I join the Minister in thanking the outgoing chairman of the board. We hope the Minister will be in a position to appoint someone who will continue the good work.
This Bill seeks to amend the composition of the board of An Bord Bia. The policy decisions on streamlining the food industry were taken by the previous Administration and implemented by the then Minister, Deputy Walsh, in response to the expert group set up as a result of the Culliton and Moriarty task force reports.
The Bill is simple in its concept. The Minister has yet to appoint a female appointment to the board. The gender equity provision of the directive applies to this Government as much as it did to the previous one. The Minister in error claimed credit for appointing a female to a board the warrant of appointment having been made during his predecessor's time. Will the Minister state who will be the appointees to the board as it has been heralded that one will be from the IFA and one from the ICMSA? Many people in the industry would like to know who will be appointed.
It is wrong to suggest that farmers or primary producers are not represented on the board. When a person is appointed to the board his occupation or status is irrelevant. As a member of the board one's primary duty is to serve it without reference to outside agendas, particularly sectional ones.
One of the great mistakes of successive Ministers in many Departments has been to believe that every vested interest must be represented on a board for it to be effective. That is not logical. Mr. Michael Hanrahan and Mr. John Duggan are eminent farmers involved in the co-op business, in the ICMSA and the IFA but this is not why they are members of the board. They are quite capable of representing the view of farmers in so far as it would apply to any matters under discussion by the board. They are members because of their expertise as farmers. Such experience should be theraison d'être for any person's membership of the board. Competence, not membership of an organisation should be the determining factor.
While I know prospective appointees from farm organisations the Minister has in mind will be more than able to contribute positively, I do not accept in principle that all organisations must be represented on the board. The Minister said he will make the appointments on the basis that primary producers pay levies to the tune of £4.3 million. This is not a reasonipso facto people should be members of a board. The food industry is a multi-billion pound industry. Levies should not be a determining factor in whether people should or should not be represented on the board. This is not to say that people from those bodies should not be on the board but the argument on the basis of levies paid is weak.
The Minister has been pressured by controversy which arose because the representative organisations were not explicitly given the right to nominate persons to the board. Representatives of the IFA in executive capacities are not excluded from membership of the board of An Bord Bia but representative organisations have not had until now a nominating role for boards. There is good reason for this. If we follow the Minister's contention to its logic every constituent area of the food industry in terms of its positive contribution to a multi-billion pound industry, would be entitled to a member on the board. Clearly this is not feasible.
However, the Minister sees political kudos for him in appointing these people to the board and this is his primary motivation. He made this announcement when he met them on the IFA's 25th anniversary on 6 January. To say that the payment of £4.3 million in levies is the reason for the appointments is insulting everybody's intelligence. It does not make sense. If this was the case, every co-op and export marketing organisation which makes a contribution to the food industry would be entitled to have members on the board. I am not objecting in principle to the appointment of people from the IFA or the ICMSA to the board. However, the Minister is seeking to assuage a vested interest, as he sees it. Two eminent members of the farming community are already on the board and are well able to ensure primary producers' interests are articulated and defended.
I made this point at the outset because of the importance of the food industry. The key issue in terms of how we develop a progressive industry was outlined in the Culliton report, which stated that a key requirement is a vision shared by producers and processors in different sectors and this must be supported by Government development agencies. Probably one of the great weaknesses of the Irish food industry until now was that there was not a share vision. Very little is being done by either side to establish common ground between producers and processors so that the long term interests of the Irish food industry are served.
We know from farmers' perception of the interests being served that they have great distrust of the processing industry. Examples can be given to show why farmers have good reason to be suspicious of the intentions of processors in terms of price and why they feel there is a cartel in the ring when they go to sell their livestock. The processing industry has developed a great deal of sophistication. We have a more market led agriculture now than we had when we had a price support mechanism under which, regardless of production levels, there was a guaranteed price. In the absence of a significant live trade, it is always felt by the primary producer that the processing industry takes advantage of this situation.
