Irish agri-business can be built up Bric by Bric
It’s not just Russia. Emerging markets in general lack the middle managers who know how to handle irrigation, seeds, fertiliser, crop defence and “all those things that make land really productive”.
Coe says countries with agri-business knowledge deficits place a high value on reliable food companies.
He recalls a discussion with a company that created a value chain of chickens for McDonald’s in China where quality supply was weak and unreliable.
“They grow the chickens, they process them and they get them to McDonald’s. It’s a closed system, they did one by themselves and the government allowed them to do that and then they did a joint venture.”
Whatever the benefits to the Chinese of high-energy, low-nutrition fast food, Coe says at least now the chickens are well sourced. Other food giants such as Yum and Dominos have also started to venture into the Bric markets creating, he claims, opportunities for well-managed Irish producers and suppliers. Walmart, the US retail behemoth, also has its eyes on new global markets.
Coe’s advice: “Look at the major retailers that want to move into Asia and tie up with one . . . you can go in there with them and secure the supply chain.”
Irish food exports are forecast to increase from current rates of €9 billion to €12 or €13 billion by 2020.
“I think you’ll do that if you tread water. I think you should do much better than that,” he says.
“You’re in a really good spot right now: you’re positioned well logistically, you’ve got a great product and with the middle class coming I think if you guys move aggressively you can capture a big chunk of that… so I think things look very, very good for Ireland for the next five to 10 years.”
Today, he offers, Irish businesses should start sending their corporate development people and CEOs out to four or five potentially strong countries. They need to start making relationships, getting to grips with local procurement and legal systems, and then, when they think they’re ready, pick one or two areas that would suit their product line.
“There are 20 green fields out there from China to Indonesia to Latin America to central and eastern Europe. The challenge is going to be picking the right ones, doing the due diligence up front to understand the countries, to find a good partner and then to take that leap of faith.”