Mr. Cormac Healy:

I will deliver my presentation as quickly as possible. I will cover the meat sector in the context of Food Harvest 2020, the targets and where we are now. I will concentrate on the beef sector but I will refer to the other sectors which I work for as well, the sheepmeat industry and the pigmeat industry.

First, I will give the committee a quick reminder of the targets. In the beef sector, the target is a growth in output value of 40% by 2020.

In the original Food Harvest 2020 report, we talked about 20% but following that, as was done on the dairy side, a beef activation group was set up to look at some of the more detailed needs and requirements in terms of delivering on the target. The first thing that group did was to recognise that world commodity prices, including beef prices, had moved on. Consequently, in terms of achieving a value growth target, a certain amount of it had been achieved through price alone. That activation group equally looked at the possibility of volume growth, both from the dairy sector and the expansion that will take place there with some additional cows in the system and in respect of the important suckler herd and the potential for some recovery in numbers that had been lost in previous years. In terms of the pigmeat sector, an ambitious growth target of 50% has been set and I will touch on that briefly in a subsequent slide. For the sheepmeat sector, there is a growth target of 20% in output value terms but I make the point, to which I will revert, that the sector itself, both at producer and processing levels, believes there is greater potential therein and considers that up to 45% perhaps could be achieved.

Before I go into some of the specifics on the beef sector in particular, I wish to take a look back at the beef sector itself and what has happened over the past decade. It is useful to reflect on that as we look forward to ascertain what is achievable in Food Harvest 2020. If one looks at the sector over the past decade, back in the early 2000s it was a sector that was a frozen commodity beef export business with a heavy reliance on intervention and on exports to international markets outside Europe with the assistance of export refunds. This has changed significantly and it is worth noting that only two weeks ago, we saw the final setting to zero in Europe of beef export refunds. I think this was the first time in the history of the Common Agricultural Policy, CAP, that export refunds in the beef sector were at zero. It is now a sector that is supplying high-quality fresh-chilled product across the United Kingdom and mainland Europe to top retailers and food service customers. Members probably have seen and heard some of these statistics previously but I note one in five burgers sold in McDonald's throughout Europe is made from Irish beef. Moreover, of every 4 kg of beef eaten in the United Kingdom, 1 kg is of Irish origin. We now are supplying in excess of 70 of the top retailers across Europe and Irish beef is stocked by more retailers than is beef of any other origin in the world, which is a significant achievement.

I will move through the graphic displays in my presentation quickly and the slide on view shows the development in exports. The red bars reflect exports to international markets outside Europe with the assistance of export refunds, while the blue bars reflect exports to Europe. Over the past decade, one can see a continual increase in the relevance and importance of the United Kingdom and European markets. Similarly, the graph now on display shows the penetration of retail markets across Europe and again, over the past decade up to 2011, one can see continual growth in the volume of sales going to retail. If one considers that ten-year period, back in 2001 approximately 27 retailers throughout Europe were being supplied, whereas last year, 75 retailers were stocking and selling Irish beef. During that period, significant work has been done in respect of branding and adding value to our beef. This certainly is the case with regard to adding value in terms of product development and new products. More recently, however, there has been work done on branding both our primary beef, in terms of Irish Hereford, Irish Angus etc. and on the processed meat side. On foot of a significant degree of work, while we remain with the core statistic in the beef sector that 90% of the beef we produce is destined for export markets, last year those exports increased by 15% to reach a level in excess of €1.8 billion. To give members an idea of the breakdown of those sales, the pie chart on the bottom of the slide on display shows that almost 50% of our beef exports go to retail, a further 23% to 25% go to manufacturing and the remainder, or just over a quarter, go to the food service sector. The map in the corner of the slide on display gives an indication of the spread of exports throughout the European Union. Obviously, the United Kingdom still remains an important market and still takes approximately 50% of our exports.

When considering this development over the past decade, what has been its impact? One impact has been on the price return from the market, that is, the price return to producers. During the same period I have covered, that is, from 2001 to last year, the beef price has gone from a level of 240 cent per kilogram to an average year-to-date price this year of 410 cent per kilogram. There has been a significant movement in price, a 70% increase, over the decade. The market has delivered, as that period witnessed a move away from intervention and from a reliance on export refunds to third countries to a closer linkage with the marketplace in Europe and the 500 million consumers therein. As I noted, finished cattle prices during that period have increased by 70% and, more recently, have increased by 30% within the last two years to the tune of an additional €700 million being paid to beef producers over the two-year period since January 2011. Certainly in 2005 and 2006, there was a step change in beef price and in the past two years, there again has been a significant move in beef prices to a new level. The gap with the European Union average certainly has been closed to a considerable extent.