This is further exacerbated by the key weakness in the food industry probably since the foundation of the State — the seasonality of our production systems and the failure to avoid a glut at various times in the season, particularly with regard to beef. The continuing divergence of opinion between farmers and processors as to where the real interests of the Irish food industry lie must be overcome. The Minister and Members of the House can seek to persuade but until producers and processors find common ground on these issues, so that they can be resolved in the long term strategic growth in the niche markets we have identified as a result of the Culliton and Moriarty reports and the report of the expert group on the food industry.
We agree with everything in these reports but we know the practice is different. People go back to their vested interest groups and short term entrenched positions. More enlightened practitioners in the food industry have indicated that this must be challenged. The Minister must be mindful that there will be short term political difficulties in facing up to this problem but if we have the long term interests of the food industry at heart we will have to address this issue.
I have enormous admiration for the many excellent people in these organisations who represent farmers exceptionally well, both here and abroad.
It is absolutely vital that the membership of the board does not seek to protect vested interests. Rather it must seek to bring about the shared vision to which Culliton referred. This key weakness can only be overcome if the board considers the overall picture. All the boards set up by the Department must have this shared vision. The Department is the regulatory body but only the industry can ensure that it achieves its full potential. The work has already been completed on the strategies and policies, the direction in which the industry should go, the winners and where the investment both in terms of capital and marketing initiatives should be placed. There is a general agreement on these issues both politically and otherwise as they make sense and a great deal of work has been put into them in recent years. Unless there is a change of culture among those in the industry and we are willing to educate each other on the importance of taking the long term rather than the short term view, we will not have the type of industry our natural resources and grasslands would give in terms of competitive advantage both in the European Union and elsewhere. I emphasise this point because, if we were to achieve this competitive advantage, the potential of the industry could be realised rather than merely talked about.
Agriculture is our most important indigenous industry. Foreign computer, pharmaceutical and electronic industries are attracted here because of our well educated workforce and good macroeconomic competitive advantages, but then can move or stay depending on how well we manage our economy in the meantime. While we will always have the competitive advantage our grasslands give us in terms of environmentally friendly farming etc., the industry will not achieve its full potential without a shared vision. If this key requirement is not met what we are trying to do in terms of structures will not work to the extent that it should. In the past there was a lack of co-ordination in the part of the various marketing organisations in their attempts to build structures which would meet the needs of a modern food industry. However, the co-ordination of these attempts may result in our taking our eye off the ball, that is the need to find a common ground between producers and processors so that everyone knows it is in their interests to produce the food required by consumers in an effort to increase our market share in the most sophisticated consumer market in the world, the European Union.
This £8 billion indigenous industry employs 200,000 people. The import content of Irish food is only 14 per cent whereas the import content of foreign non-food companies is 80 per cent. A competitive food industry creates jobs not only in the food sector but in the wider sub-supply sectors. The contribution of food to net exports — 40 per cent — is also an indication of the central importance of the industry to the economy.
The Minister is seeking to make two further appointments to the board. This is the first opportunity many of us have had to outline the problems and the need to be aware of the growing complacency in the industry. Recently people to the fore in driving the food industry such as Denis Brosnan referred to the need to be aware of this complacency. Previously we had a commodity-based agricultural sector where production levels were irrelevant and price supports were in place. As a result of CAP reform we now have a more market-led agricultural sector which needs to gain access to the market in order to survive. While the food sector has adapted well to these changes much more needs to be done, and the expert group is pointing the way. Unfortunately, this Bill is being debated the day before An Bord Bia sets out its marketing strategy. If the debate had been left to another day we would have had an opportunity to discuss these matters in a more informed way.
We need to start picking winners in the sectors and to take discerning decisions. All too often the Department has played the field and adopted the short term attitude of getting the money and looking later at what can be done with it. The Department had to grapple with a series of crises because it did not know what the final direction of CAP reform would be and it wanted to get as much of the cake as possible. Hopefully we now have in place a marketing organisation which will take a strategic view of what needs to be done. Given its objectives. I wonder whether £66 million is sufficient to ensure that we have a real, solid marketing agency. We will have to await its detailed marketing strategy to make a more critical assessment.
