Wednesday, 25 November 2009
Dáil Eireann Debate
Minister for Agriculture, Fisheries and Food (Deputy Brendan Smith): This debate is particularly timely and it is an opportunity for the House to focus on the undoubted potential of the Irish agrifood sector to contribute significantly to the recovery of the economy. I express my sympathy to all those who have been badly affected by the flooding in recent days. I am aware, from my Department’s assessment, of the impact of the flooding on the agricultural community. The Government discussed the impact of the flooding at its meeting yesterday and has agreed to the allocation of €2 million for a targeted fodder aid scheme, which will complement a wider humanitarian aid scheme to assist those communities most badly affected.
This has been a particularly difficult year, with low commodity prices, currency difficulties, particularly with sterling, and weakened demand at home and abroad. The global economic turmoil continues to have its effects on all sectors. Throughout the year, I have continued to work actively at EU level on the most effective use of market support measures, notably for the benefit of the dairy sector. In view of the importance of export markets for Irish food products, the importance of such market support measures cannot be underestimated. I have also consistently raised the imbalance in the food chain with the increasing power of the multiples. The potential of the Irish agrifood sector has long been recognised by the Government but it is all the more important in current economic circumstances that it is kept in sharp focus. The Forfás report, Sharing our Future 2025, points to the importance of the agrifood sector, realising its further growth potential and maintaining its place as an important part of the national economy and of strategic relevance in food security.
The agrifood sector is operating in a dynamic environment and, to harness the sector’s potential, we cannot afford to standstill. A new direction is needed for the agrifood sector and new thinking is required on what needs to be done, as more of the same will not be enough. It is for this reason that the Department and five State agencies — Bord Bia, Teagasc, Enterprise Ireland, BIM and the Marine Institute — have completed significant work on a new strategy for the development of the agrifood and fishing sector for the period up to 2020. The Department has long been of the opinion that the agrifood sector should consistently take a medium-term view, to be renewed periodically, and the development of medium-term strategies has been a feature of our work for a considerable time, as evidenced by previous Agri Vision 2010 and Agri Vision 2015 strategies. Those who have made recent comments, with which I wholeheartedly agree, about the need for a new medium-term strategy seem to have been unaware of the advanced nature of the work on the Agri Vision 2020 strategy. The work that has been done to date has involved the preparation of a series of papers on the main sectors. These papers are almost complete. They will give an informed basis to a web-based public consultation process and request for submissions, which I hope to initiate very shortly. The Joint Committee on Agriculture, Fisheries and Food will have an important input into this work.
I take this opportunity to repeat my invitation to all those with a stake in the Irish agrifood sector to participate actively in the 2020 process, to stimulate debate and help chart the course for the future. I know there are no easy answers, but I am convinced that, unless the 2020 strategy gives concrete direction to the industry as a whole, it will be a lost opportunity to maximise the potential of the sector.
I am anxious that the Agri Vision 2020 strategy will maintain the impetus gained from the very successful Agri Vision 2015 report and action plan. The new strategy will take full account of new global and market realities, where agriculture and food are central to the major global challenges of food security and climate change. The plan will focus on the critical issue of competitiveness, the challenges from the global economic downturn, currency fluctuations, climate change and how best to maximise the opportunities arising from a growing international food and energy crops market. We also will be investing considerably in research and development over the next few years, as it applies to the agrifood sector.
The Government is acutely aware of the competitiveness issues affecting our economy and the particular effect, especially when combined with the currency difficulties, on the food industry. The broad thrust of the Government’s approach is to take every possible step to help improve our competitive base. This is not an easy process but is one being afforded the highest priority and persistence.
The establishment of NAMA is a critical step in the Government’s efforts to achieve a properly functioning banking system. We all appreciate the importance of getting credit working through the system, particularly, for example, given the ongoing credit difficulties being experienced in the farming sector. I am acutely conscious of those difficulties and I have maintained close contact with the Irish Banking Federation and the major banks, which gives me the opportunity to impress upon them in very clear terms the short-term liquidity difficulties experienced by farmers and the wider industry and, in particular, the need to extend normal working capital facilities to farmers. My most recent meeting with the Irish Banking Federation and the chief agricultural advisers of all the banks was earlier this evening.
Following my request, the European Commission agreed in May 2009 to an advance payment of 70% of single farm payments from 16 October to assist farmers experiencing difficulties in the dairy market and other sectors. As a result, more than €850 million has been paid to 120,000 farmers since last month. These payments have been a full six weeks earlier than provided for under the rules of the scheme and the level of advance payment, at 70%, is unprecedented. Following the issue of the 70% advance payments, my Department will begin issuing the 30% balancing payments from next Tuesday, 1 December 2009, when 98% of the remaining balance will be paid out. Assuming all applications are cleared for payment, a further €380 million will be paid to Irish farmers, bringing to €1.24 billion the total amount paid between October and December. It is worth putting on record that we have the most efficient system in the European Union for the disbursement of money under the single payment scheme.
In further recognition of the income difficulties experienced by farmers, I have secured the agreement of the Minister for Finance, Deputy Brian Lenihan, to request the Dáil to approve a Supplementary Estimate for my Department. This will allow me to bring forward some €85 million in payments under the farm waste management scheme and the rural environment protection scheme, REPS, which would otherwise have fallen to be paid in the new year. If the Supplementary Estimate is approved, my Department’s expenditure on REPS this year will reach a record level of €369 million, paid to a record number of 62,000 participants. In addition, spending on the farm waste management scheme for 2009 will be €286 million and by the end of January, Exchequer spending on the scheme will be approximately €1 billion, totally funded by our Exchequer. I expect we will have the opportunity to debate this Supplementary Estimate in the next week or so and I hope all parties will support the proposal.
The price farmers get for product represents the most important way farmers can enhance their incomes. Unfortunately, we have experienced a significant weakness in prices achieved for dairy, beef and cereals this year. We are all aware of the particular difficulties the dairy sector has experienced and, thankfully, there have been some signs of price recovery in recent weeks. Obviously, we all hope this necessary price improvement will continue.
