Pat Deering (Carlow-Kilkenny, Fine Gael)
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I welcome from Bord Bia Ms Tara McCarthy, chief executive, and Mr. Michael Maloney, director, Origin Green. I thank them for coming before us to brief the joint committee on a number of issues, including Origin Green, market diversification, climate change and sustainability.

Witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Ms McCarthy to make her opening statement.

Ms Tara McCarthy:

When we received our invitation from the Oireachtas joint committee, we were asked to cover the topics of Origin Green, climate change and sustainability and market diversification, as well as our key programmes. We have structured our document to reflect that request and will be delighted to answer further questions members may have.

In 2012 Bord Bia developed and launched Origin Green, Ireland's national sustainability programme for the food and drink industry. The programme was developed in response to international market research which had been commissioned by Bord Bia that confirmed the positive perception internationally of Ireland as a green and natural food producing country.

However, the market research also showed that, in future, ongoing proof of our sustainability credentials would be required. Origin Green is the programme to provide such proof.

The Origin Green programme is a voluntary programme that operates across the food chain, from farmers to food manufacturing companies to retailers and food service businesses. Farmers are members of Origin Green by being certified members of Bord Bia’s sustainable farm assurance schemes. The two largest schemes, the sustainable beef and lamb assurance scheme and the sustainable dairy assurance scheme, have 51,507 and 15,913 members respectively. This represents over 90% of all beef produced and 90% of dairy farmers. All farms are audited at 18 month intervals and must meet all of the requirements of the schemes before they can be certified. Additional sustainability data is also collected at audit that enables the carbon footprint of each farm to be calculated. To date, over 170,000 carbon footprint assessments have been completed. Feedback reports to farmers highlight where improvements can be made. All of Bord Bia’s sustainability assurance schemes are independently accredited to the European standard for product certification, ISO 17065. The carbon footprint models have been developed in partnership with Teagasc and are also independently accredited by the Carbon Trust to the PAS 2050 standard. Over 36,000 audits are conducted annually.

At food manufacturing level, producers become members of Origin Green by signing up to the Origin Green sustainability charter and developing a multi-annual sustainability plan for their business which must include setting and achieving targets under three key areas: raw material sourcing; manufacturing processes; and social sustainability. Achieving the sustainability targets helps to reduce a company’s environmental impact, makes the daily running of its operations more efficient and positively contributes to its impact on society and the local community. In order to become a verified member of Origin Green, food and drink manufacturers must undergo a rigorous initial audit process with plans that are verified independently by the SGS Group, a world leading auditing body. Thereafter, each annual progress report is verified by SGS, to ensure that timelines and targets, committed to in the plan, are being met. There are currently 282 verified members of the Origin Green programme which represents over 90% of all of Ireland’s food and drink exports. Approximately another 300 companies have registered an interest in the programme or are in the process of formulating plans and setting targets.

Membership of Origin Green was extended, on a pilot basis, to the retail and food service sector in 2016. Participation for these companies is, in a similar way to the food manufacturers, through the development and delivery of ambitious targets as part of a five-year plan. To date, two retailers and four food service businesses have become verified members. The first years of Origin Green have been very successful as outlined above. In addition Origin Green has become firmly established as the brand for Irish food and drink internationally and is now used on all branding of Ireland’s stands at international food and drink trade events. Bord Bia and Irish companies will attend 24 this year. Bord Bia will continue to evolve the Origin Green programme. We are currently reviewing the first five years and developing a strategy for the next five. International market insight will again play an important role in informing the strategy. This market research is currently under way.

Climate change is one of the major challenges of our generation. There is scientific consensus that climate change is happening and that it is largely caused by human activity. Over the past 250 years the burning of fossil fuels, land use change and agriculture has contributed to altered global average temperatures by increasing the concentration of greenhouse gases such as carbon dioxide, CO2, methane, CH4, and nitrous oxide, N2O. With the global population projected to increase by more than 2.4 billion people by 2050, the world will need to produce up to twice as much food from increasingly limited resources in uncertain climatic conditions. This is leading to long-term fears over the security of food supplies in many parts of the world.

Sustained pressure on the world’s already strained resources is also being exacerbated by the ongoing challenges presented by climate change and increasing greenhouse gas emissions. In order to meet these challenges, it will require everyone involved in the agrifood industry to produce more from less and decrease the environmental impact of production, which necessitates the adoption of more sustainable practices. The FoodWise 2025 strategy of the Department of Agriculture, Food and the Marine, while setting ambitious targets for the growth of the agrifood sector, acknowledges the importance of balancing production with environmental management and protection. It identifies over 70 actions to achieve agricultural sustainability. Collaboration and co-operation from all stakeholders in the industry will be required to achieve this ambition.

The Irish food and drink industry has shown an impressive ability to diversify its exports over recent years with almost half of the growth in the value of food and drink shipments since 2010 coming from markets outside of Europe. Some notable achievements over the period include a six-fold increase in exports to China and more than a doubling to the rest of Asia and North America. The industry now exports to 180 markets annually. Reflecting the further growth ambitions of the sector and the uncertain backdrop created by Brexit, Bord Bia has adopted a data-driven approach to help identify potential opportunities for further growth in new and existing markets. This is being led by a market prioritisation study that the Department of Agriculture, Food and the Marine commissioned Bord Bia to undertake in mid-2017. The study undertakes a detailed assessment of potential growth markets for meat, dairy, prepared consumer foods, beverages and seafood and selects 15 priority markets for further examination.

The findings of this work will help Bord Bia and our client companies make decisions on where we invest our resources with a view to delivering the best return for all involved in the sector. The findings will drive the on-the-ground activities of Bord Bia’s international network of 13 offices which work directly with client companies to build market understanding and facilitate business development opportunities. Our upcoming marketplace event in April will attract 550 to 600 international buyers to Ireland to engage with up to 200 Irish food and drink companies. It aims to identify potential business opportunities and position Ireland as a source of high quality, sustainably produced food and drink products. More than half of the international buyers will come from emerging markets outside of Europe.

The need for the food and drink industry to attract and develop the right talent is critical to its future success, particularly as market demand and consumer needs continue to evolve rapidly. Bord Bia’s industry talent programme currently involves over 100 participants taking part in five key programmes that focus on core areas such as sustainability, marketing and sales and supply chain. The success of the programmes to date are highlighted by a few key figures: over 80% of participants are being retained in the food and drink industry once they finish their programme; our market fellows work with 40 client companies across 13 export markets; and, in 2017, the expected value of sales attributable to the programme was almost €60 million. Our Origin Green ambassador programme has seen ambassadors placed in the sustainability teams of 35 of the world-leading food and drink organisations. The strength of demand for our programmes is demonstrated by the fact that in 2017 our marketing fellowship and Origin Green ambassador programmes attracted 600 applicants for 30 places.

Bord Bia launched two new programmes in 2017, namely the market placement and MSc in design innovation. The market placement programme sees participants placed in the operations teams of leading retail and food service customers in export markets for a period of up to 15 months. The MSc in design innovation, in conjunction with Maynooth University, involves ten participants undertaking a two year design-thinking led approach to insights and innovation. Participants will be placed with Irish food and drink companies for a period of 20 months to help further embed design thinking into their insight and innovation teams.

In conclusion, Bord Bia is currently planning and developing its next three-year strategy for the period 2019 to 2021. This strategy will be based on extensive stakeholder consultation and will be positioned to support the further growth of Ireland’s food and drink industry. Origin Green will continue to be a central pillar in delivery of this strategy. In an increasingly competitive and demanding global marketplace, Ireland can continue to grow its exports through the provision of high quality, sustainably produced food and drink products.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank Ms McCarthy. Senator Mulherin, Senator Cahill and Deputy Penrose were the first to indicate questions, in that order.

Michelle Mulherin (Fine Gael)
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I am sure Ms McCarthy noted in November that the Citizens' Assembly delivered a damning indictment of Irish agriculture. I think 89% called for a tax on greenhouse gas emissions in agriculture. Was Bord Bia invited to present at the Citizens' Assembly? What is its view in relation to that particular proposition and, to me, the very negative view put on the efforts being made by farmers to address greenhouse gas emissions?

The other issue then is on the Origin Green side. I understand that 60% of the feedstuffs fed to dairy cows, beef cattle, pigs and sheep is imported. That is increasing year-on-year. How confident is Bord Bia that this will not affect our food standards?

How can we stand over the quality of the foods we are bringing in when we are promoting our own for export? We are promoting foods of a certain standard in the context of sustainability, etc. Of particular concern is the fact that, in respect of the 9 million tonnes of feed consumed, most of the 6 million tonnes imported is made from genetically modified soya and maize. Is that correct? If that is the case, surely we need an increase in output from the tillage sector to counter this trend. I understand that already in the German market there are demands that no food, including cheese, butter and beef, be tainted by genetically modified feed. The food chain is already being examined there. I would welcome Ms McCarthy's observations on the matter.

