Mr. Padraig Brennan:

I wish to convey my apologies, on behalf of Ms Tara McCarthy, who was unable to join us here today for personal reasons.

I thank the Chairman and members for the opportunity to brief the committee on the latest position on Brexit from the perspective of Bord Bia. I am accompanied by my colleague, Mr. Shane Hamill. He is the overseas trade manager for Bord Bia. He manages our Brexit activities and supports.

Overall, the value of food and drink exports increased by 13% to €12.6 billion in 2017. The share of exports destined for the UK declined from 37% in 2016 to 35% in 2017. However, despite losing share, exports to the UK rose by an estimated 7% in 2017 to some €4.4 billion, despite the ongoing weakness of sterling and the uncertainty created by Brexit. The change was very much driven by increased demand and strong prices, particularly for dairy and to a lesser extent for beef. As for year-on-year growth, from the end of quarter 2 in 2018 to date, exports of Irish food and drink to the UK was 2% higher. Again, the improvement was largely driven by increases in meat and dairy exports, while helped some fall in the exports of seafood and beverages.

The value of our exports to other European markets increased from €3.53 billion in 2016 to €4.1 billion in 2017. Other EU markets now account for approximately one third of total exports. The value of exports to markets located outside of the European Union increased from €3.49 billion in 2016 to €4 billion in 2017. International markets now account for 32% of our total trade. Despite the challenges posed by Brexit, the UK remains the most important market for Irish food and drinks manufacturers. Exporters remain fully committed to defending our current market share and, where possible, growing business in the UK in the years ahead.

The Bord Bia Brexit barometer is a risk diagnostic tool that was designed to assess the individual company level impacts that Brexit can pose. The Brexit barometer for 2018 was launched on 23 March for six weeks with an aim to measure the progress made by Bord Bia's client companies as they prepare for Brexit. Key objectives of the exercise were to measure progress across key strategic issues, to identify evolving client priorities and concerns and to further inform Bord Bia's Brexit programmes and supports for its client companies.

The 2018 barometer took the form of an online survey, which was completed by 117 client companies that represent almost 50% of the total exports of food and drinks to the UK. The results demonstrate that the impacts of Brexit vary depending on a number of factors, including the preparedness of individual companies and sector level issues such as export dependency, supply chain complexity and access to inputs. The barometer also assesses the potential impacts that may be felt by the industry with regard to maintaining customer relationships in the UK, logistical challenges and cost increases arising from customs checks, sanitary and phytosanitary, SPS, inspections, the UK landbridge, as well as new export requirements such as documentation and a potential further depreciation of sterling.

Bord Bia published the results of the Brexit barometer on 21 June 2018. The barometer revealed that while 60% of respondents remain uncertain as to the impact of Brexit, 73% of them had made minor or clear progress in preparing for potential outcomes. The barometer found that 85% of respondents had spoken to key customers in the UK about Brexit in the past 12 months of which 80% had discussed Brexit with customers on two or three occasions. Of those that have not done so, 42% report that buyers had not indicated a wish to discuss Brexit with them. In addition, 80% of participants believe they will continue to have opportunities to increase sales to the UK. The potential strategies for increasing sales to the UK aligned on new product development, enhanced key account management and marketing strategies. Indeed, 54% of the clients who responded to the barometer now have tailored marketing strategies in place for the UK market, which is up from 39% in 2017.

Moreover, 62% of respondents have mapped their supply chains to identify possible challenges arising from Brexit but only 40% have taken steps to reduce supply chain costs. In the past year we have seen a significant increase in awareness by clients about whether supply chain partners are Brexit-ready. In 2017, 68% of participants were unsure as to whether their supply chain partners were Brexit-ready but a year later, that level had reduced to 40%.

Companies have made modest progress in their understanding of possible customs implications due to Brexit. Indeed, 45% of respondents believe they have either significant or a reasonable amount of experience in complying with official requirements, while more than 50% of respondents feel comfortable identifying the tariff classifications for their products.

More than three quarters of respondents have identified their risk and exposure to currency fluctuations. They have taken strong action in terms of market diversification, with 85% of respondents actively seeking to expand their business into new markets and 75% of participants have reported a growth in sales to non-EU markets in the past 12 months. The most attractive growth markets outside of the UK have been in continental Europe, North America and the Middle East.

Bord Bia launched a recommendations report in conjunction with the overall findings of the Brexit barometer. The recommendations report has been disseminated to clients on an ongoing basis and focuses on outlining practical steps that companies can take to become Brexit-ready. The report also flags Bord Bia and other State supports and contains a template that can help companies to draft their own company-specific Brexit plan.

A benchmark report was also launched and circulated to each respondent outlining how it scores in its preparedness alongside peer companies by turnover, as well as against overall responses. The objective is to highlight where each individual company should place it focus ,which allows it to target resources in the year ahead into areas that require attention.

Bord Bia has focused on increasing the skills of industry in managing the key pressure points identified through the Brexit barometer around customs, currency risk and supply chain. Since November 2017, Bord Bia has been running a customs training programme made up of four two-hour sessions for clients. Each client also receives a two-hour confidential one-on-one mentoring session to work through sensitive commercial information and ensure tailored solutions by company. More than 50 clients will have availed of this training by the end of the year.