The past year has clearly demonstrated the value of market management mechanisms which prevented a bad situation from becoming worse. In the course of last year’s CAP health check negotiations, I was to the forefront in arguing for the retention of these measures and, as a result of the pressure which I and subsequently a number of my colleagues brought to bear on the Commission, many of these measures were activated to help stabilise a very difficult position. Equally, in recent months, an increasing number of member states, of which Ireland was a central player, pressed the Commission to address the difficulties in the dairy sector. The outcome was positive, with agreement on the need to maintain the effective use of market measures, including intervention and private storage aid, as well as the introduction of what will now be a €300 million dairy fund, as a means of providing direct support to dairy farmers. I have impressed on the Commissioner, and she accepts the point, that there has to be a very controlled release of butter and skimmed milk powder from intervention stocks to avoid any negative shock to prices.
One of the key outcomes negotiated in the health check was the agreement to abolish milk quotas in 2015. This is unquestionably in Ireland’s interest and I am particularly pleased the decision was recently reaffirmed by the EU Agriculture Council. In relation to quota abolition, we are on a road of no return. The industry must now focus on dealing with the challenges and opportunities the abolition of the milk quota will bring. One immediate benefit of the abolition of quotas was my ability to allocate 14 million litres to 70 new entrants to dairying under a new entrants’ scheme. These are young farmers who have a genuine future in the industry and the scheme was an outstanding success, both in terms of the quantity and quality of applicants. In terms of the further 1% of additional quota that will be available next year, I intend to consider how the scope of the scheme may be expanded to new and recent entrants. There will be an even greater focus on providing quota for new entrants.
There is no doubt the industry is weathering a very difficult period, exacerbated by very dramatic price volatility. I am hopeful that we have now turned a corner. That is very important because the outlook for prices in the medium term is positive, due to significant world demand for dairy products based on an increasing world population and economic growth in developing countries. For an industry that exports 85% of its produce, valued last year at €2.3 billion, the anticipated growth in world demand should bring real benefits.
The beef industry is even more dependent on exports with more than 90% of production exported. As important as export earnings are to the economy, this level of export-dependence makes the sector susceptible to fluctuations and trends in international and EU markets. The global economic downturn has seen consumers curtail spending and a consequential decline in beef consumption throughout Europe this year. This fall has been especially noticeable at the high value end of the market, a segment of the market specifically targeted in recent years by Irish producers and processors.
Nonetheless, as in the dairy sector, the medium-term prospects are encouraging. Rising population levels, improved standards of living that are forecast, growing urbanisation and changing dietary patterns, particularly in Asia, are all contributing to increasing food demand. Furthermore, the EU Commission has estimated that EU beef and veal production is expected to decline by almost 5% by 2015. This will lead to a supply gap within the EU of 600,000 tonnes by 2015, providing market opportunities for efficient market producers. I believe Irish producers are well placed to benefit from these opportunities. Apart from the sectoral challenges and opportunities, one of the most significant issues that will impact on the future of the agrifood industry is the shape of the future Common Agricultural Policy, CAP. While funding arrangements for the Common Agricultural Policy are fixed until 2013 under the current EU financial perspectives, all aspects of the EU budget are currently being reviewed. This will be followed by negotiations to determine the composition of the next financial perspectives of the EU from 2014 to 2020, including the funding available for agriculture and rural development.
In the negotiation on the new financial perspectives there will be competing pressures for funds including pressure for less money overall for CAP, as a share of the EU budget and in absolute terms. In this regard, the recently leaked Commission draft paper is of concern to us in that it advocates major policy changes and lower funds for CAP. We have serious concerns at some of the options mooted in the leaked document from the Commission on the budget review. There is speculation that it will be subject to significant re-writing, and we will press for that. We have a particular concern at the notion of co-financing of direct payments. In current circumstances, this obviously would be unaffordable for Ireland and for many other member states. More fundamentally, it would arguably represent re-nationalisation of the only real common policy of the EU.
Decision making on the Financial Perspectives will, for the first time, come within the co-decision process where the European Parliament as well as the Council of Ministers has to agree to the results. This is obviously a more open and democratic process. However, it leads to some uncertainty about the outcome, as it is new.
Our overarching view is that we need a strong and adequately resourced CAP after 2013. This is a point I have pressed strongly in discussions to date and for which there is good support in the Agriculture Council. In view of the new co-decision making process, I want to work with our MEPs to ensure the best outcome for Ireland and for the Irish agrifood sector. That engagement has begun with all MEPs.
Food security and climate change are key challenges to be addressed in the coming years. By 2030, the planet will need to produce 50% more food, with less land, water and energy as inputs. Food companies are faced with the challenge of meeting the needs of an ever increasing population while at the same time, limiting the impact of their activities on the environment.
As I said at the outset, this is an important and timely debate. There are clear challenges facing the Irish agrifood sector but importantly as well, great opportunities for the growth and development of the sector. It is a sector of enormous economic and social benefit to the country, particularly in our rural and coastal communities.
We need to have a serious analysis of the sector based on the facts and realities and not based on rhetoric and soundbites. No more than any other sector in the economy, the agriculture sector has not been immune from the difficult choices the Government has had to make. No analysis of the sector and its prospects can conveniently ignore the fiscal realities. Despite the difficulties in the public finances, the Government is investing a record level of €369 million in funding for REPS in 2009. Within a matter of weeks, total spending on the farm waste management scheme will have reached €1 billion, by an enormous distance the highest ever on-farm investment in the history of the State.
The new on-farm facilities provided over the past number of years have been extremely important in recent years when we have had extremes of rainfall and very difficult conditions. Most farmers have been able to put their cattle in appropriate housing accommodation. It is very important investment for the farming community.
When the future of the Irish pork industry was threatened last December, the Government acted swiftly to secure the industry by restoring public confidence and by providing a financial facility worth up to €200 million. These are the actions of a Government committed to securing an industry’s future and viability, in this case a production and processing industry worth €1.1 billion annually and employing 6,500 people and 500 farm families.
The Irish agrifood industry is worth in excess of €8 billion annually in exports to more than 170 countries. It has proven to be robust and resilient. It has faced and overcome challenges in the past and I have no doubt that it will emerge from this current challenging environment well-placed and conditioned to take advantage of the undoubted opportunities.
The 2020 Agri Vision strategy presents an opportunity for everybody with a stake in this most important of sectors to contribute constructively to the development of an updated vision for the next decade. The sector will have to be flexible, creative and innovative and one of the most efficient in Europe, which is it at present.
