Mr. Padraig Brennan:

I will begin by answering Deputy Cahill's questions. His first question was related to standards. It has been very clear in all of our interactions and discussions with customers in the United Kingdom that they have absolutely no interest in seeing standards slip at any stage. Likewise, it is clear from the consumer work we have done that consumers are strongly in favour of the retention of the levels of standards in the market. That is the basis at which we are looking. It will be a key concern for us when the final shape of any Brexit agreement becomes apparent. As an industry, we try to work on a level playing field at all times. Standards represent a key element of that level playing field. We believe that if there is the potential for competitors who offer lower prices to come into the UK market with what we would consider to be lower standards, it could do a lot of damage to the market. This is recognised in the retail and food service sectors in the United Kingdom. There is a strong desire not to upset the level of consumer trust in the market.

Deputy Cahill also asked about other suppliers to the United Kingdom, particularly in the Netherlands. The key element for us is looking at how we can diversify in markets outside Europe. That was our purpose in undertaking our market diversification exercise. In a worst case scenario all of the produce that has gone to the United Kingdom up to now will end up on the Continent of Europe after Brexit. That is the last thing any of us wants to do because it would be detrimental to everybody who supplies the European market.

It is clear from an examination of global demographics that growth in global demand for food is primarily being led in Asia, the Middle East and, to a lesser extent, North America. It is all about identifying the markets that offer the best potential for growth in international markets. We are putting additional people on the ground in these markets - China, the rest of South-East Asia, the Middle East and North America - and investing our own resources in local market expertise. As the Deputy said, this can take a lot of time, but we are looking at the best ways to hasten the development of our understanding of the markets into which we are looking to diversify. We have our own thinking house facility that works on consumer and marketing insights. We are investing heavily in these new potential markets and need people with their boots on the ground. In addition to our existing or additional staff, we need to access local expertise. We will invest heavily in this area. Even if we are successful in overcoming the challenges that will present in most of these markets in the event of a harder Brexit, Ireland will remain a relatively small supplier in many of them. I know that the beef side is not directly comparable, but it is worth mentioning that China currently imports 700,000 tonnes of beef each year and it is predicted that this figure will double in the next three or four years. Likewise, we are looking at double digit growth in dairy imports demand on an annual basis. For us, it is about identifying the right niche opportunities for us in these markets. We need to realise that in a worst case scenario we will have to compete with other European suppliers. We need to get our credentials and see where we can win in these markets.

Deputy Cahill, rightly, highlighted to the importance of the United Kingdom for the beef industry. It continues to take almost half of our beef each year. There is no point in denying that in the event of a hard Brexit, it will be really challenging to displace that amount of product from the United Kingdom and into other markets, particularly because the United Kingdom is the beef market with the highest prices in the world. It is probably the market that we have the longest tradition of servicing. It is also the closest market to us and the returns from it tend to be better than those from many others we have. We will focus on the Continent of Europe. We have made a great deal of progress in recent years in countries such as Germany, the Netherlands and Italy where we hope there will be scope for some further increases. We will certainly have to look to international markets to try to offset some of the real pressure being felt. We hope the key customers for Irish beef in the United Kingdom will continue to want to source beef from here and that is certainly the impression we are getting from them. They know that it is a quality product and are aware of its sustainability credentials. They want to continue the relationship we have with them.

The Deputy asked about additional staff. We have taken on 26 or 27 extra staff during the course of 2018. That might not sound very significant in the overall scheme of things, but from Bord Bia's point of view, it represents an increase of more than one quarter on the staffing levels we had up to this year. Our resources have increased significantly. It is really important that we are investing in putting people on the ground in the markets in the various regions about which we are talking.

The Deputy asked about the various options that might be available to export cheddar cheese. A level of diversification away from the United Kingdom has already been seen in the dairy industry. It used to be the case that over 60% of our cheddar went to the United Kingdom, but that figure has decreased to 52% or 53%. I know from our various trade missions that the industry has been looking at markets such as Japan and South Korea as options for cheddar cheese exports. There is a growing demand for cheese in countries such as China. They might not necessarily want to buy cheddar now, but there may be opportunities in the food service sector in markets such as China in the future. It would certainly be a big challenge.

