Official Report: Minutes of Evidence

The Chairperson (Ms Dillon): I welcome Tony O'Neill, chairperson of the Agri-Food Strategy Board (AFSB); Ian Marshall, board member; and Trevor Lockhart, also a board member. I ask that you keep your presentation to roughly 10 minutes, and then I will give members an opportunity to ask questions. Thank you very much for coming.

Mr Tony O'Neill (Agri-Food Strategy Board): Good morning, Chair and everybody. Thank you for the opportunity to provide an update on the implementation of Going for Growth. I am aware of many new faces around the table since previous discussions, so forgive me for going back over a little of the evolution. You are all aware of my colleagues here this morning. I understand that you have been given a progress report, a line-by-line update on Executive-led actions right up to the end of June. Today, hopefully, we will pick up on the key actions and things that may not have been covered in that briefing.

I think we are all aware of the key issues affecting the sector. Before looking at specific actions in the update, I want to revisit the context of the Agri-Food Strategy Board: where we have come from and what we have been doing. The board was appointed to oversee a broad strategy for agrifood in Northern Ireland and to look at a long-term sustainable outcome.

The production of our report and, probably more importantly, its implementation have taken place against the backdrop of unprecedented volatility in our industry. Most of us in the room and, certainly, the people I relate to in the industry have never seen a period of volatility like the one we have come through over the last few years. Even this year, the trading environment has probably been the most difficult that we have experienced in many years. Common agricultural policy (CAP) reform and wider issues clearly impact on agrifood, and the sector is much more affected by volatility throughout the world than most people appreciate. This change has had a significant impact on the sector, mainly on producers and farmers rather than on processors. You will all be aware of the dairy crisis. Probably the impact on other sectors, such as beef or sheep, has gone below the radar. Dairy gets a lot of airtime, but most other sectors of the industry are affected as well. In the course of the Agri-Food Strategy Board's term — the last four and a half years — there has been a major impact on the trading environment of every sector, which, as I say, is unprecedented.

We were conscious, in making our recommendations, that we were not looking for a short-term programme; we were looking for a long-term strategy of integration across the industry and a single supply chain. One of the straplines to come out of our work is the need to establish and to talk about a single supply chain. I know that you will all be aware of the factors in the background, but it is important to reiterate them, particularly when there are so many new faces around the table. Our objective is structural change in the industry as we look forward into a changing environment — recently, we have experienced change that, frankly, we would never have dreamt of four years ago.

The Agri-Food Strategy Board has been in existence for four and a half years. It is fair to say that the major elements really started to come into play only in 2014, when the Executive accepted our recommendations. We have been vocal about our frustration at the speed of change and implementation. Nevertheless, a lot of things have been achieved, and most of the key actions in Going for Growth are in train. We knew that some of the schemes would be particularly difficult. The major element of our programme was the farm business improvement scheme, with a £250 million support package for farming, which is a complex arrangement of schemes and is now coming forward into a much-changed environment from the one that we had anticipated at the start. It is clearly in a much more difficult position; nevertheless, it is key. It is worth noting that, if we had moved much faster, many of these things would have been implemented and successful by now.

The industry continues to grow. The latest statistics that we have from last year show that it was worth £4·6 billion. It is slowing down, and part of that slowdown is deflation in the industry. Whilst we produce the same volume of output, it is attracting lower prices today than it did in the past. We continue to grow and will continue to grow.

Our number one recommendation of the farm business improvement scheme is, as you know, scheduled to go public in the next few weeks. We know that that goes into an environment in which many question the ability of the industry to invest. However, we also know that many people are willing, able and keen to invest and to keep their industry going, but we recognise that many farmers lack the confidence to invest. We look forward to that starting to pick up, probably over the next few months.

We are particularly pleased with the farm business development groups. You will be aware that some 3,000 farmers have signed up to those. The scheme was oversubscribed from day one. In fact, over twice as many farmers as we had anticipated joined that scheme in the first year. We are well pleased with that and see it as an avenue for introducing change right through the grass roots of the farming industry.

We welcome the progress made on the capital element of the farm business improvement scheme. We need to get it out there as fast as possible. Alongside that, I am absolutely confident that you are all aware that we have been pushing for a strategic marketing organisation. I will steal some of your questions by saying that we are very frustrated by the time that it has taken us to get there. We have had significant political support but have not been successful in getting it established. We are working through a business plan with officials to fund the organisation, and, within that, we have made provision for market access capability because it is the biggest item that we have on our ticket. We need to have markets available to us throughout the world to which we can ship product. Whilst we continue to work through DEFRA, as we have to as the lead, the fact is that we are under-resourced in representing ourselves and Northern Ireland in that sector. We see the marketing organisation as conducting much broader business support activity, including, as I said, market access activities throughout the world.

Part of that will clearly be trying to develop a marketing message for Northern Ireland: what do we have to sell that makes us unique? We have all the elements that make our story very good, but we have to have that in place. I think that most of you are aware that, as part of the whole thing, we have developed our Food Fortress process, which guards inputs to our farming livestock. With Queen's, we have developed the Institute for Global Food Security, so. if you like, we have the big brains, the technology and the livestock control. We are also pushing the land management strategy, which should come forward in the next number of weeks. There are many strategic issues coming to maturity only now that put Northern Ireland in a very good position to market Northern Ireland plc across the world. We have also been looking at genomics. We will no doubt pick that up in the questions, and that is also a key item.

We have been successful in establishing the Agri-Food Quest centre in Queen's University, where we are actively involved in commissioning agrifood research. At the moment, we have specific projects running at about £1·5 million of investment. That progress is below the radar for many people, but it is real and it is happening out there.

It would, of course, be unusual to have a meeting of this nature and not comment on the effect of Brexit.

We are, like everybody in our economy, looking at the implications of Brexit. What does it mean to us? I think that it is fair to say that the outcome was a surprise to us. We are in a funny place, and we are looking actively at what it means for our industry and the threats and opportunities that it presents. Agrifood is unique in the world. Most countries, particularly our biggest competition, operate support mechanics for their agriculture industries, so we have to look now at whether this changes any of our key recommendations. Frankly, we do not think that it does. However, we have to look at the implications of Brexit for Northern Ireland plc and how we participate.

Our agenda at the moment is simple: to ensure that you, the rest of the politicians and the negotiating team are fully briefed on what it means to the industry and what we need to do to protect ourselves going forward. It is critical for us that you recognise that we operate at very high standards in our industry and cannot afford to open our borders to countries that do not operate to the same standards or play by different rules. It is important for us to see how this works and how we can support Northern Ireland agrifood in such trying times.

I understand that Brexit is not unique to agrifood, but it is important to reiterate the point that it has more implications for agrifood than any other sector of our economy. I do not need to labour that point; you are very aware of it. We will work with DAERA. We are on the consultative committee with DAERA to make sure that our voice is heard and that we understand and strengthen the position as much as we can.

Thank you for listening for those few minutes. I skated over a lot, but I welcome questions.

