Lessons for Kenya from agriculture revamp in Ireland

In 2008 the housing market in the US collapsed triggering a global recession that hit both developing and developed economies hard.

Ireland was particularly hard hit and in 2009, it became the first country in the European Union (EU) to not only go into recession, but also ask for a bailout from the International Monetary Fund( IMF) and the bloc.

“We took a 22 per cent pay cut,” recalls Ireland Ambassador to Kenya Vincent O’ Neil.

But now Ireland has bounced back. The Irish economy is predicted to be the fastest-growing economy in Europe this year according to new figures from the European Commission, with the EU’s executive arm expecting a 4.9 per cent Gross Domestic Product (GDP) jump this year.

The growth rate contrasts with Eurozone’s average 1.6 per cent growth expected this year, down slightly from the 1.7 per cent growth forecast in February.

Germany, Europe’s largest economy, is expected to grow by 1.6 per cent in 2016 with a 1.3 per cent growth rate expected for France. These figures were however released before Britain voted to exit the trading bloc.

At the heart of Ireland’s bounce back is its agro-processing industry.

For a country of only four million people and 70,273 square kilometres (compared to Kenya’s 569,140km2), it is certainly punching above its weight.

The food industry has a turnover of 26 billion euros and has exports valued over 10.8 billion euros. This is up from seven billion euros in 2008. It contributes nine per cent of all jobs. Beef and dairy together accounted for 50 per cent of all exports.

So, how did a small country with such a low population become a powerhouse in agriculture?

Ireland used a combination of an efficient production business model, intense cooperation between agencies and the private sector, value addition and subsidies to become the food-basket of Europe.

Their first strategy is a low cost production of both milk and beef. Ireland through its Agriculture and Food Development Authority research firm Teargasc has advocated for grass based feeding of cows and bulls.

Due to the big size of farms (the average is 35 acres) farmers grow grass and let the animals graze freely. The land is subdivided so the animals graze at a particular area at any one point. Each farmer has an average of 71 cows, up from 51 in 2008.

“This ensures our costs are low and we keep the environment safe as no additives are used thus making our meat and milk chemical-free,” said Mr NedHeffernan, an agriculture extension officer.

Also, the authority mixed genetics of different breeds of cattle to come up with a breed known as limousine which is suitable for that climate. It calves precisely after every 12 months.

And to support farmers and keep their costs low, Teargasc not only offers extension officers for farmers at no cost, but also carries out research which is disseminated to farmers through various avenues.

Currently, it has 300 research projects carried out by 500 scientific and technical staff.

Their post-graduate fellowship programme supports more than 200 MSc and PhD students in collaboration with the University College Cork.

Consequently, production has gone up from an average 15 litres in 2009 to at least 25 litres. But it is not just quantity that has improved but quality also. Ireland milk has some of the highest protein and fat content in the world while keeping bacteria low.

Total bacteria count, which is a measure of impurities in milk, is below 20,000 on average. The low count ensures milk can be used for making sensitive but lucrative products like infant milk powder, which mostly comes from Ireland.

“In Kenya, bacteria count can go as high as 300,000 to 500,000, limiting its use to make sensitive products,” said Mr Augustine Cheruiyot, an adviser on agriculture at the office of the Deputy President.

The reason for Ireland’s low bacteria count is because the milk does not come into contact with humans. Cows are milked using machines which then transfer it into a cooling plant, which keeps it at six degrees.

Cooperatives then pick the milk from the cooling plant and immediately weigh it and determine the fat and protein content.

“The higher the protein and fat content, the more a farmer receives and vice versa. We pay depending on quality and quantity,” said Mr Ryan.

And due to the mechanisation, labour costs are low. For instance, Mr Ronan Hughes, a dairy farmer, has 71 cows but only one worker. He milks his cows using machines and they graze in his 38-acre farm kept safe by an electric fence.

But in addition to keep production costs low, Ireland agriculture sector has grown due to value addition and support from the government to both farmers and industrialists.

Teargasc not only carries out research for farmers, but also industries.

It has installed model factories for agriculture products. This means that an industrialist who for instance, wants to develop a new brand of yoghurt does not have to buy machines and process it before launching the product.

They can use Teargasc model factories to make their product and test it in the market before investing in their equipment.

When the Business Daily team visited one factory for instance was piloting a project on how to use milk to make alcohol.

“We are also carrying out research on various packaging models that our industrialists can use to ensure their products remain safe and fresh for longer,” said Mr Declan Bolton, a principal research officer at Teargasc.

The organisation is funded by a combination of donations from private companies, the government and the EU.

The programme has allowed industrialists to almost eliminate the cost of research and development of their products.

One of the beneficiaries of the collaboration between Teargasc and industry stakeholders is Dawn Farms, one of the biggest ingredient makers in the world.

The Irish firm has grown from a struggling family startup to a global supplier of cooked foods including pizza toppings for giants like Dominos and Pizza Hut. It exports 90 per cent of its products.

“Research organisations like Teargasc are key to our success. They help us stay ahead of the market by testing new products and technologies and ensuring we also comply with global regulations,” said Dawn farms chief executive officer Larry Murrin, a jocular fellow with a rock-star personality.

Another pillar for the growth of agro-processing is government support. Farmers receive subsidies. Teagasc highlights that the average subsidy payment is €18,859.

Also, to attract multinationals, Ireland’s investment agency IDA Ireland has 350 staff who work as account managers.

Their role is to identify companies who are not yet in Ireland and offer them an incentive to set up there. Already, 80 per cent of multinationals in the Fortune 100 ranking in Europe have Ireland as their headquarters.

Entreprise Ireland, another State agency that helps local companies export to global markets, offers startups 6,000 euros to explore overseas business opportunities.

But despite the success, Irish industry faces key challenges. Since over 90 per cent of its agri-products are exported, the country is vulnerable to global economic factors beyond its control.

For instance, Britain’s exit from the EU, commonly referred to as Brexit may affect its trade as the State exports 33.9 billion euros in goods and services to the United Kingdom. Of these, four billion euros are in agriculture.

Also, the sector faces a barrage of food safety requirements that may make their products expensive.

Due to recession, many youth who eyed tech jobs went back to farming and agro-processing. But as the economy recovers, the sector may not attract as many youths and the government is well aware of it.

The country also has to cope with disparity in earnings between dairy and beef farmers. Dairy farms are by far the most profitable, with average income rising nine per cent to almost €69,000 last year. But for now, the good times continue.