Vol. 686 No. 2
25 Deputy Michael Creed asked the Minister for Agriculture, Fisheries and Food his views on whether the market support measures are adequate to address the crisis facing the dairy sector; the measures he will introduce to address the short-term credit crisis facing dairy suppliers and processors; and if he will make a statement on the matter. [26299/09]
The Common Agriculture Policy, CAP, provides a range of measures that can be used to assist the dairy market. These were modified in the CAP reforms of 1999 and 2003. In the CAP health check negotiations last year there was pressure to remove or weaken the support measures significantly. At that time, the Minister for Agriculture, Fisheries and Food, Deputy Smith, fought hard to keep in place the key market instruments and these are now being used to help support the market.
In the EU, export refunds and internal subsidies were suspended since 2007 as prices were at exceptionally high levels. As the market situation deteriorated towards the end of 2008, the Minister for Agriculture, Fisheries and Food called on the Commissioner to re-introduce support measures to help stabilise markets. The first step taken by the Commission following his intervention was to introduce an aid scheme for the private storage of butter a full two months ahead of the normal date. Butter market support was available in January instead of March and the scheme remains in place, already supporting the storage of some 96,000 tonnes of butter at EU level. Also in January, export refunds were re-introduced for butter, cheese, skimmed milk powder and whole milk powder.
In March, public intervention for butter and skimmed milk powder was opened. When the mandatory limits of 30,000 tonnes and 109,000 tonnes, respectively, were purchased at the intervention price, the Minister for Agriculture, Fisheries and Food arranged a bilateral meeting in Brussels with the Commissioner. At that meeting he secured agreement for the continuation of these schemes under tendering arrangements at close to the intervention prices.
To date, some 81,000 tonnes of butter have been bought into intervention, equal to 8% of the butter production in January to June. In addition, some 96,500 tonnes of butter have been stored under the private storage aid scheme. As regards skimmed milk powder, 203,000 tonnes have been purchased into stock, equal to more than 38% of the skimmed milk powder production in January to June this year. In all, an amount of 20,000 tonnes of butter from Ireland and 27,000 tonnes of skimmed milk powder have been funded under these schemes at an approximate value of €60 million to Irish dairy processors.
The reintroduction of export refunds to support the sale of dairy products outside the EU was also an important action. It signalled an intention by the Commission to put a floor under the market and has succeeded in that goal. So far this year, licences to export some 96,000 tonnes of butter and butteroil and 123,000 of skimmed milk powder have been issued. Similarly, licenses were issued in respect of cheese exports for 129,000 tonnes. The support value of this trade amounts to a further €113 million when these products are exported.
While the support measures have had an effect, more can be done. The Minister has called on the Commission to examine other steps that may assist in reversing the downturn and stimulating the market further. For example, intervention purchases of butter and skimmed milk powder will close at the end of August and the private storage scheme for butter in mid-August. The role these private and public storage schemes play is important. Extending them beyond the normal closing dates will be crucial in preventing further market turbulence at a time when supplies would otherwise hit commercial markets.
Additional information not given on the floor of the House
While the Minister understands there are legal impediments to be overcome which he has articulated at meetings of the Council of Ministers, the market situation warrants an exceptional response on this occasion.
He has also called on the Commission to adopt a practical approach to the regulation governing the export of cheese from the EU. The so-called "free at frontier" threshold price is not relevant in the current market environment. This is a self imposed technical impediment preventing the use of export refunds in support of cheese exports outside of the Community in the quantities demanded by the market. The Minister has once again urged the Commissioner to remove the free-at-frontier price for cheeses at the earliest opportunity.
The EU Commission's actions in utilising available support measures have helped to stabilise the market. However, as the milk price is greatly influenced by the forces of supply and demand, support schemes have a limited effect on milk prices. The dairy sector downturn has its roots in the supply response that resulted from high prices in 2007 and in the early part of 2008. That situation was then exacerbated by the international financial crisis. This has had a major effect on the demand side. Difficulties with access to credit have worsened what was a cyclical downturn into a major reduction in international demand for dairy products. The market is now carrying surplus stocks as a result.
As regards short-term credit, the Government is acutely aware that the flow of credit to the economy is of utmost economic importance. A consultancy firm has been appointed to clarify the actual availability of credit and its report is due in July. Also, the credit supply clearing group was appointed by the Government to identify credit supply solutions where a pattern of credit blockage to viable businesses has been identified. These groups are working in tandem to identify and arrive at solutions on credit availability and a report is expected to be made available to the Government in early July.