How does Ms McCarthy foresee the tillage sector growing in the future? Representatives of the sector outlined the challenges and the committee drew up a report. The sector is making a very positive contribution in the use of the environment as a carbon sink. I would appreciate Ms McCarthy's response on the matter.

Jackie Cahill (Tipperary, Fianna Fail)
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I thank Ms McCarthy for her excellent presentation. Bord Bia is one of our standard bearers. I had the privilege of being on its board for six years. Its personnel do a very professional job. It has always promoted the food and drinks industry excellently and done a lot to establish markets for our produce. In that context, I refer to the reduction of our reliance on the UK market. Today we talk about Brexit, but 15 or 20 years ago our reliance on the British market was reflected in a far higher percentage of exports.

Leaving that issue aside, I refer to the challenges presented by Brexit and Origin Green. Bearing in mind the fact that a significant amount of the produce we process could soon come from a non-EU member state, what challenges does Ms McCarthy foresee in our promotion of Origin Green status? There could soon be different standards applied in Northern Ireland and the Twenty-six Counties. How does Ms McCarthy think this could impact on the good trademark we have developed in Origin Green?

We have increased Bord Bia's budget. Supplementary amounts were allocated in the last two budgets. If we are serious about reducing our dependence on the UK market and sourcing alternative markets through our offices around the world, what would be a sufficient budget for Bord Bia in the post-Brexit period? There has been a lot of attention focused on the problems we have had in producing cheddar in the context of Brexit. We would have the same problems in the beef sector if UK buyers were to turn to South American countries to source beef. If Bord Bia was to mount a serious drive to divert 30% or 40% of the product exported to the UK market, what resources would be needed?

The Bord Bia quality mark has been a success story, although I have a few cribs about the scheme. On a quality assured farm animals are produced to a certain standard, but only a certain percentage of the animals that leave the farm attract a premium. A consumer can go into a McDonald's restaurant to buy a burger and see the quality mark, but the farmer who produced the beef does not receive a premium for producing it to that standard. We have all bought into the need for quality assurance which retailers and consumers are demanding. However, processors have been allowed to get away with it for too long. I am not saying every animal produced should attract the same premium, but there should definitely be some premium paid on all animals leaving a quality assured farm. The quality assurance scheme in place in the dairy sector is roughly a year and a half old. The dairy sector is different from the beef sector in that a lorry will go to every dairy farm. We will have 100% compliance within a short time.

I would like to ask a question about the use of antibiotics in the dairy industry. The vast majority of dairy farmers use them as a preventive measure. How will this affect the level of quality assurance in the future? Questions have been raised about the level of antibiotic resistance in humans. Will this become a condition of the dairy quality assurance scheme?

When I was a member of the board of Bord Bia, I was always concerned about the lack of focus on live exports. How much of the money spent in the beef sector goes towards developing live export markets? How much money has been spent and how much does Bord Bia plan to spend? An increasing amount of the stock is coming from the diary herd. Live exports are of more importance to us than ever before.

I also have a question about the fifth quarter. Thankfully, its value has increased dramatically, while Bord Bia has played its part in securing markets. As farmers, we find it very hard to determine the value of the fifth quarter to the industry. I would, therefore, like to see greater transparency on its value to processors.

I have two more questions. We have had a discussion about putting a health warning on alcohol products, similar to the one attached to cigarette packets. Bord Bia is trying to promote Irish whiskeys and beers in foreign markets. What is its view on the putting of a health warning on drink products?

The last question I want to ask is related to products which are free of genetically modified organisms. Is there a genuine demand for GMO-free products in the markets we supply? If there is, is meeting that need a practical aspiration for us? Will it create a problem? I refer to the German market, in particular, as we have heard that there is such a demand in Germany. Is it for what the consumer is asking? If it is, are we in a position to fulfil that requirement?

Willie Penrose (Longford-Westmeath, Labour)
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I thank Ms McCarthy and her colleagues for the presentation. I have always been a very strong supporter of Bord Bia. In a cost-benefit analysis it would stand up particularly well to external scrutiny. As Ms McCarthy said, it has played a pivotal role in ensuring we now have more than 180 markets. Are there others in the wider world, particularly Asia, which might present opportunities to diversify and Bord Bia could explore? In the context of Brexit, we cannot afford to rest on our laurels. What resources does Ms McCarthy think will be required in that regard? There is an international network of 13 offices which operate directly with client companies. Are more resources needed to ensure Bord Bia can penetrate and open up other markets? Even when the economy was on the ground, Bord Bia was not left behind because it was seen as integral to recovering lost and securing new markets.

Has there been any notable increase under the beef genomics scheme? I know that it is a recent development, but has it had any impact on the quality of beef products coming onto the market, which is absolutely critical? It is probably too early to say, but I hope it is having an impact because I am a very strong supporter of it.

Ms McCarthy is clearly concerned that the value of the UK market was undermined by third country imports. In that context, an initiative could be facilitated by a future agreement negotiated by the United Kingdom. Will she outline a view on the issue?

Would Bord Bia be in favour of an extended transition period to allow companies to bed in and meet demand in the market? Coming from a midlands county in which the level of beef farming is significant, there has to be a concern about the significant decrease, a little over 6%, in cattle numbers nationally. The figure has gone down from 917,000 to a little over 860,000, which is significant. It is the seed stock of the industry and I am sure the delegates are examining the issue critically. Even in County Westmeath, the figure is down by approximately 3%, while in County Longford it is down by approximately 5%. Some of the beef farmers in question are switching to dairy production. We can see the evidence and I am sure Senator Paul Daly will back me up. It would have been unheard of a decade or two ago for beef farmers to switch to dairy production. Is there any way to reverse the trend, perhaps by making payments based on meat yields, with top prices guaranteed for the heavier U and other carcase grades which present a significant difficulty for some farmers, particularly in the midlands, who try to finish cattle in the best way possible? That has to be a concern; otherwise we will not have seed stock and be able to compete in many markets. We have increased significantly the quality of our beef stock. Not too long ago, only one in four animals was of sufficient quality to achieve the price charged by supermarkets across the European market.

These are matters about which I am concerned and we have to keep our eye on the ball. If the seed stock drops away, I know that there is an argument that the suckler cow subsidy should be restored which might be one way to address the issue, but it may not be the only way to ensure it. Making payments based on meat yields might be a more positive way to achieve the same result with reference to the economic return for farmers.

Ms Tara McCarthy:

I will start with Senator Michelle Mulherin's questions. We were not invited to present at the Citizens' Assembly. The views expressed are the result of the process the citizens involved in it went through. Our perspective is that they will feed into policy discussions. We would have had many other comments to add from the perspective of Origin Green which was not deeply discussed at any stage. At a similar time, we undertook, independently of the Citizens' Assembly, a campaign in order that the public in Ireland would be aware of what was going on in the context of Origin Green. We invited people to learn more about the campaign and the work being doing by the food industry by visiting the Origin Green website. It was viewed as a successful campaign in generating a strong level of awareness among the public. However, we recognise that more work has to be done in order that the general public will be aware of the work being done in this space in agriculture.

I ask Mr. Maloney to address the matter of animal feed.

Mr. Michael Maloney:

It is a requirement of all of our quality assurance schemes that the feed used on farms, whether it be beef, dairy or pig farms, come from quality assured sources. We have a feed quality assurance scheme in place. Whether the feed comes from outside or within the country, it must come through a quality assurance scheme. We are confident, therefore, about the feed being used on quality assured farms. Under our quality assurance schemes, Bord Bia has responsibility for the quality assured farms, including 50,000 beef farms and nearly 18,000 dairy farms, all of which must source their feed from quality assured sources. We run the schemes or recognise them as meeting the requirements of our schemes.

On genetically modified, GM, products, we do not make any distinction under our quality assurance schemes between GM and non-GM foods. We do not require food to be GM or non-GM. We are conducting market research in the international marketplace to see what perspective international buyers have of GM foods with reference to the products we produce. That research is under way and we will analyse the results and take on board what we hear in the marketplace.

Michelle Mulherin (Fine Gael)
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What prompted Bord Bia to carry out the research?

Ms Tara McCarthy:

We have been doing a lot of work on grass-fed animals. When one discusses grass-fed animals with consumers and those involved in trade, the conversation turns to what else would the animal eat if was not eating grass. Against that backdrop, we wanted to understand what their other concerns were about grass-fed animals, the use of GM products and everything that might be part of the food chain. We commissioned this work last year which was part of a review that we were undertaking. It was to look at the matter from the perspective of both dairy and beef producers. We wanted to understand whether it was a consumer or a trade issue. The Senator's comment on Germany not wanting to accept any non-GM product was not exactly accurate. Lidl has launched a private label product in Germany. It has called its private label range, with a very limited range of products, non-GM, on which it is not paying any premium to any supplier. It is counted as a discount product which has created some concern for the Irish suppliers involved. That would have been another influence in commissioning the work to understand what was happening in Germany. Germany is not the only market we are researching. We are looking at quite a number of other markets, including the United States and markets to the east, to understand the full global impact.