I am optimistic and positive about the industry’s future, notwithstanding the serious difficulties faced this year. I am confident about its potential to contribute to the recovery of the economy. The Government recognises that potential and I want to work with the industry and all those involved, from the primary producer right through the chain, to ensure that the sector reaches its potential and maximises the contribution it can make to the growth and development of the economy nationally and, equally important, to the many local communities and economies throughout the country.
One of the main issues confronting agriculture over the next few years will be the review of the Common Agricultural Policy and the need for the European Union to ensure adequate budgetary facilities are provided to have a well-resourced Common Agricultural Policy for the benefit of consumers. Over the past year in particular, the power of the multiples has been of serious concern to everybody involved in the food chain. We have seen the deficiencies in the food chain with the primary producer and, in many instances, the processor not getting adequate return for their product.
I refer to unfounded commentary outside and inside this House in regard to Exchequer funding for the Department. The initial budget in 2008 for the Department was €1.89 million. By the end of that year, the Department had allocated well excess of €2 billion under the various schemes. This year, with the approval of this House, we will spend in excess of €2 billion, a sure sign and evidence of my commitment and that of the Government to supporting the agriculture sector through what is a very difficult period.
Deputy Michael Creed: We are two weeks from the budget and I want the Minister to leave the Chamber tonight with one message ringing in his ears, namely, that there is no scope whatever for further savings in farm gate schemes. If he needs proof of that, he should read the Teagasc farm income survey of 2008 which shows that farm incomes in 2008 fell by an average of 13%. Today’s figures show that farm incomes in 2009 have fallen by 28%.
Yesterday this country came to a standstill because people with secure employment and secure pension provision feared a cut in their pay. I have some sympathy but this House must respond to an industry which, over two years, has taken a cumulative cut in income of 41%. No other sector has taken that kind of cut in income. To put that in context, the Teagasc farm income survey showed that the average family farm income in the beef sector in 2008 was €7,700.
I am not saying there is no scope for efficiencies and savings in the departmental budget but I am stating clearly two weeks from the budget that there is no scope whatever for savings in farm gate schemes. There has been much comment on the McCarthy report in which efficiencies were identified. I agree with many of them but others are off the wall. The core message with which the Minister must leave this Chamber is that there is no scope for savings in farm gate schemes.
I will deal briefly with a number of sectoral issues. I refer to the beef sector. Evidence was published last week that in the past 12 months, the suckler cow herd has declined by 6%. I believe that figure to be a complete underestimate. I suspect the trend will be similar to what has happened in the sheep sector where breeding ewe numbers have dropped by almost 50% in a decade. I suspect the figure will be closer to a cumulative cut by the end of this year in the region of 20%. That is sufficient to undermine our beef industry, which is a huge employer in the economy. I have never been a great admirer of the suckler cow welfare scheme. It was flawed in its detail but in the current climate, we cannot countenance any interference with that scheme in the budget.
The Minister needs to roll up his sleeves and get involved in the introduction of a quality payment system in the beef sector. The negotiations between the industry and the primary producers have dragged on too long. I acknowledge there will be winners and losers in a quality payment system but for full-time beef farmers, we can no longer have a situation where quality production is not rewarded to the fullest extent possible.
Over the past decade, our dependence on the UK market has increased substantially to a situation where 54% of our beef production goes to the UK. If we cast our minds back to the 1990s, we will remember that most of our beef production went to Egypt, which was our single biggest market. The most lucrative market for us is mainland Europe. Given the current sterling difficulties, we are excessively dependent on the UK market.
Live exports are a very important aspect, although not for the volume of live exports of finished cattle but for the price setting mechanism they establish. The Minister and the Tánaiste are complicit in national sabotage of the beef industry by failing to take on the meat factories which are colluding to deny the opportunity of slaughtering live exports in their UK owned plants. It is not acceptable.
We are paying good money under the beef investment fund — almost €50 million — to the main plants in this country to improve their facilities. That is as it should be but we have leverage to bring these companies to heel and ensure this national sabotage does not continue.
We continue to provide several hundred work permits to the industry annually at a time when the number of unemployed has increased by 200,000 in the past 12 months. There were proposals by the Department to FÁS to introduce a processing, butcher and deboning training scheme to replace those people but for some unknown reason, which is worthy of investigation, FÁS refused to proceed with that training scheme at a time when the Irish and EU market is allegedly unable to fill those vacancies. It is a scandal.
I wish to deal with the dairy sector which, along with every other sector, has had an annus horribilis. The price support mechanism in the Common Agricultural Policy did not work sufficiently to deliver support to family farms which cannot deal with the kind of price volatility that in an 18-month period has seen milk production prices drop from almost 40 cent to 20 cent per litre. The price support mechanisms in the Common Agricultural Policy did not work sufficiently to deliver support to those with family farms who cannot cope with such price volatility in an 18 month period during which milk production prices decreased from almost 40 cent a litre to 20 cent a litre. It will collapse the family farm structure, which is not desirable.
We have the results of the banking system following the processing of financial products, subprime mortgages, etc. Now the bankers are moving into trading in commodities, grain and dairy products. We will witness the hurricane that happened in the financial sector in the food sector unless that issue is addressed. We need a proper price support mechanism at a European level.
The Minister cannot continue to talk out of both sides of his mouth on the proposed electronic identification system. I refer to the sheep tagging system that is being foisted on the industry here. We have a system that works. We are being asked to carry the can for that fact that, during the foot and mouth disease outbreak in the UK in the early 1990s, it did not have a system. DG SANCO has now foisted a system on us that will not work. The Minister’s Department is making plans to introduce that post-haste.
The proposed sheep tagging system will not work. It has been proven that the proposed electronic identification system has a 20% failure rate. If it is superimposed on a system that is currently working, both systems will collapse. We will have the worst of both possible worlds. It is interesting to note that in the cross-compliance checks, 20% of the problems currently arise in the sheep tagging system. The Minister will collapse the sheep industry with the imposition of an electronic identification system. The Minister of State, Deputy Trevor Sargent, might smile. This may not be a big issue in north county Dublin but a large number of farmers are engaged in the sheep industry throughout the country. It is a valuable industry and it is vital to peripheral communities in particular.
Deputy Michael Creed: The Minister of State should know then that this system will not work. The EID system the Department proposes to introduce will collapse both systems and we will be left with no sheep tagging system.
