I thank the joint committee for its invitation to discuss the promotion of Ireland's foreign trade, a topic of critical importance to our largest indigenous industry and the work of Bord Bia. I am joined by Mr. Michael Murphy, director of our markets division.
I would like to focus on four principal areas. I will begin with a brief review of Ireland's food and drink trade. Second, I will set out the role of Bord Bia in supporting the development of the industry and our linkages with the Department of Foreign Affairs. Third, I will address the current issues dominating trade and dictating the focus of activities in an exceptionally challenging environment. Finally, I will set out our key priorities as the market continues to evolve, as it inevitably will, beyond its current difficulties.
The Irish agrifood sector plays a key role in the economy and has significant potential to contribute to sustainable economic renewal due to its high export orientation. It accounts for close to one tenth of the size of the economy, a corresponding share of employment, and as much as two thirds of our indigenous manufacturing exports. Last year, the industry exported more than €8 billion worth of Irish food and drink to some 170 markets around the world. Meat and dairy products, reflecting the importance of grass-based enterprises to Irish agriculture, account for almost 60% of total exports. Added value prepared foods account for close to another 20%, with beverages comprising some 15% of the total, followed by seafood and fruit and vegetables.
Ireland is the largest net exporter of beef in the northern hemisphere and our dairy industry is responsible for some 15% of world output of infant formula. Our drinks sector projects the Irish brand onto retail and bar shelves in every corner of the globe. It is an industry with an impressive global footprint and a platform on which much can yet be built. Yet, as John Fanning, chairman of the judges' stated at the Bord Bia food and drink awards at the IMI in Sandyford last week, even these measures do not adequately capture the true value of the sector, the sense of national pride, self-belief and achievement we experience when we select an Irish food or drink product from a supermarket shelf in a foreign country.
Although the industry has an extensive international reach and has had success in building a presence in the rapidly growing Asian region, some 45% of its exports last year were destined for the United Kingdom market where the depreciation of sterling has posed major challenges. I will return to that issue presently. Meanwhile, some 30% of exports of Irish food and drink go to continental European — mainly eurozone — countries, with a further 24% destined for international markets outside the European Union.
The role of Bord Bia is to promote and develop markets and to drive the success of Irish food and horticulture through a range of strategic market development, promotion and information services. We are the eyes, ears and voice of the industry in the international marketplace. We have a complement of some 100 staff and operate from nine international locations as well as out of Dublin. Reflecting the pattern and potential for our food exports, six of our offices are located within the European Union while our other international locations include New York, Moscow and Shanghai. Seven of our nine offices are located within an Ireland House arrangement. The exceptions are London and Moscow where no such arrangements are available, while our location in Moscow within the Russian Department of Agriculture building has brought with it certain operational benefits.
The remit of our overseas offices extends beyond coverage of their immediate market location to include regional coverage of adjacent markets. Dublin-based Bord Bia staff complement our international market presence where required. Meanwhile, we are an active participant in the export orientation programme operated by IBEC whereby we offer ten to 12 placements within our offices on an annual basis to suitable graduates to develop practical skills and gain hands-on experience in an international and fast-moving business environment.
Our international presence is kept under continuous review to ensure it is optimally distributed to support Irish exporters. This in turn is dictated by the existing pattern of exports as well as by future potential, recognising that geographical business perspectives may and do vary sector by sector. Our market prioritisation process can equally assist companies to focus their own priorities by ranking and weighting potential markets by a range of attributes that define their attractiveness and the companies’ capability to serve them.
Within the State infrastructure we work closely with related agencies, including Enterprise Ireland, with whom an inter-agency protocol provides for co-operation and co-ordination of activities to achieve optimal efficiencies, effectiveness and cost savings. We have a similar agreement with Bord lascaigh Mhara whose overseas offices in Dusseldorf, Paris and Madrid were integrated with Bord Bia's following our assumption of the seafood marketing and promotion function as of June this year. Within each market we participate in the regular meetings convened by the respective ambassadors in each country to co-ordinate and report on promotional activities and to identify opportunities among the various agencies and embassies to work together.
