Adjournment Debate. - Food Industry Aid.

Thursday, 19 October 1995

Dáil Éireann Debate
Vol. 457 No. 3

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Mr. Cowen: Information on Brian Cowen  Zoom on Brian Cowen  I wish to raise the question of the failure of the Minister, despite his stated objective last July, to introduce a rescue package to help the vulnerable areas of the food sector which have been very much affected by the sterling exchange rate.

The food sector has struggled against the tide of international currency markets since the beginning of the year. The Minister for Agriculture, Foof and Forestry, Deputy Yates, recognised the threat to jobs in the food sector, as did the industry itself, because of the rather uncompetitive rates we have vis-à-vis sterling at the moment. He particularly singled out our convenience food sector [902] as being at a severe disadvantage in the UK, and he stated that he was negotiating at Government level for a special package to help the sector.

These truths still hold, but the Minister's promise has not. A report issued this week by the Food, Drink and Tobacco Federation highlights the very serious consequences of the Minister's broken promises in this respect. It states that in the UK market, worth £2 billion, five times more valuable than Germany, our next largest market, we face immediate and acute competitiveness problems. Employment in both the processing and grocery sectors has been threatened, and if our UK market share is lost, the development plans of An Bord Bia and Forbairt will be largely undermined. Existing jobs will disappear and future development of the industry will be very much at risk.

We know from previous currency crises that sectors like the poultry and mushroom sectors can be very badly affected because of their almost total reliance on the UK market. In the mushroom sector, for example, Monaghan Mushrooms has about 50 per cent of the market with sales in the UK of £1 million a week. In January 1994 this company was selling into the UK at a rate of 95p to the £1 sterling. Today they are trying to compete at a rate of 102p to sterling. At a time when our inflation rate is 2.4 per cent Irish companies have endured a 7 per cent decline in competitiveness in 20 months.

Last July the Minister identified the problem, at which he was very adept, but he has not delivered on his promises. This week's report from the Food, Drink and Tobacco Federation is all the confirmation required of the Minister's inaction. The Minister has shown bad faith with thousands of workers whose jobs depend on selling into this market. This Minister can spent £1 million on many consultants in ten months in office but cannot or will not deliver on the basics. He has undermined the development of the food processing industry and is jeopardising thousands of jobs.

It is time we found out whether or not [903] the Minister will deliver on the promises he made last July. Many sectors in the industry have been awaiting with interest the outcome of the Minister's deliberations. His promises were unqualified and definite. On a number of occasions since he came into office — it has become almost a signal of how he operates — the Minister identified problems and, having looked at the options suggested solutions quickly and expeditiously but then forgot about the problem. He certainly does not deliver on the expectations he raises in order to assuage the various lobbies. It is time we heard from the Department regarding what substance if any there is in the unqualified promises given by the Minister in the last couple of months.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. Deenihan): Information on Jimmy Deenihan  Zoom on Jimmy Deenihan  The Minister did not make or break any promises. I note also that the Deputy made no suggestions for solving this problem. The only undertaking the Minister gave was to do whatever was within his capacity to improve the competitiveness and marketing capability of the Irish food industry.

As already indicated in response to two recent parliamentary questions, improved competitiveness and intensified marketing are the appropriate responses to the rise in the value of the punt vis-à-vis sterling. Generous financial assistance is available to the food industry for these purposes under the Structural Fund food sub-programme.

The food sub-programme provides for a total expenditure of £640 million of which £284 million will come from public funds, both EU and national. This is a clear recognition of the importance of the industry and the measures set out in the sub-programme are those needed for its development. These measures cover capital investment, research and development, marketing and promotion, and development of human resources.

[904] All the measures under the food sub-programme will contribute to increased competitiveness. In the context of intensified marketing — the other essential element to which I referred — the annual funding under the marketing and promotion measure substantially exceeds that previously available. An Bord Bia is responsible for the implementation of that measure and has in place a market development strategy that provides support for individual companies and for the development of the food industry as a whole. In the case of individual companies, the aim is to enhance their marketing capability and performance and grant aid is available under two separate but complementary programmes. The first of these is the marketing improvement assistance programme under which grants are available for promotions and image development, market research studies, market development plans, recruitment and placement of marketing graduates, attainment of quality standards and development of marketing skills. The second programme is the strategic marketing development programme. This applies to companies establishing a three-year market development strategy and provides financial assistance for test marketing, improved product presentation, product launch and promotion and staff development.

I am confident that the measures I have outlined are the correct ones and will allow the industry to meet the challenges both in the United Kingdom and in other markets. The resources provided under the different headings of the food sub-programme will be kept under review and appropriate changes will be considered if the need arises.

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