Michelle Mulherin (Fine Gael)
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When will Bord Bia conclude its analysis?

Ms Tara McCarthy:

In March or April this year.

Michelle Mulherin (Fine Gael)
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Will it then report?

Ms Tara McCarthy:

We will share it. We have created a stakeholder group of producer organisations, the dairy industry and the meat industry. When we were scoping the research, we shared the information to make sure we would everybody's views on what exactly we were looking to find. We will debrief the industry when we have our findings.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Without cutting across anyone, I have a question about the quality of the feed that has entered the country. For example, there has been much discussion in recent times about the quality and standard of corn coming into the country. What practice does Bord Bia follow to ensure it is of top quality? The delegates referred to quality assured farms in Ireland. Is the same standard applied to feed coming in from abroad?

Mr. Michael Maloney:

Yes. There are clear guidelines on what is required in order that it would be the equivalent of what is required under our feed scheme.

Michelle Mulherin (Fine Gael)
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May I be excused as I have another meeting to attend?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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No problem.

Ms Tara McCarthy:

I will move to the issues raised by Deputy Jackie Cahill.

The dependence on the British market is the core point for the food industry. While the most recent figures show a decline in our exports, from 37% to 35%, the British market is still our fundamental export market. There is a logic to it in that it is our closest market, we speak the same language, have a similar taste profile and it is an efficient market to deliver products with a short shelf life. There is movement towards the managing the risk attached to overdependence on any one customer or particular market. Our budget has been increased significantly again this year. The Minister for Agriculture, Food and the Marine announced an additional allocation of 32 staff to Bord Bia. In an organisation that has a headcount of 110 to date we believe we will be very focused on ensuring we properly absorb the additional 32 staff and value of money is achieved for the additional funding received. In the short term there has not been an additional ask as we seek to make sure we will get value for money.

I ask Mr. Maloney to address the quality assurance issue.

Mr. Michael Maloney:

I will address the cribs about quality assurance and the percentage of animals on which premiums are paid. It is not fully understood that it is called a quality assurance premium, but there are additional requirements over and above being a member of a quality assurance scheme to be met to allow animals to qualify for the premium.

However, there are additional requirements over and above being members of a quality assurance scheme to enable animals to qualify for the premium. That leads to a certain degree of frustration. It is called a quality assurance premium and quality assurance is one of the criteria required to be met to enable the premium to be paid, but there are other criteria related to the age of the animal, the fat score, the confirmation of the animal, the number of movements and so on. If he or she meets all of the criteria, the farmer qualifies for the premium. We have set up the quality assurance scheme in such a way that all animals from a quality assured farm are quality assured. To qualify for the premium, the additional requirements have to be met.

Reference was made to dairying and the concerns about antimicrobials and antibiotics. That is a concern, but we have addressed it in our quality assurance scheme. There is increasing concern and we continue to promote and monitor the responsible use of antibiotics on farms. A big part of the focus of auditors when they conduct an audit is ensuring the correct remedies are used, as well as the correct dosage. If antibiotics are under or overused or not used for the correct period, it leads to antimicrobial resistance. A significant part of the audit is focused on the correct use of antibiotics. A national action plan to tackle antimicrobial resistance has been launched by the Government. Bord Bia is part of the plan. We will liaise with the other stakeholders to ensure this issue which is of increasing concern is addressed as fully as possible.

Ms Tara McCarthy:

On live exports, next Wednesday the Minister is due to lead a trade mission to Turkey which is being organised by us and supported by the industry. There will be a number of key export and commercial meetings facilitated during the visit. We will also undertake a number of advertising campaigns to support what Ireland is doing. The Dutch market will be targeted particularly. It is an area on which we have focused, but the focus will increase significantly.

The Deputy mentioned GM. As per the previous response, we are researching the issue, particularly because of some of the market activities in Germany and because of the claims Ireland wants to make. We are liaising significantly with the industry because it is a complex matter when it comes to the food industry and costs are associated with it. We want to ensure before any recommendation is made on what the market requirements may be it will be profitable for the industry also. Current operations undertaken by retailers in Germany would not generate a premium, although they would add costs for anybody in Ireland looking to do so. Our concern is to ensure what is going on there is an absolute market fact and to understand the dynamic behind it both from a consumer and a trade perspective because sometimes the two diverge.

With regard to the health warning carried on drink products, we will respect whatever legislators come up with and work with the law within the land in which we are operating.

On the fifth quarter, there has been an increase, particularly in markets in the east. As we have developed these markets and the Deputy may have seen in our performance and prospects, we are looking to call out the identification of from where the market values are coming and explain it to exporters and producers with as much transparency as our figures will allow.

I refer to Deputy Penrose's questions. Other markets, new opportunities and new resources are a key priority for us. We undertook with funding from the Department a complete project on market prioritisation mid-year and we did this not just from the perspective of looking out for Ireland and its food industry. We divided the industry into key sectors to identify where the opportunities are for beef, pork, lamb, all other meats, and dairy products such as cheese and powders. We subdivided those by our seafood exports, prepared consumer foods and commissioned separate studies into each. We looked at the top 30 exports to 180 markets by sector. We divided that to look at the top 15 markets and now, in collaboration with industry, we are looking at the top five markets. We are trying to create a targeted approach to market access conversations as well as to our own priorities. We will put in new resources with the additional headcount for which we have been approved to help us to exploit the opportunities that are identified.

Clearly, Brexit is a huge concern. We have met to discuss the issue every single week since the referendum. We are looking to manage every element of the risks Ireland faces. The risks we face are multifaceted, ranging from organising our supply chain to understanding the route to market and the dynamic that will change in the UK market also. We have maintained close relationships with our key retail customers, from whom the feedback tells us that their brands are very much built on the trust that they have earned with consumers and that, therefore, their supply chain must be trusted by consumers also. That gives us some solace regarding Ireland's position both from the perspective of the British consumer and the trade. However, we would appreciate as extended a transition period as possible throughout the negotiations. I have covered most of the questions askeed.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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There was a question about the beef genomics scheme.

Ms Tara McCarthy:

It is too early for us to comment on it, but to date the feedback from the industry has been positive.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Ms McCarthy referred to market prioritisation and the 24 trade shows attended by Bord Bia. How does the organisation decide where its respresentatives go and when, etc?

Ms Tara McCarthy:

We review all of our shows every year. The decision is based on the quality of buyers who visit and the level of industry demand to visit them. Some shows are long-standing. For example, SIAL and Anuga are the key shows to which we go in alternate years but, we always watch out for new shows. Free From is a new show as convenience becomes more of a driver. We scan through our overseas offices and conversations with industry to establish what are the strongest sectoral shows and the most important shows in new markets.

Thomas Pringle (Donegal, Independent)
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I thank the delegates for their presentations. I have two questions about Brexit and climate change.

Ms McCarthy has said the feedback from producers is positive in maintaining supply following Brexit. However, the feedback does not account for tariffs, controls and so on, which will impact on businesses. I wonder about the possibility of developing alternative markets. Realistically, France and other countries in continental Europe are the alternatives, but the quality and standard of products are totally different. For example, there is no market for cheddar cheese other than England. How much work is being done to make this change? It will probably have to happen. Ms McCarthy has said the United Kingdom accounts for 35% of our trade. Which country accounts for the next highest percentage?

Ms McCarthy has explained how Origin Green works, but climate change and sustainability were dealt with in a different section of the presentation, whereas they should have been discussed with Origin Green. Origin Green and climate change policy should provide protection for the food sector, but do they? Why do they make up two sections of the presentation?

How is climate change feeding into Origin Green? I think that is vitally important. Is Origin Green just a marketing tool rather than an effective tool that will make a difference to producers and to this country's climate footprint? It is vital for Irish agriculture to recognise that climate change is an issue. While recognising that it is an issue, we can develop our markets in a manner that counteracts it in some way. We can that accept there are high emissions in this sector and attempt to counteract that by trying to reduce them in another sector. At least we should be able to say it and do it. That is very important. I am aware that some companies that previously had Origin Green marks were challenged by the Environmental Protection Agency for reasons associated with pollution, etc. How does that square with the whole Origin Green project and with climate change as well?

Tim Lombard (Fine Gael)
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I acknowledge the capable and comprehensive presentation that has been made. I would like to refer to a few particular issues. Most of the topics have been covered. A review of the Origin Green strategy from 2019 to 2021 is taking place. I think sustainability is the big stumbling block in the agriculture industry at the moment. We need to consider where we are going with the current model. The Minister has spoken extensively about this issue, particularly over the last six months. Will sustainability be a major plank of the Origin Green strategy as it goes forward? I would like to hear the witnesses' views on whether, as we seek to make sure the Irish agriculture sector is sustainable, we will need to monitor the sustainability of the carbon footprint of the sector. It should be acknowledged that an increase of 32 in the number of staff is very significant. I suggest it shows a great commitment on the part of Bord Bia to what is required for it to do its job on the international stage.

