Vol. 674 No. 2
69 Deputy Kieran O’Donnell asked the Minister for Agriculture, Fisheries and Food if he will confirm the level of payment expected to be made available under the suckler cow welfare scheme in 2009 and 2010; and if he will make a statement on the matter. [5031/09]
I expect to be able shortly to confirm the position regarding payments under the suckler welfare scheme. More than 53,000 farmers applied for the scheme in 2008 and the estimated cost, at a rate of €80 per cow, will be some €77 million for 2008. By the end of 2008, €33 million was spent on the scheme. A further €44 million has been provided in my Department's Estimate for 2009 to pay for the remaining 2008 born calves. Of this €44 million, more than €12 million has been paid out to farmers already in January and payments are continuing on a weekly basis as additional animals become eligible. It must be borne in mind that the money paid to farmers under this scheme is an additional income stream that was not there before last year and that all of this money is coming from the Exchequer.
I will be as direct and as straight as I can be to assist the Minister. This was introduced at €80 per head and was then reduced to €40 per head. Will the Minister make a statement to the farmers and the nation to categorically dispel the existing rumour that this scheme will be abolished?
This scheme was introduced with funding of €250 million to be provided over five years. In the first year of applications there was a very large take up and the total cost of the 2008 scheme amounts to €77 million. A sum of €33 million was provided in the Estimates for 2008 and this scheme, by its nature, is claimed for only towards the end of the year with calves weaning. Some €33 million was spent in 2008 and the remaining €44 million due for the 2008 scheme will be paid. A total of €12 million has been paid since 1 January and payments continue. No decision has been made on the rate of payment that would apply to this scheme for 2009.
Will the Minister give assurances that this scheme will be in place for the next five years?
This scheme was introduced last year——
It is a "yes" or "no" answer.
I indicated that the €250 million provided for the scheme was not €80 per animal. It was introduced at the beginning on the basis that there would be €250 million over five years. The intention is to honour that scheme.
The Minister said 53,000 farmers applied, but the relevant figure is how many animals were applied for. The calculation was on the basis that one would need €77 million for a year, yet only €44 million was paid out in 2008, because there were animals that carry over. Is it correct that €44 million is still due on the 2008 applications? When the five years are up there will be animals that will not be claimed for until the year after the scheme closes. Is the Minister prepared to re-evaluate the amount of money up from €40 if the number of animals claimed for is smaller? If the €40 is paid out in years two, three and four, will he save the money and continue to pay €40 or does he intend to revise the figure, if possible, upwards?
As Deputy Doyle rightly said, the number of applications was almost 54,000 and the number of beef breed calves born in the scheme last year was 974,000. The funding paid out under the 2008 scheme during the calendar year 2008 was €33 million and €44 million is provided in the 2009 Estimate to pay the remainder of the 2008 scheme. Many of the applications would come in only at the end of the year and there would be that carry-over into 2009 but the payment is in respect of the 2008 scheme.
The question was whether the Minister will revise the figure upwards.
I very much doubt that because the demand on the scheme will be sufficient to draw down the funding available.
A number of complaints and requests have been sent to the Wexford office and information has circulated from that office to the local and district Department of Agriculture, Fisheries and Food offices. They have been told in typical Departmental speak, vague and meaningless, how to answer those questions. This is nothing more than a delaying tactic. Has the Minister seen this and verified that it should go out? This is regarding payments to farmers of overdue payments.
On the suckler cow scheme?
No, REPS and other payments.
We dealt with the REPS payments. I do not know if the Deputy was in at the time.
That was a priority question.
This question deals with suckler cow payments.
The suckler cow payments are processed from the Portlaoise office of the Department and I am not aware of people awaiting payments. In many instances the Department has been back to individual farmers clarifying aspects of the applications that were deficient, or whatever. The payments are issuing rapidly. If there is a query about a particular applicant we will check it out.
On a point of information, these notices came from the Department to all local offices.
70 Deputy Seamus Kirk asked the Minister for Agriculture, Fisheries and Food if the additional modulation agreed to in the CAP health check will result in a loss of money to farmers here. [4940/09]
The agreed rates of additional modulation will generate approximately €120 million in total over the four years from 2009-2012 in transfers from the single farm payment to rural development. These additional funds will stay in Ireland and be passed back to Irish farmers under the rural development programme. As such, the additional modulation represents a redistribution of money from the single farm payment scheme to other farm payment schemes. As this process will involve the transfer of funds from one type of payment to another, it will be income-neutral for farmers as a whole.