The Chairperson (Ms Dillon): Thank you very much. I appreciate you coming along and giving the presentation. I am sure that all the members will have plenty of questions. How many times has the supply chain forum met?

Mr T O'Neill: Twice, and we plan to have another meeting just after Christmas. The supply chain forum has been what I call one of our "soft" activities, through which we try to build up the relationship right through the supply chain, between farmers, processors and everybody. We have had meetings on that, and it has been very positive. I have to say, not to steal Tesco's words, that "Every little helps". It is trying to bridge the suspicion in the industry through building trust. As I have said, we have two programmes already, and we will follow up with another one in the new year. We have had discussions and workshops covering all sorts of things from contracts to specifics such as livestock genetics and so on.

The Chairperson (Ms Dillon): Have actions come out of those meetings, or has it been more about trying to have discussions and conversations, trying, as you say, to build trust?

Mr T O'Neill: There has been an element of both. We have looked at putting together model farm contracts for long-term agreements on livestock and so on. There has been fairly useful open discussion. For instance, we bring in people to present to us what is happening in the industry, what the market requirements are and so on. It has been a general education in our market requirements, but you cannot have such meetings without getting into much more difficult areas, such as the price of beef or milk. Whilst that is not within our remit and we cannot have those conversations, it leads to the structural questions about whether we can have long-term supply contracts and what form they might take. We have had specific workshops on those topics. We have had people looking at model farming contracts and, for instance, at support mechanics in America. Perhaps one of the guys will pick up on that. Ian is probably more familiar with farm mechanics than I am. Would you like to add anything to that, Ian?

Mr Ian Marshall (Agri-Food Strategy Board): Yes, certainly. The supply chain forum has been critical because, as Tony rightly says, it is about building up trust. Remember that we operate in an industry that is hugely fragmented, with many independent players functioning in the supply chain. Historically, we have not had a good track record of communicating market information back down the supply chain or information about requirements, specification and raw materials back up the supply chain. The supply chain forum has been a starting point, but it can only be a starting point in this process. From the inception of the Agri-Food Strategy Board, the notion of a single supply chain was born and that still stands today. That is more important than ever because, in the absence of enough market return from produce to make it very profitable, we have to look at ways in which we can be more efficient and better at doing what we already do. It is critical that we get communication, trust and integrity in the supply chain.

Mr T O'Neill: I can give you some simple examples. There is a message to farmers to grow the biggest livestock that they can, which makes sense if you think about it. If a farmer has big, heavy cattle, he will naturally assume that he will get a better return from it. However, we have been showing them the effect of that and what happens when we have to package the meat for a supermarket. I am defending my industry at the moment. Every one of you knows that, for the supermarkets, steak always has to be the same size, the same weight and the same price. Unfortunately, livestock do not come that way, and, if you get very big ones, you have to cut pieces off to make it fit the packet. The yield, the financial return and so on are not good. We do simple things such as putting the product from such livestock into packets of different weights, the same as you see in the supermarket, and putting them on the table for farmers and saying, "This is what the argument is. It is not somewhere else. We have to make this fit. For a 350 kilo animal, this is what it looks like in the packet. For a 450 kilo animal, this is what it looks like in the packet. It does not fit". We have done practical and simple things like that in workshops to try to give a better understanding of why we have specifications and what they are all about.

Mr Trevor Lockhart (Agri-Food Strategy Board): In the lifetime of both the supply chain forum and the Agri-Food Strategy Board, the sector to which it has been more difficult to get across this idea of integration is the ruminant side: dairy, beef and sheep. The easiest one of those to address is the dairy side. In the lifetime of the conversations that we have been having, we have seen two or three of the processors who purchase milk in Northern Ireland offering farmers the opportunity to commit part of their production for a period at a price identified at the time. That is the beginning of a journey on which, over time, the supply chains will develop in a more sophisticated way. I predict that it will go further in dairy first. Farmers will, hopefully, have more tools available that will allow them not only to predict price but ultimately, on the back of that, to predict their margin. That has huge benefits in engaging with banks and those supplying finance to them. It is a journey, and we have seen progress, particularly in dairy. Tony mentioned some of the challenges in beef. Those will be harder to conclude, but, as time evolves, progress will also be made there. I am confident that we are moving in the right direction, and I think that it will deliver benefits in the supply chain over time.

Mr T O'Neill: It is important to say that, arising from that, a number of us have put contracts in place. We do it almost to learn how it works. I will take off my Agri-Food Strategy Board hat for a moment to say that we, as a company, have put contracts in place for livestock. In a way, the farmers and processors learn whether it works and whether the outcome is known. The forum has been pretty successful, going by the feedback from people who have attended. However, we are very conscious of the fact that there are lots of people with different expectations of what it should do, including, without being rude, the pretty naive assumption that we could fix the prices as well.

I am afraid that we cannot do that. Whether we would like to do it is another matter, but it is not within our remit.

Ms Archibald: Thanks for your presentation. One of the things that the Going for Growth strategy has shown is that, when you have a focus, you can make progress. It has been successful in that way. There are loads of questions that could be asked, but I want to pick up on just a couple of things. Last week, John Gilliland presented some findings of the land use management strategy. A lot of good stuff seems to have come out of it, particularly on understanding how good environmental management and governance can improve outputs. Are actions being planned to communicate that message?

Mr T O'Neill: The land use strategy was one of our key recommendations in Going for Growth. We have been supporting them through the process, and Ian and I have been out with John to Brussels. Three or four Departments were out there. We have been very much involved in supporting it. We think that it has the potential to give Northern Ireland something special. I do not want to get dramatic, but you would probably all relate to a programme run down South called Origin Green. We see that as a significant marketing advantage. With our marketing body and the land use strategy, we think that we could, politely put, beat that hands down. The land use strategy is key, and we give it 100% support.

Ms Archibald: The farm business development groups are quite well established in the South as well. The discussion groups can really make a difference. People are much more likely to take on new technology and be more profitable when they are involved in them. Has there been good buy-in from farmers here to those?

Mr T O'Neill: We originally expected to put 1,500 people on the year 1 programme. We were oversubscribed: about 3,300 farmers applied. About 3,000 are active on the programme, and quite a number of meetings have already taken place. There is huge support for it in a surprising environment. You would expect farmers today to be pretty cynical about why they should get involved, but there is huge support.

Ms Archibald: Is there good feedback coming out of it?

Mr T O'Neill: Absolutely. There are lots of challenges, of course. We have to make sure that science and facts are input into those bodies. As you probably know, they tend to be self-governing. They are about what the farmers want to do rather than us writing a prescription telling them what we want them to do. We get feedback about them doing all sorts of things. We then had to suggest very heavily that they should do those things. I am talking about simple things, such as making sure that they understand the drive for farm safety. It is not something that the farmers will do naturally in one of their development groups. We are pushing to say that it should be an active part of their agenda, along with things like the specification of beef. It is an interaction, and we are trying to influence it without it becoming centrally driven and us saying what we want them to do. It is coming from the farmers, and we have had a lot of very positive feedback.

