Under the Bord Glas Act, 1990, the board of An Bord Glas is required to produce an annual report and accounts. Briefly the 1996 report states that in the course of the year the board continued with the work of implementing its Development Plan 1994-99 "Achieving Growth in Horticulture". The report outlines the functions of the board and it contains a general review of the horticultural industry. It also details the activities undertaken by the board in 1996 in the various sectors of the industry such as field vegetables, soft fruit, top fruit, honey, mushrooms, other vegetable crops, ware and seed potatoes and the amenity sector. The report also deals with a number of other areas of activity such as promotion of horticultural products, the Horticultural Industry Forum, the environment and various miscellaneous matters.
While the report and accounts relate to the activities of 1996 I want to take this opportunity to look at the entire horticultural industry in the broader context of the Bord Glas Development Plan 1994-99. Before doing so, I would like to give some background to the setting up of An Bord Glas.
When Fianna Fáil was in Opposition in the 1980s, we produced a document entitled "A Policy for Horticultural Development" which provided for the establishment of An Bord Glas. On taking office as Minister for Horticulture in l987 my colleague Deputy Kirk set up An Bord Glas on an interim non-statutory basis. One of the first decisions of the interim board was that a very intensive and detailed examination of the horticultural industry was essential. As a result of that examination the interim board produced a document entitled "A Programme for the Development of Horticulture". Additionally, a separate programme on the seed potato industry was published. The two programmes taken together envisaged a market share recovery and export expansion of £60 million and the creation of 1,800 full-time and 1,500 part-time jobs over five years.
The horticultural industry performed well over these first development programmes. The actual increase in output realised was over £45 million or 75 per cent of the target. The aggregate export target was an increase of £28 million and the actual increase was £32 million. The employment targets were achieved but actual performance depended more on part-time employment than was envisaged — increases of 700 full-time and 6,100 part-time jobs. During the period of the programmes market share for many products directly competing with imports remained very high. There were improvements in the basic productive and commercial efficiency of horticulture with growing participation in the board's quality schemes and improvements in marketing and production structure. Retail distributors acknowledged a substantial improvement in the quality and presentation of Irish produce.
While An Bord Glas was established on a statutory basis under the Bord Glas Act, 1990, the board has effectively been in existence with a full complement of staff only since 1991. With a very small staff of 11 and modest budgets, ranging from £700,000 in 1991 to £1.634 million in 1996, An Bord Glas nevertheless has an impressive list of initiatives and achievements to its credit by any standards. For example, it put a new emphasis on quality and hygiene and effected improvements in these areas. Quality improvement schemes for a number of products and for garden centres were introduced. Systematic market assessments and examinations of Irish fruit and vegetable sales were undertaken and consumer information provided. Assistance was also provided for feasibility studies and a wide range of marketing and development projects. An innovative and successful scheme for growing potatoes from mini tubers was introduced. The board also initiated partnerships with producers in the form of the IFA potato marketing co-ordinator and the national horticultural organiser. These partnerships have been particularly beneficial to the horticultural industry and it is important they will continue as envisaged in the development plan. The board also increased the emphasis and focus on marketing and this resulted in a more market led approach by the industry.
Towards the end of 1994 the board published its development plan 1994-99 "Achieving Growth in Horticulture". This plan built on the success already achieved and intensified development activities in other areas. It introduced a number of initiatives in the areas of better market intelligence, co-ordination, linkage with the industry and support for improved marketing efforts and structure. The plan outlines the potential for the different products. It examines each sector in some considerable detail, it pinpoints the strengths and weaknesses and, most importantly, it clearly sets out targets and the actions required to achieve these targets over the period of the plan.
The plan envisaged that amenity horticulture was an area where the market would grow rapidly and where substantial increased output was possible on both the home and export markets. Mushrooms and soft fruit were identified as other areas which would provide increased output. The plan recognised that potatoes already had a very high domestic market share and per capita consumption is the highest in the EU. The plan also saw that seed potatoes had growth potential. It recognised, given the past record in the fresh vegetable sector, that it would be difficult to make progress. Nevertheless the board's main emphasis was on increasing domestic market share which stands at very high levels for principal vegetable lines. Finally, in the protected crops sector, notwithstanding the problems of energy cost and strong competition from imports, the aim of the plan was to increase domestic market share.
