Agri-Business and Rural Development
School of Agriculture and Food Science.
Alan Renwick, Anthony O’Malley and
Doris Läpple
11th of June 2014
Innovation in the Irish
Agrifood Sector: Overview
Outline
• Background
• Highlights of
Findings
• Conclusions
• Recommendations
What is Innovation?
• Overused?
• Definition -
‘renewing, changing
or creating more
effective processes,
products or ways of
doing things’
Why Innovation is Important
• A small domestic market means that Ireland has to look
abroad for markets and growth, particularly with the
removal of dairy quotas
• Increasing trade and agricultural policy liberalisation mean
less support and more competition for Irish agrifood
products on international markets
• The domination of the sector globally by a few large
corporations means that firms need to innovate to maintain
and grow their position
• The need to move away from commodity markets and the
associated issues of volatility and price pressure
• The need to increase production but maintain the ‘green’
image that is seen by many as a key competitive advantage
for Ireland
Direct Demand of Innovation : Agri-food Supply Chains
Indirect Demand of Innovation
Research
Intermediaries
Input suppliers (e.g Goldcrop, Dairymaster etc)
Farmers Cooperatives (e.g. Aurivo, Dairygold etc)
Commodity traders (eg F.C. Stone)
Processors (e.g. ABP, Kepak, Dawn etc)
Haulage Wholesalers/Retailers (e.g. Dunnes, Musgraves etc)
Agri-food consumers Pharmaceutical market Energy market (e.g. renewable energy)
Policy-making agencies & funding bodies Social interest groups
Irish Government (DAFM) SFI/IRC
Enterprise Ireland EPA
Higher Education Funding Council
Universities - UCD, UCC etc Third level Institutes - DIT, ITT etc Research Organisations Teagasc Private companies (e.g Kerry, Glanbia)
Extension & consultancy Teagasc (consultancy & extension services)
Land Agencies: ACA
Industry associations/Lobbies with an active role in innovation
Irish Food & Drink Federation/IDB/ IFJ/IFA/ICSA/ICMSA/ Irish Exporters
Association
Financial Services
Bank of Ireland, Ulster Bank, AIB, Rabobank Grant Thornton, IFAC
TYPICAL INNOVATION
USERS
TYPICAL INNOVATION
CREATORS INNOVATION FACILITATORS
Skills Development
Innovation brokers Bord Bia /ICOS /ICBF/AHI
Education & training services UCD, UCC (education); Teagasc land-based colleges
NGOs & charities / Local councils
INNOVATION ACTORS (indicative, not exhaustive list)
Source: Derived from original concept by Lamprinopoulou
Fundamental
• The basic premise is that for Ireland to have a
successful Agrifood sector in the future, all parts
of the system have not only to work well
individually but also function collectively as well.
• For example, there is no point having world class
food manufacturers and processors if we have no
raw material supply from Ireland.
Linking the Innovation System
• In the report we
consider a range of
current activities/
initiatives
• Links created
through
– Stimulus
– AHI/ICBF
– FHI/APC/DPTC
Research Links Developed through
DAFM Stimulus Fund (2010-2013)
How well are they working?
• These pictures shows the extent of the
connections but not the strength/quality of these
connections and what they are doing in terms of
boosting the performance of the agrifood sector
• Through stakeholder interviews and data analysis
we investigate this further
• Following slides highlight stakeholder views
– Indicative not definitive
– Useful for highlighting level of agreement
How well is the system doing?
0 1 2 3 4 5 6 7 8 9 10
Development
Commercialisation
Viable
Jobs
Competitiveness
Collaboration
Environment
Average Disagreement
Overall Scored as 6.5 out of 10
Individual Components
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
R&D Food/Farm Org Public Private
Value Chain
6.4
5.8
7.6
7.0
6.1
1.4 1.1
2.0
1.3
1.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1 2 3 4 5
Input supply
Production (farming)
Trading and
logistics
Processing/Manufact-
ure Retailing
By Sector
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Inputs Farm Processing
Axi
s Ti
tle
Beef
Dairy
Sheep
Tillage
What does the data tell us?