Ms Archibald: Finally, I want to touch on Brexit. Theresa May, in her speech at the weekend, commented that we will be able to make our own decisions about how we label our food. I wonder whether you have any thoughts on that and what implications that has for the single market.

Mr T O'Neill: Today, I am wearing my Agri-Food Strategy Board hat, so I am apolitical. Frankly, I think that we have made our view well known and been very vocal on this. This is a hugely challenging time for us. We would say — we are very positive about it — that agrifood has been successful despite everything. The truth is that we will be successful no matter what happens in Brexit. We just have to work harder and find ways to do things that we did not plan to do and, frankly, would have preferred not to do. We have to manage what we have today. Our single concern is that — I need to be careful now as we are moving into politics — a number of the leaders of this programme really have no empathy with agrifood. It is critical, in my view, for us to make sure that agrifood in Northern Ireland and the UK is well understood when they get to the negotiating position. The UK has not stood up against any of the demands on Mercosur or the Transatlantic Trade and Investment Partnership (TTIP) in the European negotiations. I remain to be convinced about how they will do it on a UK basis. It is extremely important that we understand the risks and do everything that we can to mitigate them.

Ms Archibald: Have you been involved in any discussions with the British Government about agrifood and the negotiation process?

Mr T O'Neill: We are involved in so many committees, it is incredible. It is one of the challenges and one of the opportunities. We are deliberately getting involved in so many things to make sure that the message is going in at every possible point that we have. We have interfaced with the Secretary of State and Ministers in the UK, and we are involved with the Confederation of British Industry (CBI). We are taking every opportunity that we have to influence the agrifood strategy and policy. The same applies here, in that we are involved in the DAERA consultative committee and the Secretary of State's consultative committee. We are in everything that we can be in to make sure that our message is heard. Obviously, we look to you to do that as well.

Ms Archibald: Do you feel that your message is being heard in those fora?

Mr T O'Neill: I think that it is being heard, but is it being understood, and will it get to the negotiating table? Time will tell, but we will do everything that we can to make our point.

Mr Ford: You are reluctant to get into politics, Tony, but I will follow on a little from Caoimhe. You referred to engagement with DEFRA and the marketing of local produce. We clearly have issues in that much of agrifood depends on cross-border trade. We also have the issue of the image of this island as being a green and pleasant place, without regard to lines on a map. Have you any thoughts, with regard to the border, on how we can keep something of that if Brexit is to happen, given that we will be overly dependent on the UK rather than having the opportunity to build North/South relationships in the European context?

Mr T O'Neill: You are probably aware that we ship £800 million worth of food to the South every year, and we import back about £300 million. There are product flows, in that most companies over the past number of years have developed an all-island approach. My company has plants North and South. In Derry —

Mr Ford: I was trying not to be too specific, but I am well aware of your position.

Mr T O'Neill: It is a fact that a lot of us have that challenge. The natural outcome of that is that we ship milk down South for processing and about 40% of our lambs go South for processing. The challenge that we face now relates to whether we bottle a potential tariff system, which is what we are doing in asking what would the pricing of the mechanics be. All of that factors in to looking at where in the British Isles your manufacturing capability is. There are lots of "what-ifs" at the moment, and the fact is that we are all working on the basis of opinion. I am not trying to be disrespectful to anybody, but nobody knows the answer. We are making decisions today on the basis of an opinion of what might happen, and it is affecting our investment decisions and how we trade. These things are not good for business. We do not like uncertainty, and we tend to avoid risk.

We are much more engaged with DEFRA than we have ever been. The Department for International Trade is gearing up all sorts of — [Inaudible.]

Unfortunately, it will take considerable time before any of these institutions learn to do the job. We may be making decisions before we have the capability to understand their outcome, and that is the unfortunate bit.

As I said, we will engage, and we will do our best to make sure that we get our outcome. That is what we are here for, but we have to understand that we are doing it in a risky environment.

Mr Ford: Thanks. My second question is probably more directed at Ian rather than you, Tony, so I will give you a slight break. I was talking about the marketing image and the options to develop across this island, and part of that has to be the issue around agri-environment schemes and appropriate ways of providing farm support that look at that issue of, effectively, urban support to farmers alongside the pure production support. Has there been any thought given as to how you see agri-environment schemes developing in that changed world?

Mr T O'Neill: I have maybe been a bit vocal on this one. I go to farmer meetings to get abused regularly. Farmers think that the rules have all changed and that it is all going to go away. None of the rules have changed, and, frankly, we do not really anticipate any of the changes being material, because we need the same controls and the same regulation to allow us to export. That is the way that the world works. We are pretty supportive of the environmental agenda other than the way that some of it has been executed, I have to say.

Mr Ford: Let us not gold-plate today.

Mr T O'Neill: I am not going to go there, but the fact of the matter is that we see lots of those things being very positive. The land management project will help that big time, and we think that that deserves major support. We would like it to go much faster than the food strategy, Going for Growth. Now that we have learned how to do it, maybe we can go faster. Maybe I should ask Ian to talk from a farmer's perspective.

Mr Marshall: Environmental concerns are in the forefront of many farmers' minds. That having been said, we have to recognise the fact that farm support is an essential part of our industry. Unfortunately and whether we like it or whether we do not, 87% of our revenue comes from support. We are not unique in that, because, in most developed economies around the world, you either support and subsidise farming or you ask the consumer to pay more for food at the supermarket. That does not change no matter where you are in the world.

That having been said, as Tony referenced, the land management strategy is a huge opportunity for us to really look at how we manage the environment and manage our land, remembering that 30% of our land is rented out in an annual conacre arrangement. We need something in place that gives a bit more certainty on that and gives longer-term arrangements where people can invest and reinvest in the land and manage the land, first, to be better and more productive and, secondly, to be farmed in an environmentally sensitive way. I think that we have the building blocks with the land management strategy so that, if we implement these initiatives, we go back to some of the basic principles of farming. Remember, our soil is one of our best and biggest assets, and, if we manage that well and properly, we can be more productive, more efficient and better environmental custodians.

Mr Swann: Thanks, gentlemen. Tony, going back to what you said about having lots of challenges, what are your main challenges? If this Committee could remove or tackle two of your main challenges, what would they be?

Mr T O'Neill: You are really putting me into a political arena now.

Mr Swann: No, I am not. I am just asking you.

Mr T O'Neill: It is actually not politics, you will be glad to hear. We find that, generally, we have widespread political support in Northern Ireland across all parties. What we have is a huge inertia in the machine to actually do things. My simple request is that, when we make a decision in this fine Province, we find a way to make things happen quickly. The Agri-Food Strategy Board is a classic example. We are four and a half years or five years into a programme that, if it were in industry, we would have done it in a year. Everybody, and I mean everybody, says that this is a good thing to do and that we want to do it, but the machine then moves into gear and goes in a funny way in that they all work very hard and it takes forever. We need to remove the fear factor, frankly, from our public sector of the Public Accounts Committee. Everybody prepares for the Public Accounts Committee before they do the project. They do two projects at once; one to implement it and the other at the same time preparing their defence. Our Public Accounts Committee, I think, has become our greatest weakness.