A currency training programme was also launched in November 2017 and has assisted 24 clients to design a treasury policy and foreign exchange strategy. This helps companies prepare for buyer meetings, tendering and negotiations and will also support existing and new business development. According to the results of the Brexit barometer, the supply chain is one of the highest risks emerging from the uncertainty around the UK’s future status as a trading partner with the EU. Increased lead times, especially when related to short shelf-life products, in conjunction with a complex and intense supply chain, is a key issue facing the industry. Bord Bia’s supply chain logistics guide helps businesses to optimise supply chain operations by reducing costs and identifying solutions to potential disruptions and identifying the right partners. The guide is aimed at current and potential exporters who wish to review their logistical operations for servicing both existing and new markets in Europe. Diversifying into new markets will challenge companies to review their existing supply chain and their logistics channels. Bord Bia's logistics partner database enables Irish companies to identify logistics service providers operating both in-market at a national level and internationally. As markets continue to evolve, exporters will need to look beyond their incumbent provider and become more educated in the options available. The database that Bord Bia has developed focuses on the UK, Germany, France, Netherlands, Spain and Poland. Bord Bia has hosted three supply chain workshops, with a total of 87 companies attending, focused on bringing the recommendations of the logistics guide to life, exploring optimisation opportunities and identifying key performance indicators, KPIs, for logistics partners.

If the export growth trends evident between 2009 and 2017 continue, international markets outside the European Union will account for more than 40% of Irish food and drink exports by 2025. Global population growth, along with increased urbanisation and affluence, as well as the intensifying challenges of climate change, provide the macro-context for this opportunity. Bord Bia was commissioned by the Department of Agriculture, Food and the Marine to undertake an in-depth market prioritisation exercise. This focuses on identifying relatively new markets that are likely to present growth opportunities over the next five to ten years and on assessing these against the capability of Ireland to supply those markets. For this reason, strongly established markets, particularly some of the key European markets when it come to meat and dairy, have been excluded from this analysis. We adopted a funnel approach with an initial screening of over 180 markets using macro-economic and sector-specific criteria to assess and weight on the basis of each category. This has formed the basis of what we have now in our market prioritisation tool. The output from the tool initially was to develop a list of the top 30 markets for each category. Through ongoing consultation with industry and the Department of Agriculture, Food and the Marine, Bord Bia has identified 15 potential markets for meat, dairy, prepared consumer foods, beverages and seafood. Some 75 summary reports have been published for each market and sector, outlining the scale of the opportunity, the potential level of competition and any barriers likely to be faced by Irish exporters. In-depth reports are now being prepared on five of those 15 markets by sector and that will outline how Bord Bia and the industry can leverage what appear to be substantial opportunities. These outputs will guide Bord Bia’s allocation of resources in order to help us work with the industry to deliver on insights, lead generation and in-market promotion, among other areas.

As part of Bord Bia’s recruitment campaign for 2018, it is currently in the process of placing 13 additional staff in our overseas offices. The allocation of these resources was based on the market prioritisation exercise and these market specialists will assist food and drinks companies in market insights, planning and business development. Four new staff will be placed in Asia, in Singapore, Tokyo and Shanghai; four in Europe: in London, Amsterdam, Dusseldorf and Warsaw; two in the United States; one each in Dubai, Nigeria and North Africa. To complement that deployment, an additional 13 staff have been recruited to be based in Dublin and will support the international office network from various functions including the insight team, Origin Green and our sectoral teams.

A key part of our activities on an annual basis is Minister-led trade missions and this year they started with a livestock trade mission to Turkey in January, and to the US and Canada in February, both of which were led by the Minister for Agriculture, Food and the Marine, Deputy Creed. The Minister then led a trade mission to China and Hong Kong in May and to Indonesia and Malaysia just last month. In addition, Bord Bia hosted Marketplace International 2018 in the RDS on 12 April, which was attended by 532 buyers from 52 different countries across all continents. In the days before and after the event, some 290 buyers participated on 28 bespoke itineraries visiting 61 producers and 20 retail and food service sites. We have been actively following up on these leads to see how we can convert what are good prospects into real business opportunities for Bord Bia clients.

On stakeholder engagement, Bord Bia continues to play a leading role in the various Irish Government and industry fora to provide market and customer insight to policy makers and to prioritise support services and opportunities for Irish food and drink manufacturers. Bord Bia has held a number of meetings with Irish and UK customers to present the findings of the Brexit Barometer 2018 and to outline the preparedness of the Irish supply base. These meetings have been used as an occasion to assess the potential opportunities that can arise for Irish food and drink manufacturers post Brexit. A series of meetings also has been held with logistics operators to better understand the challenges that may arise from the supply chain as a result of Brexit and to feed back the expectations of food and drinks manufacturers on the sector.

In July 2018, Bord Bia launched Plan to Grow, which is a way of working more closely with individual clients to help them develop and implement their own marketing strategy. This is the first time Bord Bia has launched a bespoke end-to-end service of this scale. This service will be central to helping seize emerging opportunities that have arisen in emerging markets, for example in China, with the opening of the beef market there in April, while also helping client companies to address the challenges being faced by their business.

I hope this presentation has given members of the committee a comprehensive overview of the challenges faced by the food and drinks sectors as a result of Brexit, their level of preparedness, as well as, hopefully, a good understanding of the actions being taken by Bord Bia on behalf of our client companies.

Mr. Hamill and I will be happy to answer any questions members may have.