I appeal to the Minister at this late hour to retreat from the decision he made on REPS 4. It is an outstandingly successful scheme. It delivers valuable results in terms of environmental rural management and income to farmers. The Minister’s replacement scheme has been described elsewhere as a Mickey Mouse system, a description with which I concur. The existing system works. As the saying goes, “If it ain’t broke don’t fix it”. I appeal to the Minister not to proceed with a new rural development plan. I advise him, with all the conviction I can muster, that this is the single biggest fatal decision the Department has made in respect of the agri-industry during his tenure.
We need somebody at the Cabinet table who is an advocate, not an apologist, for the industry. The decision on REPS will be the Minister’s lasting legacy in the Department. I appeal to him not to proceed with that decision.
I want to deal briefly with the flood crisis. There are three issues that need immediate hands-on management by the Department and other State agencies, particularly Teagasc. There are the issues of the fodder crisis, animal welfare and housing for animals that are in flooded houses on flooded lands, and slurry management. We have farming by calendar, which makes it illegal for farmers, even if it were possible in the current climate, to empty their slurry tanks. We need an understanding approach to that issue. We need immediate identification of the farmers most at risk and targeted interventions at those farm gates. The €2 million fund that will be provided will be entirely inadequate. I wish the Minister had not even referred to it.
I was interested in the Minister’s observation on the banks and to learn of his meeting with them this evening. Farmers are crying out for working capital but they have not got it. They need it now for fodder relief and producers of store cattle, winter finishers and winter fatteners need it to buy cattle. They are not getting any relief from the banks. I would like to know what exactly they said to the Minister during his meeting with them today.
I want to conclude on the Common Agricultural Policy, to which the Minister referred. A paper was leaked from the Commission a few weeks ago, which suggested co-financing of the single farm payment, which in any climate would be a disaster for this country, but in the current financial climate it would be abominable. We need to preserve the common aspect of the agricultural policy across the 27 member states. The arrangements in place whereby the Germans can come to assistance of their farmers to the tune of €1,500 spell the beginning of the end of the Common Agricultural Policy. That is something that happened under the Minister’s watch, albeit under the aegis of state aid from Germany. We need to be much more vigilant and aggressive about an industry that can be a significant engine for recovery and job creation.
We need an advocate with ambition at the Cabinet table, not an apologist for the industry. The Minister has two weeks to show his mettle at the Cabinet table to ensure that he delivers for agriculture. We will be watching closely.
Deputy Seymour Crawford: I thank Deputy Creed for sharing time with me and allowing me to contribute to this debate. It is ludicrous that we have only one hour and 15 minutes to discuss such a major industry.
There is no scope for savings under the farm gate scheme. In the more than 40 years that I have been involved in farming, farm organisations and politics I have never seen so many young progressive farm families under such economic pressure. Some of these farmers expected to get installation aid, which of course they did not get. All of them received a cut in their payments and the REPS payment has been removed from other farmers, which they had already committed to covering the cost of payment on farm building loans, etc. The decisions on these cuts and delayed payments were all in the Minister’s hands.
The price of milk, beef and pigs has collapsed. The mushroom industry is now available to a small number of farm families who are also under pressure. As a constituency colleague, the Minister should have a full understanding of the needs of people in areas such as Cavan-Monaghan. I implore him to stand up and be counted at Cabinet and European levels. The European Union has not been used to the full. I know that to be the case. Without the presence of the agriculture and food industries in our constituency and elsewhere throughout the country, what alternatives do we have?
Farmers in Cavan-Monaghan have invested more than most in the pig and poultry industries and in the dairy and beef sectors and they deserve support not only for their own sake, but for the future of the area. The Minister of State, Deputy Trevor Sargent, should show us the sheep farmers who agree with the proposed tagging system.
Even farmers who have an income but have a cashflow problem find it almost impossible to get the much promoted farm assist payment and their current financial problems are not being recognised by the inspectors. It is in the best interests of consumers and farmers that the industry is managed properly at Government and EU levels. Without leadership and support, farmers cannot survive the lack of income and the failure of banks to provide normal capital funding. I, too, would like to know from the Minister what exactly the banks said to him. I know what they have been saying to farmers on the ground.
The Minister said he is delighted that the milk quota is gone. I am not sure the farmers of the north west would agree with him. The producers of winter fatteners cannot get funds and that is affecting the cattle trade.
Deputy Willie Penrose: I will begin my contribution by expressing my solidarity and support for the many families affected by the recent unprecedented weather conditions which have caused untold damage, particularly along the Shannon basin and catchment area, with torrents of rain wreaking havoc and devastation across wide geographical areas and people’s houses being destroyed and so on. We have seen the picture of desolation arising from this natural disaster. I congratulate the many emergency workers and volunteers who continue to work hard to ensure that help is given to those most affected, especially to the elderly and the infirm.
I also congratulate the staff of the local authorities, the members of the Defence Forces, the Civil Defence and community and voluntary organisations. We have seen them at their very best in recent days. They all carry out such work away from the glare of publicity day in, day out in the normal course of their duties. I recognise the Minister has indicated some €10 million will be allocated for humanitarian assistance. I trust this will be delivered quickly to the many people who are suffering. Certainly, people in Athlone require help in this regard. The €2 million allocation of relief is only a start but it would appear to be totally inadequate to deal with the devastation foisted upon farmers throughout the country, including the loss of fodder. It is a start but clearly it will not be enough. The situation is especially severe along the banks of the Shannon in parts of Galway, Clare, Limerick, Athlone, south Westmeath, Leitrim and other areas with severe flooding problems and there is more to come. This financial package will be insufficient.
Although only 25 days of November have gone, one third of average annual rainfall has fallen in these 25 days, an objective measure of the dimension of the problems. Yesterday, I took the opportunity of visiting Athlone, along with Councillor Jim Henson and my brother, Councillor Johnny Penrose. I witnessed the devastation sustained and suffered by the people of Athlone and surrounding areas. More than 60 people have been evacuated from their houses to date and a further 50 or 60 people have suffered from severe flooding as well. One cannot but be moved by the resilience displayed by these people and their families in the most trying and difficult of circumstances. It is possible to see the devastation in such areas as Wolfe Tone Terrace or Parnell Square. Overnight, other areas such as Iona Villas were subjected to flooding and for the people involved it feels like a never-ending cycle. I compliment many of the local representatives who were physically working on the ground, helping people and providing as much assistance as humanly possible.