Mr Swann: As Chair of the Public Accounts Committee, I take exception to that.

Mr T O'Neill: You drew me into it. [Laughter.]

Mr Swann: We are actually there to ensure that there is value for money rather than a waste of money. That is a get-out, if you are preparing the civil servants' defence for them rather than looking at the strategy board's failure to deliver. You talked about the machine —

Mr T O'Neill: I would like the opportunity to talk to you about that.

Mr Swann: Are you honestly saying that what is holding up industry and the Agri-Food Strategy Board is our civil servants and their fear or risk aversion?

Mr T O'Neill: There are a number of different bits to that, but I would say that that is the biggest single thing.

Mr Swann: So, it is not the Public Accounts Committee. Is it the fear of failure or something different?

Mr T O'Neill: I am not sure that I would talk about the fear of failure. Everything is judged against having to go to the Public Accounts Committee and justify it. So a huge amount of time and effort goes into preparing for something that may never be challenged. We should ask the Public Accounts Committee to go in front of them and talk about the food strategy board, and we will go with you.

Mr Swann: I think that you actually need to go and talk to the head of the Civil Service.

Mr T O'Neill: Possibly.

Mr Swann: More so than worrying about what the Public Accounts Committee does. I am happy to have that conversation, Tony, I can assure you. I am disappointed that it took you until now to raise it, if you think that it is a problem.

Mr T O'Neill: I can assure you that it has been a conversation in many, many places.

Mr Swann: But it has not been had with the Public Accounts Committee.

Mr T O'Neill: No, because —

Mr Swann: Why?

Mr T O'Neill: I am not sure how we would do it, to be honest with you, but I would welcome the opportunity.

Mr Swann: You have taken the opportunity now, and I will certainly follow it up with you.

Mr T O'Neill: Thank you.

Mr Swann: To go back to the marketing board that you talked about, you said that there was political support but stalling, so I suppose you are going back to the civil servants again. It was announced in 2013 and launched officially in 2015, and the Minister mentioned yesterday that it should be in action, hopefully, soon, which is 2017. You are indicating that the business case seems to be the sticking block. Is that what you are going back to again — the fear of the Public Accounts Committee?

Mr T O'Neill: The single item on this agenda is not quantum of money — we would always accept that there is a debate on money. The issue is that we have all agreed that this should be as commercial an enterprise as possible, with — let us call it — "appropriate controls on finance". It was agreed with the Ministers way back that it should be a private sector organisation with public money to fund it. That is where the issue arises of how you put public money into a private sector organisation because, because, because. It has been challenging the system to say how we can do this with light-touch controls, which is what I would ask for. The officials have been tasked by the Ministers to prepare a paper for them on how they can do it. That is in process. The detail of the plan has been debated for 12 months now, and the stumbling block is how we fund it.

Mr M Bradley: You touched on your promotion of Northern Ireland worldwide, and you touched on a couple of questions that I was going to ask about the cross-border market and the UK market. In light of all the negativity around Brexit, do you see any positivity in new markets opening up for the farming industry? The biggest complaint that I get in my area is about farmers not getting a fair price for their produce. I know that you cannot fix prices, but is there a way of looking at new markets outside the existing EU through your agrifood forum?

Mr T O'Neill: The bit that we have majored on in livestock — I do not think that I am teaching anybody in the room anything new — is that your value depends on having a market for all of the bits that come off the animal. The UK classically eats about 60% of a chicken and that figure is even less for beef and lamb.

We need to have markets that will consume all of the component parts when you take an animal and cut it into pieces. That means that you need those markets available to you. That is where the real value comes into the livestock equation. It is easy to say that we should get really good prices for an animal, but that is where the value really comes into the equation. It is critical — I am not telling you anything that you do not know — to have the markets to buy those components, otherwise, not only do you not sell them but you have the cost of disposing of them, which takes value out of your livestock. That is the single biggest thing.

We operate in a strange world in which many of our fifth quarter products are sold around the world on the grey market. That is not a place in which we as businesses can plan, because it means that you are not getting value for those. You are paying someone who is effectively a smuggler, to be blunt. They are buying them at a silly price because they can trade them to some of those markets through the back door. The fact is that that kind of business is switched off very often as officials crack down on smugglers. That has huge effects on us, but it is outside our control.

Mr M Bradley: Thanks very much, Tony.

The Chairperson (Ms Dillon): I will follow up on that. Obviously, Maurice is asking about the opportunities to get into other markets now that we are out of the EU. Concerns have been raised with me by a number of companies about opportunities that were starting to open up but which may now be affected by Brexit. For example, there is the whole issue of getting pork into China. A paper on that is apparently sitting on somebody's desk in China and just needs to be signed off. There is a fear that, if that is not done quickly, they will have to start the whole process again. There is also a fear that the change, whilst it has not happened yet, may force them into the position of having to start over again. I think that is a concern.

The same industry has concerns about the fact that, although, at the minute, all of the ribs going America, whether those come from the North or the South, are treated the same — everything goes; it does not matter where they come from, and there is no issue raised about that — in light of the referendum result, that could change. That would have a massive impact on an industry that is already under strain and under pressure, as you said, as are all agri-industries. We know, however, that pig farming is under particular pressure. It does not get the same media attention as other sectors, but that does not mean that it is not under the same kinds of pressures. Do you see that as an issue? Have you looked at or addressed it in your discussions or conversations?

Mr T O'Neill: It is an issue. Sometimes, it is a bit difficult to decide which hat I am wearing. Obviously, we have a pork business, and we will have eight Chinese in our plant in Ballymena on Monday. Both customers and officials are trying to get through the logjam. The fact is that, whilst it is important to us, it is a relatively small thing in China. Market access will be more and more important to us. The dynamics may well be more challenging, because the natural place to go for new trade deals is the Commonwealth countries. That is the easiest thing for relationships and so on. New Zealand and Australia are classics. I happen to be the UK's biggest importer of lamb from New Zealand. Farmers are not very happy that I do that, but the fact is that, if we do a trade deal with New Zealand, that could open up even more lamb to the UK. Some of the what look like relatively easy trade deals to do could actually be very negative for agrifood. That is back to my key point about the fact that we have to try to identify and be aware of those and look at alternative options.

Mr McMullan: Thank you for your presentation, Tony. In light of what is happening and looking forward, with some of the fears and some of the things that we are talking about, including what you said about exporting and how opening up markets in other countries could have an adverse effect on the home market, do you think that we need to revisit some of our targets in the Going for Growth strategy? When they were brought out, they were ambitious and good and all the rest of it, but, because of what is happening now, we think that we need to revisit some of them.