The Minister of State at the Department of Enterprise, Trade and Employment, Deputy Billy Kelleher, has commenced a series of eight regional meetings in the coming weeks with regional representatives of the major banks, business representatives from local chambers of commerce, ISME, SFA, IFA and the Irish Hotels Federation to gather first hand experience of bank lending. Local representatives from the various state agencies, Enterprise Ireland and Fáilte Ireland, will also attend. This will feed into the work of the CSCG and future Government policy.
It has become a predictable process that the Minister for Agriculture, Fisheries and Food issues a press release the week before an Agriculture and Fisheries Council meeting informing us of the current crisis and what he will ask of the Commissioner. After the meeting, he issues another press release stating that because of his intervention, the world and all has been achieved for the dairy sector.
The reality is that for both the producer and the processor there is a real crisis. Farmers being paid per litre of milk 7 cent below the cost of production illustrates their problem. The most recent profit warning by Glanbia is evidence of a crisis on the processing side.
Have the costs of all interventions, such as export refunds and aid to private storage, introduced by the Commission been quantified? Considering we are facing into the CAP post-2013 review, has it been determined whether these interventions are the most appropriate use of public funds to support the dairy sector? For example, has an alternative system been considered that might pay a direct subsidy to farmers to get them through this trough in demand?
Regarding the processors, is there any initiative forthcoming from the Department of Agriculture, Fisheries and Food or the Department of Enterprise, Trade and Employment on the long-promised export credit insurance scheme?
As the Deputy is aware, I attended the Council meeting in Luxembourg with the Minister, Deputy Smith. I observed at first hand the effort being made by the Minister on behalf of Irish farmers. It is fair to acknowledge that there are significant difficulties in the milk sector at this time. Those difficulties are probably exacerbated by the fact that additional people, who were not previously involved in the sector, got involved in milk production when prices were relatively good in 2007. The Deputy mentioned the possibility of introducing alternative forms of infrastructure. One of the difficulties with that is that it would have to be made up from the start. The initiatives that were taken by the Commission on foot of the proposals made by the Minister, Deputy Smith, are already in place. In some cases, they have been brought forward by a number of months. They have had a positive impact on the removal of produce from the market.
They have not had a positive impact on the prices being paid to farmers.
The ultimate aim is to ensure that all of these measures will have such an impact. Farmers often complain that processors are the first to benefit from many of the measures that are taken. Deputy Creed has proposed another intervention on the processors' side. Like all of us, the Minister would like the prices being paid to farmers to increase as quickly as possible. All the indicators suggest that the price of milk, which is entirely cyclical in any event, will return to previous levels in the medium term.
The Minister of State's words are cold comfort for the producing and processing sectors. The monthly milk cheques being received by dairy farmers are approximately 50% of what they were 12 months ago. The political challenge we face is to ensure the industry can survive the cyclical nature of the downturn and be in a position to take advantage of the upturn in the global markets when it emerges. In light of the severity of the downturn, the reality is that many Irish dairy farmers will be out of business by the end of 2009. Is any initiative being pursued at a political level to prevent that? I acknowledge that initiatives are being ratcheted up at the various monthly meetings. They are not delivering what farmers need, however. If farmers go out of business, jobs outside the farm gate — at food industry and processing levels — will also be lost. If the Minister of State needs evidence of that, he should read Food and Drink Industry Ireland's recent report, which stated that 2,000 jobs have already been lost in this indigenous industry in 2009.
In my initial reply, I gave the House some information about the availability of credit. Like other Members of the House, the Deputy will be aware of the existence of the Credit Supply Clearing Group, which has had some impact in that regard. As Deputy Creed rightly said, farmers face substantial short-term difficulties. A little over a year ago, many farmers built additional infrastructure on the basis of legitimate expectations arising from the higher price levels of that time. The reality is that we operate in an EU context in the first instance. We also operate in the context of the WTO, which imposes all kinds of rules and regulations to be adhered to. The Deputy will be aware that the price paid for milk to farmers in New Zealand and the United States is considerably lower than the price currently available to Irish farmers. Ultimately, the most effective interventions are those which take produce off the market and ensure that new produce comes on to the market at an enhanced price.
26 Deputy Seán Sherlock asked the Minister for Agriculture, Fisheries and Food the market supports which will be devised to ensure that milk production is guaranteed at a price to farmers that will ensure the viability of dairy farming; and if he will make a statement on the matter. [26200/09]
Over the past year or so, we have witnessed unprecedented examples of volatility in dairy product prices. This volatility is a symptom of the changed EU policy framework in which we are operating. Global market forces are having a major influence on the price paid for milk. The mid-term review of the Common Agricultural Policy in 2003 led to a series of reforms that resulted in a shift from market support to direct income support. These changes were expected to lead to a reduction in the prevailing milk price, but the opposite occurred — the international commodities boom caused milk prices to reach as high as 40 cent per litre. Prices averaged 34 cent per litre in 2007 and 2008.