Our relationship with the Department of Foreign Affairs and Irish embassies throughout the world is integral to our work. This was never more evident than during and subsequent to the dioxin-related pigmeat product recall last December. Both within and without the European Union, the role of our embassies in briefing national authorities was critical to keeping markets open. At that time and subsequently we have continued to work with the embassies and with the Department of Agriculture, Fisheries and Food to restore full market access, with that work now focusing on the two principal markets still to be reopened, namely, Russia and China.
Bord Bia is also an active participant, together with the Department of Foreign Affairs and other agencies, on the Asia strategy group and the market access group for food exports, which is chaired by an assistant secretary of the Department of Agriculture, Fisheries and Food. Access to international markets remains an issue in the meat sector in particular where some outstanding restrictions date back to the BSE crisis of the mid-1990s.
The contribution of our embassies overseas in hosting key functions for the food industry should not go unremarked. Perhaps the most successful example is the annual networking event organised by Bord Bia and hosted by the Irish ambassador which each year attracts some 400 British and Irish trade representatives to the embassy in London. A similar event now also takes place in the embassy in Paris, while throughout the year the contribution of our embassies in advancing business development initiatives, hosting target customer groups for Irish food and drink, supporting our presence at trade fairs around the world and showcasing Irish food during Saint Patrick's Day cannot be overstated.
Our international network plays a critical role in what we do. It enables us to sustain relationships with existing and potential customers and a network of contacts which are a key asset that we can leverage on behalf of exporters. That leverage will be utilised in February 2010 when as part of an initiative to intensify support to industry in the current difficult environment, 250 international food and drink purchasers will be invited to Dublin to meet with 150 Irish companies seeking to build and expand their business overseas. Our overseas presence facilitates the types of insights into food markets that go with total immersion in the marketplace and which allow us provide specialist support to the industry we serve.
Market knowledge and consumer insight and understanding inform all of what we do and comprise an area in which we make a significant and ongoing investment. Our consumer lifestyle trends programme draws on research from markets around the world accounting for 80% of global GDP, with examples of product innovation sourced by "streetscapers" located in 40 cities in every continent. Our periscope research has been tracking consumer attitudes in Ireland, Northern Ireland and Britain for the last decade.
Like many industries, the food and drink sector faces a world of opportunities but never enough resources to explore them. This year we launched the Bord Bia marketing fellowship programme to put 25 recent graduates, already with upwards of three years' work experience, into 12 overseas markets, covering the United Kingdom, Europe, Russia, the United States and Asia. They will work on 168 commercial assignments for 113 Irish exporters while also meeting the rigorous disciplines of the UCD Smurfit School of Business from which they will, at the end of the programme, receive a masters degree. We are confident the programme will bring renewed energy, vitality and fresh thinking while adding further momentum to the search for new markets, new opportunities, and most of all new business for Irish food and drink. The 25 graduates will commence their placements next Monday. The Department of Foreign Affairs has been highly supportive of the initiative, particularly in supporting organisation on the ground in the case of areas where we do not have a physical presence, namely, in Copenhagen, Warsaw and Dubai.
In the meantime, we have launched a new trade awareness campaign, covering 12 markets and incorporating on-line and off-line advertising and social media, to bring Ireland and its food and drink manufacturers' front of mind among continental European buyers. It positions Ireland as having the perfect formula for quality food production, blending sustainable resources with applied innovation and world class service. The initiative is part of our drive to seek out new business and will complement the arrival of our 25 marketing fellows in the market while working to heighten interest in sourcing from Ireland in the approach to Marketplace 2010, the programme that will bring 250 buyers to Ireland next February.
