Mr. Michael Keatinge:

I thank the Chairman and members of the joint committee for allowing us to come before them to present our annual report for 2013. As the State's seafood development agency, Bord Iascaigh Mhara, BIM, is tasked with the conservation and development of the seafood sector. We employ 123 persons, some of whom are part-time. Our current staff number is one hundred and fourteen and a half full-time equivalent positions, a reduction of 30% on the number employed in 2009. Despite this reduction in numbers, I am glad to report that 2013 signalled the start of an ambitious corporate plan by BIM entitled,Capturing Ireland’s Share of the Global Seafood Opportunity 2013-2017. This strategy is consistent with the Government’s wider strategy for the agrifood sector. This tailored plan includes ambitious targets and encapsulates a clear vision for the seafood sector. Put simply, we are intent on growing a thriving seafood industry. We will do this by expanding the raw material base, adding value and developing efficient supply chains that together will deliver on the Government’s targets for the seafood sector and create sustainable jobs. We believe that by delivering on these objectives seafood sales can be increased to in excess of €1 billion. We can add up to 45,000 tonnes of new raw material to the seafood base and thus create up to 1,200 jobs.

Our strategy informs the business plan for BIM up to 2017 and beyond. More specifically, it involves working closely with the industry to take advantage of current and future market opportunities through enhanced sustainability which we believe is central to everything we should do, increased competitiveness, greater industry scale and expansion of the raw material base, all underpinned by appropriate levels of training and professionalism throughout the sector.

I would like to set out in more detail the five key strategic objectives of the plan.Our first concern is to add valueto the fish we land, be it farmed or caught in the wild. The demand for seafood is growing and in the next decade projected to grow by 42 million tonnes per annum according to the Food and Agricultural Organization, FAO. The major factors contributing to this growth are the increasing world population, the growth in spending power in Asia and the preference in that region for seafood. The growing demand for seafood in Asia may be expected to have a knock-on effect in traditional markets in Europe which are now almost 65% dependent on imports. BIM is confident that the combination of these factors is creating new business opportunities for the Irish seafood industry. If the industry is to gain advantage from this prospective growth in demand, it is imperative that it expand output if it is to compete in the global marketplace. Therefore, it is essential that additional sources of raw material are sought to generate the expanded levels of new and innovative value added seafood products that will be needed to capitalise on the emerging market opportunities.

The second objective is the scaling of the sector.BIM firmly believes there is a big opportunity to grow the sector from its current turnover level of approximately €850 million to in excess of €1 billion.

To do this, we need large-scale operators. The seafood industry employs up to 11,000 in fishing, fish farming and fish processing and these jobs are located in peripheral coastal regions. Family owned firms are dominant. There are 180 registered seafood companies with processing facilities in Ireland. A large proportion of this number are small scale firms, with a turnover ranging from €3 million to €10 million. In addition, there is a significant number of artisan scale operations supplying dispersed local markets such as shops and restaurants. This is in contrast to a typical European competitor which has a turnover in the order of €50 million.

Compounding the lack of scale is our geographical position on the periphery of mainland Europe. In reality, this means that it can be very difficult for Irish seafood companies supplying perishable product to compete with much larger European counterparts in the marketplace. This is particularly relevant when dealing with buyers from large continental companies that require daily delivery arrangements. In the next five years BIM will lead the sector in its efforts to build scale and create the necessary level of competitiveness to compete in the long term and realise its capacity to grow revenue and generate jobs. Appropriate scale, particularly in defined product categories, will enable a company or a group of companies working collaboratively to invest in marketing, research, advanced business and monitoring systems, all of which will open access to new markets and improve company profitability. BIM commenced this work in 2012 with the route to market programme and in subsequent years, through the implementation of this strategy, will continue to work with the industry on an ambitious business development strategy.

The third objective concerns the critical supply of raw materials.There is a big future in processing in Ireland and adding value to catches must be at the heart of it. To do this, we need to increase the volume of raw material supplied by various means. When one looks at the global market, it is clear that Ireland is a small player in the world seafood scene. As a consequence, Irish seafood companies cannot and should not try to compete on a cost basis against cheaper third country produce such as pangasius or tilapia which are heavily imported into the European Union. If we are to maximise the return from our precious seafood resource, we need to differentiate Irish seafood products from those of lower cost producers. The need to move from commodity trading, with the exception of some pelagic species, is of paramount importance to the Irish seafood industry. In addition, the need for added value products is driven by younger generations of consumers who are demanding more convenience in product presentation and meal preparation. This is a feature of newly emerging markets in Asia and elsewhere, as well as in traditional European markets. A strong focus on maximising additional value will ensure the industry will be able to keep abreast of this trend and, ultimately, protect market share and ensure long-term financial sustainability. The facilities at the Seafood Development Centre in Clonakilty will critically support this priority objective.

Our fourth objective is sustainability.Anything we do in the sector must take into account the sustainability of stock. Thus BIM’s priority to enhance the sustainability of seafood has due regard to the Europe 2020 strategy which sets the agenda in creating a resource efficient Europe. It also reflects Government policy on how Ireland can achieve a resource efficient, low carbon and climate resilient future.

Our programmes are likewise informed by the new Common Fisheries Policy, CFP, with its focus on the broader maritime picture, as advocated by the Integrated Maritime Policy, IMP, and its environmental pillar, the marine strategy framework directive. The new policy is based on exploiting fisheries resources sustainably. Ecological sustainability is, therefore, a basic premise for the economic and social future of European fisheries and the development of the wider seafood sector. The CFP will provide critical support for the long-term sustainable future of Ireland’s seafood sector and ensuring it can retain access to and grow the resource base on which the industry is dependent. Through our development initiatives, we are intent on growing the seafood sector by applying green economy principles that align the preferences of environmentally conscious consumers, while maximising renewable resources to reduce waste and input costs and embrace assured food production systems.

