The food industry in Ireland

meat, with a consequential development of jobs, meat factories and the industrial infrastructure. The total output of the Irish meat industry reached IR $1000 million in 1980, with the employment of 10000 people. The cattle sector, in particular, has to cope with problems arising from considerable seasonality in supply and also The 1970s saw 8 transformation in the economic position of the food and sharp fluctuations from one year to the agricuttural sector of the Irish economy. Ptior to membership of the EEC, the next. The high level of cattle slaughterdevelopment of kish ag~~u~ure had been severe& ~u~ai~~ by the limited ings in 1980 has been followed by a low market op~~~it~es that t&ced food exports from Ireland. The prospect of level in the early months of 1981 and membership of a large and prosperous European ~rnon~b~ht a new era this has created great difficulties for the f& the food sector_ These new ma&et op~~~~~es ~~~jd~ withz and gave production, marketing and financial incentive to, a tech~~~~~ ~~fut~n in food processing in expand. The extent operation of the factories. The meat industry is owned on both a private and of this change can be rn~tg~phj~~~ys~~ fmm a comparison of tie smalllocal basis, with each cream@riies which played a ma&r roie in daiv manufacturing in the 1960s with farmer-cooperative plant generally operating as an indivithe large, sophisticated plants of the 1970s. dual business unit. The grain milling and animal feedIt is appropriate first to set out the role ing dependence on home produced raw ingstuffs industry expanded rapidly in of the food and agricultural sector in materials and its basic export market the 1970s due particularly to the large the Irish economy. Ireland has a long orientation. The most important areas increase in the manufacture of comof production are dairying and meat pound feedingstuffs. By 1979 the uuttradition offood production for export, but the industrial sector had, at least processing. Irish agriculture is prim- put of feedin~tu~s had reached almost arily a grass-based industry and the 1.9 million tons, compared with 1 miluntil recent years, been relatively underdev~lo~d. In terms of the major production of milk and grazing live- lion tons a decade earlier. The connational economic variables - employ- stock are the most efficient means of sumption of bread has been expanding slightly but this has been more than ment, gross domestic product and turning grass into saleable agricultural offset by the decline in household flour, products. exports - the food and agriculture The dairy industry currently handles so that overall the production of flour sector continues to play a major role. Primary agriculture amounts for about about 1000 million gallons of milk a for human consumption has tended to one-fifth of total employment, for year, directly employs 11 000 people fall. Most of this sector is privately about 17% of gross domestic product and generates export earnings of 500 owned, though with a considerable (GDP), and one-third of export earn- million Irish pounds (IR). Most of the involvement of farmer cooperatives in of animal feedingindustry is cooperativeiy owned by the the manufacture ings. As in the case of other member six large co- stuffs. states in the Community, the more milk suppliers-with In the case of sugar, all of the manuoperatives dominating the industry. In rapid expansion in the non-a~~ltur~ facturing is undertaken by a state comsectors has tended to reduce the signif- the 1960s a period of rat~on~~tion resuited in the closure of many small pany, whose four factories process the icance of the food and agricultural creameries and the national output of about 85 000 acres of sector. Although this sector has been manufacturing of sophisticated multi- sugar beet and undertake a certain expanding, the rate of expansion has emergence been less than in other sectors of the product plants. The rapid growth in amount of refining of imported raw economy. Ireland is, however, still an milk output which took place in the sugar. The company concerned also agricultural economy to a degree far 1970s has now slowed down; in 1980 operates the main vegetable processing milk intake fell slightly. While a further activities in Ireland, but has run into greater than in most other European increase in output is widely expected it difficulties in securing remunerative countries. Agricultural output had been the is unlikely that the large increases, such markets that would make its operations basis for a traditional food processing as that in 1978, will be repeated unless fully viable. The other sectors. of the food indusindustry which had, until recent market circumstances change sharply. In the case of the meat industry the try - the processing of oils and fats, decades, been a major part of manusugar confectionary, the manufacture trend has been different. Traditionally facturing industry generally. Industrial policy pursued by successive Irish there has been an export trade in pig- of jams and jellies, the canning of fish, governments has been particularly con- meat, particularly bacon, but in the etc - are smaiier than the sectors cerned with the use of this raw material case of cattle the export trade was in discussed above. They are concerned with the small but live animals rather than in meat. How- overwhelmingly to generate industrial growth. The two major characteristics of the ever, there has been a steady shift away growing domestic market. A primary objective of public policy Irish food industry are its overwhelm- from live cattle exports towards that of

Special focus

The food industry in Ireland

194

FOOD POLICY August 1989

Specialfocus

for the food industry as for industrial policy generally is to foster the growth of employment, particularly in view of the large numbers of young people who will be joining the labour force over the next few years. This concentration on creating additional employment has in turn led to policies to generate a higher volume of native raw material, and to develop industrial capacity for a greater degree of processing through the consumer.