During last year's health check negotiations, there was pressure to considerably remove or weaken the support measures. The Minister, Deputy Smith, fought hard to keep the key market instruments in place. They are now being used to help to support the market. EU export refunds and internal subsidies were suspended in 2007 when prices were at record high levels. When the market situation deteriorated towards the end of 2008, the Minister called on the Commissioner to reintroduce support measures to help to stabilise the markets. The Commission initially responded by introducing — two months ahead of the normal date — an aid scheme for the private storage of butter. This meant butter market support was available in January instead of March. This scheme is still in use. Export refunds were reintroduced for butter, cheese, skimmed milk powder and whole milk powder in January. Public intervention for butter and skimmed milk powder was opened in March. When the mandatory limits of 30,000 tonnes and 109,000 tonnes, respectively, were purchased at the intervention price, this was extended to enable significantly increased volumes of butter and skimmed milk powder to be stored under tendering arrangements. Some 20,000 tonnes of butter and 27,000 tonnes of skimmed milk powder from Ireland have been funded under these schemes.
The reintroduction of export refunds to support the sale of dairy products outside the EU was an important action. It was a signal of the Commission's intention to put a floor under the market. It has succeeded in doing that. These measures have helped to stabilise the dairy market. The Minister and I believe other actions can be taken to help support the market, however. Intervention purchases of butter and skimmed milk powder will close at the end of August. The private storage scheme for butter will end in the middle of August. The extension of these schemes beyond the normal closing dates will be crucial in preventing further market turbulence. At meetings of the Council of Ministers, the Minister has strongly recommended that the closing dates should be extended without delay. He has also called on the Commission to set aside the "free at frontier" threshold price so cheese exports from Ireland can attract export refunds and facilitate trade.
Additional information not given on the floor of the House
I have given examples of ways in which the market can be supported by fully utilising the available measures. However, as the milk price is greatly influenced by the forces of supply and demand, support schemes have a limited effect on milk prices. The dairy sector downturn arose from the excess supply response that resulted from high prices in 2007 and the early part of 2008. That situation was worsened by the international financial crisis. This had a major effect on the demand side. Difficulties with access to credit exacerbated a cyclical downturn into a major reduction in international demand for dairy products. The market is carrying surplus stocks as a result. It will not recover fully until demand picks up. It is important to emphasise that medium-term prospects for global dairy markets are good. Growth in wealth and population is forecast to stimulate strong levels of demand for dairy products. Returns will improve commensurately. The Minister is confident that the sector will recover from this current downturn and achieve its fair share of the annual growth in demand for dairy products predicted by the OECD and others. In the meantime, he will continue to monitor closely the Commission's management of the dairy market. For example, he will call for the full implementation of existing and new measures as appropriate.
Does the Minister of State accept that while some farmers made profits that could be described as super-normal in recent years, when historically high prices were being paid for milk, the vast majority of them reinvested those moneys in their farm holdings? Does he agree that the lowest price being garnered in the market at the moment — 20 cent per litre — is completely unsustainable for dairy farmers with small and medium-sized holdings? I take the point the Minister of State made about export refunds. I welcome the extension of the aid to private storage scheme. Is the case in aid scheme in operation at present? What kind of take-up is it enjoying? Is the efficacy of the calf replacer scheme being analysed at present? As part of the overall process of increasing market supports through the EU, will the Minister for Agriculture, Fisheries and Food examine the relationship between producers, retailers and the co-operative movement? It seems to me that the relationship is unbalanced — it is not based on equity. Perhaps the Minister and his colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, should consider introducing legislation on fair trade practices. We need to ensure the multiples act fairly when they designate a price to the primary producer, especially as the primary producer is a price taker.
The Deputy is quite right to suggest that many farmers reinvested their profits on the basis of their belief that the price of milk, which was historically high in 2007 and 2008, was likely to be maintained in the medium term. To be fair, the indicators at the time suggested that was likely to happen. The Deputy made the point that the current position is unsustainable for a number of producers. It is certainly unsustainable in the long term. All the indicators are suggesting that this is a short-term blip. Farmers and others will be aware that the price of milk has always been cyclical. It has never before decreased as dramatically over a short period of time as it has recently. Nevertheless, it is cyclical. All the indications in relation to future milk prices are very positive. The availability of credit, which is a really important question for farmers in terms of sustainability, is being addressed. The Minister, Deputy Smith, has met the banks on a number of occasions to make that case strongly to them. The Deputy also spoke about the need to increase market supports. Virtually every support that had previously been in place has now been brought back into action. The Department is constantly looking at new ways of addressing the problems mentioned by Deputies Sherlock and Creed and ensuring some benefits accrue to farmers as part of that process.