The Irish food and drink industry has never needed support more than now. The economic downturn combined with a massive 30% depreciation in sterling and a collapse in world dairy markets mean that as the industry strives to defend market share, the value of Irish food and drink exports in euro terms is set to fall substantially in the current year. That the industry must now also compete with cheaper sterling-based food imports on its own domestic market exacerbates its difficulties.
Irish companies have responded to these challenges by introducing cost reduction initiatives, reformulating offers, sharing distribution and other costs, seeking price increases where available, and prioritising strategically important businesses while exiting low margin ones. Bord Bia, through our London office, has facilitated these choices by providing companies with access to local market mentors, that is, experienced former or current retail and food service buyers who provide advice on optimal business development and key account management strategies. We also provide access to "route to market" experts who can help companies identify, select and contract cost-efficient, best-in-class logistics, sales and marketing service providers.
Current difficulties should not divert us from recognising the significant progress industry continues to make in carving out new market positions and searching out new opportunities and new business. The transformation of the profile of Irish beef exports, from one principally focused on volatile, international markets in the last and previous decades, to one almost completely focused on the consumer markets of Europe has been one of the most impressive achievements of recent times. Irish beef is now listed on more high-end supermarket shelves in more markets than beef of any other origin anywhere else in the world.
In partnership with the industry, and funded as we are partly by levies on the sector, Bord Bia is working actively with more than 70 supermarket groups to advance a strategy of differentiation and repositioning that will continue to add value to its business. In the dairy sector we have defined our strategy as enabling strategic choices through market knowledge, recognising the unique structure of the industry and the prospect that many such choices, of how and where to compete, must be made in the years ahead by an industry with the potential to raise its output by some 50% as quotas are lifted. Our research to date of future market opportunities, in an agenda agreed in advance and shared with the dairy industry, has reviewed the potential for both consumer-ready products and dairy ingredients in areas such as sports, medical and infant nutrition across all major member states of the EU. We have similarly examined the potential for the continued development of exports to the growth markets of Asia and Russia.
We also possess a vibrant and dynamic artisan and small food business sector. Although most of its business by its nature is domestically focussed, it has never felt constrained by borders and many players, particularly in the farmhouse cheese sector, have been successfully building profitable niches in markets such as the UK and the US. Bord Bia operates a dedicated centre of excellence for small business, supporting more than 300 owner managed firms, while more than 30 companies participated in our market readiness programme this year, designed to brief and prepare businesses targeting the US.
Notwithstanding the formidable challenges of today's marketplace, earlier this year Bord Bia set out a target for building Irish food and drink exports to €10 billion. We did so in the knowledge that, driven by the evolving demographics of the global population, the world will need to produce almost 50% more food by 2030 and will need to almost double food production by 2050. We set out six strategic priorities for our organisation, in support of this target and which would inform and dictate the allocation of resources in the period ahead. I will not go into them all now other than to say that among those priorities is the need to broaden the industry's export reach, to drive consumer-focussed innovation based on emerging global trends and to promote and position Ireland as the sustainable food island. Farming and food is Ireland's strength. A recent independent study of 18 of Europe's leading retailers, undertaken on behalf of Bord Bia, recognised our natural advantages in grassland production and animal welfare. It described Ireland as a trustworthy food source, strong on heritage and strong on tradition. This is what we intend to build upon.
Recently, we had the opportunity to present our strategy and our priorities to the Department of Foreign Affairs and its ambassadors, who have a key role to play in helping us realise our ambitions. That role will be particularly important in helping to foster business relationships internationally at the highest level, maximising market access for Irish food exports and developing the awareness of Ireland as a sustainable food island with a major customer and export orientation. Following the success of the recent Farmleigh global Irish economic forum, significant scope exists to further build on a global food-specific diaspora, a diaspora whose potential could be harnessed locally by embassies and Bord Bia working in key target markets. By virtue of its singular sector focus this could make an important contribution to the development of markets for Irish food and drink.
I thank the Chairman and members for affording me the opportunity to address the committee today. We are happy to address any questions the committee wishes to ask.