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Agri-food sector has the innovative ingredients to build on its success

By Angela McGowan, chief economist at Danske Bank

Published 03/11/2015

Angela McGowan, chief economist at Danske Bank
Angela McGowan, chief economist at Danske Bank

Global commodity prices waned in 2015 as demand from China and emerging markets fell back. The full impact of that slowing demand has undoubtedly been felt by local dairy farmers, but for other food producers working on products further up the value-added chain, current conditions remain very good.

If there is one thing that Northern Ireland does well, it is food. The local agri-food sector is a huge player in our economy and it is by far the biggest producer in our manufacturing base.

The number of employees in the food and drink processing sector is estimated to be in the region of 27,000 and, if we were to include those working in farming we could add another 47,000 to the total. However, we can only begin to get a true appreciation of how significant food is to our local economy when we include the thousands of staff cooking and serving food in the hospitality sector as well as those involved on the retail or transport side of food production.

The food served in local restaurants and hotels plays a key role in the overall tourism offering that Northern Ireland presents to the world. Revenue from food tourism alone is estimated to be worth around £350m to the economy, but in recent years the food sector has also become so much better at bringing our food products to foreign customers.

With the help of Invest NI we have seen numerous artisan food producers sell their produce in distant markets such as Turkey, the United States and even the United Arab Emirates. Closer to home food produce has successfully made it on to the shelves of Harrods as well as Fortnum and Mason in London and indeed has even been served in Buckingham Palace.

In Northern Ireland this sector has demonstrated fantastic levels of innovation by opening itself up to changing customer preferences and nutritional needs. We only have to look at the success of food manufacturer Linwoods to see how a company can use insights from science and nutrition to produce a high value functional food - in this case organic flaxseed. Linwood successfully sells its health food products around the globe and has made numerous adaptations for different markets such as the introduction of the Flaxseed Cocoa, which was originally designed to meet the demands of customers in the Middle East, but has quickly become popular in many other markets, too.

As scientists inform us about 'smart ingredients' and the impact of food on our health and longevity, the opportunities for the agri-food sector will continue to grow. Vitamin D enriched mushrooms, Omega 3 enriched eggs and indeed Linwood's flaxseed are probably just the tip of the iceberg in terms of the amount of functional food production that we expect to see in the future. Intelligent food will be a strong growth area for the agri-food sector going forward.

This increased collaboration with scientists and academics that is adding value to the food sector is not just limited to nutrition. When it comes to food production, reputation is everything and Northern Ireland's association with lush grassland has undoubtedly helped to support local brands. Our island position also offers natural protection from disease and because of our consistently high standards there is a growing preference within Northern Ireland for locally sourced products.

Reputation based on brand image is one thing, but when it is based on firm evidence that is quite another. This is where collaboration with the Institute for Global Food Security at Queen's University in Belfast comes into play. Here a team of local academics led by Professor Chris Elliott is currently developing techniques that can be used at the earliest point of entry to the food supply chain to prevent contamination.

By ensuring the integrity of food produced in Northern Ireland, this team of academics are raising the reputation of local producers further and helping them to be recognised as 'safe suppliers' in global markets.

This sector certainly has a lot going for it, but it would be foolish to ignore the challenges it faces, too. In the Republic the food sector still receives a huge boost from a reduced rate of Vat across the hospitality sector which provides restaurants and hotels with a significant competitive advantage for attracting custom.

Last year the Republic's government pumped a whopping €21m (around £15m) investment into Food and Health Ireland, a collaborative research facility aimed at commercialising research in the dairy sector and, in addition, the food science departments of Irish universities are also very well-funded.

The competition may be stepping up, but Northern Ireland plc is ready for the challenge. Next year has been earmarked as the 'Year of Food and Drink' in Northern Ireland. Those working in the food sector will be working hard, but they will also need support - support from the public to buy local produce and support from government in the form of a full implementation of the agri-food strategy.

In next week's Economy Watch, we hear from PwC chief economist Dr Esmond Birnie

Belfast Telegraph

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