The most successful food conglomerates in the world spend enormous amounts of money on research, development and marketing. Given that it will take some time to gain the resources necessary to do this, it is critical that the marketing agency is adequately funded. The expert group in the food industry and Culliton have referred to the need to build more Irish companies. We are talking about building twenty to forty £100 million pound turnover companies during the term of the plan. It is sad to note that one of the companies at the cutting edge of the food industry, Green Isle, has to be taken over by a company from another country in order to develop. There is a certain logic to this as there was insufficient capital within the country to help it develop. However, it is sad to think that in order to develop, control of some companies will pass to companies outside the State. That need not necessarily be a bad thing. I understand the scales and the need for marketing and distribution systems into those markets. Greater penetration into those markets is an understandable objective. It is sad that as we develop the food industry with indigenous raw materials there will be fewer Irish food companies in terms of ownership. That is something which the Department, the Minister and others in this economy should take cognisance of to see if it is the right or the only way to go or whether we should have a greater degree of partnership as distinct from take-over in terms of the development of the food industry. It appears that take-overs will become the norm rather than the exception and partnership will be the option taken by those who are not in the first division.
As regards marketing, a couple of issues have arisen in the Department in recent months which jar and which will not be helpful to the job of An Bord Bia in the future. Again, it is a case of crisis management. The Minister and the Department are calling for a strategic marketing view when they do not seem to have one themselves in terms of delivering basic schemes which help to build the image of an Irish food industry. The fiasco of the control of farmyard pollution scheme contradicts everything in the Minister's speech about the development of the food industry. The fact that we are not able to manage our resources to ensure that such a scheme is properly funded is a reflection on our policy direction and our failure to allocate sufficiently where the need is most.
If we are to pick winners in the food industry and in food companies, we must pick them departmentally. We must choose schemes where there is obvious demand and where a critical element must be addressed. The expert group on the food industry and the Culliton report always refer to the growing importance of the environment and the need for environmentally friendly practices as being the norm in agriculture. It is not simply for the purpose of a good image, these are now becoming critical viability issues for many farmers. The ability to deal with waste and farmyard pollution is an important factor in terms of the viability of many farmers, particularly in the small to middle income groups, and it must be addressed. When we consider that small level of capital investment in relative terms, probably an investment of £14,000 to £20,000 on average, it is obvious we have failed as a Department and from our resources of thousands of millions to deal with that issue for 18,000 farmers.
Yet at the other end of the chain, we will say that if we develop a food business and competitive companies, we will grant aid capital investment, provide repayable loans and increase the percentage of marketing initiatives. We are again putting the cart before the horse. As the Minister said, there is failure to integrate the farmyard with the supermarket in terms of maintaining not only the food link chain, but the quality assurance on which the modern sophisticated consumer not only in Europe, but in Ireland, insists if we are to have a market share for our food industry in the European Union.
The disease fee status of our herd is an important issue as people look at Irish food. This is another issue where there is a stand-off which should be resolved by the Minister. It is his job to ensure that we do not harm the image of the food industry. It is important to resolve these issues quickly because that is the name of the game, doing the job one is entrusted to do. We do not want hassle over this because it will create a huge problem for us internationally if we allow it to continue. It will be used by competitors in the same way as the live export issue was used. This has become a cut-throat business and if people put a black mark against us, we should do everything possible to remove it.
I understand that every Minister faces vested interest pressures and problems in Departments. We must find a solution to this problem. We do not need stand-offs because there are enough in our supermarket chains at present where people are being hurt. We can solve this problem if the Minister has the goodwill and political ability to do so. I encourage him to do so as quickly as possible. The appointment by the Minister for the Marine of a person from the fishing industry was included in the definition of food in the original Bill but discussions had not been completed with an Bord Iascaigh Mhara at the time. I am glad the Minister now has the opportunity to complete that process by making the appointment.
I have no objection in principle to the fact that he is making these appointments and I hope board members realise that their job is to address the board's agenda and not to bring others to it. A shared vision for the producer and processor will determine not only how effective this board will be, but how effective the food industry will be in meeting the targets it has set itself and which have been set for it by the Department and the Minister in the Structural Fund allocations. I wish whoever is appointed to the board well, they will have our full co-operation and assistance.