However, in a word of caution before I turn to considering some of the recommendations, one cannot ignore the marketplace either and there are always issues there. Since 2008, we have been working against both the severe impact the sterling-euro exchange rate has had on Irish exports and the economic downturn, both here in Ireland obviously and across Europe, which has had an impact on consumption. It has led to a trading-down by consumers, who are being more cautious and are opting for lower-value cuts, etc. Consequently, this has created its own pressures and consumption and sales volumes at retail level are down in the past two years. In addition, there has been a disconnect between what I mentioned earlier, namely, developments in farm gate price and developments in retail price. I have considered this issue in two ways. If one takes the Central Statistics Office's agricultural output price index and its consumer price index since 2006 when that base period was set, the beef consumer price has moved by 8% while the farm gate or cattle price has moved by 35%. The graphic in the middle of the slide on display shows the most recent two years, in which the blue line reflects what has happened at beef consumer price level, while the red line, which has moved on more considerably, reflects what has happened at farm gate level. Consequently, there are pressures within the marketplace at present.

I will turn to Food Harvest 2020 itself and what it means for the beef sector. The beef activation group that was formed just after the original report was produced sat for a short time, three months, and came up with a series of further refined recommendations that were perceived to be important to achieving the targets for the beef sector. Briefly, the group considered the importance of the suckler herd as a bedrock of the beef sector and a platform from which much Irish beef is marketed, as well as the critical nature of the suckler cow welfare scheme to the aforementioned suckler herd. It considered policy issues in respect of the CAP, as well as technical efficiency on-farm and I will revert to some of these issues briefly. The closing of the gap with European prices was perceived to be important in respect of giving the confidence to move on and deliver on the growth targets. It also identified the quality payment system and the role it has played in rewarding quality and I have appeared before the joint committee to discuss that issue in the past. It also identified areas of young bull production, on which I will touch and which may have been something of a newer development in the Irish beef sector, as well as setting important recommendations on breeding and the progress that can be made from the breeding side.

That is copying much of what has been done in the dairy sector, where much progress has been made in breeding and genetics. We hope much of that can be replicated in the beef sector. Animal health is an important area as we must remove some of the underlying disease problems causing inefficiencies on Irish farms. There is also market access to consider.

The suckler cow welfare scheme is particularly important and we want it retained. It is under pressure in the current budgetary climate but it is important to assist and maintain the numbers we have in the suckler herd. The Common Agricultural Policy has already been discussed but we all recognise the issues with securing a strong budget for CAP and Ireland's envelope. I do not believe we will see disagreement on that. There are dangers with regard to a flattening of the single farm payment and we are concerned about that.

It is accepted that "greening" will form some part of CAP in the context of European taxpayers and showing the dividend from an environmental or climate change perspective but the level of budget currently being assigned to it is significant. There must be a re-coupling element and the last CAP reform went too far. We have seen the impact not only in Ireland but across Europe for the livestock sector, including beef and lamb, which have declined since the last CAP review. Do we want a CAP that continues to see a decline in European beef and lamb sectors in Ireland or across Europe? The evidence is that the sectors have declined considerably. Current proposals mean some members are permitted to have 5% re-coupling of budget and others may go to 10%, based on decisions they were forced into in the context of the last CAP.

With regard to the discussion on coupling and greening, if we want to see real sustainability or measures in CAP tackling climate change, why not consider an element like a finishing premium that would encourage finishing animals at a younger age? There is a direct link in terms of carbon output and footprint to the age at which animals are processed, so perhaps that could be considered.

In as much as market price is critical and will send confidence to producers, much can be done behind the farm gate and progress should be made in that area in the beef sector. Some projects have been covered by the BETTER beef farms area and a new discussion group has been established by the Minister. We must see progress behind the farm gate in technical efficiency. I often refer to the statistic that in the sucker herd, there are 78 calves per 100 cows each year, which is not good. If progress can be made on this to a modest extent, even where there would be 85 calves per 100 cows, there would be significant benefit to the producer's bottom line. Equally, there would be more animals in the system as well. We must focus on the area and the issue is not all about price or the market.

