Food, like agriculture, is a long-term capital-intensive industry and the sector has huge growth potential,” chief executive of Dawn Farm Foods Larry Murrin told the Alternative Finance Conference in Dublin’s Marker Hotel recently.

According to Larry, the good news is that the Food Wise 2025 report formally recognises the strategic importance of the agri-food sector as Ireland’s largest indigenous industry, one that touches the fabric of life in every town and village.

However, with significant requirements in capital assets and working capital, Irish companies currently face a prohibitive funding environment to grow and build scale.

At the minister’s request, Larry was part of a group who submitted a report on the fast-growing prepared consumer food sector to feed into Food Wise 2025.

A principal recommendation was the establishment of a €500m fund through the Irish strategic investment fund (ISIF), with appropriate terms and conditions to make it feasible for food companies small, medium and large to invest in enabling technology, plant renewal and expansion, refinancing, market development and innovation.

State aid rules are essential, but Larry argues that they need to take into account the economic and financial circumstances that Ireland and Irish companies find themselves in today and into the future, especially in relation to access to funding and scaling food businesses.

“The absence of appropriate State-sponsored scaling and investment finance increases the need to look at innovative and affordable private funding mechanisms,” he said. However, he believes it will take more than this.

Larry had just gone through the story of Dawn Farm Foods that started with just 12 people 30 years ago.

“We borrowed four of the vehicles when we took a picture outside the factory to make the company appear bigger than we were,” joked Larry. He acknowledged the foresight and advice of John and Peter Queally, who have been patient and supportive investors and shareholders in the company from the beginning.

“We are now one of the biggest producers of cooked meat proteins in Europe. Being at the edge of Europe, we have to invest in the best technology to ensure we have the best-quality products to get into export markets,” Larry said.

“We are not always paid for it, but it must be done,” he added. “There is strong demand in the sector for flexible funding tools to incentivise ambition, to empower growth and to create the kind of conditions where more companies can grow to the size of Dawn Farm Foods and bigger.”

The current difficulty, he said, is that there is a very low appetite for risk among commercial lenders, especially to the small- and medium-sized companies, and funding costs are too high and conditions too onerous compared with our competitors in bigger markets.

In the medium- to long-term, if this is not addressed, it will be a significant disadvantage to the growth ambitions of our sector.

JFC’s John Concannon later made the same point, saying that banks in Germany are lending to companies at rates as low as 1% and asked why the banks cannot do it here.

John has a similar growth story to Dawn Farm Foods. He grew from having a €25,000 loan from the local credit union to where he is today, employing 250 people mainly in Tuam, the UK and Poland.

“We launched our latest division, JFC Marine, recently that is opening up new opportunities across the world,” he said.

“Sales are vital for any business, but access to funding and strong cashflows are critical to grow. We have grown from the cashflow of profits and also used tax incentive schemes, such as the business expansion scheme, which worked well along the way,” said John.

One piece of advice he gave for both farmers and businesses is that you should keep money available for a rainy day. “Your back could be against the wall or you may need it for an opportunity,” John said.