ADVERTISER’S ANNOUNCEMENT
Safer Trading with Coface
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griculture is one of Ireland’s greatest success stories. Resilient during the years of economic turbulence, the agri-food sector has outperformed other areas of the economy when it comes to exports and led the way during the recovery. Now the Government is pushing for more. Its latest ten year strategic plan, Food Wise 2025, envisages an 85% increase in the value of agri-food exports over the next decade to €19bn. Dairy sector While the quality of Irish produce is second to none, this export push is against a global background of increased competition, volatile exchange rates and geopolitical tension, especially the situation in Russia. And nowhere are the challenges and opportunities more apparent than in the dairy sector. Global milk production has grown by 56% in the past 30 years, according to the Food and Agriculture Organisation of the United Nations, and the end of EU milk quotas in April 2015 inevitably led to another surge in production. At the same time, dairy prices have fallen by more than 60% since
2014 and the effect on profits has been felt across the world. For example, the New Zealand giant, Fonterra, recently announced it was cutting jobs as part of measures to improve its competitiveness1. Despite these current uncertainties, Coface believes the long-term prospects for the dairy sector are generally favourable. Consumption of milk may be falling in parts of the EU, but there is a large emerging market in developing countries. Emerging countries in Latin America and Africa are expected to increase their per capita consumption of dairy products by more than 11%, and this could reach 29% in Asia2. This means that milk producers have an ideal opportunity to export dairy products, especially to China where consumers have lost confidence in domestic brands following a series of health scandals. Managing risk Across the agriculture sector, Ireland has already proved it has much to offer outside its traditional markets of the UK and the rest of the EU. Exports of food and drink to Asia grew by almost €270million to €850 million in 2014, while exports to China alone were worth €520 million, a rise of 40%3.
“Credit insurance can safeguard your business and help establish a stable platform for export growth”
And now that the United States import ban on EU beef no longer applies to Ireland, Irish farmers have a great opportunity to establish a foothold in a significant new market. But as we have seen the agriculture sector can be affected by sudden downturns which can lead to insolvencies along the supply chain. Many farming businesses in Ireland, especially smaller operations, are deterred from trading overseas because of concerns about the risk of late payment or customer insolvency. This is a shame because it is possible to trade safely overseas if you secure your sales revenue. For example Coface is one of the world’s leading credit insurance providers, protection in the event of bad debt being just one of a number of benefits:
1. Evaluating risks in overseas markets Coface’s experienced economists produce regular reports and assessments of the trading situation in different countries so you can research the potential of different markets. Our business climate assessments will highlight weaknesses in corporate governance and corporate law which could jeopardise the enforceability of your contract. 2. Current intelligence about potential customers Coface has access to a global database which tracks the trading behaviour of over 65 million companies, as well as underwriters on the ground to monitor local trends. 3. Cash flow protection in the event of payment default Coface has developed a new credit insurance policy –TradeLiner- to meet the needs of different businesses, including SMEs. Policyholders are protected in the event of non-payment by domestic and overseas customers and debt collection is included. As well as traditional whole turnover cover, it is
also possible to obtain cover for strategically important customers or specific short-term risks. 4. Make your business more attractive to commercial lenders. A credit insured business represents a demonstrably better risk for investors than one which is vulnerable to the failure of one or two customers. Many Coface customers have found that their policy provides evidence of financial security to banks and other sources of finance, improving their credit options and borrowing terms. 5. Streamline the credit management process CofaNet Essentials is an online policy and credit management tool which allows all our customers to apply for credit limits on new customers; monitor and adjust existing limits; view a real-time snapshot of the distribution of credit risk in their portfolio; and send messages directly to our underwriting department. An app is also available called CofaMove, for access from mobile devices.
Reference 1. Dairy giant Fonterra to cut jobs amid tumbling prices, BBC News, 16 July 2015 2. End of European milk quotas: a new era for the French dairy sector, Coface Panorama, May 2015 3. Page 5, Minister’s newsletter, Dept of Agriculture, Food and The Marine, March 2015
For more information about Coface in Ireland; contact Roslyn Keogh, Country Manager Coface Ireland on 01 230 4669 or visit www.coface.ie