AGRI Summer 2017 BUSINESS aN irish farmers journal report in association with KPMG Agricultural thinking Inside the minds of global agri leaders IRISH farmersjournal.ie FARMERS JOURNAL 001_agribusiness.indd 1 08/05/2017 15:29:12 Kerry Group IFJ Ad indd 1 03/05/2017 4:32 p m 002_agribusiness.indd 2 08/05/2017 13:57:03 IRISH farmersjournal.ie FARMERS AGRI JOURNAL BUSINESS FOREWORD DFHGZLWKWKHWKUHDWRI%UH[LW ur survey highlights both DQGDPRUHSURWHFWLRQLVW the optimism about the trading environment glob- future and a realisation that ally, agribusiness needs to be WKHUHZLOOEHVLJQLoFDQW RQWRSRIWKHIDFWRUVWKDWDUH effort involved in innova- shaping our world now more tion, developing personnel, FWKDQHYHU&OLPDWHFKDQJHDUDSLGO\ OVRXUFLQJoQDQFHDQGDERYHDOOPHHWLQJ FKDQJLQJFRQVXPHUDQGIRRGDQGZDWHU WKHQHHGVRIFXVWRPHUVqLIRUJDQLVDWLRQV Eoin VHFXULW\DUHDOOEHFRPLQJPRUHLPSRU- David DUHWRZLQ7KLVLVWKHVHFRQG\HDUZH Lowry tant. Meagher broadened the survey from Ireland to Agribusiness editor, ,QRXUoIWK\HDURIWKHIrish Farmers Partner-in-charge for around the globe, and I thank my KPMG Irish Farmers Journal Journal/KPMG Agribusiness report, we Agribusiness, KPMG FROOHDJXHVDURXQGRXUJOREDOQHWZRUN LQWHUYLHZDVHOHFWLRQRIDJULEXVLQHVV for their help in meeting with key agri- leaders to gain their insights into busi- EXVLQHVVHVLQWKHLUFRXQWULHV ness, along with what they see as the key 0DQ\RIWKHWKHPHVFRPLQJWKURXJK RSSRUWXQLWLHVDQGELJJHVWFKDOOHQJHV IURPWKHVXUYH\DUHUHpHFWHGLQWKH IDFLQJWKHVHFWRU interviews in our report. )URPJOREDOSOFVWRIDPLO\UXQ 7KHLQWHUYLHZHHVVSHDNRIFKDQJHVq EXVLQHVVHVWKLV\HDU VUHSRUWRXWOLQHV FKDQJHVWKDWWKH\KDYHPDGHLQRUGHUWR the strategies and visions of global agri ensure that their organisations pros- OHDGHUVDQGWKHFKDOOHQJHVDQGRSSRUWX- SHUHGLQWKHSDVWDQGWKHFKDQJHVWKDW QLWLHVWKDWOLHDKHDGIRUWKHLUUHVSHFWLYH WKH\VHHDVQHFHVVDU\WRHQVXUHWKDWWKHLU businesses, for farmers and the industry RUJDQLVDWLRQVFRQWLQXHWRDGDSWJURZ DVDZKROH$NH\oQGLQJLVWKDWWKHFRQ- DQGEHVXFFHVVIXO VXPHULVFKDQJLQJDQGZDQWVWRNQRZ So what are the lessons for Irish agri- PRUHDERXWZKHUHWKHLUIRRGLVFRPLQJ EXVLQHVVDQGIRUWKH,ULVKDJULIRRGVHF- from, while also making more respon- WRU"7KDWZHDUHLQWKHWLPHRIXQSUHF- VLEOHFKRLFHV7KHFKDOOHQJH RURSSRUWX- HGHQWHGFKDQJHLVFOHDUq%UH[LWLVOLNHO\ nity) for agribusinesses is to deliver this WRKDYHDRQFHLQDOLIHWLPHHIIHFWRQWKH DJDLQVWDEDFNGURSRIFOLPDWHFKDQJH LQGXVWU\,WLVFULWLFDOWKHUHIRUHWKDWZH UHJXODWLRQVFDUERQIRRWSULQWDQGFDULQJ WKHSDUWLFLSDQWVLQWKHLQGXVWU\GRZKDW for the environment. ZHFDQWRHQVXUHVXFFHVV We are delighted to partner with :HPXVWFKDOOHQJHWKH*RYHUQPHQW .30*DJDLQWKLV\HDUZKLFKFRP- DQGWKH*RYHUQPHQWPXVWFKDOOHQJH ELQHVLWVH[SHUWLVHDORQJZLWKLWVJOREDO LWVHOIqWRFUHDWHWKHULJKWHQYLURQPHQW network with the insights and analysis for Irish agribusiness. Changes to sup- from the agribusiness team at the Irish port business must be made and made Farmers Journal. without delay. 