Pursuing Added Value in the Irish Agri‐Food Sector: An Application of the Global Value Chain Methodology

In 2015, under its Food Wise 2025 strategy, the Irish government set itself the ambitious target of increasing Ireland’s income from agri‐food exports to €19 billion within ten years, an 85 per cent increase. This paper analyses the structure of the two main food systems in Ireland; the dairy and beef industries, to examine value chain efficiencies in production needed to achieve such a level of growth. This paper, lays bare a reality characterised by significant inefficiencies and suggests innovations to increase the competitiveness of the industries internationally. Moreover, the paper recognises that the ability of stakeholders to add value to primary products in the two main Irish food systems is key to the success of the Food Wise strategy. The methodology that the paper employs to analyse the dynamics of the Irish dairy and beef systems is the Global Value Chain (GVC) methodology championed and developed by the Center on Globalization, Governance & Competitiveness at Duke University. Through the disaggregation of the various segments that comprise the food systems, the GVC methodology allows for a multidimensional analysis, and for the identification of where rationalisation is required and where value may be added to primary products. The paper presents value chain maps for both the Irish dairy and beef systems to compare and contrast the structures, institutions, characteristics and effectiveness of the two value chains. The comparison illustrates cogently where rationalisation is needed and where value may be added. The paper finds that the Irish dairy system is more fragmented than the systems of other dairy‐producing countries and that at the farm and processing levels it still requires, despite much rationalisation since the 1980s, substantial consolidation may still be necessary. Regarding where value may be added to primary products, the paper finds that in the Irish dairy system there remains an over‐reliance on basic commodity sales and that innovation to open up entirely new markets, both in terms of products, such as in the area of sports nutrition, and geographically, such as middle‐eastern markets, with white cheese, is required. Regarding the Irish beef system it finds that while there is not as much scope for product diversification, innovation in branding and standardisation could produce a considerable dividend. Comparing value chain integration, the institutional structure built upon farmer owned cooperatives in the dairy sector allows for greater coordination and responsiveness to market opportunities. The beef value chain however is much less integrated, beset by cross‐value chain competition and low levels of trust, which has implications for future value generation and transformation across the chain.