Professor Gerry Boyle:

I thank all the members for their comments and questions. I will preface my remarks by saying that some of the issues raised are of a political nature, and our organisation has no role in that regard. As the committee will understand, we very much occupy the science space, so to speak, and we are a little reticent to comment on some of the matters members have raised. Nonetheless, we will do our best.

Several issues were raised regarding the impact on teasing out the potential impact of an extreme scenario on small farmers and the question of market diversification, which is an issue for companies. Unfortunately, there is no doubt but that if we were to face the kind of shock that is possible, small farmers would be more severely affected. This is quite clear in two senses - they will take a bigger hit from any reduction in the prices they can get for their products and, more important, they will be adversely hit if the CAP budget is reduced because of their dependence on it. Sheep and cattle farmers are, as the committee will be aware, substantially dependent on CAP payments, so there is no doubt but that small farmers will be adversely affected.

A specific question about food fractionation was raised. This relates particularly to the dairy sector. Even we in Teagasc are continually surprised by the extraordinary product that milk is. To help the committee understand what we mean when we talk about fractionation, I will give an example. Many years ago, the farmer used to take the skimmed milk home for the pigs. I can certainly remember this. It was quite common. Not too long ago, whey was considered a waste product; it is now a critical part of the nutrition industry. The more we learn about products, the more we realise there are further opportunities to distil down their by-products - whether for standard milk production or cheese production processes - and recognise their value, and this will continue. When I talk about market diversification and market penetration, I emphasise that Irish companies are already hugely involved in these new markets. This is well known to the committee. What is interesting is that these markets present their own challenges in the scale of the operation required to successfully penetrate them. Substantial investment is required to penetrate them.

Regarding what the Government can do, the Government is already doing a lot by supporting industry through a variety of means to access such markets. There will have to be a substantial step-up in the investment and the timescale of that investment. All the commentary suggests that Brexit will play out over several years. In our view, at least as far as dealing with the challenges of market diversification is concerned, now is the time for a significant plan to be put in place to address this. The point Senator Daly made, that the only uncertainty is the uncertainty, is well taken. A private company cannot wait around for clarity; it must take decisions. This is where the risk arises. Senator Daly talked about cheddar cheese. It is not easy for a company to change its production model. To some extent, one can produce continental-type cheeses off a cheddar platform but, by and large, purpose-built investment will have to be put in place if that is the market diversification route that must be pursued. Some Irish companies are doing this. Dairygold, for example, now has an agreement with a Norwegian cheese producer to produce a completely different type of cheese that involves a different technology. There has been substantial investment by the Irish dairy processing sector on foot of the anticipated impact of the removal of quotas, but the sector is now faced with a further requirement for investment. I still think we have an opportunity to persuade the Chinese that cheddar is a delightful product, although our tastebuds would find some of the cheeses I have seen in the Chinese market utterly bizarre.

I will leave all the hard questions Senator Ó Domhnaill has raised about the bargaining position and so on to my colleague. We can make a big mistake in our sector by focusing on agrifood. It is probably not as high up on the UK agenda as it is on ours, and many other factors will impinge on that. As I said at the beginning, I think there would be universal agreement that we would like an outcome as close as possible to the current situation. The North-South issue is critical and, from a political perspective, if we could retain that single market, so to speak, on the island at least in the agrifood sector, that would be hugely positive. We have an extraordinary amount in common. Nonetheless, it is interesting that if one takes dairy as an example, there are vastly different systems of farming practised in the dairy sector North and South. We would like to think we have a more competitive and resilient model in the South but we need to collaborate on a much more extensive basis. Only yesterday, I had a discussion with my counterpart in Scotland on this broad theme. It is very early days yet, but I thought he made an interesting argument that one thing we have in common with the Scots, the Northern Irish to an extent and the French - but let us just take us, Northern Ireland and Scotland - is the development in agricultural terms of a sort of Celtic alliance in terms of our pasture systems and the sharing of our technology in a way we have not done before. One positive thing about Brexit is that it has brought us all to the point of considering the potential opportunities for collaboration.

I ask Dr. Hanrahan to deal with the difficult issues that were raised regarding tariffs and so on.