I do not think the poultry sector has been mentioned today. I would like to get some figures as an update on the development of Origin Green in the poultry sector. Ms McCarthy provided some comprehensive figures for the beef and dairy sectors, but I would be interested to know how the poultry sector is tied into the Origin Green effect. There have been phenomenal successes in the dairy and beef sectors. This is obvious in every supermarket. I wonder whether the poultry sector is enjoying the same take-up at market level. Is there an issue with produce coming to this island to be remodelled or processed and then exported, perhaps not with the Origin Green label but with a Republic of Ireland label or with the Tricolour attached to it? Is this becoming a major factor in the poultry market? I refer to the practice of bringing in produce from France or Germany to be chopped up, remodelled or repacked for export without the Origin Green branding. Do housewives and people on the street know that produce that is manufactured in this way is not Irish? I am very interested in where we are going with the poultry sector and in how we can close any marketing loopholes that exist, particularly in the context of the proposed Origin Green strategy from 2019 to 2021.

Ms Tara McCarthy:

I will begin by responding to Deputy Pringle. He is absolutely right that tariffs are a significant concern for companies in the context of Brexit. If we were so inclined, we could do nothing other than look at the many possible Brexit scenarios. We are trying not to get blocked into that one. We are looking at doing the risk analysis for companies. Last year, we did a significant piece of work called the "Brexit barometer". We spoke to representatives of companies that account for approximately 70% of exports to the UK about their key areas of concern. The Deputy is absolutely right when he suggests that tariffs, the calculation of tariffs and non-tariff barriers are key areas of concern. We need to look at the complexity that Brexit will add to the supply chain. Delays at borders will cause new costs, perhaps because of decreases in product quality, longer hours worked by lorry drivers or other time factors. New challenges will be faced on the route to the market. New competitors will be encountered as well. Other challenges relate to currency issues and the associated volatility.

We have been looking at helping companies to calculate tariffs. As many of our exporters export predominantly to the UK, or even to the UK and Europe, they have not had any experience of touching tariffs for many years. We have two objectives in mind. We are working out the risk, but we are also looking at market diversification, which means we will need new skills in our industry. As the idea of going outside the EU becomes more realistic, skill sets will need to be developed. We are piloting a new training programme with companies so that they understand how to work with tariffs. We want to make sure that is bedded into their system. While Brexit is not considered desirable or helpful within the industry, it is accepted as a market reality. We need to know we can deal with it. We are introducing a training programme for companies with that perspective in mind.

We are also looking at it from another perspective. Companies that import certain products, such as some of the ingredients they use, are facing a realistic threat as well. They need to know how to calculate the import tariff. They need to understand the consequences of such imports from the perspective of VAT refunds, for example. They need to know whether Brexit will increase the cost of doing business with their suppliers.

I am not suggesting nobody is worried about Brexit. There are multiple concerns when it comes to Brexit. We are trying to break it down into manageable and realistic chunks by focusing on skill sets, on what people can do about Brexit and on the scenarios that might have risks associated with them. The focus on scenarios has led to the market diversification projects we have been looking at. That has not resulted in a suggestion that we should all move to France or Germany. We are dealing with very different stories in each product category. Some sectors have very few options as they decide what to do. Approximately 95% of the exports in the horticulture industry go to the UK. There are quite a few options in that industry because its products tend to have a seven-day shelf life and, thankfully, attract low tariffs. We are trying to ensure we add as much value as possible in that regard.

Particular reference has been made to the cheddar market. Clearly, 50% of our cheddar exports go to the UK. We do not envisage that the first opportunities for those products will be in France. That is why we specifically called out cheddar within the market prioritisation process. We are finding that we need to look at where food service products are growing. Rather than focusing on the kind of high-quality mature cheddar that is produced today, we are looking at the use of processed cheddar in products like burgers and pizzas, etc. We are looking for such base opportunities in various markets in the first instance. We have already found that the Japanese market is potentially a strong market for importing cheddar into. As a result of the new Japan-Europe trade deal, the tariffs on those products will decrease significantly in the coming years. We are looking outside the box at such opportunities.

As I said earlier, we want as long a transition as possible to facilitate the negotiations on Brexit. It will take time for Ireland to build its reputation in these markets. It will take time to recognise who the right contacts in those markets are.

We would appreciate having as much time as possible, as would our exporters.

The Deputy asked where the next market after the United Kingdom was. We export over €4 billion worth of goods to the United Kingdom. The United States is our second largest market. It hit the €1 billion mark this year for the first time. Some 50% of our exports to the United States are alcohol products. Dairy products account for the second highest percentage. We consider Europe to be one group of countries, to where 33% of our exports go.

The Deputy asked which markets were growing the fastest and where there was growth. Last year there was 8% growth in exports to the UK market, 16% growth in exports to the European market and 17% growth in exports to international markets. Growth was very robust. As Deputy Jackie Cahill knows, dairy prices, particularly butter prices, skewed a lot of the figures because, given our butter exports to the Netherlands and Germany, butter export values increased significantly and that had an impact. There are multiple factors that influence the where, what and why in all of these markets. We are trying not to ask to what country we will go but rather what sector will be the most attractive in what location. We are merging the two scenarios and looking at the macroeconomic forces, the ease with which we can export to a particular country and its track record with Ireland.

Mr. Michael Maloney:

The very simple reason climate change and sustainability are under a separate heading in our submission is we were asked to submit under four headings - Origin Green, climate change and sustainability, market diversification and talent. The Deputy is correct. Sustainability is an integral part of the Origin Green programme which operates at two levels. It operates for food companies and at farm level. At farm level, farmers are members of Origin Green by being part of our sustainable assurance schemes, our quality assurance schemes with sustainability added. Farmers are required to give us data that allow us to calculate the carbon footprint on their farms. As mentioned in our submission, to date we have made over 170,000 of those carbon footprint calculations. The provision of that information allows us to feed back to the farmer his or her carbon footprint relative to his or her peers and we can demonstrate where improvements can be made. We are moving on to look at other areas surrounding biodiversity, water quality and all of that. We are gathering the information which we will analyse and show to farmers to show them where improvements can be made at farm level.

Thomas Pringle (Donegal, Independent)
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Does the information shared have an impact on whether a farm stays in the Origin Green programme?

Mr. Michael Maloney:

It does have an impact and farmers are required to give us the information. We must get it from them. We have also developed, with Teagasc, a carbon navigator tool, a tool that combines the economic performance of farms with their greenhouse gas emissions. With the carbon navigator tool, we can demonstrate what effect achieving certain efficiencies on a farm would have on its carbon footprint and profitability. A good example to illustrate what I mean is looking at the length of the grazing season, which in part of the country might be 290 days. If it could be increased to 300 days, it would have an effect on the carbon footprint because animals on grass have less of an effect on the environment than animals which are housed indoors. It is also cheaper and more economic to keep animals on grass. It increases the efficiency of the farm and also profitability. That is how farmers are members of Origin Green.

Companies are also members of Origin Green. We have mentioned that there are 282 companies that are verified members of Origin Green and that account for over 90% of exports. For a company to be a member of Origin Green, it has to sign up to a charter. It has to set targets to achieve sustainability. Companies must set targets for raw material sourcing, manufacturing processes and social sustainability, including health and nutrition, worker welfare and so on. They are not targets they can just set by themselves and get a pass on them. SGS which is internationally recognised as a world leader in auditing and verification analyses the targets for individual companies and only if it is satisfied that they are stretch targets, realistic and credible can a company become a verified member of Origin Green. Companies have to meet these targets; set out a three-year plan and submit them to us for analysis on an annual basis to show they have met the targets. In addition to the 282 companies that have been verified, we have another 300 that are registered but not yet over the line because they are in the process of toing and froing with us on the setting and credibility of the targets they are setting.

Thomas Pringle (Donegal, Independent)
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What would make a company lose its Origin Green status?

Mr. Michael Maloney:

It would lose it if it did not meet the targets it had set out to achieve, unless there was force majeureor something like it which had caused it not to reach its targets.

Thomas Pringle (Donegal, Independent)
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Would that include spillages, failure to deal with effluent pollution and stuff like that?

Mr. Michael Maloney:

They are particular areas that involve environmental licences and ensuring they meet the requirements.

Thomas Pringle (Donegal, Independent)
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Is that not part of the Origin Green programme?