Value-added The objective of a greater degree of processing has come to be synonymous with greater domestic value-added in relation to any given volume of raw material. There has been a great deal of discussion of policies that would generate more added-value. At the same time there has unfortunately been a strong tendency to regard value-added as a benefit virtually without cost. This has led to complaints about the ‘failure’ of public policies which have a more realistic conception of the need to balance added-value with the additional costs involved. The problem of the development of employment, value-added and product mix can be clearly seen in the case of the Irish dairy industry. The tremendous strides made by the industry in the 1970s had given rise to expectations of even more rapid progress in the 1980s. The industry, currently employing about 11000 people, was projected to expand to employ 25000 by 1985. However, a recent study’ has shown that on a more realistic basis, employment is likely to increase by around 600 net, with developments in technology likely to lead to the loss of about 300 jobs. In this industry, the growth of employment and value-added have been linked particularly to a change in the product mix from butter/skim milk powder to cheese. In the study cited above, the direct employment content in cheese-making per million gallons of whole milk was estimated to be nine times greater than that in buttermaking and three times greater compared with combined butter-making and skim milk manufacture. However, in recent years the level of value-added

FOOD POLICY August 1981

in cheese production was low; the recent Industrial Plan, covering the highest level reported was only 14% years 1978-82, labour productivity was and most cheese manufacturers report- projected to increase by over 61/2% per ed significantly lower levels. These low year, with investment in manufacturing levels of value-added have been due expanding at 15% annually. primarily to the poor return from the An important aspect of IDA policy is cheese market in recent years, though the promotion of industries based on it is expected this will be reversed and native natural resources. The IDA has the market will then justify greater provided substantial grants both to new cheese production. and existing food processing firms. In These effects of market prices are of the years 1975-79 a total of over g63 major importance in the justification of million was committed for grants for value-added policies. Developments investment in the food industry.* The towards greater efficiency in the Irish total fixed asset investment involved dairy sector would, however, appear to was over S50 million involving nearly be eroding the process by which value- 500 different projects. It was estimated added products add to employment. that a job potential in excess of 9000 Diversification and a higher degree of would be created by these investments. processing have involved the rapid A further a0 million has been funded adoption of new and highly sophis- by the EEC under Regulations 17/66 ticated technologies. The revolution in and 355177 aimed at improving the food processing technology has meant conditions under which agricultural a rapid growth in capital intensive food produce is processed and marketed. The role of the IDA is, however, manufacturing industries, so that the growth in employment in the industry considerably more than just that of has not kept pace with the level of out- providing capital grants to individual put in the industry. Capital intensive firms in the industry. It is concerned technologies, which tend to have with identifying the problems of the strongly favourable effects on labour sector, establishing its potential for and creating a well productivity (as measured by total out- development put per person employed) at the same balanced and efficient industry. In a time restrict the growth in employ- report’ prepared for the IDA on the and processing ment. Although the objective of more Irish beef-packing employment is of major importance, it industries the authors suggest that: has been accepted that capital intensive The IDA should, as a matter of policy, production methods, with their effects make the payment of grants to firms in the on higher labour productivity, must be meat packing industry conditional on the adopted if the industry is to prosper in achievement by these firms of desired increases in productivity levels even - and the years ahead. The alternative is no this is a particularly important point - when industry and no jobs. the area of investment in resoect of which

Investment

in food processing

general Policy of encouraging industrial development in Ireland has been concentrated in the hands of the Industrial Development Authority (IDA), set up for this purpose by the Irish government. The central industrial strategy of this body is to shift Irish industry into products of higher domestic added-value, based on good quality and aimed at specialist markets. Investment in the industries generating the growth in industrial employment will support the economic development objectives of GNP expansion, and the maintenance of an acceptable balance of payments position. In the most The

the grant application has been made does not directly impinge on the area of apparent inefficiency.

The authors go on to say that they ‘note that the IDA has already accepted this approach in respect of many applicants, including those in the meat industry’.