Some people involved in farming have no insurance and have been unable to get insurance. This is an important matter for the Government and every assistance should be given and rendered to these people to ensure they can get back on their feet.
Although the matter is not directly related, the events of recent days bring to mind the need for a River Shannon catchment authority, to acts as an umbrella for all vested interests and stakeholders. It could be in a position to co-ordinate activities and responses from Lough Allen through to the sea in Limerick. It is time to stop foot-dragging and procrastination and establish a single over-arching authority. I drafted a Bill on 21 January 2000 which I have before me this evening, namely, the River Shannon Authority Bill. It contains 12 sections and several subsections and I am prepared to hand it over again. It is time. The river runs through the Minister’s county and he knows it as well as anyone. The main purpose of the Bill is to put a single new authority in place to tackle the problem of flooding, which has dogged the midlands, including Cavan, and parts of the west for many years. The authority would provide a medium to long-term solution to the flooding problems of the River Shannon. As it stands there is no single authority in the Shannon basin to deal with flooding. At the end of the day the response to recurring flooding has been characterised by delay and denial by local authorities and by a host of State and semi-State bodies throughout the years. The work of this authority could significantly reduce flooding and ensure people in these areas are not left without a livelihood if flooding recurs. It could have overall responsibility for the management and improvement of the Shannon catchment.
Under the Bill I drafted almost ten years ago, the authority would be obliged to submit a five year plan to the Minister for the Environment, Heritage and Local Government with regard to its proposed activities to improve the river and surrounding areas. This plan should deal with fisheries, navigation, improvement by drainage of lands adjacent to the Shannon, the improvement of water quality and the protection and enhancement of the river environment and of the natural habitat of its bird and fish life.
The Bill would also have enabled a whole range of interests to be represented on the new authority, including representatives from the farming sector, the community, tourism, fisheries and a range of statutory bodies including the Office of Public Works, Bord na Móna, the ESB, Dúchas and the relevant local authorities. The authority would have complete responsibility for directing all public bodies, where relevant, and for the management of the Shannon catchment area including fisheries, navigation, drainage and wildlife habitats.
I believe that Bill offered and continues to offer the best solution to the problems of the communities which have been marooned in their homes by the recent flooding. The Bill could be amended or whatever but it is time to take the bull by the horns and to make progress in this regard. There is no guarantee these problems will never be prevented but we should put in place an authority to bring forward a national early warning system. There are geographical early warning systems in existence but no such national system. Such a body would be a positive contribution but I do not say as much in any political way. I am not interested in politics on this matter as it is too important for the wider interests of the country. The Bill is still an option and the Parliamentary Counsel could improve it. I have no monopoly on divine inspiration in that regard.
We do not know to what the ultimate cost of the clean up will amount. The recent flooding is reason enough for concern. However, the result of that combined with one of the wettest summers in living memory means we face a very significant fodder crisis. Many farmers housed their cattle in mid-October and early November and will not be in a position to let them out until April or, in many western counties, as late as May. I note Deputy Connaughton is in the House and he is aware a seven month winter is not unusual in this context.
The Minister referred to bank credit. I acknowledge he is concerned about this matter and I accept his bona fides at face value; I have no reason to doubt them. However, the availability of bank credit for farmers is of major concern. As the Labour Party spokesperson for enterprise, trade and employment, every banking institution I encounter informs me that life is beautiful. However, when one inquires with a small or medium sized enterprise, a farm, anyone involved in the locality or who comes to a constituency clinic, a totally different picture is presented. I am beginning to wonder if I am too stupid to realise what is going on. No money is filtering down or else it is not filtering down quickly enough. Today one of the chief executives stated that after NAMA there would be a very slow trickle of credit. This is a time when money was never required more, when people will have to buy additional fodder and need money to tide them over the difficult, extenuating, unprecedented and unanticipated circumstances. Such people indicate the availability of credit might happen and if it does it will only be a trickle. However, to use the terrible term, a flood of credit is required at this stage to help out. Sufficient bank credit is very important and of greater urgency now than ever, to help the farming community and small businesses.
Deputy Willie Penrose: However combined with a wet June, July and August many farmers were only able to cut one crop of silage rather than the usual two or three crops. This shortage, combined with the long winter, will lead to major problems in the early spring. As Deputies Connaughton and Creed are aware, I make this point from the perspective of beef farmers. Not only is there a problem with fodder quantity, there is also a problem with fodder quality. The reduced dry matter of silage made in bad weather along with reduced digestibility as a result of late cuts will force many farmers to purchase very expensive concentrates to supplement the nutritional needs of such stock.
I draw the attention of the Minister to an excellent article in Teagasc’s Today’s Farm wherein there is an excellent analysis of the fodder crisis facing farmers on page ten. It calls for a response in the budget to assist farmers in the light of the difficulty presented to them at present. A survey was carried out by Teagasc last September. It included the Minister’s county and that of Deputy Johnny Brady, and indicated one in three farmers does not have an adequate supply of fodder. Given the disastrous weather of recent weeks, I believe this figure will rise significantly. The year 2009 has been a poor year for silage. It has compounded the drop in real income in the sector due to increased inputs for feed and the low dry matter content in silage. Farmers will now have reduced stock in a market already deflated. As Deputy Creed remarked there are issues of animal welfare, a slurry build up and so on, all of critical importance. The situation is not tenable. The price for silage bales ranges from €35 to €50, although closer to the more expensive figures at present. This development will impact very negatively and very severely on agricultural income when coupled with the fact that silage is rotting in the pits, slurry spreading is curtailed until January, as Deputy Creed remarked, and we are working off this calendar of events.
Deputy Willie Penrose: Beef is almost back to the price it was when I was a student. If farmers cannot buy silage cheaper than €35 per bale then purchasing meat or feed will be the only real option for them to maintain stock against a poor market for sales. I acknowledge and welcome the move of the Minister to front-load payment. It is extremely important and I have noted it because it will help to address animal welfare concerns and it will allow cattle to be fed adequately. However, much of that money will be subsumed by the very banks to which I have referred to try to meet other areas of payment. Given the weather of the past week, the remainder of the country is in a similar situation to the area covered by the study, that is, north-west Cork, west Limerick, north-west Galway and Cavan. Most farmers will encounter a fodder shortage.