Mr T O'Neill: I do not. I will ask my colleagues to contribute as well. The strategy and its elements are as valid today as they were four years ago. It may take us longer to get to the growth numbers that we asked for or expected, because the market has become more difficult, but the direction of travel and everything that we have done to underpin it still make sense. I hope that, if we join up as Northern Ireland plc, we will still hit those targets in the timescale. However, even if it takes us a year, two years or five years more, we are still going in the right direction and doing the right things. I do not challenge the fundamentals of Going for Growth.

Mr McMullan: There are payments for the cost of production in England that we do not get here. If we ship everything out to the UK market, and if we are then batting against New Zealand in exporting beef and lamb into the country, we will be at a disadvantage to the British farmer unless that is rectified. That will help to guarantee a price for the farmer here. At the minute, that is not guaranteed. Do you see that, in itself, as being part of the pricing structure that we should look at in any negotiations that we have?

Mr T O'Neill: We need to be very clear that we need to be competitive in our own right. The market has changed in the UK, with the national living wage and all the things that have come into play. It is fair to say that, a few years ago, Northern Ireland was considered to be a cheap place to produce food. Livestock, labour and the environment were cheaper. Those things are no longer the case. Our competition today is in the UK first and overseas second. We need to be competitive in our own right. We need to consider whether we are playing in the same match as the foreign countries, or the countries trying to ship product into the UK, and whether we are applying the same standards. I use simple examples. We have smallholdings with 10 or 15 animals. I have changed my allegiance — I am no longer in a Brazilian company — but when I was in Brazilian ownership, my boss had a ranch with 10,000 livestock. The difference in terms of our market and competitors is huge, so we need to be different. We cannot meet them head-on, so we need to be different. We need to apply better and higher standards, and we need to understand how to meet that. We need to be efficient within our shores and in our competition. Whilst we all say that we are one, I go to companies in Scotland, Wales, England, Northern Ireland and the Republic of Ireland, and every one of those areas competes against us. It depends on how you look at your competition. We need to be focused in the next few years on being as efficient as possible and then consider what the external market will do to us.

Mr McMullan: That is part of what I asked you. If we are driving towards that, there needs to be equality in pricing. How do we get the equality in pricing for our farmer here with the farmer in Britain? We are driving towards production here, and, as you say, we have smallholdings.

If we push that mantra of production, we will end up going towards a two-tier system here in farming. That is a longer conversation that I could go into, but I will not go into it today because I do not have the time for it here. I think that everything that you have just said is fine, but you have not told us how we can get equality on pricing if they have a cost of production price in the UK that is paid by government. Now, legally, if you introduce it here, it could come out of the block grant. That is something that, I think, you have to look at or that has to go to the negotiating table, because if we are going to compete here, we are already competing down the ladder from all the rest. If we are going to compete with New Zealand, America and all these other countries that you are opening up, we are at a disadvantage. Our big issue here is pricing. We export 60% or 70% of what we produce. As you always say, we produce more than we can use. We have to make sure that we get a fair price. It is not about exporting; it is about getting the price for the farmer. Is he getting the right price for producing the product? At present, he is not.

Mr Marshall: Cost of production is a very dangerous route to take. At the moment, we sit in one of the most lucrative markets for red meat in the world in Europe and still our farmers fail to make a living and a good return on their investment. The important thing, I believe, from an Agri-Food Strategy Board perspective, is that we have to be market-focused. That is the important thing. Nine times out of 10, the beef, lamb and pork that we produce in Northern Ireland goes into the same markets as our counterparts in the UK. The Agri-Food Strategy Board has always been about maximising return to the industry from the production of food. Our focus on farming and primary production is always on efficiencies. You need to know efficiencies. You need to know your costs of production. For a farmer, it is actually not about the headline price: the most important thing for the industry is the margin. That is the key in this. It is not about what the milk, beef, lamb or pork is worth: it is about what margin there is in it. When we look at farmer efficiency, we have a responsibility as an industry to focus on our efficiency and cost of production and to know it, which is a starting point.

We also need to focus on fairness in the supply chain. Reference was made earlier to the single supply chain. That is critical. We need fairness and a degree of sharing of profits through the supply chain. That happens by virtue of communication, trust and integrity being built into the supply chain. Ultimately, we would like food to be worth more in the market, but we have to be focused on the market. The market is the market. We, as Northern Ireland plc, will not change the market for food production.

Mr McMullan: Could I just finish by asking you one question? Is the farmer here getting a fair price for his product compared with the rest of the UK?

Mr Marshall: Farmers are never getting enough for what they do —

Mr McMullan: I did not ask you that.

Mr Marshall: Northern Ireland farmers will always tell you that, to a man.

Mr McMullan: No, no.

Mr T O'Neill: You are being disingenuous. I can answer that question; he cannot.

Mr McMullan: Well — OK, then.

Mr T O'Neill: Well, I have the advantage, remember: I buy livestock in every region of the UK. I can tell you right now that I can buy livestock in the UK cheaper than I can buy it in Northern Ireland. Nobody in this room will actually believe me because your assumption is that the Northern Ireland farmer does not get as much as his friend in England.

Mr McMullan: I did not ask you that. I asked you whether you think that the farmer here is getting a fair price for it. I did not say that he was not.

Mr T O'Neill: I will tell you what I think.

Mr McMullan: That is all that I am asking you.

Mr T O'Neill: You should know that I have been known to think a lot.

Mr McMullan: Just tell me this: is he getting a fair price?

Mr T O'Neill: I do not believe that the farmer is getting a fair price. I do not believe that the processor is getting a fair price. That is a straight answer to the question.

Mr McMullan: Who is getting the price, Tony?

Mr T O'Neill: Well, the truth of the matter is that the supermarkets get a margin. They always get a margin. The question really is this: is the customer paying enough for the product that they are getting today? The truth of the matter is that they are not.

Mr McMullan: We have a supermarket-driven economy.

Mr T O'Neill: We have and we have had it for years. You know that. I have been on that soapbox for a long time.

Mr McMullan: We are at a disadvantage here when four supermarkets are taking in three quarters of the income of the food market at present. The four supermarkets take in three quarters of the money that is spent on food at present.

Mr T O'Neill: That is correct.

Mr McMullan: How will we have a fair, costed price for farmers here unless we do something about it? That is the point that I am putting to you, Tony.

Mr T O'Neill: I understand that, but the fact of the matter is that we have to accept that the cost of food has to go up. The CAP and the system that has been built for many years has supported not the farmers but the cost of food. People are not paying enough for food, and there is this whole thing where the support mechanism that was intended for farmers has actually been eaten up over time by the retailers. It has not supported the farmer, and it has been transferring into the retail chain. That fundamentally has to change, and it is changing; it is just changing too slowly. It genuinely is changing. There is no doubt that the supermarkets are now realising that they have gone too far. They have to find a way back, and I do not think that they know the way back.

Mr McMullan: We will have to try to lead them back.

Mr T O'Neill: Absolutely.

Mr McMullan: That is your job.

Mr T O'Neill: We can show them the way. You can invite them up here and encourage them to go that way.

Mr McMullan: We will. OK. Thank you.

