PWC’s US agri-business leader sees good times for Ireland if it can capitalise on a global middle class

Sitting in a top-floor room at PWC’s Irish headquarters on Spencer Dock, William “Bill” Coe, the firm’s US l agribusiness leader, is looking forward to spending some time in Dublin.

This is his third visit to Ireland. Most recently in 2001 he holidayed with his family on the Dingle Peninsula. Despite a harsh recession in the intervening years, the Chicago-based partner doesn’t see much change in the country.

“Actually flying over it it looks the same,” he quips, “but I haven’t been in Dublin, so it’s hard to judge.”

Indeed, this week one can draw parallels between Ireland now and 12 years ago.

Back then an outbreak of foot-and-mouth disease brought the country to a standstill and the night before we meet another meat issue, albeit a less disruptive one, exploded into the media spotlight.

Coe speaks positively about the Irish beef industry but acknowledges the “horse burger” debacle will have some repercussions.

“It’s all over the news right now,” he says, pointing out that damaging the public’s trust in what they’re paying for and what they’re actually getting is difficult to undo.

He also questions producers’ claims they were unaware of the burgers’ content. “Tracing with beef is so strong right now there should be no way this can possibly happen.”

Good times ahead

But suspect burgers aside, Coe, who has 25 years international agri-business experience, sees good times ahead for Ireland if it can capitalise on an expanding global middle class.

Ireland doesn’t produce enough grain and subsistence foods to target markets for the world’s poor but it’s in a good position to cater for countries such as Brazil, Russia and China where middle class demand is high but management expertise is low.

“In Ireland you’ve got water, you’ve got natural resources, a lot of your cattle are grass-fed, you’ve got a very sustainable eco system here for the production of high quality food produce,” he says.

But what the Irish don’t seem to be aware of is their own “deep understanding of the agri-business sector and what it takes to manage farms and manage the value chain properly”.

Herd management

In Russia, he continues, the government might invest in new tractors but they won’t have people to drive them; or farms will have cattle but a poor system of herd management.

“You have manufacturers which are incredibly inefficient, they do have equipment but the management processes have been neglected.”

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.

‘Good spot’

“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.”