I respectfully suggest that this is not necessarily a short-term blip. This is potentially a structural change in the market. Nobody, up to the EU Agriculture and Rural Development Commissioner herself, can foresee what will happen in the market in the future. Will the Government consider other means of ensuring that primary producers of all hues are guaranteed some kind of fair market price for their produce in the retail multiple sector? I refer to the introduction of fair trade legislation, for example, or the appointment of a retail regulator. Such measures should be introduced as part of a package that includes the market mechanisms being implemented by the Commission.
I have not addressed the final element of the Deputy's initial question. The relationship between producers, processors and retailers is an important aspect of all of this. There may well be a structural change in the market at this particular time. I have heard that postulated by people who look at the price in New Zealand and the USA, for example. Notwithstanding that, considerable research has been done, not least by Teagasc, which the Deputy will be aware of, which indicates that one of the effects of a low price such as this is that people who increase their production are unlikely to continue and, in fact, are likely to go in the opposite direction. The balance between the availability of the product and the market demand for it is likely to become balanced in the relatively short term in view of the dramatic drop in prices at this stage.
In response to the Deputy's question about fair trade legislation, neither the Government nor anybody else should have their ears or minds closed to any form of initiative that might address what is an enormous difficulty for Irish dairy farmers and one which, even if it were short-lived, has enormous consequences as regards sustainability and incomes.
27 Deputy Tom Sheahan asked the Minister for Agriculture, Fisheries and Food the progress made in tackling the delays in delivering the Operational Programme for Fisheries arising out of difficulties with Natura 2000; the recent discussions he has had with the Department of the Environment, Heritage and Local Government and with the Department of Communications, Energy and Natural Resources with regard to their concerns; the deadline for the final resolution of these issues; and if he will make a statement on the matter. [26300/09]
The seafood development measure contained in the National Development Plan 2007-13 is divided between the EU co-funded operational programme, OP, and the national seafood development operational programme. The EU co-funded OP has already commenced and has funded the 2008 decommissioning scheme which has allowed 46 boats to be decommissioned with grant aid totalling €36.6 million already paid or in the process of being paid over 2008 and 2009.
The national seafood development operational programme 2007-13 was advertised for public consultation in October 2008. Following this consultation process issues were raised by the Department of Environment, Heritage and Local Government and the Department of Communications, Energy and Natural Resources on behalf of the Central Fisheries Board regarding the grant-aiding of projects where environmental issues arise relating to compliance with the EU birds and habitats directives and sea lice control on salmon farms.
This Department with its agencies working with the Department of Environment, Heritage and Local Government developed a plan to deliver compliance with the EU birds and habitat directives for wild fisheries and aquaculture over a determined timeframe. This plan was submitted to DG Environment for consideration. A meeting between this Department, the Department of Environment, Heritage and Local Government, Government agencies and DG Environment took place in Brussels on 13 May 2009 to discuss the plan — with a view to securing DG Environment's support for the approach set down in the plan.
DG Environment advised that it was, in principle, favourably disposed towards Ireland's plan subject to a positive response to the issues raised and further clarifications from the Irish authorities on the details of the plan. Additional material has now been forwarded to DG Environment where it is being examined. When these matters have been satisfactorily addressed, DG Environment expects to be in a position to formally respond on the plan at an early date.
A meeting at ministerial level was held last week between my Department and the Department of Communications, Energy and Natural Resources at which I advised on the significant progress made in managing sea lice levels on salmon farms and the concerns of the fisheries boards were also set down. I am hopeful that there is a better understanding of the issues involved from both Departments' perspectives and that on this basis we can find a satisfactory resolution to the concerns raised.
It is noteworthy that the delay in the launch of the national seafood development operating programme has not held up grant aiding aquaculture developments in 2009 as the European Commission has agreed to the continuation of grant aid under the 2000-06 OP until 30 June 2009. A provision of €5 million has been made for aquaculture development in the Agriculture Vote for 2009 and I have approved the spending of €4.5 million of this for aquaculture projects in both the BMW and the south and east regions under the 2000-06 OP which will assist the continued operation of aquaculture projects in these areas and the employment that they support.