7KHRYHUDOODLPRIWKLVSXEOLFDWLRQ %XWJRYHUQPHQWVGRQ WGHYHORSQHZ LVWRFKDOOHQJHLQGXVWU\LQpXHQFHUVWR SURGXFWVFUHDWHQHZSURGXFWV\VWHPV GULYHFKDQJHIRUWKHLPSURYHPHQWRI DQGZLQQHZFXVWRPHUV7KHRQXVLVRQ WKHDJULIRRGVHFWRULQFOXGLQJIDUPHUV RXUDJULEXVLQHVVHVqODUJHDQGVPDOOqWR SURGXFWLYLW\DQGWKHLUORQJWHUPVXV- HPEUDFHFKDQJHDQGoQGQHZZD\VWR tainability, with food quality and human win. health to the fore. 3 003_agribusiness.indd 3 08/05/2017 18:10:49 Contents 20 22 16 CAPITAL LONG-TERM 8survey A SUSTAINABLE MARKETS AGRI VISION CONFIDENT MOOD GLOBAL FOOD INVESTING Why businesses need AMONG GLOBAL SYSTEM IN A TIME leadership and vision to The world’s challenge is create a story that AGRIBUSINESSES Ireland’s opportunity OF CHANGE is long-term in focus 24 CORE 35 DRIVERS 32 MOVING WITH OF CHANGE 28 VALUES THE TIMES 2017 looks set With close to half Bord Bia’s strategy to be a marker of its food-to-go GLANBIA for food exports year in the products changing against the history of the every year, Greencore TAKES SHAPE headwinds of global agri- is no stranger to Glanbia plans to restructure to Trump, Brexit and food sector adapting to change create value for shareholders a slowing Chinese economy 42 BITING INTO A 38 YOU ARE WHAT 48 SUSTAINABLE RISING OF YOU EAT big mac Why Devenish believes that WHY McDonald’s wants THE KINGDOM feeding animals to produce superior The secret ingredients of healthier foods could revolutionise to buy sustainably a Kerry Group leader human nutrition and health produced beef 60 ZAMBEEF 52 The Irishman who ORIGINS 56 built an integrated food company 74 IN SCIENCE DAWN OF A in Zambia The role of NEW ERA LIDL technology is key Building a prepared 65 AND THE to driving farm consumer foods HURDLING productivity business BARRIERS CHANGING for Origin AT ORNUA CONSUMER Editor: Eoin Lowry | Assistant editor: Lorcan Allen | Production: Garrett Allen, Regina Horan, Brian Murphy, Anthony Murphy | Photo editor: Carol Dunne | Imaging: Alice O’Sullivan, Ferdia Mooney | Commercial director: David Leydon | Advertising: Linda O’Mahony, Barbara Kilkenny, Sandra Bothwell, Noel Lynch | Ad production: Barbara Kilkenny, Peter Mullen, Laura O’Keeff e, Brian Morton, Graham Vard | Circulation & marketing: Jamie Leonard, Clodagh Carey, Mary Dunphy, Sinéad Evans | Printer: Boylan Print Group, Drogheda, Co Louth | AgriBusiness 2017 is published by the Irish Farmers Journal, Irish Farm Centre, Bluebell, Dublin 12. Tel: 01-419 9500 4 004_agribusiness.indd 4 08/05/2017 16:57:26 At the heart of business in Ireland KPMG IrishFarmersJournal FA indd 1 02/05/2017 12:55 005_agribusiness.indd 5 08/05/2017 13:57:17 AGRI BUSINESS INTRODUCTION IRISH AGRI-FOOD INDUSTRY NEEDS TO LEVERAGE ITS SUSTAINABLE REPUTATION ear after year, Ireland is the country’s beef processing industry ranked among the highest that led to the revelations from Opera- in the world for its ability to tion Weak Flesh was a major disappoint- attract foreign direct invest- ment and emphasised the importance ment (FDI). In the food of a transparent supply chain from farm sector, one company with a to fork. Yfootprint in Ireland for a long time is the For Ireland, the Brazilian meat scan- French dairy giant Danone, which has dal reinforces the importance of reputa- Justin facilities in Cork and Wexford. tion. The agri-food industry in this coun- McCarthy For years, many of the world’s other try, from farmgate to processing level, large food and ingredients companies has carried out a lot of important work Editor and were reluctant to do