The plan also recognised that quality and hygiene were key features of modern industry and they were likely to become even more important. Accordingly, the plan envisaged the extension of the board's quality symbol and approval schemes to a comprehensive range of products to ensure the industry could continue to be competitive in these two essential areas. In addition the plan envisaged the board would continue and enhance its promotion of horticultural products with emphasis on the health and environmental aspects. Action was also envisaged on value added market opportunities, improving links with all sectors of the industry and on improved market and marketing structures.
The plan recognised the development and marketing of horticultural produce is consistent with and supports efforts to improve the environment. There is little direct conflict in horticulture between production and the environment. Amenity product production and consumption, for example, directly enhance the visual environment. The production of most primary horticultural food products is done in an environmentally friendly way. The board ensures, therefore, that its marketing and development efforts continue to support the environment.
As Deputies are aware, the significant health benefits which arise from increased vegetable and fruit consumption are being increasingly recognised. In addition to positive environmental impact, increased horticultural consumption will be associated with the enhancement of the general health level. The gains to society from improved marketing and consumption of horticultural produce, therefore, extends beyond the direct economic benefits. An Bord Glas has promoted a wide range of horticultural products to the consumer in recent years, including, for example, potatoes, tomatoes, apples and soft fruit. In 1996, the board implemented a multi-sectoral promotions plan which provided for a comprehensive series of actions to ensure co-ordinated and balanced promotional activities in all the key market sectors. I will return to this subject later.
The development plan envisaged an increase in output of more than £56 million, an increase of 33 per cent on the 1992 figures. On the assumption the target is achieved, the board envisaged that employment would increase in amenity horticulture, vegetables and mushrooms. Horticulture is labour intensive, as Deputies are aware, and this is significant in the context of employment. Horticulture represents only 5 per cent of gross agricultural output, yet it accounts for 14 per cent of the agricultural labour force.
I want now to let Deputies have some further indications of areas in the development plan where progress has been made. The board has placed great emphasis on hygiene and quality. Quality programmes have been developed specifically for the needs of the horticultural industry. In addition, a comprehensive range of quality manuals have established appropriate codes based on EU and national legislation as well as best practice for the management of horticultural products from the growing environment to the end user.
The quality programmes currently target primary producers and wholesalers and pre-packers to present the highest quality product for sale to the retailer or processor of horticultural products. Participants are required to develop and operate quality control and traceability systems as an integral part of the quality programmes. All quality audits of participating enterprises are undertaken by an independent quality auditor and participants who achieve An Bord Glas standards are awarded quality and hygiene awards or certificates as appropriate.
Market intelligence is another area of crucial importance and the board engages in the collection and dissemination of data on wholesale market prices, horticultural production, retail consumer expenditure, sectoral market research and information on EU trade and trends.
I referred earlier to the question of promotion. These activities are undertaken by An Bord Glas by promoting the concepts of healthy eating and living, quality produce and the enhancement of the environment. Promotions target the benefits of greater fruit, vegetable and potato consumption for a healthier lifestyle and the contribution plants and flowers make to our .environment and lifestyle. Medical research worldwide has confirmed evidence that vitamin E, which occurs in many vegetable and fruit oils, dramatically reduces the risk of heart disease. In addition, increased consumption of fruit and vegetables in the daily diet can help in the prevention of certain forms of cancer.
