Mr. Cormac Healy:

The next slides will take the committee through some of our sectors. I will address the meat sector, Mr. Barry will address the dairy sector and Mr. Dempsey will address consumer foods. We will briefly refer to the growth potential, as we do not meet this committee regularly, and some of the principal issues in the sectors.

I look after IBEC's members in the meat processing industry - beef, lamb and pigmeat. The first slide relates to the Food Harvest 2020 targets that have been set for the meat sector. The target for growing output value in the beef industry is 40% by 2020. The original target was 20%, but subsequent work through an activation committee and a more detailed examination of the figures revised the target to 40%. A significant amount of the growth in value output has already been achieved. The targets for the pigmeat and sheepmeat sectors are 50% and 20%, respectively. When the document was originally being worked on, the latter sector in the agri-economy was at a low point and there were question marks hanging over its ability to recover. Thankfully, it has. The opinion within the sector's farming and processing elements is that a more ambitious target of 40% or 45% growth is possible.

The table shows that significant progress is being made. Consider the sectors' export performances. Beef has grown to €1.9 billion in export value, an increase of approximately 21% on 2010. Food Harvest 2020's baseline period is 2007-09. Pigmeat and sheepmeat export values have grown by 36% and 26%, respectively. A significant amount of this growth has been generated through an increase in commodity prices, but sustainable growth also needs volume. This is anticipated and I will touch on some of the figures in question.

For the beef sector, a recovery in throughput and processing levels is expected to make the 40% target a reality. The pigmeat sector has seen a volume increase in processing throughput as well as an increase in prices and, therefore, value. After hitting a low point, the sheepmeat sector has experienced an increase in volume throughput for the past two years. As Mr. Kelly stated, the targets are ambitious but realistic. A significant amount of progress has been made. The meat sector is confident that, between now and 2020, the growth targets are achievable.

The second slide highlights a number of key issues for the meat sector. Will there be a growth in volume? The beef sector, which is the major industry, has the highest overall value and has the greatest reach into the agri-economy. Close to 100,000 farmers are involved in beef production in some way or another and there are 60,000 specialist beef producers. It is a relevant sector. The anticipation is that slaughtering levels will increase for the next two or three years. They have increased this year relative to last year. The forecast for processing activity this year is 1.5 million head of cattle. In two years' time, it is expected to be 1.7 million. The target is 1.8 million. Volumes are also increasing in the pigmeat and sheepmeat sectors. Great processing activity in the meat sector means more jobs. It remains a labour intensive pursuit. An increase or recovery in volumes increases the potential for jobs. It also increases commodity prices and export opportunities, which in turn feed into job creation. As Mr. Kelly stated, we believe that 30,000 additional jobs could be created in the food sector with the achievement of the Food Harvest 2020 targets.

The maintenance of the suckler beef herd is important to the beef sector. This specialist herd has been the platform for the past decade's significant progress in penetrating European markets and top retailers. Coupled with its maintenance, the increase in the beef sector owing to the expansion in the dairy herd is also important. Mr. Barry will refer to that issue shortly.

We must continue to differentiate ourselves and work on matters of quality assurance, for example, play to our strengths in terms of grass-fed beef production. Our strong sustainability credentials will be important in the marketplace. A critical issue in the list on the slide is market access, by which I mean access outside of Europe. Our focus for beef, pigmeat and lamb is on the European market and will remain so. However, there are increasing opportunities globally and access is critical. We do not have access to particular markets because of veterinary restrictions and legacy bans post the BSE episode. With the Department of Agriculture, Food and the Marine and Bord Bia, we are working to secure access for all of our sectors. Pigmeat is probably the industry that has the greatest volume of exports to international markets, but there are opportunities for the beef industry, particularly in terms of lower value cuts or fifth quarter items. The lamb industry is increasingly considering international exports. The general global increase in demand for protein is driving increased exports. We want to ensure that we have access to it.

I do not plan to discuss major policy issues during my brief presentation, but the outcome of the Common Agricultural Policy, CAP, negotiations is important, as members know.

Equally important is the impact of certain trade negotiations. WTO and an overall conclusion of the Doha Round may seem quite distant but there are more immediate threats to us from some of the free trade agreements being discussed. I do not want to make the point that free trade agreements have to stop. We heard much talk in recent weeks about the launch of the US-EU trade agreement, which clearly has great potential to grow trade and output, but from a beef sector perspective we have concerns that our sector would not be used as the bargaining chip, to put it bluntly, and we would demand that there be fair access. When we slaughter and process an animal from a producer in the morning, we have to take all the different cuts from that animal, and Senator Quinn is familiar with the range of cuts and their various values. We cannot cherry pick and decide we will take only the fillets and striploin from the farmer and let him take the rest home. We have to market the entire bunch, whereas if we grant access to the US or to Canada, which is being discussed, on a selective basis where they can come to our market with their higher-value cuts, that has a disproportionate effect. We seek recognition of such issues in the overall agreement.

In terms of growth prospects, on-farm productivity and gains that can be made behind the farm gate show major potential. We have been involved with Teagasc, the Irish Farmers' Journaland some of our major processors in the BETTER beef farms project. It has shown the possibility of growing gross margin by 118% in the three years it has been operating, with two thirds of that coming from productivity gain, in terms of greater efficiencies, reduced costs and greater output per hectare, and a third of it coming from the price increase that has taken place. It augurs well that there is significant untapped potential behind the farm gate that can drive this sector on.

We have to continue to work on investment in new and existing product development. It is an important area in which the industry is involved and we must keep investing in it. Mr. Kelly mentioned the research and development tax credit as being important and we, too, see that. I thank the Chairman. That was just a quick, whistle-stop tour of the sector.