The Chairperson (Ms Dillon): I think that we probably just need to be a wee bit careful on that. We are already saying that people in deprived areas are less healthy because they are not eating properly. I have to say though that you can get your food more cheaply if you go to a farmers' market. There are two sides to that argument.

Mr Anderson: How do I follow that? Thanks, Tony and your team, for coming along. I will continue the theme of Brexit, and why not? It is a big topic at the moment. We have heard so much talk about Brexit since the referendum. Most of it is about the negative impact or negative effect. We have talked this morning, but do you not think that we need to look at and talk up the opportunities? I have said this in previous meetings. We need to look to and talk about the positives and the opportunities that may and should arise. I believe that. You touched on New Zealand and other countries and about the setting up of trade deals with those countries, which may have an impact on the market here. We have to get that balance right. Whatever deals are set up have to have a good balance for us. What is your opinion on that?

Mr T O'Neill: We have to forget about the vote. The vote is irrelevant. We have to manage our position in the environment that is presented to us. I made the point earlier that we are good at agrifood, so we will come through this regardless. It may be more difficult than we thought, and it will present different challenges from those that we thought it would. Frankly, it will present challenges that are different from those we even know of today, because we are going into unchartered territory. My frustration is dead simple, and it is that we will spend a huge amount of our energy managing through this situation rather than building and growing what we know today. In 10 years' time, it may be that we can sit back and say that it is a better answer; I do not know.

My challenge today is this: how do we get certainty in our industry? I mean no disrespect to anybody, but for the Treasury to say, "We will guarantee your system until 2020" is meaningless, when everyone in this room knows that it will not happen until 2020. So the Treasury did not actually give us anything. It gave us no promise that means anything. My call would be for Treasury to say, "We will underpin these programmes for 10 years", so that we have time to manage the change and know what we have to do.

We will find opportunities in this, and, without getting too smart, all of us today are looking at what this could mean. Multinational companies are looking at where they produce their goods. We are looking at where we produce our goods. I made the comment earlier that 40% of our lamb goes South. I am a lamb processor. I am looking at increasing my capacity to process those lambs here. If the tariff goes up to a certain level, it becomes economic for me to do so. Now, farmers will not be happy about that. Ian would say, "You have one or two processors". Things like that are opportunities for companies today, but they are challenges in terms of how you actually make that plan. If I invest now, and in two years' time the thing is not what I think it is, what am I doing? We can look at local production and at where we produce in the UK and Ireland; and we will do that. That will open up lots of questions and possible opportunities and challenges. If we say, as UK plc, that we need to rebalance our production, the question arises of whether the Government will come in and help to reshape and rebalance that production capacity.

Are they going to help investment in processing plants across the UK to actually displace some of these imports we are talking about? There is a huge challenge for all of us, but some of those things will be positive. All I am saying is that, for agrifood, this presents a much bigger challenge than for any other sector in our economy.

Mr Anderson: At the start you said we are good at what we do.

Mr T O'Neill: Absolutely.

Mr Anderson: That is a good starting point to move forward from into the future and get away from the other things we talked about, such as fear factors. I think we have to move to a situation that has positives and ensure that we feel confident in what we do in going forward. I and others believe it can be very much to our benefit. Do you think that, at the moment, too much focus is being put on — maybe you do not want to answer this — negative impacts instead of the positives?

Mr T O'Neill: I will ask the guys to come in on this. I suppose there is a Northern Irish characteristic of tending to be rather negative. It is a natural instinct, and I have more natural instincts than most. You have to understand the risks before you do anything to manage them. If you work on the simple basis of saying, "There is no threat here", you do not do anything about it. We have to recognise there is a threat here, and we are smart enough to know we have to do something about it and will do something about it. We can deliver a positive outcome, but we have to understand that. Frankly, all you guys have to join with us because this will require joined-up working. It will require government support in restructuring our industry because we will have to restructure our industry.

Mr Anderson: At the start you touched on the farm business improvement scheme and the ability to invest by farmers. Do you think we and the farmers have the ability to get involved and invest in the scheme?

Mr T O'Neill: We actually know farmers who are ready to go and are waiting on this programme to open. We know there is an appetite. There are probably fewer people with that appetite than we hoped due to the circumstances we face today. There is a confidence factor, and as the confidence comes back over the next period of months or years, as the case may be, we will find more people stepping forward. We know there are people who have actually been harassing us saying, "When does this programme open?" There are still very positive people out there, so we might have negatives, but we also have opportunities.

Mr Anderson: That is a very positive point to finish on. Thank you, Tony.

Mr Irwin: I apologise for being late and for not hearing your presentation. Tony, you mentioned tariffs on a number of occasions in your answers. It seems strange that Europe or the UK would want tariffs. For instance, we import much more agrifood than we export. The Irish Republic exports massively to mainland Britain. Do you think tariffs are inevitable? I would think the Irish Republic certainly does not want tariffs. The UK does not want tariffs. Will it happen?

Mr T O'Neill: There might be 25 other people who do want tariffs. I do not disagree with you. The UK and Ireland do not want tariffs, but I do not see how they will come out without them, to be blunt. At the moment, we are working on the assumption that there will be a tariff structure in place, and if there is not, we will be happy.

Mr Anderson: If there is a tariff structure in place, would that not put Northern Ireland in a better position to export to mainland Britain because it would create a more open market?

Mr T O'Neill: It could do. You could displace the 40% of imports we bring in. On the other side, and maybe you did not pick up this bit, all the signals we have at the moment suggest that a tariff framework would be a more likely outcome for the UK. You could find the tariffs on imports disappearing. Today, beef from Brazil would probably be losing a tariff of about £2 a kilo. That is a hell of a challenge to the UK beef industry. It is as high as that: £2 a kilo on beef. There is a long list of things I could tell you about tariffs, but, today, that is the protection Europe applies to beef. I do not know whether you were here when I made the comment on TTIP and the American trade agreements. The UK did not resist them, so the same people could be sitting at the table doing the new trade agreement with those two countries, and they are quite happy for zero tariffs for agrifood as long as they get cars, financial services, insurance and all these other things.

Mr Irwin: In other words, you are saying it is all down to negotiations.

Mr T O'Neill: Absolutely.

Mr Irwin: Like me, Ian farms, and we have all talked about fairness in the food chain and all the rest. Processors seem to be making a healthy profit, and retailers are making big profits. It is not only that many farmers are not making a profit; meal companies are owed millions more than they were two or three years ago. Farmers have built up more and more debt. Something more needs to be done. We have all tried to look at other ways. Is there anything more you believe can be done that will help? I am going to put another question to you. Northern Ireland receives 80% of its income from European subsidies, so why do you believe many of those farmers voted to leave Europe?

Mr Marshall: Your first point about profit or lack of profit in a supply chain is interesting because, as much as the farmers do not believe they receive enough for what they produce, there is not a huge profit in the supply chain at the moment. Food deflation in the UK has been the order of the day. Trevor can speak much better for processing, but, at the moment, no matter what sector you are in, processing is about a large turnover and a small margin. That is the reality of it.