Mr. Michael Maloney:

No, EPA licensing is separate from Origin Green. Companies are required to meet the requirements attached to their licences. That is one part of what they are required to do and it is a legal requirement. What we are talking about in Origin Green is setting targets in areas such as raw material sourcing. If we take some of the dairy co-ops, for example, one of their targets is that all of their suppliers be in the dairy sustainability assurance scheme. Two years ago they had no supplier in that scheme, but by the end of this year 100% of their suppliers will be in it. In the manufacturing sector they will be looking at reducing energy levels, recycling water and reducing waste.

Thomas Pringle (Donegal, Independent)
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Therefore, they can continue to pollute and still keep their Origin Green status.

Mr. Michael Maloney:

What did the Deputy say?

Thomas Pringle (Donegal, Independent)
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They can continue to pollute nd still keep their Origin Green status.

Mr. Michael Maloney:

No, they cannot. If there is an issue with pollution and a company being in breach of its licence, it becomes part of its targets. There have been certain companies listed on an EPA priority list in the past six months. If they are members of Origin Green, these issues have become part of their sustainability programme with us and they must address them.

Thomas Pringle (Donegal, Independent)
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How does it become part of the sustainability programme?

Mr. Michael Maloney:

How do the issues that arise become part of it?

Thomas Pringle (Donegal, Independent)
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Yes.

Mr. Michael Maloney:

If they are listed on the EPA priority list and members of Origin Green, we carry out audits to see what they are doing. It is apparent from the EPA's website what the issues are. We include them as part of their targets or plans to ensure they will be addressed in a timely manner. That is how they become part of it. They are added to their targets in order that they will be addressed.

Thomas Pringle (Donegal, Independent)
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If we were to check the EPA's website, could we check with Bord Bia to see what was happening with the particular companies?

Mr. Michael Maloney:

Yes. We are working with companies to ensure they are in compliance with their licences and meeting the Origin Green targets.

Ms Tara McCarthy:

Senator Paul Daly asked about the market prioritisation study and the extension of markets. On new and current markets, our approach is to invest in market insight initiatives to understand the dynamics of a particular market. In some of our mature markets there is a level of sophistication in our understanding which shapes the promotions we undertake in them. In some of our newer markets there is much more exploratory research. Very often those involved in them do not know where Ireland is and we are looking to understand how best we can make a pitch for Ireland to them.

A clear example of that is when we were looking at the Chinese market and trying to understand whether China respected Ireland and what assets Ireland had that we could communicate to the Chinese consumer. We were looking to position in that market because we do not have the funding of a branding company to conduct huge branding campaigns. We need to use our assets as much as possible and to leverage Ireland's values as much as we can. We have a thinking house facility, which is an insight centre that we have invested in over the past year and half, particularly in our office in Dublin. We have researchers in that facility whom we send overseas. They went to China and spent time with Chinese consumers in their homes, speaking to them about what is important to them, and, in particular, about the dairy products they consume and what makes them choose one product over another. Their awareness of Ireland at the time was low but they linked Ireland to Europe and European regulation and standards were important to them. We then researched in a number of different cities to explore in-depth the language that should be used when speaking about Ireland, the respect they would have for tradition versus technology and making sure that we were understood within that market as we tried to communicate to those consumers the benefits of a sustainable food production and the traceability systems we have in a simple way. We found with Chinese consumers, which is different from European consumers, that they wanted us to demonstrate the merging of technology and tradition.

With regard to the images we used, they were not interested in seeing Irish rain, for example, because in China pollution is very often associated with rain and, therefore, why would rain be connected to food? They were impressed with images showing the clarity of rivers, etc., that we could share with them. They wanted the farmers that we were illustrating to them not to be the traditional farmer, which we have often used in imagery. They wanted to see a young farmer with an iPad beside a modern tractor. Again, one is talking about an industry that has tradition and respects the farming culture but uses technology well so that the consumers can trust the technology. It is about the merging of modernity and tradition and how we can position that to show what Ireland does best. They could respect and understand that. The approach we took there, compared to the approach we take in the German or UK market, which we know much better, was much different. We can go straight to product category in Germany given the respect consumers have for Irish traditions and their knowledge of Ireland whereas in newer markets, we first have to ground where Ireland is and then introduce the systems the country has before getting into marketing the product.

With regard to quality assurance and the move towards organic farming, Origin Green welcomes organic products within it. It is not an either-or of a journey. Organic producers are members of Origin Green and we hope that will add to their proof points or credentials. There are further opportunities for organic products in the market, particularly for organic dairy products. There is huge demand in eastern markets for organic infant formula, for example, and many organic dairy products. It might also explain the backdrop to us looking at grass because sometimes natural is a short cut to organic. We are looking for consumers to understand that natural equals grass fed whereas organic adds to that and attracts a higher premium. What we are trying to understand in our research all the time is how to position Ireland to best fulfil its commercial potential. There are further opportunities for Ireland to increase organic production and there are markets for organic products but the pricing needed to make organic production profitable is not as obvious as people sometimes assume. For example, many continental retailers discount organic products in the same way they discount mainstream products. It is not the "Eureka" that it is positioned as but it is definitely a space that has huge opportunities. Ireland competes successfully in markets for organic salmon and most of the salmon we export is organic. That is one of the main categories we operate in on an export platform and there are not that many other categories that we export organic in on any scale.

Senator Lombard asked about our strategy and the journey we are on. We have two major projects under way. The first project is looking at the next five years of Origin Green. Over the past five years, there has been a sustainability agenda. If we conversed five years ago, the Citizens' Assembly would not have been in operation and would not have been as eloquent in speaking to the challenges around sustainability in comparison to today. The market has significantly changed, as have the expectations of both the consumer and the producer. We logically expect it to change even further over the next five years. We are conducting significant research in our main markets and in new markets to understand where the sustainability agenda is going. We want to bring that information home in order that we can build our sustainability credentials and build Origin Green to ensure it is ready for the next five years of its existence. While that research will feed into our strategy work, we are engaging widely with our stakeholders in this work, particularly Irish companies as well as acknowledging the politics that surrounds Bord Bia ranging from the producer organisations to the EPA or the Department, as they have a perspective on the future of Irish agriculture, and we want to ensure that we find out what is meaningful to them. It will be very much informed by the market drivers and we will have detailed research looking at the key forces of change from a consumer and a market perspective. A coalition of those forces will decide our new strategy. We have every expectation that sustainability will be at the heart of that. We had a small business event earlier and sustainability was highlighted in every market force that we described at it. We have no doubt that sustainability will be a major underpinning of our future strategy.

Mr. Michael Maloney:

The Senator asked about poultry. I focused on dairy and beef because they are our largest schemes. However, we have quality assurance schemes across the board. At farm level, we have schemes for poultry, eggs, pigmeat, and horticulture. We are in the process of converting the schemes from our traditional quality assurance schemes to sustainability assurance schemes. Our beef and dairy schemes have been converted to sustainability assurance schemes and they are fully accredited by the Irish National Accreditation Board. Our egg scheme has just got over the line to be converted as well. We are in the process of converting the poultry and pig schemes but that process takes time because the conversion has to be done with input from key stakeholders. We cannot, therefore, change schemes and impose them. Under the rules of accreditation, which are important because they are recognised internationally, we must involve stakeholders. We want to do that anyway because the schemes are for them. The technical committee on the poultry scheme has met a number of times and we expect that the scheme will be converted by June or July this year. A total of 95% of the poultry produced in Ireland is processed under our existing quality assurance schemes and it is a similar scenario for pig production. While the number of producers may be much smaller than the number of beef or dairy farmers, almost 100% of the product is covered.

The Senator also raised the issue of the concern relating to imported product being chopped up and relabelled. There is concern about whether the consumer is being misled when the product is sold with a tricolour on it. We can speak for the 95% of the product that is processed in Ireland under the Bord Bia quality assurance scheme. If it is produced under the scheme, it can carry the Bord Bia quality mark, which has "Quality Assured" and "Origin: Ireland" on it. One will see that on all the products that come through under the scheme in supermarkets.

That means that the product was born, reared and slaughtered in Ireland. At over 90%, consumer awareness of the quality assurance mark is extremely high. We have carried out quite a bit of research with consumers because all of our advertising in the home market is very much based on the quality assurance mark. We encourage consumers to look for it and know from where products come. They are the messages we send and they are getting across to the consumer. As I said, there is very high consumer awareness of the quality assurance mark and what it stands for. It stands for quality but also origin, as consumers understand. The message we are driving home is that they should look for it. If a consumer is concerned and wants to support what is produced from start to finish in Ireland, he or she must look for the quality assurance mark.

Tim Lombard (Fine Gael)
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On the review due to take place on the poultry side which I hope will be completed by June or July - it will be followed by the Christmas period only a few months afterwards - is Maloney proposing a marketing campaign to ensure the multiples and the major buyers will buy into it? They have really bought into the reviews in the dairy and beef markets. I fear that has not happened to the same degree in the poultry market. Is Mr. Maloney proposing to undertake a campaign on the back of the poultry sector review?