Promotion is conducted on a generic basis utilising a wide variety of promotional media. As Deputies will have seen from the 1996 annual report of An Bord Glas, it published and implemented a promotions plan which had a multi-sectoral approach to consumer communications spanning six key market areas for fruit and vegetables while the amenity products covered three areas. Specifically the areas covered in the fruit and vegetable sector were consumers, retailers, catering, medical, schools and colleges and community groups, while the amenity products covered consumers, retailers and specifiers. A wide range of organisations were consulted and collaborated in the implementation of various promotional projects under this programme. In addition, a wide range of media advertising projects was undertaken. An Bord Glas also participated in and supported a number of shows and exhibitions as well as producing and distributing a wide variety of promotional literature. Demand for literature increased substantially as promotional work progressed during the year. Promotional activities are continuing in 1997 and will be further continued in 1998. The promotional activities provide a co-ordinated and integrated approach to the promotion of horticultural produce on the domestic market. In general, the intention in 1998 is to base the promotion on an overall unifying theme which will take account of the needs of various sub-sectors. The promotion plans will be devised and implemented in close consultation with retailers, producers and relevant An Bord Glas personnel.
Under the 1990 Act An Bord Glas also has a strong development function which it implements by co-ordinating the total development effort in conjunction with other relevant State agencies. It directs resources into the areas where they are required to realise the potential in the various product sectors. It liaises with interested groups to ensure a fully integrated approach to promoting growth within the industry and encourages development on an individual business level through assistance for feasibility studies, the operation of business development programmes and other related measures.
I will now speak specifically about some of the product sector areas. In the case of mushrooms, the aim under the development plan was to increase output from £51 million to £71 million and to actively encourage the continued orderly development of the industry in line with State policy and developments in the marketplace. The value of the mushroom industry at the end of 1996 was almost £73 million, so the target of An Bord Glas for the sector has been achieved.
An Bord Glas has carried out a wide range of activities in this sector, including market research in the UK and continental markets, promotional activity, the organisation of the national auditing and hygiene awards, organising demonstration farm sites and business management training programmes, an in-depth review of the industry in conjunction with other State agencies and the promoting of spent mushroom compost projects.
Since the start of the development plan the mushroom sector has performed very well overall. Initially there were difficulties with sterling, increasing costs and reducing margins coupled with a more competitive market. However, 1996 was a satisfactory year. Demand from the UK market was strong and developments in exchange rates favoured trade. The wholesale market maintained a reasonably good demand and supply balance during the year and average returns were up.
Challenges facing the sector include market developments, environment pressures and recruitment. The industry will have to ensure that the adoption of new technology, which will lead to an increase in total production, is balanced with the potential of the markets to absorb extra production.
There are at least six key issues facing this important industry: the continued orderly development of production and marketing in order to prevent fragmentation of the sector; potential future growth of market sectors, for example, multiple markets, and other market sectors, including exports; technological developments at home and abroad, for example, phase 3 compost, indoor composting, alternative growing systems, picking aids etc., which will impact on production levels and viability; environmental issues, including waste disposal; training and recruitment; and the impact of the single currency.
In the case of other vegetable crops, for example, tomatoes, cucumbers, peppers etc., an increase of £2.6 million in output value was aimed at under the development plan. It is expected that in this sector domestic per capita consumption of the main products will reach the level of the European average. The picture in this sector, however, is not as positive as that in the mushroom sector. Returns to the glasshouse sector are unpredictable and variable and influenced by many factors. Tomato output will have the biggest influence on the Bord Glas target for this sector because it is by far the most important crop in value terms. Unfortunately, since the launch of the development plan the total acreage of protected crops has fallen. While a small acreage of new glass has been erected, this has not been enough to replace the loss which resulted from high energy costs and EU expansion.
Nineteen ninety-five was a disastrous year for tomatoes due to gluts in the EU market which resulted in very low prices to producers and a consequential dramatic drop in the output value of tomatoes by £2.8 million. In 1996 there was a much improved situation which led to a significant increase in the output figure compared with 1995, making an important contribution to the target of An Bord Glas. Cucumber and pepper production is small and it is not likely that we will see any significant increase in the production of these crops. Total lettuce production has decreased in recent years, and the flat lettuce market has been affected by the demand for iceberg lettuce.