Historically, if we look back at the legacy issues in farming, we see we produced a product and then wondered who wanted to buy it. That leaves a farmer in a very bad place in the supply chain. We believe that, as we move forward with this discussion, if we accept that the market should dictate what you receive for what you produce, you should be market-focused.

The disadvantage of agriculture is the long lead time, so the time from we start the process to having a product on a supermarket shelf is a long lead time, and it leaves us at a huge disadvantage. However, the reality is that we must be focused on the market, and if we continue to produce things and wonder who wants to buy them and what to pay them, the situation will not get any better, but I believe that is changing.

I believe the younger farmers especially who are coming through will not accept the long hours, difficult conditions and risky investment in the absence of any significant return, so it can and will change. We are fortunate in Northern Ireland in that we have a small industry. Geographically and demographically, we are small. We can change this. We know all the people involved in primary production, processing and retail, and we can drive some of this change through, but we need everybody working together on this one.

Mr Irwin: I saw a headline in the paper a couple of months ago about the beef barons of Ireland. We are told there is no money in processing, but they seem to be able to buy factories and processing plants for millions on top of millions.

Mr T O'Neill: I simply cannot let that one lie. I do not think it is appropriate that I come here to have a barney with you, but I have to respond. Ian made this point dead simply: it is a low-margin industry. You should have been in the farmers' meeting in Dungannon the other day when they gave me abuse. The fact of the matter is that, in processing generally, the outcome is a 2% margin. If anybody thinks a 2% profit margin is the place to go to be a beef baron —

Mr Irwin: I am talking about the paper headline.

Mr T O'Neill: Let me tell you this: I use the same term. I just do not know how to become one. The challenge and margin are there, and we made the point that the cost of food needs to be realigned, if you like. The only point I will make is that we would be foolish not to accept that we have two agendas running in Northern Ireland. You have two agendas in this room. We have an agenda saying we want to produce food at the right price, and we have another that says we want to look after the countryside.

Those are two different things. We need to understand they are two different things. Ian will get excited now, because when I made this statement the first time, the farmers' union hung him out to dry. We need 5,000 or 6,000 high-volume production farmers to produce food competitively, and we need 15,000 or 20,000 farmers to look after our environment, which we all want to do.

Do not get me wrong: every one of us — processors and people on the other side — wants Northern Ireland plc to be a place where we can live and look after our children with a good environment and all the rest of it. However, we have to accept that, if we are going to produce and sell food in the market, we have to compete. Nobody owes us a margin; nobody will pay us a price that is uncompetitive. We have suppliers that produce beef today in Northern Ireland ranging from about £2·50 a kilo to £6·50 a kilo. What would you suggest I pay them? We have to understand that the market will drive us, and we have to compete in that market. If we cannot do it here, it will be done somewhere else. It is not in our power to tell the supermarkets or the customers what to do. Sometimes we would like to, I have to tell you.

Mr Irwin: Do you accept that there some very efficient farmers still making a loss?

Mr T O'Neill: Absolutely.

The Chairperson (Ms Dillon): I am going to ask you to keep the responses short and sharp because we have gone over time. I have allowed it to go over time, to be fair, because I think this is important and I want every member to get an opportunity to ask questions and have them responded to.

Mr Poots: It has been interesting listening to a lot of this. On the environmental side of things, stupid legislation like having to get permission from the Department to clean out a sheugh or cut an overgrown bush that is more than six inches in diameter is not good environmental legislation. It is a nonsense, and it is one of the reasons why farmers voted to get out of Europe. I hear what Tony says, and I do not think the farming population are stupid people. I do not think they bought a pig in a poke. They are used to buying livestock, but they do not tend to buy pigs in pokes. I remind him of that.

Farmers are not being paid enough for their produce. The plant farmers could get considerably more money for their livestock if they were selling them in Scotland than they are getting in Northern Ireland. Indeed, milk prices are rising more quickly in the Republic of Ireland than they are here, in spite of the weak euro. So, do not put headlines in the paper saying, "We want more milk". If you want more milk, pay for the blinking stuff, because people cannot continue to produce it at a loss.

You are talking about working on large volumes with small margins. At the moment, farmers are working with no margins, so give them some of that margin and then come looking for the milk. They will be very happy to produce it for you and try to earn a pound or two. When you are producing something at a loss, do not ask people to produce more of it.

The Chairperson (Ms Dillon): I do not know whether that was a question or a statement, to be honest, but if anybody wants to respond. [Laughter.]

Mr Poots: I was hoping to draw a response.

Mr T O'Neill: I am not sure how you could respond to that. I commented that I do not think farmers are getting an appropriate return, but I will caution that by saying you cannot apply that universally. They have to be efficient and competitive. Your point is that there are farmers who are very good, but today they are in trouble because they have a cost base that is killing them. That is probably because they invested heavily and are carrying an overhead. As I said, we recognise that.

Mr T Lockhart: I will just add to that. It would be wrong to assume that the processors are not equally affected, Edwin. This goes back to William's question as well. If you wanted to buy a beef factory in the island of Ireland today you would probably get a choice of four or five to pick from because they are readily available. In the context of the ownership of our own dairy assets in Northern Ireland, they are still predominantly farmer owned. There is nobody more aware than the boards that govern those co-ops that every price available has to be paid back to farmers.

The reasons why certain people's prices move at different rates from others is a reflection of the markets in which they serve. Those people who are more committed to consumer retail products are in longer-term contracts, and the benefit of higher and improved market returns takes longer to feed through. If you are in a manufacturing market, which the Republic of Ireland is, for instance, in its market mix, and if spot markets for commodities improve, as they have done by about 25% in the last two or three months, those moneys are available more quickly to feed back down into the supply chain. Product mix is a part of the combination.

As somebody said to me at a meeting I was at on Monday night, ultimately, profit is a function of price, production cost and product. That applies to farmers and to processors. There are lots of things we talked about today that we cannot control, but there are key things that we can. We can control our product, and we can control big elements of our production costs. The farmer up until now has had little or no influence over the price he gets paid. Ultimately, through the supply chain process, the goal is to try to change that, or to at least give the farmer more visibility and predictability over what the price will be so he can make his own decisions on whether to produce. We have a lot of work we can do through the scope of the Agri-Food Strategy Board on all those elements. Whatever happens with Brexit, we will put our best foot forward and make the best of the cards we are dealt. We should focus on those bits that we can influence; that is, getting ourselves more efficient, better at what we do and producing what the market wants. Then, whatever else comes at us, we will be better placed to deal with it.

Mr Poots: The reality is that Brexit is happening. There is no point in bemoaning it if you were against it. I was for it, so I am celebrating it as opposed to bemoaning it.

The UK Government have always sought to keep food as cheap as possible for the masses. For anybody who thinks that policy will change, it will not. That may involve doing deals with Brazil or New Zealand. If that is the case, you would be looking to have that compensated at the other side of things by ensuring we get the proper subsidies.