That is not true.
In line with the new regulations the funds must be used for measures to address the so-called "new challenges" of climate change, water management, bio-energy and biodiversity, dairy restructuring and innovation. The consultation process as to how these funds can best be used for the development of Irish agriculture is currently under way. It is also worth noting that more than 50,000 Irish farmers will be exempt from the increased rate of modulation.
The Minister may not have the statistics, but could he tell us what will be the total annual benefit to the agriculture industry of the modified arrangement?
With the existing modulation arrangements, the amount collected annually is €42.5 million. That modulation is in place up to 5%. With the new rates that will be applicable there will be an increase in modulation rate of 2% this year and 1% in 2010, 2011 and 2012. The additional funding that will be generated for the modulated fund will be €17 million this year, €25 million in 2010, €34 million in 2011 and €42 million in 2012. That brings the cumulative amount in the period up to 2012 to a total of almost €120 million.
The Minister said these would be zero gain, but there will be a net loss to some farmers who will not avail of some of the schemes. Can the Minister clarify whether some of the REPS 4 budget is being taken out of the modulated money? The spin on this is that REPS 4 and single farm payments have separate budgets, but is this a transfer of funds from the single farm payment into REPS 4?
Up to now the modulated funds that were available, which were fairly small, went into the overall rural development programme. The Exchequer puts a substantial amount more into the rural development programme than the necessary requirement, because it is co-funded by the European Union. Deputy Doyle's point is correct in that there was an effort in the past to ensure the modulated funds would go to the broader rural development programme, which would encompass measures outside the farm gate. In the health check, I argued strenuously that the money should be retained on farms and not go to programmes that did not directly benefit individual farmers. Programmes will be introduced, particularly in the areas of climate change, water conservation, biodiversity and innovation, which can be availed of by individual farmers. I said in my initial response that the consultation process had begun and we have asked for submissions to be returned to the Department by 16 February. All the funding will go back to on-farm activities, not those outside the farm gate, as other countries would have argued for.
The question is whether there will be a loss of money to farmers. The point of modulation, as the Minister has stated, is to contribute towards environmental measures such as water conservation. Will the moneys involved be controlled by the Department? Will they be paid directly to farmers, or will they be paid to other agencies as determined by the Department to administer those schemes? The point is whether farmers will lose money through the measures that are supposed to be incorporated within modulation.
The funding will remain in schemes operated by the Department, not outside bodies. For argument's sake, we could have a top-up in REPS which would consist of an extra measure, but the money will not go to agencies, projects or programmes that are outside the farm gate.
71 Deputy Niall Collins asked the Minister for Agriculture, Fisheries and Food the additional support measures being put in place to support the dairy sector here. [4932/09]
Dairy farmers' incomes comprise the market price paid for milk and direct income support from the EU. Market forces have a significant and increasing influence on the price paid for milk. World market prices determine the returns received by dairy processors and these in turn are reflected in the price paid to farmers. In essence, farm gate prices normally reflect the returns from dairy product sales in international markets. Dairy product prices reached record high levels in 2007 and early 2008, and producer prices also peaked at that time. Since then, international prices have fallen back considerably, although the average Irish producer price for 2008 was similar to the 2007 price. The indications are that markets will remain weak in the first half of 2009.
I made it clear to Commissioner Fischer Boel that a range of supports would help to restore confidence and put a floor under market prices. The Commission initially responded by commencing the 2009 butter private storage scheme two months early. Subsequently, on 15 January, the Commissioner announced further measures to assist the dairy sector, which included a commitment under the intervention system to purchase more than the fixed quantities of butter — 30,000 tonnes — and skimmed milk powder — 109,000 tonnes — if the market situation requires it. In addition, she announced the reintroduction of export refunds for butter, milk powders and cheese, and these were reinstated at the milk management committee meeting on 22 January.
Irish operators can now avail of these refunds and my Department will continue to examine the position and urge the Commission to set the refunds at an appropriate level to support the dairy sector. During the health check negotiations, I argued strongly in favour of keeping critical market instruments in place and using them effectively. These support measures can now be used to respond to price volatility in the current market situation and will help support the dairy sector in Ireland. While we are facing short-term uncertainty, analysis shows that the long-term outlook is bright. The main international forecasting organisations predict global growth in wealth and population in the medium term. This will present new opportunities for high-quality producers such as Ireland, and all areas of the dairy sector can expect to reap the rewards.