• Series of indicators
– Inputs (Expenditure on R&D etc)
– Outputs (Patents, Publications etc)
– Outcomes (Farm and Firm performance)
• Compare across Europe (where available beyond
Europe too)
• Focus on a couple
– University Publications
– Total Factor Productivity of Agriculture
Performance within EU: Inputs
0 0.2 0.4 0.6 0.8 1
Business Research
Research into Industry
Intensity
R&D Personnel
Tertiary Education
Research into Agriculture
GERD
Score of 1 means best performing in EU
Performance within EU: Outputs
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Citations
Co-operation
Co-opetition
Innovative Businesses
Patents
Patents Biotech
Marketing/Org Innovation
Score of 1 means best performing in EU
Performance within EU: Outcome
0 0.2 0.4 0.6 0.8 1
TFP
Gross operating Surplus
GVA Food and Drink
GVA Agriculture
GVA growth
Share of Exports
New Products
Score of 1 means best performing in EU
0.55 - 0.62 0.51 - 0.55 0.41 – 0.50 0.29 – 0.40 0.20 – 0.28 0.15 – 0.19
2
1
3 4 5
7
6
The world isn’t waiting….
Publications in Agriculture and Food
Science
0
5000
10000
15000
20000
25000
30000
35000
40000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ireland United Kingdom New Zealand United States Brazil China
US
China
Brazil
UK
NZ
Ireland
Huge Growth
Hard to see but significant rise in Irish publications
over the period from 300 to >900
Source: Scimago
Growth in Agricultural Productivity (TFP)
Source:USDA
Barriers and Facilitators Score
Category Factors
< -2 Strong
Barrier Land Mobility, Age Structure, Farm Business Structure
-1 to -2 Medium
Barrier
Power of Supermarkets, Availability of Finance, CAP Support,
Chain co-ordination
0 to -1 Weak
Barrier
Structure of supply chain, Attitude to risk, Level of leadership
within sector
0 to +1
Weak
Facilitator
Finance Skills, ICT (rural broadband), University engagement with
industry, Employment Legislation, Private consultants
+ 1 to +
2 Medium
Facilitator
Government Support, Regulation, Advisory services, Training in
agrifood skills
>+2
Strong
Facilitator
Research capacity, Education levels, Physical infrastructure, Tax
regimes
Disagreement
-60% -40% -20% 0% 20% 40% 60%
Broadband
Legislation
Finance Skills
Risk
Supply Chain Structure
Leadership
% rating as Barrier % rating as Facilitator
Conclusions
• From the analysis undertaken a series of
conclusions are drawn concerning the state of the
Irish Agrifood Innovation System.
Ireland has a number of truly world class innovative companies, however the problem is there are simply not enough of them and there are too few new innovative
companies emerging from which world leading companies could emerge.
Conclusions
• Within Ireland there is a high
level of government support for
the agrifood sector and for
Science and Technology within
agriculture and food sectors in
particular.
• However, much of the science
and the efforts at encouraging
innovation are supply pushed
rather than demand pulled.
• In addition, Ireland lags behind
other countries in terms of
business investment in research
and development.
Conclusions continued
• Companies are finding it difficult to access the knowledge they
require. Much of the engagement that occurs is ad hoc in nature.
• Ireland is relatively strong at innovation that removes cost from the
supply chain (Lean principles), however it is weaker in terms of the
development of new products
• Evidence points to access to finance being a key constraint in the
innovation process.
• As as a small country can co-ordinate activity more easily than other
larger countries. However, more generally there is a lack of a
culture of collaboration across and between all components of the
Agrifood Innovation System.
• The structural issues in agriculture that are well known as more
general are also a significant barrier to innovation at the farm level.
• Through the discussions undertaken for the study, there is a
perception that a conservative mindset dominates organisations
with power and influence and that leaders in the agrifood sector
need to be more open to the benefits of co-operation, collaboration
and partnerships for innovation.
Recommendations
• Incentives for more R&D within Firms
• Incentives for more KTE within
Universities
• New Products – Adding Value
• Novel funding arrangements for
companies
• Education and Advisory – Redirection?
• Greater Collaboration – Industry
Forums
• Structural Change
• Fit for Purpose Structures
• Is it just about people?
Acknowledgements
• Sincere thanks to:
• All those that gave up
so much of their time to
be interviewed and help
with the study
• The Bank of Ireland for
funding the research
• Karen Keaveney for
map production