The Deputy asked about the level of resources we might need. The Department of Agriculture, Food and the Marine conditioned us to focus on undertaking the market prioritisation exercise. It shows that there is a level of co-ordination as we proceed, as more clarity on the final shape of any agreement emerges, as we seek to identify which markets offer the best potential and which markets in we should invest more. We will be keeping all of these issues under review as we proceed in the coming months.

The Deputy asked about Food Wise 2025. The industry's ambition is to achieve €19 billion worth of food and drink exports within the next eight years. That has always been seen as an ambitious challenge. I think it was deliberately set as an ambitious challenge for the industry. I know from talking to representatives of various sectors and client companies that they are still determined to try to achieve the €19 billion target, but we really need to target the markets and segments of markets in we are trying to do business. That brings me back to the Deputy's question about what all of this means for primary producers. We are also required to be even stronger in the credentials we offer in these markets.

Traditionally we have sold Ireland on its clean, green and natural reputation, which is strong. The perception of Ireland in the international marketplace is it is strong in those areas. Increasingly, there is a requirement for us to quantify those claims and to provide more data, facts and figures to back-up and verify the claims on an ongoing basis. For example, through the sustainable dairy assurance and sustainable beef and lamb schemes, we provide the data that reassures and gives customers the ammunition to build a proposition for why they source Irish meat or dairy products. It is something we are investing in. Grass-fed product is one of our key strengths. We have just completed in-depth research across 13 markets in Europe, Asia, the Middle East and North America looking at grass-fed products at a customer and consumer level. There is no doubt that grass-fed products are a motivator for both customers and consumers. Globally, approximately half the consumers we spoke to said whether a product was grass-fed would influence their purchasing decisions, particularly of dairy. In Europe, it was two thirds of the consumers we spoke to. There is an opportunity for Ireland to own that space but to do so, we have to have a clear, quantifiable standard in place to show why grass-fed makes sense for us. If we can establish those sort of positions - the Deputy is correct that it takes time - it gives us the best opportunity to extract the best value out of the market and ultimately give the best return to the primary producer.

Regarding what we are trying to do in diversification, we have established what we call our global relationship team. A number of our customers are global, multinational operators. Up to now we have been dealing with them individually in different countries. Ms Karen Coyle is heading up the team in Bord Bia to try to bring a centralised approach to how we work at a global headquarters level and to build the awareness and reputation of Ireland at headquarters level and not just on a country-by-country basis. It is all about positioning Ireland in the right way in terms of its capabilities and credentials as a food producing country.

We are all well aware of the sterling challenge to the industry over the past two and a half years. As part of the Brexit barometer, we assessed the exchange rate at which client companies would get into severe difficulties. If one went back to 2017, when we talked about an exchange rate of €1 being equal to between 90p and 94p sterling, it meant that more than 80% of companies would be in severe difficulties. A year later that figure is 55%. It is a decrease but still a worrying figure. Companies have taken steps in respect of currency risk management and efficiency gains within their supply chains to try to offset some of that. We find currency risk training is a good way of engaging with clients on a one-to-one basis regarding what they can do in their businesses. There is no point in saying otherwise - sterling continues to be a major challenge for the industry.

Getting product to other markets is a particular challenge. One member asked how we are preparing. We are preparing on the basis of the worst-case scenario and trying to get our supports and programmes in place to help companies prepare for that. Like everybody around this table, we are hoping it will not come to pass but it is the basis for our planning. Alternative routes are available to get products to other markets. The issue is time delays and their cost implications. They could be significant depending on the product. If we get into shorter shelf life products, it can also be a major challenge for us. Through our customs and supply chain services and supports, we are breaking it down for the client companies we work with.

Senator Conway-Walsh asked if we are engaging with partners in the UK. From the outset, we felt the key for us in the UK market was to engage in maintaining and building relationships. Our first port of call was retail and food service customers that had been sourcing from Ireland on a longstanding basis. This year alone, we had 70 meetings with retailers and food service companies in the UK.