One of the major challenges in the medium term is to ensure that Irish farming and the agrifood sector is at the heart of an evolving high-value food market which is focused on quality and innovation. As part of this overall strategy, the Department provided funding of €140 million towards investment in dairy processing. A total of 19 capital investment projects were approved and awarded grant assistance under the fund, which will generate an estimated capital spend of €286 million at full production. In the meantime, I assure the House that I will continue to monitor developments in the dairy sector closely and intervene again with the Commissioner as the market situation evolves and in view of the particular difficulties facing the market at present.
Could the Minister clarify the products covered by the export refunds that were recently introduced? In addition, I ask the Minister what he considers to be the general outlook with regard to dairy pricing. How does he feel the dairy investment fund will improve the dairy industry? Could he comment on the benefits of the CAP health check to the dairy sector?
With regard to dairy prices, as Deputy Collins knows and as I mentioned in my earlier comments, the dairy market has been volatile and things are difficult for producers and processors at present. We had good prices in 2007 but difficulties arose in 2008 due to the extra supply coming from New Zealand, turbulence in the global financial market and the lack of demand worldwide. New Zealand, which is a big exporter, can benefit from a favourable exchange rate. All of this makes things difficult for Irish and European producers. Prices are low in New Zealand and the US and the recession is reducing consumer demand. As I said, New Zealand benefits from having its own currency which can be devalued when necessary. It is a major exporter. Fonterra, its major processor, is the biggest exporter in the world. Thus, things are difficult for producers in terms of prices, and processors have indicated that the first half of this year will be particularly difficult.
Export refunds are applicable to butter, skim milk powder, whole milk powder and cheese. The Deputy also asked about the health check. This country has a strong dairy industry, notwithstanding the pressures on the market at present. Additional milk quota will be valuable and beneficial to dairy farmers. It will bring extra capacity to the country and will be put to good use.
I accept that this is a difficult time and many of the problems are dictated by global conditions. What we need is far more aggressive use of market support measures at European Union level. The Minister said that the picture looks difficult for the first half of 2009, which is the peak milk production time for Irish farmers. The Minister will be aware that some processors are talking about a doomsday scenario, with farmers paid in the region of 19 or 20 cent per litre for milk. That is the cost of production. Farmers will not be able to ride out that type of price volatility. Notwithstanding what has been achieved in Brussels, as the Minister has outlined, does he accept the necessity to go back to ensure that a more realistic price can be paid by processors if there is more aggressive use of market support measures?
A number of Deputies wish to speak so I ask people to be brief.
Deputy Creed is right. The market mechanism measures can take product off the market, thus giving it a boost. During the course of the health check, many countries argued that such measures should be much restricted and that the Commission should decide when they were invoked. We argued strongly for the need for the private storage system, the intervention system and the export refunds. The market management committee is meeting on 19 February. We have indicated to the Commission that we are adamant that there should be a higher level of refund to support the market. We have argued for that. The private storage scheme was brought forward to 1 January. We have argued strongly to the Commission, and will continue to do so, that we need to make maximum use of the market mechanisms that are available in view of the particular difficulties that exist at present.
I welcome any support measures. Does the Minister accept that it is pointless to get an increase in quota when we do not have an increased market? Clearly, increased production at European level and elsewhere has affected the price. How can he give such a positive view of the world market when production in the US and elsewhere is constantly increasing? The US, in fact, is now using storage systems to prop up its own market. Can the Minister assure us that he will exert maximum pressure to increase the use of intervention and other measures to underpin the drastic prices available at present?
The Deputy pinpoints the particular difficulties facing the market. Additional quota will be useful. The commodity price and this industry have suffered from cycles. We can suffer problems arising from the currency, which can be in our favour at times and against it at others, while in 2007 there was a drought in New Zealand which reduced production there. The US emerged as an exporter and was helped in that by the weak dollar. However, higher feed costs there and the strengthening of the dollar slowed that trend. Undoubtedly, farming practices that increase production or decrease production in any of the major producing countries have an adverse effect on us. There is a limited market.
With regard to the medium term, a couple of years ago we could have discussed the growing affluence of highly populated countries such as India, China and Asia, the changing dietary requirements of people there, the huge growth in population and new markets evolving in those countries for dairy products. That is not as applicable today as it was at that time or a year ago. The only consistent trend is the growth in the world's population. The Food and Agriculture Organisation of the United Nations has produced long-term forecasts on the likely demand for food and has indicated that food production will have to double by 2050. I appreciate that this is no good for the individual farmer who is getting a bad price for milk today.
