I thank the committee for the invitation to discuss Bord Bia’s strategic direction. Bord Bia’s purpose is to bring Ireland’s outstanding food, drink and horticulture produce to the world, thus enabling the growth and sustainability of producers. Our focus is on supporting and enabling our producers, growers, fishers and farmers in order that customers across the globe can recognise that Irish food and drink are world class, that they are of high quality and distinctive and that our producers set the global standard in sustainable production and meet the responsibility we all have to the planet, to society and to future generations.
Our largest and most important stakeholders are Irish farmers. Ultimately, our goal is to help develop and grow the best and highest-paying markets for our primary producers, which, in turn, can help to deliver value back to the farm gate.
The value of Ireland’s food, drink and horticulture exports increased by 22% last year. As a result, exports reached a new record high of €16.6 billion. This performance was delivered amid a profoundly challenging year for the sector, most notably the impact of the war in Ukraine, inflationary pressures on producers and ongoing Covid-19 disruptions to the global supply chain. Our sector continues to operate in a volatile market. I will outline some of the key challenges it faces.
Bord Bia’s strategic direction is closely aligned with Food Vision 2030, which provides the sector with a coherent, stakeholder-led vision to underpin its continued development. Bord Bia’s Nurturing a Thriving Future statement of strategy was launched in January 2022 and includes a three-year and a ten-year approach. Our three-year strategy focuses on five key pillars. The first is building Food Brand Ireland - our reputation - with customers and consumers and further developing its proof points. Origin Green, Ireland’s national sustainability programme, will be at the heart of this activity. We will continue to build our strengths in sustainability and take them to the next level. We are concentrating on further building trust through sustainability and quality assurance schemes amplifying the work that has been done on the verified grass-fed standard. Farmer engagement is critical to the delivery of this ambition, and Bord Bia is working closely with the farming community to help navigate the challenges and opportunities ahead.
We are looking to provide better ways for our customers and clients to connect and build partnerships. This pillar recognises that the very nature of doing business has changed. That change has been accelerated by Covid-19 and the disruption it has caused. Bord Bia was agile in its response to the pandemic. That agility remains central to our operations and will be required in the years ahead.
The emergence of the next generation of digital technologies is a game-changer for both business-to-business and business-to-consumer marketing. We remain committed to some of the more traditional ways of doing business, for example, participating in key international trade shows, which remains a crucial platform for generating and building business in our sector. However, we are also embracing opportunities to connect with customers in new ways through digital marketing and other emerging technologies. Delivery of this ambition will touch every aspect of our strategic plans from how Food Brand Ireland is represented around the world to how we help clients develop their own brands.
Our third area of focus is around nurturing industry talent and developing client capability. This includes providing relevant and useful supports and training to the industry as well as delivering talent programmes. Bord Bia’s Talent Academy ensures that we are creating a pipeline of talent for the industry that is upskilled on relevant areas such as sustainability, supply chain, marketing, insights and innovation. As part of this programme, we recently established an executive education programme to build knowledge on climate change and sustainability at senior management and board level within the Irish food, drink and horticulture industry.
Championing insight-led innovation and brand development is the fourth area of our strategy. We are doing this in three ways. The first is through thought leadership grounded in consumer and market insight, the second is through the development of innovation partnerships with the food science community and the third is through ongoing bespoke insight and innovation projects aligned to our wider sector strategies.
Our fifth and final pillar looks at supporting and enabling the organisation and its stakeholders to execute strategy though continuous learning and development, best practice corporate governance and physical and digital infrastructure.
Looking further ahead, in the context of our ten-year strategy, Food Brand Ireland will drive differentiation and continue to help premiumise Irish food, drink and horticulture by building on our strength in sustainability. Our insight-innovation and brand development work will help create value through a real focus on sustainable nutrition. Around the world, Bord Bia will continue to capture value through access to new and reimagined channels. Delivery of these actions and our strategy will be fully aligned with Government policies.
The market environment in which Irish farmers and food businesses are currently operating continues to be challenging. Having navigated the turmoil of Covid-19 and the impact of Brexit to date, the ensuing cost inflation challenge that started to emerge in late 2021 and that was accelerated by the war in Ukraine has tested the sector to its limits. Food price inflation continues to significantly outpace general inflation across the globe. The OECD estimates global food inflation at 15.2% in January of this year while general inflation tracks at 9.2% in the EU.
In the UK, the single largest market for Irish food and drink exports, food inflation was 16.8% for January. Consumers are making choices accordingly. For example, we have seen a significant reduction in volume sales of higher-value proteins. Companies and customers are having to work extremely hard to retain consumer engagement in these product categories. The cost-of-living crisis has brought about significant consumer behavioural shifts, including trading down, reducing frequency, switching brands and seeking greater meal value.
While the consumer is pressured, we know that the primary producer is equally impacted. The ongoing inflated costs of energy, fuel, fertiliser, labour and almost all input costs on a farm are squeezing profit margins none more so than what we are currently seeing in lamb, which is in a particularly difficult situation as a result of from decreasing consumer demand, higher supply from our competition and ongoing high operating costs in Ireland. In direct response to the current sheepmeat crisis, Bord Bia has intensified marketing and promotion of Irish lamb this year through our activity on both the domestic and export markets. This will continue to be closely monitored and supplemented with additional activity as necessary.