Mr. Michael Maloney:

It will seek to replace the current scheme with the sustainable poultry assurance scheme. When a such scheme is launched, we will not expect all poultry producers to change and be audited overnight. When their membership comes up for renewal, they will become a member of the new scheme in a phased process. Producers may be in the process of being audited under the current scheme and it would be unfair to expect them to undergo another audit in three or four months' time. It will form part of the overall marketing strategy for the quality assurance mark. It will be worked out with the board in the context of the plans for the year ahead whether it will be product or species-specific.

Pádraig Mac Lochlainn (Sinn Fein)
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To return to Origin Green, I have been conducting some research into the organic models emerging in the United States and which have been in place for quite a while in the Basque country. They are co-operative models in which the size of a herd for particular farmers has to be below 100 head. In terms of animal welfare and achieving sustainability and strong environmental standards, there is a very strong brand that benefits farmers immensely. I am very impressed by it and in due course will place some recommendations before the committee. This touches on the questions asked by Deputy Thomas Pringle. It strikes me that the typical farm in rural Ireland would be a good fit for the organic model. I have spoken to a number of farming organisations about this matter and wonder if, in the context of the ambitions for Origin Green, the aim is to go down this road.

On the markets that have been identified, we have a grass-based model in beef and dairy farming in Ireland, of which we are very proud, but there is a concern that we are not getting the benefit in the prices achieved. I noted Ms McCarthy's remark about Lidl in Germany and how there was no premium, despite the fact that it was marketed as a special category of food which I assume is more expensive than other categories in that supermarket chain. Did I hear it correctly?

Ms Tara McCarthy:

It is selling GM-free butter at the same price as a normal butter from Germany.

Pádraig Mac Lochlainn (Sinn Fein)
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I have referred to organic farming and the need for change and for us to look at how we can make the typical Irish family farm sustainable. Farmers often say to me that it is a niche market and too limited. It has not been accepted that if people want to have sustainable farming and rural communities, they will have to pay a little more than they are for a range of produce. I want to get a sense that the consumer is being so educated. This is applicable globally, not just to Bord Bía. Are we really engaging with and explaining to consumers that if they want to know about animal welfare and achieve environmental standards and the sustainability of rural communities, they will have to pay a little more for that quality produce? If they want to make sure climate change and environmental standards are adhered to, they will have to pay a little more. How are the delegates joining up the dots? Deputy Thomas Pringle's question was fair, as was Mr. Maloney's response. The committee presented that structure to the delegates. How does one ensure consumers are educated in order that they understand they will have to pay a little more? Where does the plan all fit together? Are we heading down the road towards big ranches, meat factories and major producers and in the process letting the small family farm model to die eventually?

One of the issues that came up in the context of Brexit was that of all-Ireland markets. Is Bord Bía happy that there is an all-island approach in the dairy sector and that it is facilitating the adoption of that approach? Do the delegates believe dairy processors in the North are at a significant disadvantage compared to those in the South? Is there a partnership with their counterparts in the North? The Government and the Department of Agriculture, Food and the Marine are talking about the need to ensure there will be no barriers to trade and that there will be an all-Ireland approach to the agrifood sector, but I am picking up on criticism of Bord Bía's approach in that it seems barriers are being put in place in adopting a genuine all-Ireland approach. Processors are reporting difficulties in accessing schemes Bord Bía is promoting in this state. Is that a fair criticism? Is Bord Bía aware of and working on it?

Michael Fitzmaurice (Roscommon-Galway, Independent)
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In the past few months farm organisations in different parts of the country have publicised the fact that even though meat might be stamped as such - especially chicken - it is actually not Irish. What does Bord Bía intend to do to sort out this problem? The product may have originated in another country, but it is stamped as having come from Ireland, which is causing confusion.

The delegates made reference to the success of the beef genomics scheme. Do they have any worry that 10,000 extra cattle are being killed to have the same tonnage of beef? They are the latest statistics.

Bord Bia had a system with the dairy farms and then came into the beef farms. Farmers in the dairy sector had an opportunity to sort something out and come back a few weeks later, whereas the quality assurance lasted for a certain length of time on the beef sector. Is that still the case or has it been rectified?

Ms McCarthy spoke about the carbon navigator earlier. Farmers are being charged fairly heavy prices for doing these carbon navigators. Is it a concern that at the end of the day the farmer is paying for nearly all of these new add-ons to make things better? I know it is in the interest of food, but generally they are not getting any more for what they produce.

Ms McCarthy mentioned the organic sector. Senator Mac Lochlainn and Deputy Pringle also mentioned it. I know of many people who go to the ordinary mart because it does not pay them to go to the organic sales. They go to the ordinary commercial marts with their stock. There does not seem to be a niche market for that. I believe the hill lambs are organic because when they are up on hills they are not getting too many injections or anything. They have no good market for the hill lamb at the moment. Why are we not doing something on that end?

We are hearing stories that the China market is close to being open for us. Does Ms McCarthy have any update on that?

Restrictions on the movement of cattle are causing problems for farmers. If an animal was in two or three different farms, provided it was looked after properly, it is the same animal that gets eaten. We have the 30 month requirement. After 30 months and two days the steak tastes the same as after 29 months and 28 days. As Senator Mac Lochlainn said, we may need to educate consumers more about how Irish beef, lamb etc. are produced to a great standard.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Deputy Cahill wanted to come back.

Jackie Cahill (Tipperary, Fianna Fail)
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I forgot at the start to relay apologies from Deputy McConalogue who is unavoidably absent today. I want to ask one other question and then go back on a few of the answers I got from the delegation. Does Bord Bia have any concerns about zero-grazing with the larger herds on the dairy side and the higher proportion of indoor feeding especially as it affects the taste of butter, which attracts a premium especially on the German market?

I asked a specific question on whether the Bord Bia budget is adequate to cater for the challenges Brexit will present. The witnesses spoke about the additional resources Bord Bia had taken on. It does not answer my question as to whether the budget is adequate. If we had more resources, could we do more to reduce our dependence on the UK market?

A point was made about quality assurance and the different add-ons there are to qualify for premium. The reality is that processors are using quality assurance as a marketing tool. They are being disingenuous to farmers in not paying a premium for all animals coming from farms that are quality assured. In some cases only 30% or 35% of the animals coming from a farm are getting the premium even though all the meat would be marketed as quality assured. That issue needs to be addressed.

Of the money Bord Bia spends on the beef side, what percentage is devoted to live exports? As a promotional body, what is Bord Bia's view on the consequences for our sales in foreign markets of the proposed health warning on drinks?

There is one other point on which I felt I did not get a satisfactory answer. How can we determine the value of the fifth quarter, which will have an increasing value owing to much of the work Bord Bia has done? How can producers be sure the proper price is being paid? That fifth quarter is increasing in value all the time, but it is very hard to get a handle on it.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Before I ask Ms McCarthy to sum up, I wish to make one point. As she probably knows, we produced a report on the tillage sector just before Christmas. It is a sector that is at the crossroads at the moment. We made a number of recommendations in that regard. Some of the recommendations, Nos. 8, 11 and 16 in particular, refer to the part Bord Bia might play in the promotion of some of the products. Perhaps at some stage Ms McCarthy could give us her opinion or some input into that report.

Ms Tara McCarthy:

In response to Senator Mac Lochlainn, I want to flag that there is not a difference. Origin Green is pro or anti anything on organic. Organic is part of the membership of Origin Green. It is not some sort of system to drive organic behaviour or to take organic clothes or anything like that. They are two very different initiatives with regard to the certification behind it and the production systems involved.

On the research the Senator has done on the different co-operative models with regard to organic, we have done a lot of work and we work with the organic section of the Department of Agriculture, Food and the Marine to ensure the promotions we run within the organic sector and the research we do for the organic sector are keeping that sector informed. In many of the sectors Ireland plays in a very small niche when we look overseas. As I mentioned earlier, salmon is the only category we would have any volume of organic exports. We do a lot of work on the home market to help organic producers to understand the route to market for organic food. We have done a lot of work on farmers' markets in particular to ensure they are able to communicate the value of what they offer within their organic range and to assure where possible they can get that premium for their product. We commit resources to it, but it is very much in partnership with the organic section of the Department of Agriculture, Food and the Marine. Funds are ring-fenced specifically for organics and specific work programmes are designed in partnership with the organic industry.

With regard to Brexit, we obviously have huge concern on the Border issues. We are an agency with a remit for 26 counties. We are not an all-Ireland agency. Therefore, we clearly bias our services towards the companies producing in the Twenty-six Counties. Obviously anybody who is not producing in the Republic of Ireland will say that we are not giving them a service. While that is true, our remit is towards the counties that are producing here in the Republic of Ireland.

Pádraig Mac Lochlainn (Sinn Fein)
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May I ask a supplementary question on that?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Yes.