To what extent does the Minister believe that the commodification of dairy products and the fact that they are tradeable commodities has an effect on the markets and on the price of milk for Irish farmers? This should be taken into account. Are there discussions at EU level or within the WTO framework to tackle the fact that commodification is causing great vagaries in prices? That is having an impact on the market here.
With regard to the price supports the Minister mentioned and his talks with Commissioner Fischer Boel, what do they mean in a practical sense to a farmer who is offered 19 cent per litre when the farmer's production costs are probably 22 cent or 23 cent? In the last three or four years farmers have been mandated to follow EU directives relating to issues such as waste management on their farms, the nitrates directive and so forth. They have been asked to spend a great deal of money on their farms. In some cases the Department has announced schemes. It allocated €56 million for one of them but thousands of farmers have not even received that money and do not know if they will get it. At the same time that the Minister has imposed this burden on farmers, the processors are offering them 19 cent per litre, a reduction from 29 cent. In the case of some winter milk producers, it is a reduction from approximately 39 cent. The Minister must answer the farmers' questions. How are they to stay in production if that is the price they will be given by the processors? What is the Government going to do about it, considering what the Minister has mandated farmers to do under EU directives? What will the EU do to try to save some of these family farms that are facing non-viability within the next year?
In response to Deputy Deasy, the market mechanism measures we discussed previously are European Union wide. Everybody knows the law of supply and demand — if there is over-supply or lack of demand, the producer is, unfortunately, the victim. That is happening with milk production today. We argued within the European Union, with some success, for the retention of aids to private storage, intervention, which is really public storage, and export refunds. We succeeded in having the date brought forward for the implementation of some of those measures. We will argue in the management committee of the European Union next week that the measures should be improved to provide a better baseline price in the industry. Over-supply, lack of demand, currency problems and global recession are all factors in keeping the price down for the dairy producer.
We are seven minutes over time on this question.
The reality is that in my constituency hundreds of farmers will go out of business. The Minister will have to succeed next week.
We must proceed to the next question. The Deputy has made his point very forcefully.
Hundreds of dairy farmers will go out of business if this price reduction comes into force.
We must proceed to Question No. 72. We have spent more than double the allocated time on this question.
Will the Minister please respond?
Very briefly.
The Deputy is well aware that we do not set the price. Deputy Crawford and I are from a constituency that has a huge dairy sector as well. People are working extremely hard.
The Minister mandated that EU directives be carried out. At the same time the farmers are paying this money, they get a price reduction.
We do not mandate any EU directive, as the Deputy is aware. He was chairman of the European affairs committee and he knows——
I tried to stop it, for this reason.
Allow the Minister to reply.
Directives are implemented European Union wide; they are not mandated by me or by the Department. We must implement them when the decision is made.
Could the Minister not grant aid it?
We must move on. We are eight minutes over time on this question.
Does Deputy Deasy think——
The Minister has allocated €56 million for these farmers. Most of them are not going to get the grant for the waste management scheme. The Minister cannot announce a scheme for waste management and then not fulfil it.
72 Deputy Joanna Tuffy asked the Minister for Agriculture, Fisheries and Food if extra funding will be made available to Bord Bia to promote Irish produce to continental EU markets following the pork dioxin scare and in view of the 30% gain made by the euro versus sterling which has a major impact on producer profits from British sales; and if he will make a statement on the matter. [4885/09]
The total Exchequer allocation to Bord Bia for 2009 is €31.6 million, including specific allocations for quality assurance, that is, the quality assurance scheme, and healthy eating initiatives, such as the Food Dudes programme. This grant-in-aid, together with an industry contribution of the order of €7 million, will enable Bord Bia to implement a comprehensive set of promotional programmes and services to assist Irish food and drink companies build additional business in Europe, particularly in euro zone countries. These programmes have been developed in consultation with industry, bearing in mind the impact of the sterling differential on competitiveness.