Effects of EEC policy Membership of the EEC with participation in the CAP has had two major effects on the food industry. At the macro-level it has meant greater opportunities for export to the European market and the benefits that have flowed directly from that. At the microlevel, the implementation of the secondary legislation of the

195

Comunity (Directives and Reguiations) has had a considerable impact on the day-to-day operation and returns of the food processing industry. This secondary legislation is part of the system of market management operated by the Community. The decisions of the Community on market management have major consequences for the sales, prices and profits of the individual firms which make up the food industry. From time to time there has been criticism in Ireland that these decisions have had an adverse effect on the food industry. Much of the criticism of the effects of the EEC system have revolved around certain defects in the market management arrangements which have become complex. While these arrangements should be neutral as between different forms of trading, they tend, at some time or in some c~c~s~~s, to favour exports in one form rather than another, or exports to one market rather than another. These have arisen more as a consequence of the decisions on market management rather than through deliberate policies for this purpose. One area which has given rise to such criticism is the agrimonetary system, especially the effects of the system of monetary compensatory amounts (MCA) applied to offset the effects of changes in market exchange rates of different currencies. MCAs were designed initially to apply to the basic CAP products only, but this gave rise to trade distortions on the more highly processed products which nevertheless had a significant agricultural content. The MCA system has been extended to apply to some of the more sensitive processed products and, where this has been done, it has been applied where the economic impact of the MCA has been significant in relation to the value of the product in question. The position of MCAs has, however, been subject to rapid change as individual currencies, particularly sterling, have changed from steady depreciation to sharp appreciation. This has meant that some disadvantages, which arose from the operation of the MCA system, have been eliminated, or now apply in reverse form. Recently there has been considerable criticism in Ireland about the level of EEC refunds

i96

on the exports of live cattle to third dominant than in countries where the food industry is concerned mainly with countries, particularly North Africa, compared with the level of refund the internal market. The Irish payable on boneless beef. As the latter population of 3.5 million is far too small refunds are substantially smaller, the to consume the quantity of milk, beef, processors of boneless beef are at a lamb or pigmeat which is produced. disadvantage in sales to these desti- Much of the output of the Irish food nations. The revision of refunds paid industry is inevitably destined for on cattle and beef exports has been the overseas markets. This export can be seen in the subject of official proposals to the EEC o~entation Commission by the Irish authorities development of government agencies aimed at ensuring fair competition in in the food sector. These agencies have the beef and cattle export markets. grown in an ad hoc fashion ano their The effects of the CAP on the food scope and organization differs from industry must be seen in the context of one body to the next. the expectations that the food industry In the case of the dairy sector, the should provide a major input into the main marketing organization is Bord expansion of the Irish economy. To the Bainne (the Dairy Export Board); this extent that these expectations have not is a cooperative body which represents fully materialized, it has perhaps been the individual manufacturing dairy woperatives in the export of dairy inevitable that the detaiied implementproducts. Prior to 1973 Bord Bairme ation of the ~~uni~‘s agricultural policy should be criticized. It is in the was state sponsored, but with the nature of commercial life that, in a accession of Ireland to the EEC its managed market system, there will be basic structure changed to that of a criticisms of those decisions on the cooperative. Its role as a centralized operation of the CAP which may have export body is fully supported by the government, as this policy has been adverse consequences for particular concerns while, at the same time, little part of official philosophy towards the public recognition of the decisions and development of the agricultural sector. The rapid development of milk prooperations that have favourable ducts and dairy manufacturing during results. Nevertheless it is important that these gains and losses should be the 1970s substantially surpassed the seen not simply as separate effects but growth in demand in the domestic rather against the background of the market, so that an increasing proportion of milk production has been totality of the impact of EEC membership on the food industry as a whole. destined for export. This system of centralized exporting Indeed it has proved difficult to reach any consensus as to the impact of is also the ration d’etre of the Pigs and Bacon Commission through which the particular decisions, so that the debate in Ireland on the effects of the CAP on bacon factories, for the most part, sell on the export markets. This Comthe development of the food industry mission has, however, retained its has been confused and sometimes poorly informed. While there has been statutory form although its role has no comprehensive analytical study of changed in some measure since 1973 this question, it is difficult to sustain the and is now concerned particularly with thesis that p~i~pation in the CAP has promoting the export of Irish pigmeat. been inimical to the development of Exports, however, account for the smaller part of total sales of Irish pigthe food industry or that the industry would, in fact, have developed further meat, the domestic market having grown rapidly over the past few years. in the 1970s had Ireland remained In the case of cattle and sheep there outside the EEC. is no system of state sponsored export selling. The main official body conHome and export market cerned, CBF (the Irish Livestock and Policy orientation towards Meat Board), is engaged primarily in the promotion of livestock and meat employment, exports and economic growth has meant that the role of the and it has only a limited trading funcdomestic consumer has been less tion. The individual meat plants and