business in Ireland over the last decade to develop Ireland’s chief executive, Irish Farmers Journal as they viewed our island as a “Danone image on the global stage as a source play”. However, after a number of high- of high-quality and traceable food and SURoOHIRRGVFDQGDOVDURXQGWKHZRUOG ingredients. over the last decade and the develop- The proof of this is in our food and ment of the Origin Green sustainability drink exports, which have seen seven programme, many companies have years of consecutive growth to reach adapted their strategies and now see Ire- €11bn last year. However, while export land as a must in terms of sourcing safe growth is positive, the challenge for Irish and traceable food and ingredients. farmers and agribusinesses is how we Today, multinational food companies can move further up the chain to capture and brands such as Nestlé, McDonald’s, more value. Burger King, Subway and Mead Johnson :LWKVLJQLoFDQWFKDOOHQJHVDVDUHVXOW are all sourcing food and ingredients of the UK leaving the European Union from Ireland. in the years ahead, Ireland’s agri-food The sustainability and “green image” industry needs more than ever to lever- of Ireland’s food system is aligned to the age its sustainable reputation to move values of these companies, which seek further up the value chain. to protect the reputation of their brands With the Common Agricultural at all costs. Policy (CAP) under review, coupled with Earlier this year, we saw another a smaller EU budget thanks to the UK meat scandal erupt in Brazil that left the leaving the single market, it puts more country’s reputation as a global food emphasis on the industry to deliver im- VXSSOLHULQDGLIoFXOWSODFH)RU%UD]LOLDQ proved returns for the economic sustain- beef farmers, the alleged corruption in ability of the primary producer. 6 006_agribusiness.indd 6 08/05/2017 18:08:22 Your gateway to connected farming www.glanbiaconnect.com EASY ACCESS VIEW & DOWNLOAD SHOP ONLINE 24/7 STAY UP TO-DATE to your statements your supply and for delivery direct with Glanbia news and transactions quality data to your farm and events 007_agribusiness.indd 7 08/05/2017 14:56:44 SURVEY CONFIDENT MOOD AMONG GLOBAL AGRIBUSINESSES The 2017 AgriBusiness report marks the fifth year where the Irish Farmers Journal and KPMG have conducted a survey of agribusiness leaders in a bid to gauge the mood of the sector. Given the geo-political unrest of the last 12 months, the results are more pertinent than ever. 52% expect to grow more than 5% in 2017 92% of companies expect growth in the global economy 80% 72% of companies expect to grow their business. of companies expect growth in their local economies Of these, 90% 48% felt their company would grow between 1% and 4% of companies expect growth in Comment: while global agribusinesses are confident, fewer expect to grow in 2017. the agribusiness However a greater share expect to grow at a higher rate. In the 2016 survey 91% of sector, of which companies expected to grow with 29% saying they would grow by more than 5%. Similarly, 52% expect a higher percentage (92%) believed the agri sector would grow this year (85% in 2016). growth of over 3% 8 008-011_agribusiness.indd