The cost of energy and low prices driven by developments within the EU continue to cause problems. The key issues facing the sector are: new developments within the marketplace and a move toward direct purchasing and centralised distribution; opportunities for grower groups to have closer liaison with fresh produce buyers, negotiate better returns and improve co-ordination; developments in other producing countries; high costs of reinvesting in and developing production units; high cost of energy; the need for specialist labour skills.
An Bord Glas has been taking and will continue to take a range of actions to achieve the targets set for this sector. Group marketing has been actively encouraged and assisted. An important aid to this sector is the operation of the An Bord Glas Tomato Quality Mark which was introduced in 1992 and continued in 1996 and 1997. This scheme is used to assist producers raise quality standards, inform them of relevant legislation, promote quality produce in the marketplace and help them in obtaining better returns. Promotion of tomatoes was carried out and will continue to be carried out to highlight quality and increase consumption.
An Bord Glas played a major role in having the business expansion scheme extended to the glasshouse sector and prepared a guide to widely promote the scheme as a vehicle with which to raise funds for investment in the industry.
I now turn to field vegetables. The objective in the development plan was to increase domestic output from £26 million to £32 million by 1999 — an increase of £6 million. This target has been exceeded with output reaching £35 million by the end of 1996. The main emphasis within the sector will be on maintaining and increasing domestic market share which stands at 70 per cent to 75 per cent for principal vegetable lines. Vegetable trade with the United Kingdom is expected to reach £4.5 million by 1999. While the overall value of the sector has increased, rising input costs combined with lower producer margins and the availability of cheap imports are putting severe pressure on producers and leading to some growers leaving the sector.
With almost 60 per cent of the retail market controlled by multiples which are introducing central distribution and supplier rationalisation strategies, there is an immediate requirement for smaller producers to work in a more co-operative and focused manner. In terms of market demand, there is a growing requirement for exotic prepacked and prepared vegetables. There is significant market potential in the domestic, retail, multiples and food services sector.
An important element of the work of An Bord Glas in this sector is the market co-ordination programme which was introduced in 1995 and continued to operate in 1996 and 1997. The benefits of this programme have been acknowledged by producers, wholesalers and retailers. The Horticulture Industry Forum which was established towards the end of 1995 by my predecessor, Deputy Deenihan, also plays a crucial role in this sector as it does for the horticulture industry as a whole. The forum was established to encourage greater co-ordination, co-operation and communication within the horticulture industry with particular emphasis on closer links between those in the industry comprising the supply chain. It is also designed to create closer and more dynamic links between the statutory bodies, such as An Bord Glas and Teagasc, my Department and the various sectors of the industry, such as growers, wholesalers, retailers and their representatives.
The key issues facing this sector are: to encourage and facilitate increased co-ordination among field vegetable producers; to support producers in adapting to the trend towards centralised distribution among multiple retailers; to continue to improve quality standards at producer and prepacker level; to improve the flow of market information to producers; to address the issue of labour availability; to keep abreast of technological developments, i.e. new production methods; to monitor and encourage the uptake of the new EU producer group scheme.
The output of soft fruit has exceeded the target increase of £2.5 million set down in the development plan. Valued at £6 million in 1992, the soft fruit sector had increased its value to £9.07 million by 1996. Strawberries continue to be the dominant product, accounting for an estimated two thirds of production.
The market for minor fruit, such as tayberries, blueberries and loganberries, is expected to increase while there is also scope for increasing fruit production for processing. Export markets, particularly for strawberries, are being developed and further potential exists. The erratic and severe weather conditions during 1997 caused serious problems for soft fruit production in terms of reduced yield output and low quality standards.
The processing sector accounts for 28 per cent of the soft fruit industry. Ireland is the only country in the European Union producing Cambridge Favourite type strawberries. This gives us a strong competitive advantage in terms of selling to processors in Ireland and the United Kingdom. Despite the market potential, the level of acreage is declining. To combat this decline, An Bord Glas, in consultation with Teagasc, producer representatives and the processing industry, has introduced a scheme to improve quality in the sector and encourage increased production of strawberries for processing. This scheme is part of a long-term strategy designed to guarantee the survival of the strawberry processing industry by achieving better quality, higher yields and output, and encouraging the maintenance of a critical mass and economies of scale among growers. The scheme will also act as a strong marketing tool in promoting Irish strawberries to processors operating in the Irish market. An Bord Glas has had ongoing liaison with groups operating in this sector and encouraged and assisted group marketing projects.