We will always refer to the market access point and maximising our options in the market has the goal of maximising the return possible from that market. In beef we have target markets; we want access to the US, Chinese and Japanese markets. We would have been in markets in Japan and the Persian Gulf in the past but we remain locked out because of legacy issues from the BSE days.

Quality assurance is an absolute priority and a prerequisite of the top customers throughout Europe. We must have all producers involved in quality assurance schemes, which have an important sustainability dimension tied in. That is a very positive development which we will rely upon for Irish food and agriculture. Producing what the market requires is important; grass-fed prime beef from steers and heifers is the unique selling point of Ireland and our tradition. More recently there has been some movement to young bull production, although I accept that is producer-led and considers the type of returns that could be achieved. It is not where Ireland's processing sector will see its future in Irish beef sales in the European market. We must also focus on other parameters, including age, weight etc., that I do not need to explain in detail.

There is significant potential in the beef sector. We have increased cow numbers from the dairy sector but we hope to see some recovery in suckler cow numbers. There has been evidence of a stabilisation of numbers and some rebuilding of the beef herd. Technical performance can also be improved and with the increased number of calves, much of the industry, working in conjunction with Teagasc, is considering new production systems for beef from the dairy herd.

The beef activation group report indicated that annual beef slaughterings in Ireland can move to 1.8 million or 1.85 million head and beyond, and with that there will be a jobs dividend, which has been referred to already and is included in the overall figures from Food and Drink Industry Ireland. European beef production is falling and that trend looks set to continue. People are talking about almost a 5% reduction in European beef production, and we are the major suppliers into that market of 500 million people. That is where we have strong ties and that market is on our doorstep. There is also a growing global population with protein demand following, which will keep our key competitors in South and North America focused on other regions of the world. There is a strong message and story around sustainable production. There is significant advantage to be gained from technical efficiency on Irish beef farms.

I will touch briefly on the sheepmeat sector. The growth target set for the sheep sector in Ireland was 20%, and the sector has come through significant decline over the last decade. Since 2005 we have lost 1 million ewes from the breeding flock, bringing it down to just over 2 million. In the past two years, with positive price development, we have seen a recovery and we hope the flock can grow to 3 million ewes again. The farmers and industrial partners considered submissions to Food Harvest 2020 and they believe there is more potential than the 20% figure indicated by the report.

Sheep enterprise is shared on most livestock farms in Ireland, and there is not a large number of specialist sheep producers. There is potential for the sheep sector in that respect. Technical efficiency may help in this regard, and recently there has been developments with Sheep Ireland on a breeding programme. There has been assistance from farmers and processors in that regard. We must have a renewed focus on quality in the area and international market access will be critical.

There is a 50% growth target set for pigmeat in Ireland. Much of this was to come from improved technical efficiency, specifically with regard to the number of pigs produced per sow per year. Ireland led the way in this respect in Europe for many years but we fell behind in the past five or six years. Progress is being made, especially in the past two or three years.

Another aspect was the potential to add a further 150,000 sows to our sow population. It is important to point out that considerable progress has been made in the pigmeat sector. I appeared before this committee in the past when we examined the aftermath of the dioxin contamination but since December 2008 significant progress has been made. The volume in terms of the numbers processed in the country has increased by 19% from the base period considered in Food Harvest. Prices have increased by 25% but of all sectors this one is still under critical pressure because of the price of feed and the reliance on feed.

Exports of Irish pigmeat to international markets since the base period, which was 2007 to 2009, have increased by more than 100%. Therefore, huge progress has been made. There are some immediate challenges. We are in the middle of a major feed crisis for the pigmeat sector but the price has responded.

Another issue is the sow housing legislation, the welfare legislation, which will come into effect on 1 January next, and it is one to which Irish producers are significantly responding. A grant system was announced by the Government and the take-up of it has been considerable. We are working our way towards being in compliance and have no option other than to be in compliance. Significant progress is being made on that.

Market access remains critical. It has been shown that once markets have been open internationally pigmeat is supplied to them. Of all of the markets, the home market is particularly important to the Irish pigmeat sector. We have lost some of the premium in the home market and that is an issue for us in an area that is under particular focus at present. The sector at farm level and processor level has been meeting with Bord Bia to discuss those issues.

I thank the members for their time and hope I did not continue for too long.