Pádraig Mac Lochlainn (Sinn Fein)
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Obviously this committee has done extensive work on the issue and has published a report. We have repeatedly said that the loss of the all-Ireland market would be devastating for agrifood. Obviously it is not just the all-Ireland market, but also access to the British market. Has there been any attempt to improve the all-Ireland nature of what Bord Bia is doing to work in co-operation with its counterparts in the North to market the island of Ireland? Obviously the 40 shades of green - coming from Buncrana, I appreciate this more than most - does not stop at the Border of Derry and Donegal or Louth and Down. The all-island model could be marketed. The potential consumers for what we are marketing overseas do not look at the Border. They think of this beautiful green island and that is what we sell.

Would Ms McCarthy accept that for producers and processors in this State who are signed up to Bord Bia, the lack of an all-Ireland approach impacts on their business model?

It is not good for many businesses in this State that conduct business in the North. I appreciate that Bord Bia has a 26-county remit. Does it plan to change that situation? We have the North-South Ministerial Council. We talk about all-Ireland co-operation and an all-Ireland market. We have an all-Ireland agency that markets tourism and there is a range of all-Ireland agencies and markets. It strikes me that we have a dichotomy and contradiction. On the one hand, we say we want the all-island agrifood sector to be protected but, on the other hand, we say we will only promote Irish food produced in the Twenty-six Counties. I would like to hear the views of Bord Bia other than its remit. Does Bord Bia think its remit should be changed? Should the Irish Government give Bord Bia better instructions about its work?

Ms Tara McCarthy:

We work in partnership with all of the agencies on the British Isles because we learn so much from them, and share so much with them. We have regular meetings with each of them, whether it is Northern Ireland Food & Drink Association, NIFDA, or our Scottish, Welsh or English counterparts. Clearly, Brexit is not something that any of us wants and complicates all of our businesses. We have not and we have no ambition to profiteer from Brexit in any way.

Pádraig Mac Lochlainn (Sinn Fein)
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I did not ask that question.

Ms Tara McCarthy:

I am unable to answer the Senator's question. I have been given a remit to which I respond.

Pádraig Mac Lochlainn (Sinn Fein)
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Yes.

Ms Tara McCarthy:

I try to deliver that well.

Pádraig Mac Lochlainn (Sinn Fein)
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Ms McCarthy has clearly understood what I said. I am saying that the Government, this committee and many others have articulated a desire to protect the all-island agrifood sector. I am saying that the way Bord Bia carries out its work contradicts the stated Government policy. I mean that there is not an all-Ireland approach. Has Bord Bia adopted an all-Ireland approach in other sectors or is it just dairy?

Ms Tara McCarthy:

No, we would have that aim. What we are looking to do, which is our remit, is to promote the products of the Irish food and drink industry which are produced in the Republic of Ireland. When we look at everything that we do, if a company has facilities in the North or in mainland Britain, we do not show a bias but seek to work with those companies as much as possible.

When it comes to Derry, I am not quite sure. The Senator might have confused activities. We have a lot of challenges on the promotion of the Republic of Ireland on the Irish market but it was not Bord Bia activity that caused them. We have never promoted or un-promoted products from outside of the county. What we look at is quality assurance schemes. We do have, and recognise, facilities in the North of Ireland within that but we do not have, include or invite, from any member state, anybody who is working on it. We are fair with everybody in that we operate within our remit. The Twenty-six Counties are within our remit. Outside of the Twenty-six Counties, and that can be in Normandy in France, Germany, Wales or the North of Ireland, we respect the job we have been given to do.

Pádraig Mac Lochlainn (Sinn Fein)
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With respect, there is a huge difference between the North of Ireland and Brittany or Wales. We talk the language of no barriers and no border. Frankly, Ms McCarthy is talking the language of barriers and borders when she compares the North of Ireland with France or Wales. Today, we are here to talk about the island of Ireland and working together to break down barriers to trade using an all-island approach. Does Ms McCarthy think Bord Bia's remit should be widened? Does it contradict the stated Government policy?

Ms Tara McCarthy:

I cannot answer the Senator because-----

Pádraig Mac Lochlainn (Sinn Fein)
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Fair enough. I note that Ms McCarthy did not answer my questions.

Ms McCarthy has not dealt with the issue of educating consumers. What is her response to the matter?

Ms Tara McCarthy:

We do educate consumers on the Irish market. We talk to them and promote organic products. We also pay for advertorials to be placed in the newspapers on the Irish market as part of our campaigns. We do not do that much work overseas because we do not have that many organic products to market. We learn from and research other markets to ensure we have best practice in what is happening within the organic categories, and ensure then that when we speak to our individual companies they are informed and position their products correctly to speak to organic consumers, no matter what market they go to. From a scaled Ireland Inc. perspective, we do not do advertising campaigns in organics overseas. We conduct trade or study missions for companies. We go to BIOFACH, which is a very large trade show that takes place in Nuremberg in Germany. At the event we have an organic stand and represent the companies that can export.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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No problem. I apologise for the interruption and ask the witnesses to please proceed.

Mr. Michael Maloney:

Deputy Fitzmaurice asked what Bord Bia intends to do about meat that displays a stamp stating the product is Irish in origin when it is not? If meat origin is being misrepresented in the marketplace then that is an issue for bodies other than Bord Bia. We do not have responsibility for policing how meat is stamped, sold or portrayed in the marketplace. That is not a role for us. Other agencies have that remit. As I said earlier, we have responsibility for the products that carry the Bord Bia quality assurance mark. We promote them and police the system. We police it at farm level and, particularly, at factory level. When we go to the meat processors we carry out extensive audits to ensure that, in terms of traceability and reconciliation, it is only quality assured products that come out of the meat factory that carry the Bord Bia mark.

The Deputy mentioned the beef quality assurance scheme. I think it is the closed-out model for beef. We had a situation in our previous beef scheme whereby, if non-compliances were raised at farm level, then the farm fell out of certification and had to reapply. Last April we introduced a new scheme and changed the rules to have a closed-out model in line with our other schemes. Therefore, if a farmer gets a non-compliance notification, following an audit, he or she gets 30 days to rectify the problem. Provided the matter is resolved within 30 days, he or she remains certified for the 30 days and will continue to be certified.

The Deputy mentioned that farmers are charged a heavy price for carbon navigation. In actual terms, farmers are not charged. There is no fee to be paid by the farmer to be part of the programme. I presume he was referring to the things that farmers have to do to pass the audit. In terms of all of those things, and particularly since we moved to the closed-out model for farms, there seems to be very little negative feedback on the schemes. Farmers appreciate that the criteria for the quality assurance schemes are criteria that reflect good practice at farm level. There is also an appreciation that being part of a quality assurance scheme, and a sustainability assurance scheme, is important for market access and trying to access better markets.

In terms of the movement of cattle and whether an animal aged 30 months and three days tastes better or worse than one aged 30 months less three days or one that has not reached its 30-month birthday. That is an issue for the meat factories and their customers. If their customers demand a product that is less than 30 months of age then that is a specification individual factories must meet in order to meet the requirements of their contracts. As far as Bord Bia is concerned, we have left our quality assurance as broad as possible so as many animals as possible can qualify. We insist on animals spending 70 days on the final farm or farms but they can move a number of times and still be quality assured by us.

The marketplace will dictate in certain markets, and in certain higher spec markets, that the number of movements are restricted and that the age of the animal is restricted. I mention confirmation, the fat score and the weight as well. That would reflect an earlier comment about extra cattle for the same tonnage of beef, and smaller carcases being required in regard to that. Our schemes try to keep it as broad and as open as possible. Then it is really a matter for the meat factories and their customers to work out the details of the contracts and which animals meet particular contracts. I do not know if Ms McCarthy wants to pick up on any other matters.

Ms Tara McCarthy:

There are two other matters, namely, organic and Connemara hill lamb. Obviously, one cannot market anything as organic unless it is certified, regardless of the process that it has gone through. One would, obviously, market it on its naturalness. We do a number of campaigns promoting lamb, and the particular markets which we have been looking to grow within that have been the French, German, Swedish and Swiss markets as we move our dependency away from the UK market and, in particular, the French market. It is in those newer markets that we are looking to create a premium for the product and to really market the naturalness of our product. We have been doing European campaigns as well in order to amplify the spend we have so that in partnership with the French and the UK we have been able to get funds from Europe to market European lamb and then within that, obviously, to have a position for Irish lamb.

Lamb, as a product this year, had a reasonably good finish to the year. While it had a very hard start to the year, it had a good summer within the pricing that it achieved but we would regularly work with industry to review our marketing efforts of lamb and to take guidance from industry. We are in consultation with industry at present in order to undertake a new meat strategy. We will look specifically at the products - again this is dictated by the challenges Brexit will pose for us - and at where the best places and the best value for Ireland Inc. will be in terms of its promotional campaigns. We are sitting down with industry, and in partnership with Meat Industry Ireland, as part of that stakeholder consultation to get their guidance and input as to where they believe the best bang for our buck will be achieved, as we look at the different positionings and marketing opportunities for Ireland, first, for quality assured lamb, and then for different opportunities for niches within that.