The key issues in this area are: to maintain and increase, where appropriate, the acreage and number of growers to ensure the viability of the soft fruit industry, both fresh and processing; to increase quality and hygiene standards at production level; to promote and assist the establishment of producer groups and further develop existing groups; to provide producers with up to date market information. Other key issues include exchange rates, exports, developments in the European Union, technology and labour productivity.
In the top fruit sector growth has exceeded the modest target set in the development plan. Output value increased from £2.17 million in 1992 to £3.63 million in January 1997. Irish apple producers hold an estimated 14 per cent share of the domestic market. During 1997 domestic output and the quality of domestic produce was severely hampered by frost during the spring growth season. With the changing retail structure to centralised distribution and supply rationalisation, it is vital that apple producers are more co-ordinated in targeting the retail market. An Bord Glas has assisted producers with promotion in this area to maintain and increase market share.
Among the key issues are: to encourage increased co-operation among producers to increase economies of scale; to provide strategic direction to producers in terms of identifying and targeting retail customers; to provide marketing and promotional support to producers; and to assess market potential for new apple varieties. Other key issues include recruitment and developments in the EU market.
The ware potato sector has been under severe market pressures in recent years with a combination of poor pricing and increasing customer standards. Significant investments have taken place in the potato sector since the mid-1980's under the FEOGA and OPARDF grants schemes. However, some businesses which have invested heavily are under financial pressure due to poor markets.
Potato production increased by approximately 10 per cent during the period 1992-6 leading to an oversupplied market in 1996. Preliminary estimates project 1997 production to be reduced by between 5 per cent and 10 per cent. These changes are expected to lead to more balanced supply and demand. There are also structural changes which concentrate an increasing percentage of production in the hands of larger producers while smaller producers are moving out of production.
The An Bord Glas development plan target was to increase output by £3 million. The 1992 output was valued at £51.1 million. The assessment of the achievement of this target is complicated by annual price and yield variations. The 1996 output was estimated at £57 million. While there has been modest growth in production since 1992, sustainability of this growth will be difficult to maintain unless there is ongoing growth in export markets and-or the development of new value added and processed products in the domestic market. I understand there may be developments in the chip potato sector.
An Bord Glas introduced new quality awards for potato pre-packers in 1996. The awards were an important step forward for the potato sector as they highlighted a strong commitment to promoting quality and hygiene within the sector. The An Bord Glas awards are assessed on the basis of the quality manual for potatoes which outlines a code of practice for handling, storage and marketing. This manual forms the checklist against which participating companies in the An Bord Glas quality and hygiene programme are audited by an independent quality consultant. The companies receive feedback on areas where improvements are needed in their systems, operations and facilities and this has been an effective mechanism for putting new standards in place. The key issues in this sector are to promote value added initiatives for potatoes and monitor fresh market consumer trends; to support and promote enterprises supplying the catering trade; to support new processing initiatives; to monitor and encourage export opportunities for fresh potatoes; to expand the quality programme which An Bord Glas operates for potatoes; to promote the quality programme to major retailers and to improve the timeliness of production and market intelligence in conjunction with my Department and Teagasc.
The seed potato industry has undergone many significant developments in recent years. However, its competitiveness remains a continuing cause for concern. Against this background An Bord Glas undertook a strategic review of the industry in 1997 with a view to developing new policy initiatives. This review is being finalised and will set the agenda for State agencies and the seed potato industry for the coming years. The development plan target for seed potatoes is to increase output by £2 million. The 1992 output was valued at £4.7 million.
I am aware that my time is exhausted. However, I have much more to say on this issue and I would be grateful if I might use some of my colleagues' time.