Moving away from Europe, I think the opportunity exists to have subsidies that are based on helping us to produce what the customer wants. The customer does not want us leaving hills growing wild and getting £100 an acre for them. They want us to produce good-quality lambs and suckled calves off those hills. A farmer will not be able to do that at, say, £3 a kilo for the cattle or £4 a kilo for lambs. They will not be able to do it to make money. It is up to us to negotiate the best possible deal with the United Kingdom Government to provide the farmers with the added subsidy that will allow them to produce at the price the UK Government want to put goods in the supermarkets.

Mr T Lockhart: I will deal with one element in your latter point, Edwin, on production in the upland areas of Northern Ireland, which is typically where suckler cows and sheep are farmed. There is one element that is within our control, and that is areas of natural constraint (ANC) payments. We have an option to do that within Northern Ireland. That debate is ongoing. We can choose to pay it, or we can choose not to pay it, and there is a question mark over it in the long-term, as I understand it. There are elements within the scope of what we have within the pillars of money we have, in that we have strategic choices to make. If we are serious about keeping beef and sheep farming on the uplands in Northern Ireland, one option is to give a commitment to continue to pay that.

Mr Poots: The sheep annual premium and the suckler cow premium should never have gone.

Mr McKee: My comment is about fair prices for farmers from the livestock producers' point of view. You mentioned, Tony, cuts to packaging. It makes me wonder whether the farmer is producing livestock for the customer or producing livestock to suit the processor. Farmers, particularly beef farmers, have prided themselves for years, at the cost of a lot of money to themselves, on providing cattle with good estimated breeding values (EBVs), such as 200-day growth or 400-day growth and all those figures. It more or less tells me the type of livestock you are looking for. Another way is a Brexit without a referendum because it is not continental cattle you are after.

My main question is this: are farmers being put at a pricing disadvantage because they have large livestock?

Mr T O'Neill: Yes; absolutely. The point I was trying to make — unless you know the industry, this is confusing — is that everybody thinks the specification we have for livestock is a Machiavellian thing done by processors to stop paying farmers. It is not. The best price in our pricing process is for the animal and the specification we want. We have huge debates with everybody about why we penalise them for things that are not the right specification. That is why. We pay the best price for the animal that fits our specification and the packets I am talking about. Everybody thinks we should pay the same price for an animal that is 100 kg heavier, and we say, "We actually don't want it 100 kg heavier". The argument, if you like, is legit; everybody knows the argument, but the specification is to meet the market requirements and fit the supermarket requirements, which are to fit the packet so we can sell it at the right price to the customer. If we get it too big, it means you have loss. There is an argument that is very vocal on this and that goes all over the place. Everybody thinks you should pay good prices no matter what size they are. Unless you are making beef burgers, it has to have the natural loin that fits the packet. If you cut bits off, you are throwing them out — you are not throwing them out, but you are downgrading.

Mr McKee: So, are you saying a 14-month-old animal is more beneficial than a 24-month-old one?

Mr T O'Neill: I make the comparison that everybody in this room hit their fighting weight, I suggest, when they were 18 or 20 years old. Feeding them beyond 20 years old is an absolute waste of money. [Laughter.]

Your return on investment is abysmal. Your investment is to bring them to the fighting weight, and then that is it over. It is the same thing with livestock. We maintain animals between 10 and 15 months beyond where we should for hitting efficient production. We want to get them to the right size and weight as fast as possible and then process them. Because we have a system of farming in Northern Ireland that says, "We winter in", "We winter out", or, "We winter twice", the average age of livestock that comes into our factories is 30 months. The best result we should be achieving is under 20 months. That means the farmer makes better money and they hit the livestock weights and specifications we are looking for. That is genuine. We can do better if we work with the farmers to hit their weights efficiently, look after their health, look after their nutrition as best as possible, hit the specification as young as possible and process them.

Mr McKee: Is the farmers' union getting that message out to our farmers?

Mr Marshall: I think it is. As I mentioned, the problem with the industry is that there are long lead times. From a service date on an animal to something hanging on a hook, you have a long lead time. As Tony said, the pricing grid reflects what the market probably wants. When you are in livestock breeding, you plan for product, but, unfortunately, you do not always get it. That is nature. The reality is that, if we send out the right signals to the industry to say, "This is what the market requirements are" and communicate that message effectively, that, ultimately, should mean more profit for the farmer. That is what we need.

Mr T Lockhart: Just adding to that, it ties back to the Agri-Food Strategy Board work we are doing on information that allows us to better select genetics. Part of the answer to get us from Tony's 30 months to the 20 months is through making sure that we operate with the elite and best genetics of the animals that can convert the food most efficiently to achieve that. Today, we do not have all the information we need to get there in as fast a time as we might otherwise. That goes to the importance of the genomics, as it is called, but it is actually a broader scheme on information. One of the benefits of that is that it will allow us to make better genetic selections in beef and sheep. We have not made any progress on that in Northern Ireland in 20 or 30 years. We have made big advances in pig and poultry and significant advances in dairy cows, but we have made very limited progress on beef and sheep. We would solve Tony's challenge quicker if we invested in making sure we identify the best genetics. It is not a debate about breeds. No matter which breed you pick, the variation in genetic potential performance is far greater within a breed than it is between breeds. There are very efficient converters of Simmentals and Aberdeen Angus, and there are very poor ones. We have to try to identify the genetics, which can give us part of the answer. You then have the management, the feeding and all the other bits that complement that to make the total package.

The Chairperson (Ms Dillon): If members have any other questions they want to ask, we are not doing them now because we are already 40 minutes over time. I really appreciate that you have given us that extra time, but I think there are a lot of important issues. We could give you easily the rest of the day, to be honest.

I just want to pick up on a few points. This does not need a response; it is just stuff that is in my head. You raised some of the challenges of the referendum result. Something that probably was not touched on was the workforce issue and whether that will force some processors to think about moving south of the border; I do not know. Particularly given some of the statements made at the Conservative Party conference over the last couple of days, I have some concerns about what the freedom of movement is going to be, and that will obviously have implications for your workforce.

I agree — I am sure they will be shocked to hear this — with William, Sydney and Edwin about the fact that we need to have a positive attitude to things. We also have to be honest. If we and everybody else had been honest prior to the vote, we might have been in a different situation. The vote has been taken, as Edwin said, and we are where we are; that is it. Edwin also pointed out that, historically, the UK Government have a policy of feeding the masses with cheap food, and he is right. He also said we have to compensate there with subsidies, but, historically, the UK Government have underinvested in and taken money off the North, so I think we can be fairly certain that subsidies are a pipe dream.

Unfortunately, your job is a difficult one, and I do not think it is any less difficult than our job going into the future. I really appreciate you coming here to give a presentation and for giving us that extra time. As I say, if members have any other questions, they will feed them through to Stella, and she will come back to you in written form, if that is OK.

Mr T Lockhart: Yes.

Mr Marshall: Thank you.

Mr T O'Neill: Thank you very much.