Oireachtas Joint and Select Committees

Tuesday, 29 November 2016

Joint Oireachtas Committee on Agriculture, Food and the Marine

Impact of UK Referendum on Membership of the European Union on Irish Agrifood and Fisheries Sectors: Discussion

4:00 pm

Mr. Aidan Cotter:

In regard to presenting products from Ireland in the successful Kerrygold format, when seeking to apply that to the beef industry one finds there are significant differences between the way beef and dairy products are marketed. Dairy products are branded categories. Fresh meat is an own-label category. Retail outlets almost anywhere in the world have the name of the retailer on packs of meat. They have the power to market fresh meat. It is incumbent on us to work with retailers to build a brand image.

All of the features Deputy Kenny mentioned in regard to brands are those we agree resonate most with consumers and can best differentiate Irish beef in the international marketplace. Reference was made to the family farm structure, the care that goes with that and its uniqueness in terms of sustainability whereby farms are handed down from generation to generation. Therefore, special care is taken in producing beef in such situations.

Grass fed beef is a major issue, in particular outside of these islands. The beef in many of the markets in which we compete does not come from grass fed environments.

On beef being mixed from feedlots and so on, this comes back to the issue and importance of traceability. This country has an extraordinarily good traceability system, which needs to be protected in any new environment post Brexit.

Anything that comes out of this country in terms of beef, for example, is clearly traceable back to the farm in every respect back. We know more about our animals and where they are at any one time than we do about almost anything else in this country. Direct traceability is something on which we can build. It is a fundamental part of our brand in terms of food safety. We have a very good story to tell in terms of building on all of the grass fed and family farm credentials.

I referred to Origin Green. We have built a new programme of sustainability on the quality assurance programme so that every quality assurance audit that is undertaken also carbon footprints every farm. No other country anywhere in the world carbon footprints its farms every 18 months on a routine basis and feeds information back to the farm on how the carbon footprint and efficiency can be improved and the profitability of the farm increase at the same time. It is a win-win for farmers and the industry. It resonates in the marketplace and creates a point of difference like never before.

It is on that platform that I believe the brand image to which members have referred can be built and succeed. The Origin Green programme is generating feedback from international markets, as I said, like no other and is the envy of many other countries. We have some way to go in terms of investing in and communicating the programme so that it is more widely known.

The German perception of Ireland as clean and green was regularly mentioned, as was the importance of increasing value rather than volume. I completely agree because if we do not get more value from the market the value cannot come back, in terms of higher prices, to producers which need a better return in order to keep producing. The German market is the most successful for Irish beef at the current time. It is the fastest growing market, at 24,000 tonnes, having grown from about 10,000 tonnes four or five years ago.

On how we are prepared for Brexit, it did not happen on 24 June. Rather, it will happen in two or three years time. The question is whether we were prepared for the kind of volatility that would be triggered by the vote. Very few people were prepared for that. In terms of whether anything could have been done about it, quite a number of companies would have hedged forward when currencies were in a favourable place at the beginning of this year or the autumn of 2015 when the currency rate was about 25p, which is the best protection one could have taken against the vote that materialised. The vote took many people unawares. In fairness to those who thought about the vote, it was not at all clear what they could do about it. Even today, how can one do anything about the uncertainty that has been generated other than learn to live with and manage it? Perhaps those who will win will be those who can manage through uncertainty in the future.

On trade agreements, as a country we export food and drink to 175 markets around the world. It is in our interests to have the maximum access that we can get to markets around the world. In principle, one must argue that we should be in favour of free trade in order for us to have that access. Clearly, we have to have defensive interests as well because there are, it could be argued, unfair threats coming from low-priced markets that have different standards to us.

Therefore, in any trade agreement that we need to negotiate, or if we are part of a EU negotiation process, it is absolutely critical that the standards that are part of that agreement are equivalent to the standards that farmers and producers are expected to adhere to in this country.

I understand that next week there will be a visit from a counterpart committee from the Northern Ireland Assembly. As the committee may know, it is establishing an agrifood and marketing body in Northern Ireland and will visit Bord Bia and the committee next week to share its plans with us.

It is an opportunity for us to share our experiences with them. Bord Bia is prepared to work closely with the new Northern Ireland body in that context.

One of the questions was whether a structural shift will take place. We will have to wait and see. If there is a soft Brexit there probably will not be a structural shift. If there is a hard Brexit there will be a structural shift as new trade barriers will be put in place and a new economic paradigm will exist between the UK and the rest of Europe, including Ireland. At the moment it is too early to say. When we wrote the paper we deliberately said there may be a structural shift because we are conscious that it may not take place. We hope there is no structural shift.

I noted the questions but now I find it difficult to read my writing. Another question was whether there is potential to replace UK exports to continental Europe. There is some potential but not a great deal. Clearly, the UK is a significant lamb exporter into France but there is a New Zealand angle.

I was asked about the repercussions generated by a change in trading arrangements between New Zealand and the European Union and between the UK and Ireland. It might be a situation of swings and roundabouts. The UK is not a significant beef exporter. It has exported cow beef but that is at a relatively low level of trade at this stage. Our industry will pursue the opportunities that exist and we will help them. However, I do not regard them as major opportunities.