the sector to produce the best possible product.
Farm outlook
The challenges facing food production in Ireland are multifaceted. From market volatility, environmental regulations, climate risks and policy uncertainty to labor shortages, access to land and an aging farmer population.
However, amidst these challenges lie numerous opportunities. Despite the dominance of the dairy industry, export data reveals a diverse portfolio including beef, sheepmeat, pigmeat, poultry, drinks, seafood, horticulture, and prepared consumer foods.
Market diversification beyond traditional territories like the UK, into emerging markets such as China, the US, and Germany, offers resilience against economic fluctuations.
Ireland's reputation for quality produce, sustainability, and innovation allows for premium pricing and added value along the supply chain. Collaboration within the industry fosters knowledge-sharing and product development, driving overall growth.
If we are to have resilient farmers, we must think about how we can change the on-farm income model
Succession planning
Over the past two decades, the demographic of farmers in Ireland has shifted, with an aging population raising concerns about succession and the future of agriculture. Both the Republic of Ireland and Northern Ireland have seen an increase in the average age of farmers, with significant portions over 60.
There's a need to encourage young farmers into the sector, but barriers like high costs and lack of support persist. Succession planning, involving the transfer of knowledge, skills, and ownership is crucial for the sector.
Proactive measures are essential to ensure a sustainable future for Irish agriculture, with collaboration between government, farming organisations, and the wider community crucial for success.
Addressing succession challenges today will safeguard the future of agriculture and promote innovation and growth in the years to come.
Primary food processing outlook
Beef
UK trade deals with Australia and New Zealand have intensified competition in key markets, notably in beef, impacting Irish exporters. These agreements, featuring generous tariff-free quotas, grant substantial access to the UK market for beef and sheepmeat. The lower prices of Australian and New Zealand products pose a significant threat to Irish exporters, prompting strategic adjustments amidst increased competition.
Dairy
With the abolition of milk quotas in 2015, dairy processors in Ireland significantly expanded their processing capabilities to accommodate the surge in milk production, with output soaring by over 50% to 8.8 billion liters by 2022.
However, this rapid growth has resulted in an overcapacity issue. Despite having processing capacity for an additional 3 billion liters, the challenge lies in spreading production evenly throughout the year.
The retention of derogation is also crucial for viability. Dairy's future in Ireland hinges on maintaining sustainable practices amidst regulatory changes and global challenges like climate change.
Prepared consumer goods – Food processing
While Prepared Consumer Foods industry faces rising costs, they are increasingly turning to innovative solutions such as lean manufacturing techniques, to enhance efficiency and reduce expenses.
Despite a recent decline in interest in plant-based alternatives, there remains a strong focus on product quality and sustainability, with hybrid products gaining traction. Waste prevention and valorisation have emerged as crucial trends, reflecting a broader industry shift towards minimising inefficiencies and sourcing local ingredients to ensure supply chain security. In recent years, the food processing industry has emphasised adding value.
There has been a substantial growth in the prepared consumer foods (PCF) export sector in the Republic of Ireland, reaching €3.1bn in 2023 (Bord Bia, 2024). This growth, driven by value-added products aimed at end-use consumers, marks PCF as a resilient and distinct sector within food and drink exports.
Global market outlook
In the face of surging global demand for beef, Irish farmers confront formidable challenges in competing against dominant producers like Brazil and Australia. Despite comparable farm-gate prices to major export markets, Ireland's beef industry struggles to maintain financial viability, relying heavily on support payments.
While Asian markets offer potential growth opportunities, intense competition and looming environmental regulations threaten Ireland's export prospects. The prospect of increased Brazilian production and the potential ramifications of a UK-Brazil trade deal further compound these challenges.
Amidst these headwinds, the future of Irish beef hinges on the industry's capacity to innovate and add value to its products. Adaptation to evolving market dynamics, coupled with strategic initiatives to enhance competitiveness and sustainability, will be paramount in securing the industry's long-term viability and relevance in the global marketplace.
Regulation & policy
Impact of CSRD across the sector
The Corporate Sustainability Reporting Directive (CSRD) marks a significant shift in corporate reporting, aiming to promote sustainable behavior and innovation among companies. The first phase requires large entities on EU regulated markets to report in 2025 on 2024 results, with all other large EU companies following suit in 2026. Companies exceeding certain criteria must report, including those with over 250 employees, net revenue of €50 million, or total assets of €25 million.
For co-ops, compliance involves examining various aspects of their operations, from climate impact to biodiversity loss, and disclosing related metrics. Data flows from farm to co-op will increase, facilitating reliable reporting. Down the value chain, considerations include resource use and consumer impacts.
Through enhanced and consistent reporting of ESG matters, the CSRD will drive sustainability and innovation in companies throughout the supply chain.
EU climate policy
The European Union has committed to reducing greenhouse gas emissions by 55% by 2030 and achieving climate neutrality by 2050, as outlined in the Climate Law of 2021. Despite recent setbacks due to farmers' protests, EU climate policy remains steadfast, though agricultural policy shifts have stalled. Climate impacts are accelerating across Europe, posing significant risks to agriculture
Recent EU climate policy focuses on emissions reduction and enhancing nature's capacity to absorb carbon. While political shifts may influence priorities, existing climate targets are legally binding, necessitating contributions from all sectors. A transformation to sustainable agriculture is imperative, demanding preparation for future impacts and a just transition.
Download
Read the 2024 Irish Farmers Journal – KPMG Agribusiness Report in full to explore the intricate web of factors that will define the trajectory of the agri-food sector in the years to come.
Get in touch
The food and agribusiness sector is a complex and competitive arena. If you have any queries on how we can help develop your business, please get in touch with please contact Tom McEvoy, Head of Food & Agribusiness. We'd be delighted to hear from you.
Tom McEvoy
Partner, Head of Food & Agribusiness
KPMG in Ireland