Among the extensive range of activities planned for continental Europe are: a Private Label seminar, France-Belgium, which will be followed up by participation at the MDD — Marques de Distributeurs Alimentaires — trade fair in Paris and mentoring on the requirements of supplying continental supermarket groups; Marketplace Roadshow Spain, which involves building insight into Spanish market requirements, through a seminar on the retail and food service markets and the dynamics of the market, which will be followed by participation at the Club de Gourmet trade fair in Madrid and individually tailored buyer meetings with the largest customers in the market; Portugal market familiarisation, which involves a key insight into market and visiting the Alimentaria trade fair in Lisbon; the Private Label seminar, Scandinavia, Germany and Holland, which includes company specific mentoring on market requirements and participation in the PLMA — Private Label Manufacturers Association — international trade fair in Amsterdam; and food ingredients-nutraceuticals, Europe, which involves providing industry with detailed analysis on market requirements, particularly for dairy ingredients, culminating in participation in the Vita Foods international fair in Geneva. Other trade fairs where Bord Bia will be promoting the capability of the Irish food, drink and horticulture industry include Biofac in Munich this month, Vinexpo International Wine and Spirits in Bordeaux in June, TFWA Duty Free in Cannes in October, Anuga International in Cologne in October and Food Ingredients Europe in Frankfurt in November.
Bord Bia activities will also be prioritised to assist the meat sector following the dioxin contamination incident last year and the board has in place a market recovery campaign to build on the reassurances already provided to customers since the product recall. My Department, the Department of Foreign Affairs and Bord Bia are continuing to work closely on market access issues and will be guided by Irish exporters with regard to programmes and activities required on a market by market and customer by customer basis.
I anticipate that the Minister of State will spend some time in the air to visit some of the events. I welcome the fact that there is a significant budget for Bord Bia. It is money well spent when one thinks of the return. The €8 billion to €9 billion in food exports will be one of the saviours if this economy is to lift itself out of recession. The emphasis on food production will be vital in that sense.
Has there been a full restoration of the markets in light of the pork dioxin scare? I refer to the markets prior to 6 December. As I understand it, we have lost some market share to the UK because of the sterling differential, which is a major factor. I welcome the Minister of State's answer but we need to step up our efforts in terms of the potential of continental Europe given that we have 33% of exports there currently. There is a greater potential in continental Europe. I do not necessarily expect the Minister of State to come back with a reply on that one given the timeframe — it is just by way of a general comment.
I appreciate what Deputy Sherlock said. He has taken a pragmatic approach. He put his finger on it in terms of the potential of the food market when it comes to the recession.
On the pigmeat sector, consumption in Ireland has returned to relative normality quite quickly. That, in itself, has sent out a positive message demonstrating the confidence of the consumer in Irish pigmeat. That is what Bord Bia is using in its market recovery campaign.
Bord Bia is currently preparing the first in a series of promotional campaigns being launched this month and it is hoped, subject to resources, that this can be followed by two similar campaigns later in the year. It is intended that these will focus on promoting products bearing the Bord Bia quality mark, which will also communicate origin as the Irish pork and bacon approved label is phased out.
The recovery plan has four aspects. First, there is the customer reassurance programme. This demonstrates the integrity of Irish health controls, which is the first point that Bord Bia makes internationally in all of our markets. Second, Bord Bia is working specifically with the Irish embassies, hosting bilateral veterinary meetings so that the people in those countries can be absolutely assured and can speak from a position of knowing everything that must be known about our traceability and our confidence.
Third, a trade communications programme is in place. That is where Bord Bia approaches decision makers in the retail, food service and manufacturing sectors to ensure that there is no breakdown in communication and they understand the primary quality of our product. Finally, on international access for pigmeat, Bord Bia is approaching opinion formers in the market based around the exemplary health controls. This involves the media, where Bord Bia gets into magazines and newspapers.
I admire the Minister of State's list of conferences worldwide.
A supplementary, please.
I do not go to them all, by the way.
I was going to ask if the Minister was going to travel by Government jet.
He will cycle.
The Minister of State mentioned the word "traceability". We have failed hopelessly on the traceability of the products that are offered here as Irish products in the poultry sector. What will the Minister of State do to correct that imbalance? It is no good going around the world advertising our product if it is not genuine product.
On the same issue of traceability, I support all the Minister of State's efforts to promote the product but for the future we must be absolutely sure there is traceability. We did not have it when the problem arose. We have the same problem of traceability in the poultry sector. We do not have proper labelling. I would encourage both the Minister of State and the Minister to do all they can on food labelling.
I agree with the Deputy that it is a key issue. We have been asking the European Commission to accept our proposals. While we are working through that and insisting on a higher standard Europe-wide, we are succeeding in getting across that our overall health checks are exemplary and the fact that we had a total recall was evidence that we were not prepared to accept anything but the very best. There was no doubt whatsoever and no caveats in that regard. Unfortunately, that was required to ensure that we would not have any doubt.
There is still work to be done. The Minister, Deputy Smith, is working hard to ensure that our European partners accept that we need improvements in traceability.
Written Answers follow Adjournment Debate.