The REPS payments have been cut and changed, the disadvantaged area payments under the social welfare scheme have been significantly cut, the early retirement scheme has been turned upside down and the isolation scheme has been emasculated. All of this has meant incomes have dropped by 28% according to the CSO and over two years this will become very significant.
I spoke to a number of beef farmers and discovered they are depressed and in dire straits. It may be stated that we have heard all this before. However, on this occasion there has been a major impact on beef farming. Many people are considering leaving beef farming. I know people who stuck with the industry in the past, in good and bad times. In addition, everyone is aware of the situation for dairy farmers. In that context, bringing forward payments or trying to secure payments is extremely important. I hope the Minister will meet the relevant farm interest groups, discover what their needs are and put in place a plan of action.
I wish to address some of the issues relating to the McCarthy report. Today’s Teagasc bulletin highlights the importance of research in assisting farmers to maximise their potential through using evidence-based models to maintain yields against falling incomes. Teagasc is an essential component in maintaining and increasing our comparative advantage in agribusiness and agrifood production. We retain that advantage and we should never resile from expounding on our clean, green image. However, we must penetrate the high-value markets. It took some time to change our production systems in the past in the context of moving from Holstein breeds and half-breeds to pure beef breeds. Some 80% of our production should be concentrated on pure beef breeds and good beef cross-breeds in order that we might penetrate the markets to which I refer. At one stage, we could not get even one in five of our cattle onto high-quality European markets. I accept that the position has changed dramatically in the interim but there is a need for further action.
Jim Power of Teagasc recently stated that Ireland could become the Silicon Valley of agrifood production, particularly if it takes serious steps to penetrate the sector. I wholeheartedly agree with this analysis. We must do what those in Silicon Valley did in respect of IT and high technology, namely, sustain and develop this natural resource. In addition, when the agrifood production sector experiences difficulties we must not abandon it.
The McCarthy report recommends that some €14 million could be saved through a restructuring of how research funding is awarded. It also recommends the establishment of a single funding stream for research in respect of which each entity could compete. This could work, in theory, if it were done fairly. However, I have major reservations as to whether that would be the case. I am sceptical with regard to cutting the research of an entity such as Teagasc, which is driving higher rates of output in our basic productive sector, which will drive economic growth in the future and which is intent on retaining the maximum number of farmers on the land.
The McCarthy report recommends that a total of €100 million be cut from the overall research budget. On a pro rata basis, this means funding for agricultural research would be reduced by €14 million. The implied assumption in the report is that Teagasc and other agencies are given just that for which they ask. In reality, however, the Department of Agriculture, Fisheries and Food is, like all other Departments, obliged to make its case for funding to the Minister for Finance at budget time.
The agriculture industry is at a crossroads and farm families are struggling to survive. Is the Government serious about this indigenous industry which accounts for more than 25% of economic activity in the rural economy? Given that this week’s extreme weather has led to hardship for farmers and rural dwellers — residents in particular urban areas were also affected — it is important that we should do everything possible to secure the agriculture brief when appointments are made to the European Commission. We must not pass up the opportunity to have an Irish Commissioner in charge of matters during the run-up to the CAP negotiations in 2013. Every effort should be made to secure this brief. If implemented, the proposals in the McCarthy report would decimate rural areas. The halving of payments, from €80 to €40, under the suckler cow welfare scheme in the most recent budget was cruel in its own right. However, the abolition of the scheme, as recommended in the McCarthy report, would be detrimental to the 50,000 people who avail of it. Up to 10,000 farmers will leave REPS 4 during the next 12 months.
Deputy Willie Penrose: A replacement scheme must be drawn up, particularly as farmers have factored REPS payments into their budgets. The reductions in the disadvantaged areas scheme will also affect our most vulnerable farmers.
I have much more to say on this matter. In that context, I would like the House to debate it further in the future. We should do more than merely pay lip service to this indigenous industry. We should provide it with every assistance possible.
Deputy Martin Ferris: In common with tens of thousands of other people, large numbers of farmers are suffering the consequences of the flooding which occurred during the past week and which will continue, depending on weather conditions, to pose a severe threat in parts of the country in the coming days. The problems that have arisen range from loss of animal feed, a need to move animals and damage to machinery and buildings. The impact on farm operation and the costs involved mean that many of those farmers affected will have been pushed over the brink of survival and may well be forced to cease operations. It is important, therefore, that — as in the case of the damage done to homes and businesses — the State should intervene, where possible, to ameliorate the effects of the damage that has been done and to assist those most affected in recovering.
The Minister referred to the grant scheme that was put in place in the past 18 months in respect of waste management, etc. In many instances, the slurry tanks that were installed, for environmental and other reasons, under this scheme have been submerged as a result of the floods caused by the recent unprecedented rainfall. As a result of a regulation that prevents the spreading of slurry until January, we find ourselves in the ridiculous situation whereby — despite the fact that good weather may arrive in the interim — these tanks must remain full. The Minister should allow common sense to prevail and permit farmers to empty their slurry tanks if the weather improves.
Apart from the floods, 2009 has not been a particularly good year for the farming sector or the related rural economy, which has suffered from the impact of the overall economic downturn. As in other sectors, the effects of the recession have been further exacerbated by the negative response of the Government. This was evident in the cuts introduced in last year’s budget. People in the farming community are concerned that the forthcoming budget will contain more negative proposals that will further restrict the sector’s ability to survive and recover. The projected loss in income for farmers to date this year is approximately 28%, while last year the actual loss was 13%. Therefore, as Deputy Creed stated, there has been an overall reduction of 41% in farm incomes. The current average income is in the region of €13,000 for part-time farmers and €16,000 for full-time farmers. This means they earn approximately on quarter of what public sector employees are paid, which shows their determination and commitment to trying to survive on minimal incomes.
Farmers, like those who own small businesses, have been affected by the restrictive lending practices of the banks. These practices contrast starkly with the banks’ liberal dispensing of huge amounts of credit to property and other speculators whose activities — allied to whatever global impact there has been — contributed greatly to the economic downturn in this country. In comparison to those involved in the property sector, farmers have always found it difficult to access credit. Many of them are currently unable to persuade the banks to lend them money. It is ironic that in order to procure loans, farmers are obliged to offer the deeds of the property as collateral. This is in stark contrast to the position with regard to speculators and developers, who in recent years could obtain credit whenever they desired. The latter proved detrimental to the health of the economy and we are all being obliged to pay as a result.