Ireland’s horticulture industry is also facing significant challenges. Since the outbreak of the Ukraine war, energy and key input costs have significantly increased. The protected glasshouse industry has reported that its energy costs tripled in just over one year. Horticulture is also a labour-intensive activity and producers across all sectors have been reporting a growing and serious difficulty in attracting workers. This challenge is now posing a major obstacle to the operation and development of many horticulture businesses.
Notwithstanding the current cost challenges across the supply chain, sustainability continues to trend upwards in terms of influencing factors for consumers and customers. Greater awareness of climate change, environmental impacts and Government regulation are pushing consumers to seek more sustainable products. This is coupled with the continued expectation for high animal welfare and human nutrition standards. In certain markets, animal welfare is becoming increasingly more important for some of Ireland’s major retail customers.
In terms of planning our overseas activities, each year, Bord Bia undertakes a market prioritisation review. It considers the progress and capacity of each market and its customers and consumers to deliver against the four major strategic growth levers, namely, retention of existing customers, recruitment of new customers, increasing the value-add and delivering premiumisation.
Given its scale and importance, the UK remains our top priority market albeit operating alongside a clear market diversification strategy for some product categories with over-dependence. The US and China are also top priority markets despite some sectoral challenges as they offer scaled opportunity and high growth rates.
Our market prioritisation work enables Bord Bia to adjust and focus its resources appropriately to maximise the potential to deliver on our strategic commitments.
In the interests of time, I will omit some of detail on our export performance as it will arise during questions. Members have all the detail that has been provided in the opening statement. Our export performance of €16.6 billion last year points to the complexity of the trading environment and is testament
to the resilience of Ireland’s largest indigenous sector. As an organisation, we are always proud to represent Irish food and drink overseas and are confident that we can stand out in a competitive market thanks to our adherence to consistently high standards of quality, sustainable food production and verification systems.
The widespread participation of Irish farms in our sustainable assurance schemes and the industry’s engagement with Origin Green underpins Irish food and drink exports. Our focus under our sustainable assurance schemes is to build the proof points that validate our farming processes. This verification is increasingly critical to maintain and unlock the best opportunities with customers in the marketplace. It is also, therefore, important that we are progressive and continue to ensure that our standards stay ahead of encroaching competition. Our Origin Green programme remains the only national sustainability programme for farming, food and drink in the world, and is the envy of a number of our main competitors.
We are very conscious that our ambitions, and the targets set out in Food Vision 2030 and the climate action plan, will require Irish farmers to invest additional time and resources into sustainability. There is an ever-increasing ask for farmers to participate in improvement schemes, record more data, and make more submissions. Therefore, simplifying where we can, and making access to supports and resources easier and more helpful, is central to our thinking and work. We are actively collaborating with Teagasc and the Irish Cattle Breeding Federation, ICBF, on how we support and engage with the farming community to bring greater consistency to our sustainability messaging and guidance.
The focus under the Government’s climate action plan is to transition farms to additional alternative land use through incentivised diversification options. We have already seen significant increases in organic payments to farmers to incentivise organic farming, and there are further targets of reaching 450,000 ha under organic as part of the climate action plan. This will bring Ireland’s agricultural land under organic production to 10% from less than 2% in 2022. The vision outlined in Ireland’s national organic strategy for the period 2019 to 2025 is for: "Irish organic food [and drink], based on its natural production attributes, being a desirable choice for farmers, consumers and retailers." The addition of one of our colleagues, Mr. Emmet Doyle, as Bord Bia’s first dedicated sector manager for organics, is critical to realising Bord Bia’s ambition under the national organic strategy.
On key priorities for this year, Bord Bia needs to balance the pressure presented by the current market context with the ongoing pursuit of our strategic goals. We remain focused on delivering for our stakeholders. In order to do so, we have three key priorities for the year ahead. First, to remain agile and responsive to client needs, as the effects of inflation continue to bed in. This means not only providing relevant and timely insight to help companies navigate the marketplace and shifting consumer behaviours, but also backing this up with responsive services and support that enable them to make the appropriate changes in their approach to these challenges. This can range from training in negotiation skills to helping them revise their brand propositions for the marketplace.
Our second priority is to maximise the opportunities in new and recovering markets. This year is the first full year in respect of which we will be able to say that the whole world will, we hope, have largely emerged from Covid-19. Even so, there are still market demand shifts. At the same time, the global impacts of production cost increases, environmental restrictions and climate impact on output, have resulted in shifts in output of production. All this, coupled with reopening existing markets and accessing new access to markets, is creating a definite momentum of opportunity, which Bord Bia is intent on supporting producers to maximise. Central to this will be significant trade show and trade mission activity, which will include ministerial missions to China, Southeast Asia and Africa this year. We include the ongoing focus to support companies on Brexit readjustment within this priority.
The third priority is to continue to drive global leadership in sustainability in the agrifood sector, both through the ongoing development of our standards and programmes, sustainability metrics and tools, and the promotion of our capability and global thought leadership through Origin Green. As mentioned, our national Origin Green programme remains the only such programme globally and the envy of many of our competitors. However, it is imperative to our international reputation to keep ahead of evolving needs of global customers, and the evolving environmental and legislative landscape, by constantly looking to appropriately improve programmes and proof points.
I thank the committee for inviting Bord Bia to address it. My colleagues and I are eager to respond to any queries members may have. If, for some reason, we are unable to provide the required detail, I assure the committee that we will follow up with individual members in writing after the meeting. I thank members for their attention.