Consumers worldwide want to know from where their seafood is coming and are concerned to ensure the seafood they consume is sourced responsibly. In this context, specific projects undertaken by BIM include consideration of the potential for branding using appropriate quality assurance standards, together with certification from organisations such as the Marine Stewardship Council, as well as organic or eco-labelling. BIM is geared towards assuring all products covered by its schemes are sustainable, safe and traceable. It also ensures its assurance schemes are aligned with the Bord Bia origin green programme. The sustainability positioning provided for by the origin green brand initiative permits participant companies to engage directly with the challenges of sustainability, reduced energy inputs, a minimised carbon footprint and a reduced environmental impact. In turn, this secures better prices for the food and seafood sectors.

On our fifth objective, if we are to grow the sector, it is imperative that those involved have the requisite skills to enable them to maximise opportunities. In common with other business sectors, the seafood industry needs a regular supply of suitably trained and skilled personnel to work on board fishing vessels, on fish farms and in processing plants. BIM has a long established record of providing the industry with vocational training to attain appropriate qualifications to work as crew members, skippers and engineers on fishing vessels and this vital service continues. Building on this tradition, our strategy marks the introduction of a new era of professionalism in the sector. The provision of accredited training services, allied with a new approach with third level institutions, will secure the seafood sector’s place in the modern economy. The new approach will ensure the skills development work BIM undertakes for the seafood sector is accredited to National and European Framework Qualifications in order that our actions will be fully compatible with the requirements for portable qualifications and lifelong learning progression.

BIM’s national fisheries college, with locations in Greencastle, Castletownbere and Dún Laoghaire, is equipped to deliver a broad range of Department of Transport, Tourism and Sport and FETAC accredited courses. They include certificates of competency training courses for fishing vessel deck officers and on engineering, as well as short duration courses on safety, radio, first aid and other nautical skills. In addition, BIM’s mobile coastal training units provide short courses on safety, radio, engineering and navigation skills at ports around the coast, offering industry practitioners convenient access to necessary training. Courses related to product handling for seafood processors and traders are provided at the Seafood Development Centre in Clonakilty.

An integral component of the new strategy is the promotion and development of business management skills in the sector through leadership programmes and the introduction of new seafood business management courses with selected third level institutions aimed at attracting potential seafood graduates into the sector. The provision of appropriate skills and training for the sector will underpin the drive towards competitiveness which is the central focus of the strategy.

I will now deal with some specific issues highlighted in the report. Market performance in 2013 demonstrated that lack of supply, one of the key issues, was a problem. It resulted in a decline in sales from €822 million in 2012 to €810 million in 2013. In 2013 BIM applied for a licence for an organic salmon farm off Galway Bay. If successful, the intention is to lease the site to a reputable operator with the necessary capital and expertise to ensure the farm will be run to the strictest of regulatory practices. With the farm in place, up to 15,000 tonnes of high quality Irish farmed salmon could be produced every year, worth a minimum of €100 million annually and with an average flow of about €14.5 million directly to the economy.

Sustainability is a key growth issue. As we have seen in our success in the Chinese market, there has been an increase in the size of the middle class and a trend towards quality, sustainably caught and farmed seafood. With Ireland's reputation for clean waters and quality seafood, Irish seafood can demand an excellent price in new and existing markets, but, labelling and traceability are crucial. We have developed a range of internationally accredited standards, including the BIM responsibly sourced standard, to further increase sustainable fishing and operational practices for the wild catch and processing sector that underpin Bord Bia’s Origin Green charter.

In addition, the seafood sector has realised the benefits of running processing operations in a more sustainable manner and, with assistance under BIM’s green seafood business programme, is benefiting from substantial cost savings through greater management of energy and transport usage.

In 2013 coastal communities played a pivotal role in BIM’s fisheries local action group or FLAG programme, funded under Axis 4 of the European Fisheries Fund. The programme empowers local communities to look at new ways of adding value to the fishing and marine activities in their areas, with a view to generating additional revenue and employment. This successful programme provided grant aid for 41 projects in 2013, the first year of operation, totalling €95,069, but generated an investment of €178,974. A number of the fisheries local action groups are implementing their respective strategies through a diverse range of projects that will add value to their local communities’ infrastructure and business.

Safety at sea and the necessity for safety training remained a key priority for BIM in 2013. Following the launch of its enhanced safety training programme, we have a comprehensive safety training programme that also provides grant aid of up to 60% towards the cost of purchasing personal flotation devices, fitted with an integrated personal locator beacon. The programme complements BIM’s basic safety training programme and the fleet safety grant aid scheme ensuring crews receive the best safety training and safety equipment to help save lives at sea.

In 2013 the Seafood Development Centre in Clonakilty, County Cork assisted 29 seafood companies with new product development, branding and labelling advice, sensory panels, pilot testing and equipment and product upscaling. We also made a significant investment in new technology for the centre, including a new breading-cooking line to generate a range of new products. To encourage greater participation in the pelagic sector in value added innovation, BIM and Letterkenny Institute of Technology signed a memorandum of understanding to create stronger industry links with the third level sector, including access to culinary development facilities, science and culinary graduates.

It is clear from similar challenges other food sectors have faced and the limits within which we can do business in the current economic climate that we need to think outside the usual parameters of the seafood sector to build industry scale. BIM is facilitating and proactively pursuing investment opportunities and strategic alliances at home and internationally to generate the necessary capital and resources to ensure the sector can compete effectively. The growth and longevity of the sector is our primary goal. We are looking forward to delivering on the potential of the sector in the years ahead.