Lending institutions are also exerting pressure on farmers to make repayments on existing loans. This constitutes a massive pressure on many farmers and is greatly restricting their ability to remain in operation. In a significant number of cases, they are being forced to consider the option of leaving farming altogether.
The large processors have been also less than helpful in the current situation. During this year they have again systematically attempted to cut the prices paid to farmers for milk and other products. In some instances the products involved are being used as loss leaders in a competitive war between the major retailers. The historical evidence, however, points to a long-term reduction in the proportion of the price charged to consumers that is eventually passed on to farmers. As I stated on previous occasions, and as was highlighted by a number of submissions to the report of the Joint Committee on Agriculture, Fisheries and Food on farming in the west, this has implications for the way in which a small number of large operators have come to monopolise the processing of farm produce. It also illustrates the loss of power of farmers as what were once farmer-owned co-operatives have been transformed into orthodox businesses which are no longer amenable to the type of democratic decision-making that was previously in place. Farm co-operatives have become public limited companies whose motivation is profit whatever the consequences and this is detrimental to the good intentions of those who established those co-operatives.
Returning to the issue of the budget, all rural representatives are aware of the impact which the cuts in areas such as disadvantaged payments and the early retirement and installation schemes as well as other cuts in the budget available to Teagasc have had on the sector. In many cases it has meant the difference between a farmer being able to survive or not. The cuts in the retirement and installation schemes have had a massively negative impact on the transfer of land and farms from elderly farmers to a new generation. That is having a major impact along the west coast where the average age of farmers involved in the process is in excess of 45 years and in many cases is well over 60 years. The early retirement scheme was beneficial; it offered security to those giving up their land to a new generation while they awaited their old age pension. The installation aid was a start-up grant for young farmers which was necessary for someone taking over a holding. Cutting that has been a disaster.
To return to the report, one of the clear demands made throughout the sector was that those cuts should be reversed. It is vital that no further similar measures are included in next month’s package. Their impact extends beyond the farming community and into the rural economy as whole, taking as it does vital income out of circulation and weakening the ability of farms to contribute to the overall economy, as they do in so many ways. That direct economic impact has been added to by the implementation of cuts in public provision to rural communities, with other cuts yet to be made. It will also be added to by the impact of the type of cuts recommended by the McCarthy report if the Government decides to implement them.
It is ironic that the report of the economic forum of Irish farm and food industry leaders on the agrifood sector should appear at a time when it is unlikely to be matched with the type of commitment on the part of the Department which it urgently requires. As the report states, there is huge potential to harness the food sector as a vital element in economic recovery. Central to that is the issue of food security which, it has been argued, in the Irish context would be threatened if the EU was to return to advocating the type of measures proposed by former Commissioner Mandelson in the context of the WTO trade negotiations.
This country still retains significant advantages in food production and these can be built on to further enhance the Irish processing and general food sector with all the benefits that would bring to farm viability and income as well as job creation. It is one of the few major areas where we can make decisions and implement strategies that are not dependent to a huge extent, as is the case in some manufacturing areas, on what happens outside of Ireland and decisions taken by multi-nationals.
Key areas identified by the report are access to credit; research; the relationship between the farmer and the processors, to which I have already referred; and the power of large retailers in determining price and standards. The report also addresses other areas such as State supports and targets higher value production for the domestic and overseas markets.
In 2008, the agrifood sector accounted for 10% of total merchandise exports from Ireland at approximately €8.6 billion in produce. Similarly, the sector accounted for approximately 9% of total exports on average. Given that the worldwide population is increasing at a rapid pace, consumption is rising and food demand is greater than ever, agrifood exports are a large potential source of revenue for the country. Ireland is seen as a green food island and greater efforts should be made to capitalise on this and expand our agrifood exports.
At present the agrifood sector directly employs approximately 50,000 people as well as providing the primary outlet for the produce of 128,000 family farms. These jobs are dispersed throughout all regions of Ireland, especially in rural areas. The sector accounts for half of Irish goods and services purchased by the manufacturing industry and just more than half of exports by indigenous manufacturing industries. The importance of protecting that and the potential from any expansion hardly needs to be pointed out.
Deputy Arthur Morgan is completing a report for the Joint Committee on Enterprise, Trade and Employment on expanding employment in the agrifood sector, which covers much of the same ground as the report to which I referred. The submissions provide much evidence of optimism about the future of the sector to stimulate the economy but suggest that practical initiatives are required to create the basis for a prosperous indigenous economy. However, they also highlight market failures in the provision of services to SMEs in the availability of capital and support for start-up companies, where indigenous SMEs increasingly compete against companies that can produce goods from a much lower cost base.
Among the key challenges to the growth of scale and employment in the industry are access to credit, regulation and Government policy, retail pressure and disparities in labelling requirements. Similar findings were made in the industry forum report. Among its recommendations are the need to research problems; more rigorous labelling so that, for example, a term such as “Irish food” can only be used after specific criteria are satisfied; and the encouragement of greater co-operation among producers and other related and supporting groups to take advantage of opportunities through enhanced knowledge and contacts, easier access to markets, reduced costs, increased bargaining power and greater competitive advantage.
The farming sector faces a number of serious problems at the present time, the most immediate being the impact of the floods, but also the long-term impact of the cuts. However, as the reports to which I referred indicate, there are grounds for optimism in the future if the correct strategy and support is put in place.
Deputy Johnny Brady: Like other speakers, I am conscious that we are conducting these proceedings with the backdrop of very severe weather conditions which are affecting many parts of the country, particularly the south and the west. I would like to convey my solidarity to the many farmers who have been badly affected by the flooding and I look forward to the €2 million in aid alleviating the disruption and unrest which many are experiencing.
I am acutely aware that this has been a very challenging year for the sector. A series of factors have combined to put severe pressure on incomes, most notably low commodity prices, difficulties with sterling and weakened domestic and international demand. The dairy sector in particular has had a tough year, which was acknowledged by the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith. He has had notable success at EU level in pursuing market support measures.