FOOD POLICY August 198-I

Specialfocus/Viewpoint

livestock exporters undertake their own selling. The EEC intervention facility has, however, been of particular importance to the beef industry over recent years and sales of intervention beef have become a significant feature of Irish beef exports. In 1981 however, the extent of intervention purchasing has declined, due to the scarcity of animals for slaughter and the buoyancy of the beef market generally. For the other food products, the level of direct government action has been smaller. The national export promotion board (Coras Trachtala) provides assistance towards market research and development and the promotion of export outlets for all Irish manufacturing industries, including processed food products. The two government departments most directly concerned - the Department of Agriculture and that of Industry, Commerce and Tourism - have a detailed involvement with the food industry both in production and marketing.

The great changes that have taken place in food processing in Ireland over the past decade are hardly likely to be repeated. There are, of course, still some plants which need to be modemized; others may not remain viable and will either cease to operate altogether or be absorbed into a larger operation. The development of the food industry will be concerned with further rationalization, with streamlining its operation and the creation of new outlets for new products. The breakthrough to modem technology has, however, now been largely completed and, while further will improvements in technology undoubtedly be developed, there are no entirely new processing revolutions to replace that which is now well underway. The adoption of capital intensive processing methods has created a modem food industry in Ireland with the capability of a sustained output of high quaity products. New products, new methods and new markets are now

commonplace. Research and development work is basic to the further development of the industry. The volume of raw materials will expand as the production potential of Irish agriculture is more fully exploited. The degree of domestic processing will grow. Ireland has entered the 1980s with a food industry geared to current needs and ready to meet new opportunities as they arise. E.A. Attwood, Department of Agriculture, Dublin, Ireland

‘C. Cahill, ‘Employment and value-added in the dairy manufacturing sector, 197980’, paper presented to the Agricultural Economics Association of Ireland, 1981. 21ndustrial Development Authority, Annual Reports, 1975-79, Dublin.

‘Beef Packing and Processing: A Development Study, Industrial Development Authority, Dublin, 1977.

Viewpoint Prospects for low cyanide cassava in Nigeria Sweet (low cyanide) and bitter (high cyanide) varieties of cassava are compared from the viewpoint of their production, pmcessing and consumption in Nigeria. With this information, the costs and benefits of breeding higher yielding sweet varieties are calculated. A newpmcessing method, currently in use in one region of Nigeria, is examined for its likely impact on the demand for sweet cassava.

Nigeria is a major world producer and cassava (Munihof consumer of es&en& Crantz), producing about 10.8 million tonnes per year, or about 9% of total world output. ’ There is virtually no export of the crop from Nigeria. Two types of cassava are grown: ‘bitter’ and ‘sweet’. Bitter cassava is the most common. It is high in cyanide content, while sweet cassava is low in cyanide. * Bitter cassava generally requires processing, to reduce the cyanide level, before being eaten.’ However inadequately processed bitter cassava can cause severe health problems. It FOOD POLICY August 1981

has been linked with tropical ataxic neuropathy, goitre and cretinism.4 One possible approach to reducing the health hazard and the resources used in processing would be to promote the use of sweet cassava. Currently obtainable yields of sweet cassava are generally low, but a plant breeding programme could change this. Would a higher yielding sweet cassava be accepted by growers, processors and consumers, who currently utilize the bitter type? An even more fundamental question is whether users recognize clearly the existence of the two types. If so, what factors determine their choice

between the two and how do the production and processing characteristics of the two types compare? Two aspects warrant special attention. One is the potential rodent problem. Many scientists have expressed the belief that rodent damage on sweet cassava is high. The second aspect is the potential effect of a new ‘screw press’ processing system on the acceptability of higher yielding sweet cassava. The study was launched to explore these issues and to make an overall assessment of the consequences (benefits) of breeding a high yielding sweet cassava. In the final section of the article, a comparison is made between these benefits and the costs of breeding a high yielding sweet cassava, within the context of the cassava breeding programme at the International institute of Tropical Agriculture (IITA). The methodology of the study consisted of three components: a survey to elicit information on the growing, processing and consumption of sweet and bitter cassava types; an experiment to gauge the effect of a new processing method on the likely 197