Tue 21st Jul 2015
Agri-food industry continues to be the cash cow of the local economy
Ann McGregor, Chief Executive, NI Chamber of Commerce and Industry
Eurozone leaders have agreed to offer Greece a third bailout, after marathon talks in Brussels at the weekend. Bankruptcy has been avoided, and Greece will stay inside the euro.
The head of the eurozone group of finance ministers, Jeroen Dijsselbloem, said the agreement included a €50bn Greece-based fund that will privatise or manage Greek assets. Out of that €50bn, €25bn would be used to recapitalise Greek banks.
Banks in Greece are reported to have only some €500 million left in cash – equal to just €45 (£32) per head of the 11 million-strong population.
The stakes are high: before the result of the referendum, Martin Schulz, the President of the European parliament said: “Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down, and they won’t be able to import vital goods because nobody can pay.”
Already, some food companies are refusing to make deliveries unless they are paid upfront and there are reports of empty store shelves as panicked consumers try to buy food. Also, key farm inputs such as fertilizers, pesticides and fuel also are usually imported and will require payment in advance in hard currency that is no longer available.
Imports have already ground to an immediate stop and exports are limited to the available transport currently in Greece.
All of this has resonance for those operating in the sector in Northern Ireland, where exports are so important to many businesses, as it starkly highlights the consequences of what can happen when a country’s debt mountain becomes insurmountable which in the case of Greece is €323 billion (£228 billion).
In 2014/15, the value of imports from Greece to Northern Ireland totalled £2.6 million while exports to Greece from Northern Ireland over the same period topped £9.8 million which represents an increase of 5.8 per cent over the figure for 2013/14.
The spotlight will certainly be on the sector – which is made up of well-known multinational businesses located across Northern Ireland as well as a thriving small business sector – next year with Northern Ireland’s Year of Food celebrations.
The agri-food industry continues to be the cash cow of the local economy delivering export led economic growth for the region. It is worth £4.5 billion and employs almost 100,000 people. Around 70 per cent of all sales are outside Northern Ireland.
Two years ago a report published by the Agri-Food Strategy Board made more than 100 recommendations aimed at accelerating the growth of farming, fishing and food and drinks processing in Northern Ireland to 2020 and beyond. The action plan’s targets include growing sales to £7 billion, increasing employment by 15 per cent to 115,000 and a 75 per cent growth in export sales.
NI Chamber has a very strong membership across agri-food with many of the leading names in the sector regularly participating in NI Chamber events to share their success stories and inspire others to explore export opportunities.
A recent ‘Minister on the Move’ event with Regional Development Minister Danny Kennedy was hosted by Fane Valley Dairies in Banbridge whose Chief Executive Trevor Lockhart gave an insight into the challenges and opportunities within the business.
Meanwhile Moy Park’s Chief Executive Janet McCollum has headlined NI Chamber events at which she has detailed the importance of the poultry processing industry world-wide and the role the company plays in that. And Dale Farm Group Chief Executive David Dobbin has shared the growth story of the firm which exports to 45 countries.
There is no doubt that Northern Ireland’s agri-food sector is facing challenges.
Earlier this year, a report by Danske Bank forecast that the industry was likely to experience foreign exchange headwinds during 2015 but the sector would also benefit from the ongoing economic recovery and rising household incomes.
The report noted the prevailing weakness of the euro against the pound is expected to curb export activity this year but agri-food manufacturers should also see demand levels improve as the local economy and neighbouring economies get a boost from low inflation.
Meanwhile, a new ten year strategy for the Irish agri-food sector aimed at creating over 23,000 jobs has been launched by the Irish Government – further underlining its importance.
It is a sector which has continued to grow despite difficult economic circumstances through a focus on export sales, innovation and productivity. Let us hope it will thrive even further and that those in the sector in Greece will survive whatever the outcome of the country’s financial crisis.