Food production in Northern Ireland has enjoyed 12 years of continued growth but to succeed against the current very challenging market place the Northern Ireland food industry, especially the dairy sector, needs to be more market lead according to Dr David Dobbin, group chief executive of Dale Farm Ltd and chairman of the NI food and Drink Association.
Speaking at a meeting of the Northern Ireland Grain Trade Association, Dr Dobbin stressed that the food industry faced a number of challenges that are disrupting the market and causing the current deflation, volatility and turmoil.
“Oversupply and weakening global demand had led to a general fall in commodity prices,” he added.
“Favourable global weather had resulted in two successive bumper harvests and ideal grazing conditions. The ending of quotas is leading to a surge in EU milk output and the development of fracking and green energy had resulted in an energy price war with Opec, with this war fast becoming a last man standing battle.
“Food demand had been weakened by a Russian ban on EU food produce and a slow down in Chinese demand. In retailing a move towards home shopping and the rise of discounters had led to intense price competition. Add to this the significant volatility in currency and adverse exchange rate movements especially against the Euro. If this wasn’t enough the uncertainty coming from the Brexit debate and the real threat that the UK could leave the EU had further added to market uncertainty.”
Dr Dobbin claimed that the cumulative impact of all of these market disrupters was being felt right along the supply chain from the feed industry to farmers, through to food processors and retailers.
“The reality is that no-one was making money in the current market and that the root cause of our problems is oversupply against current demand. If there is a lesson from the current market turmoil it is that we must be more market led and ensure when we produce on farm or in a processing plant that we have end customer/consumer, not just in mind, but as far as possible locked into a long term supply partnership. Market led growth will be profitable whereas mindless production was simply not sustainable.”
He went on to say that rather than sit out the current market turmoil the Northern Ireland food industry must step up its game and become more competitive, become better at marketing and more innovative. Most of all he said that we had to build on our strengths not just our ideal climate for grassland but on the strength of our people in farming, processing and the wider supply chain.
“Instead of regarding our island status as adding to our cost to market, we should focus on the natural barrier that makes it much easier for us to control our agri inputs and prevent the spread of disease. This has allowed us to create a food fortress with one of the highest integrity food supply chains in the world. We have significant world class expertise in our local Universities and Research institutes including the internationally recognised work on food safety and horse gate by Professor Chris Elliot who leads the locally based Institute for Global Food Security.
“If we are to win through in the current environment of intense price competition and falling returns then we must up our game and proactively pursue opportunities to improve our competitiveness, opportunities to improve our product and service offering and opportunities to win new business.”