We were asked for an update on the Chinese market. Obviously, this is a Government decision. Ireland received a further inspection from the Chinese who have reported back. The feedback will go to the Department of Agriculture, Food and the Marine. I believe the committee might be meeting officials from the Department after this meeting. They will have seen this report and they are in dialogue with their Chinese counterparts with regard to some of the details but they have fed back to us that the overall tone of the report was positive.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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What about the organic producers trying to sell in the commercial market? There does not appear to be a market, especially for cattle?

Ms Tara McCarthy:

As one will see when one goes into a supermarket, organic meat is a very small niche within the market. I had not heard of organic producers not being able to market their beef but that is something about which I will definitely try to understand a little more. I know there are some specialists who are marketing organic beef, but I had not heard of anybody who had not been able to sell that product.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Deputy Cahill's-----

Ms Tara McCarthy:

I am sorry about the poor performance on some of the Deputy's questions.

Jackie Cahill (Tipperary, Fianna Fail)
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I would put it another way. Ms Mc Carthy just evaded answering the questions.

Ms Tara McCarthy:

On zero grazing, we have not heard any concern from the market yet with regard to any impact that may have on the taste of butter. If there is, we feed that back to the producers to ensure they do not lose an opportunity with regard to positioning of Ireland and its butter and the creaminess that butter is well known for, particularly in its primary market in Germany. However, it is not something that has been raised with us by the market, or by the marketeers.

With regard to the budget, obviously, that is a rock and an hard place question. What I can say is that our budgets are given to us on an annual basis. The plans we have in place to deliver that budget are adequate for this year. However, the Deputy Cahill's question was on whether we have enough money to solve Brexit. Given the challenges Brexit presents to us, the only answer I can give the Deputy is that I do not know because we do not know the job to be done yet. When we know the job to be done, we will clearly put a business case to Government to see if it can invest in the job to be done. To date, we have received a positive to any request we have made to Government.

Jackie Cahill (Tipperary, Fianna Fail)
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We cannot wait to see the scenario. We have to put in the foundation work first.

Ms Tara McCarthy:

Absolutely, and that is why-----

Jackie Cahill (Tipperary, Fianna Fail)
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If the UK leaves and it imposes a tariff on us, we cannot then go looking for the markets. We must have the foundation work done.

Ms Tara McCarthy:

I did not mean to be smart when I said we got that 30 extra headcount. To get a 30 extra headcount, for us the biggest job is recruiting those on Government salaries in a market that is coming closer to full employment. That is absolutely a challenge for us when we look to ensure we are getting the best people who are prepared to travel, who have languages and who understand the food industry. We will we have challenges within that. Would I say a 32 headcount for an organisation of 110 is not a huge investment and vote of confidence from the Government in it? Absolutely not. One cannot do every single job in year one. What we are trying to do is to phase ourselves and our budgets are given to us on an annual basis for the jobs that we have described to the Government that we need to get done this year, in addition to the €6.7 million we were given in September of last year. We are adequately funded to get us through this year. We will obviously keep dialogue going with all Government parties to ensure that adequate funding takes us step by step through it. What we do not want is to given funding that we cannot spend with a good value-for-money head on us. If one threw money at a problem, one would not get good value for money. Each of the projects we have presented have been funded by Government. What we would regularly do is to keep dialogue going during supplementary budget discussions. If there are new jobs to which we have resources to allocate and if we have resources we can disseminate back out to industry, all these will be influences on the asks we have of Government. When we got that €6.7 million last September, it put our organisation, in some ways, under pressure to make sure we could spend it properly and well. We would be concerned about asking for huge budget amounts in order to make sure we can absorb the spend and give value for money on it.

I cannot give the exact percentage for live exports versus beef. It would be a small percentage because the work we do is very different. We can follow up on it and give the Deputy the exact percentage on this. However, when looking at the type of work we do in live exports, it is very targeted work. We would take advertising in trade magazines and we would do trade or study missions in particular markets. They do not have the same spend as undertaking consumer insight, undertaking huge market research or undertaking consumer campaigns on the ground so one will get quite a different budgetary spend on it. However, I cannot give the Deputy the exact figure today but I will follow up on that. Was there another question?

Jackie Cahill (Tipperary, Fianna Fail)
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As a promotional body, what is Bord Bia's view on the proposal to put a health warning on all drink products?

Ms Tara McCarthy:

I would not be a supporter of it. If we are promoting it as a fantastic product that comes from Ireland, it is challenging to say it is not a fantastic product that comes from Ireland, but that is a personal perspective.

Mr. Michael Maloney:

On quality assurance, Deputy Cahill mentioned the premium and the add-ons. More than most, the Deputy, as a former member of the board of Bord Bia, he will understand our role and the fact we cannot get involved in the price discussion between meat factories and producers. That is an issue between the meat factories and the representatives of the farmers.

Jackie Cahill (Tipperary, Fianna Fail)
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The point I am making is that a farm is quality assured. The culled cow coming off that farm is meeting the same standards as the 18-month old heifer coming off the farm. The processor buying that culled cow is using the fact the animal is quality assured to help sell the product but the farmer is getting no return for that. There are farms that are quality assured but would have no animals coming off them attracting a premium. That is wrong. Quality assurance was the brainchild of Bord Bia and it has worked very well. I am not questioning the scheme at all, but factories are using the quality assurance, which is what it was brought in for, to promote our beef. However, they are not being genuine with the people who participate in the scheme. I accept that they say that in order to qualify for the top level of premium, the animal must be under 13 months and be graded in a certain grade. However, I refer to the culled cow going out the gate and the farm which is meeting all the standards required and the O minus bullock or the O minus heifer going out the gate, which is what many farmers are producing.

Where a culled cow, or an O minus bull or heifer, which a lot of farms produce, goes out the gate, the farmer is paid nothing for adhering to the standards. If those farmers opted out of the scheme in the morning, it would give processors a very severe headache. They should look at that seriously. We met the representatives of the milk promotion body. They have a lovely glossy brochure, but it did not contain one picture of a black and white cow, yet those cattle are producing more than 50% of our beef. That should be recognised. For example, one sees Aberdeen Angus beef on the shelves and all these standards apply. However, a significant number of Aberdeen Angus cattle that are killed do not qualify for quality assurance. Factories are being short-sighted in their approach. Farmers are brought well into the scheme. While I am not saying there should not be a different level of premium, all animals that come out of a farm should attract some premium. Quality assurance has served the industry well and factories are being short-sighted in failing to incentivise people to adhere to those standards.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I am sorry to cut across, but it is probably a question for the factories also.

Mr. Michael Maloney:

Yes.

Jackie Cahill (Tipperary, Fianna Fail)
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It was Bord Bia's brainchild and it has worked well. A little kick from Bord Bia to processors might not go astray.

Ms Tara McCarthy:

I apologise but we were not familiar with this report before it was brought to our attention today. We have looked at the recommendations made within the report and which were referenced during the meeting. We were chatted through some sort of fair trade concept and there was a familiarity or similarity running through each of the report's recommendations on understanding how better to integrate the supply chain with the market to achieve better returns. We have no problem looking at that. Anything we do must be linked to a market requirement and buy-in from the industry. If we create a quality assurance scheme into which the industry does not buy, we have wasted our time and our money. We are going into deep stakeholder consultation on all of our work and, having read the recommendations somewhat briefly, we have no issue committing to asking industry, within our strategy development process, to come together to find out the appetite in the market, among distillers or drinks producers and among farmers, for something workable within this. However, there is only so much we can do in this context from within our remit versus others.

We have two pressure points, the first of which is state aid rules which prevent us from advertising "made in Ireland" as a point of differentiation. However, we can advertise that a product has its origin in Ireland as part of a quality assurance or traceability scheme. If that is the route industry decides it would like to go down, we will definitely have a role. Origin Green is not the "Buy Irish" campaign in any sense. It is a sustainability scheme. Clearly, we can communicate the work being done under that banner. In relation to the three issues that the committee raises with us, we can commit to bringing industry together to discuss solutions which may be within our remit and to see if there is an appetite for that. Once again, we will not be able to decide who gets the premium and where. We can, however, decide whether putting the infrastructure in place represents a good investment.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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That is really what we are asking, that Bord Bia would be part of a conversation going forward, which could be useful.

Ms Tara McCarthy:

Absolutely. We would be delighted.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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That covers all of our questions. I thank the witnesses for a detailed conversation and discussion over the past hour and a half or so. I thank the witnesses for coming before the committee to discuss this very important matter. As this part of the business is concluded, we will suspend for a few minutes before resuming in private session to deal with the matter we were discussing with officials from the Department of Agriculture, Food and the Marine.