RURAL IRELAND 2025 Foresight Perspectives - Coford

Rural Ireland 2025 - Synthesis Reportconsequences for the rural economy. In suchcircumstances, accessible jobs from growth amongexporting businesses would be of critical importance.The major challenge facing the wider ruraleconomy is to achieve the optimum balance betweenbusiness competitiveness on the one hand andenvironmental and social sustainability on the other.This will require a sustained commitment ofresources to building demand-driven regionalresearch and innovation systems, involvingeffectively operating networks between localbusiness and enterprise, education/training andresearch agencies (Section 6.3). It will also requiresupportive environmental and socio-economicresearch. Given the opportunity costs involved, thepublic organisations concerned are often not in aposition to provide services that are specially tailoredto meet the requirements of individual regions/localareas. Funding specifically earmarked for use incommissioning/contracting the delivery of research,education/training and other support services needs tobe made available to regional/local agencies.Otherwise their needs, in terms of research andinnovation, will continue to be poorly provided for.The core challenges facing the natural resourcebased sectors of the rural economy, and the keyinitiatives that now need to be taken, are outlinedbelow. Further details on those and other importantchallenges and initiatives in relation to the agri-food,forestry and environment dimensions of the ruraleconomy are set out in the Thematic Papers containedin Part 2.4.1 Agri-food industryThree key challenges face the agri-food industry.These are: (i) responding to declining realagricultural prices; (ii). achieving an appropriatescale of operation; and (iii) increasing productdifferentiation (see Thematic Paper No. 4).Competitiveness in the predominant dairying andbeef sectors requires the attainment of muchincreased scale in both production and processing. Inmilk production the delivery of 1 million litres ormore of milk per farm business has frequently beensuggested as a necessary production target. Also, ashas been advocated in a number of national reports –most recently the McKensey and Prospectus Reports– major rationalisation is required in dairy and beefprocessing. Ireland’s seasonal milk productionsystem and the consequential plant capacityrequirements and associated under-utilisationproblems, have crucial implications for the scale ofcapital investment required in dairy and also beefprocessing facilities. In addition to this large capitalrequirement, the processing sector must attain themassive scale required to maintain internationalcompetitiveness. As mentioned in Section 2.1, thesepressures can be expected to result in Ireland having,in the coming decade(s), just two major dairyprocessing companies and a comparable number ofbeef export processing groups. Governance issuesmay of course adversely delay this essentialrationalisation process.The progressive lowering of real agriculturalprices will severely challenge and could threaten theeconomic viability of the dairying and beefproduction. These are the core sectors of agriculture,where Ireland is considered to have some competitiveadvantages. With its current scale and excessivedependence on undifferentiated products, the primaryfood processing industry will be subjected to parallelpressures. If the primary producer does not produce,the first stage processor cannot survive. Thesecondary processing sector, in particular theprepared consumer food component, which has beenthe most dynamic sector of the food processingindustry in recent decades, is already sourcingsignificant volumes of its raw materials on worldmarkets. As with the FDI sector, the preparedconsumer food companies may ultimately find itmore profitable to re-locate to cheaper economies,including the new EU Member States. Themanufacture of prepared consumer foods and alsosome other high value food products is not dependenton having an indigenous farm production sector.The new policy framework, allied to the growingcompetitive environment, increasingly demands themanufacture of market required food products ofconsistent quality and guaranteed safety, produced ina manner compatible with environmental and animalwelfare requirements. Meeting these demands willrequire the development of new livestock productionsystems, that match animal nutritional requirementsand genetic potential, and that produce in anenvironmentally sustainable manner, consistentquality raw materials for the food processingindustry. These must be internationally competitivenot only in price, but also functionally. In theknowledge driven international markets, the agrifoodindustry must have the business, technologicaland innovative capacities to support a moredifferentiated product portfolio, ranging from thecontinued manufacture of high volume commodity16