I remain optimistic about the future of farming and the agrifood sector, notwithstanding the serious difficulties being faced. The Minister already mentioned his commitment to developing an Agri Vision 2020 strategy, which has the potential to be an exciting blueprint to take the sector forward well into the 21st century. No doubt major obstacles will have to be crossed in the negotiation of the CAP post-2013 but I see no reason to believe that the outcome will not be positive for Ireland. The abolition of milk quotas in 2015 holds great opportunities for our dairy farmers. However, it is vital that the industry focuses on dealing with the challenges as well as the opportunities that milk quota abolition will bring.
Of immediate and critical importance is the need to assist farmers as much as possible with cash flow difficulties. I am glad to state that the Minister has responded imaginatively and energetically to this need. His efforts have borne fruit to the early advance of the single farm payment, which began allocating from 16 October. A full 70% of the amount due has been paid to more than 120,000 farmers at a cost of €850 million. These payments, which were made a full six weeks earlier than was provided for under the rules of the scheme, have been an enormous relief to the sector.
Assuming all applicants are approved, farmers can look forward to a further €380 million from next week. The total value of payments will be €1.24 billion. Farmers will also warmly welcome the Minister’s intention to seek Dáil approval for the Supplementary Estimate of €85 million. If approved, this money will allow payments due next year under the REPS and the farm waste management scheme to be paid before Christmas. These efforts are a direct response to the income challenges facing our farmers and clearly demonstrate that even in the most difficult of economic environments the commitment remains to assisting them in sustaining their livelihoods.
The dairy, beef, sheep and pig sectors have all experienced difficult times. Potato farmers, of whom there are a number in my county, have experienced particularly severe problems over the past three years. Some in my constituency have not been able to harvest a single acre of potatoes. Any assistance for them would be more than welcome.
Deputy Noel Treacy: I thank the Minister, Deputy Brendan Smith, and the Ministers of State, Deputies Trevor Sargent and Tony Killeen, for their support, flexibility and dedication in addressing the serious crisis bedevilling agriculture. International volatility in markets, the global financial depression and weather conditions have had a deleterious effect on Irish farming. I am grateful to the Minister for the flexibility he has shown in advancing payments and bringing a Supplementary Estimate before the House. I thank him for despatching a team of inspectors to my constituency to investigate at first hand the serious situation that obtains on the ground. I warmly welcome the €2 million investment in a special fodder scheme for the farming community.
In order to ensure sustainability in farm incomes, it is vital that we put the maximum effort into restoring REPS payments to their full capacity. The suckler cow welfare scheme and the disadvantaged area payments are also critical to my county and the entire western region. I appeal to the banking community to show flexibility and generosity in advancing payments, extending overdrafts and recapitalising farmers. The Government is prepared to help them despite the constant financial pressure it faces. The banking community has been supported by the Government and should in turn ensure a cashflow to all our citizens, including farmers.
Minister of State at the Department of Agriculture, Fisheries and Food (Deputy Trevor Sargent): I thank all those who contributed to this debate, although I share with Opposition Deputies the wish that we had more time. My colleague, Deputy Mary Alexandra White, is one of many Deputies from both sides of the House who is disappointed at being unable to contribute.
We all agree this has been a difficult year for farming families and farm incomes. It is cold comfort to the many farmers who are facing immediate cashflow problems to say that the medium-term outlook is an improvement in market conditions for core products. For that reason, I welcome the Supplementary Estimate being brought by the Minister, the cash injection of €120 million into the primary farming sector through REPS and the bringing forward of payments due in 2010 under the farm waste management scheme. These will have beneficial effects on farmers’ cashflows. The supplementary payments on foot of the ongoing flooding crisis will also be badly needed.
Reducing the costs associated with farming may not be a headline grabber but it is, nonetheless, a major element in maintaining the viability of farms. In January 2009, the minimum age for BSE testing of animals slaughtered for human consumption was increased to 48 months. In September, new arrangements were introduced to reduce the cost of brucellosis testing. A scheme worth €7 million was introduced for upland sheep producers. From 2010, a new support scheme for sheep producers will provide grant aids of €54 million over a three year period. These are significant developments which indicate the seriousness with which my Department is approaching the problems facing farmers.
These provisions should be seen in the context of the crisis in the country’s finances. Despite the closure of the REP scheme because of shortages in funding and pressure from the European Commission, payments to farmers in 2009 and 2010 will be at their highest level ever. Almost 17,000 applications were received by the scheme’s closing date of 15 May and it is safe to assume that the great majority will see their REPS III contracts end this year. These applications are now being processed with a view to making payments at the earliest opportunity. A further 1,600 applications arrived between 16 May and 9 July and these will be processed as applications for 2010. All REPS contracts will run their full course so that farmers will receive payments until 2014. It is hoped that the new measures which are on their way will help to maintain the agri-environmental objectives with which we have to comply. We will maximise payments to recognise the benefits of REPS.
I agree with the IFA that sterling’s devaluation is a distortion of the Single Market. As Deputy Michael Creed noted, we have to get around the problem by focusing our attention on the eurozone. Bord Bia and Bord Iascaigh Mhara are directing considerable energy at marketing Irish products in this area.
Deputy Johnny Brady and I recognise the difficulties being experienced by the horticulture sector and potato growers in particular. This sector lacks the benefit of single farm payments and is more exposed to the market than other sectors. In many ways, the sector represents the canary in the coalmine and highlights the need for new thinking. We have included a number of new measures in the revised programme for Government, such as an ombudsman redress the imbalance between producers and retailers.
We must get to grips with the flooding crisis. The Minister of State, Deputy Killeen, is ensuring that forestry plays a role in reducing floods and addressing our climate change commitment of doubling planting rates. I have a particular interest in the organic sector because I see its merits not only in regard to its 11% annual market growth, but also in the impact on percolation of increasing organic matter in soil. Yesterday, I was told by an organic farmer in County Galway that the panning of land which does not contain good organic matter is contributing to run off. We need to take account of these issues because they demonstrate that organic farming helps in terms of percolation. We need to have more cognisance of the methodology that helps organic matter in the soil improve.
I ask Deputies and members of the public to read the new programme for Government to see the renewed commitment therein and the manner in which we are adapting to changing times. We will do everything possible to ensure the agricultural food sector, on which the country relies, grows.
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