From the outset, this operational programme has been delayed 20 months. If that is not a definition of incompetence, I do not know what is. The Minister of State has just said it has not held up funding, but that is incorrect. I have been contacted by fishermen from Dungarvan and Sneem who applied for grants which were approved, but they will not get funding until the operational programme is in place. It is clear that issues need to be addressed in terms of the Minister of State's Cabinet colleagues and their objections. The industry needs to know urgently how long it will take to resolve those issues.
The Minister of State referred to a meeting he had with the Minister for Communications, Energy and Natural Resources, Deputy Ryan, but has he a timescale or a deadline in mind as regards getting the operational programme up and running? What is the situation in the Department of Communications, Energy and Natural Resources regarding the sea lice? There was a meeting last week, but what is the up to date position? We want this resolved so that it does not hold up proceedings at a later date.
The reality is that €5 million was provided in grant aid for this year and €4.5 million has been allocated. The projects referred to by the Deputy are more than likely in Natura 2000 sites where grant aid cannot be paid until the issues outstanding have been addressed. Consultants were commissioned to prepare an environmental impact assessment. Subsequent to that the Department of Communications, Energy and Natural Resources, through the Central Fisheries Board and the other Department through the National Parks and Wildlife Service, had reservations about elements of the assessment which was carried out and raised these. Until they are dealt with it will be impossible to have the operational programme activated. However, following the meeting on 13 May, most of the outstanding issues have been addressed with the European Commission. At this stage I am satisfied that when that process has been completed we will be able to deal with the outstanding issues involving the other Departments.
Europe is not the problem, neither has it been over the past 20 months. The problem lies within the Cabinet between the Minister for Agriculture, Fisheries and Food and the other two relevant Ministers. There are real environmental concerns at stake, but it must be recognised that this programme has been stalled for 20 months and needs to be activated.
On another issue, in previous times the vast majority of funding for the operational programmes came from Europe. This time only €42 million of the €126 million will come from Brussels and most of this has been committed to decommissioning. Will the Minister of State say if there is a question as to whether the funds will be made available in the current climate? As I have said the problem is not with Europe, but within the Cabinet and there are hundreds of jobs at stake. I plead with the Minister of State, on behalf of the fishermen around the country, and urge him to act on this. It is 20 months late, and that is a definition of incompetence.
The inherent difficulties, for example as regards sea lice in salmon, considerably pre-date the present Government and in fact were an issue when the marine element of the Department, including those elements now with the Departments of Communications and Natural Resources and Agriculture, Fisheries and Food were within the same Department. In fact, that debate and all the issues surrounding it long pre-date the present Administration.
I agree strongly with the Deputy that Europe is not the problem. We frequently congratulate ourselves on being enormously compliant Europeans, but as regards the directives in question in this instance, concerning the Natura 2000 sites, we had about 12 to 14 years to implement them and have not done so. Ultimately, a European Court of Justice judgment in December 2007 was successfully prosecuted against Ireland and that is the nub of the difficulty in getting over these issues.
On funding, €4.5 million of the €5 million provided for this year has been allocated and the question of funding for future years is clearly contingent on budgetary considerations.
28 Deputy Andrew Doyle asked the Minister for Agriculture, Fisheries and Food if he has had discussions with the Department of Enterprise, Trade and Employment with regard to the difficulties facing the food and drinks industry; his views on the way forward to sustain employment and production in the industry; and if he will make a statement on the matter. [26301/09]
My Department works closely with the Department of Enterprise, Trade and Employment and our respective departmental agencies on issues confronting the food and drinks industry. The economic downturn, rising costs and currency exposures have translated into sudden and severe deterioration in trading conditions. One of my key priorities is to ensure a policy and support framework that will facilitate the food sector in maintaining competitiveness and its contribution to the economy. In this context the Government has established a cabinet sub-committee and interdepartmental group on economic recovery. Arising from the work of these groups, the Department of Enterprise, Trade and Employment launched an enterprise stabilisation fund, which is run by Enterprise Ireland, to allow for meaningful additional assistance to be provided to basically sound internationally traded companies that would otherwise struggle to survive the global downturn. The fund operates in conjunction with the banks to provide direct financial support to eligible, internationally trading enterprises which are undertaking development expenditure to reduce costs and gain sales in recession hit overseas markets. It complements the banks' commitment to SMEs under the recapitalisation scheme and should facilitate much of the restructuring that is needed for viable companies selling on the home market. Other issues affecting the competitiveness of manufacturing industry, including the food industry, will continue to be addressed by the Government.
Within my direct area of responsibility, I should point out that my Department and the development agencies have supported capital investment, marketing measures and food research to sustain the food and drinks industry. Grant aid has been awarded under the dairy and beef and sheepmeat investment funds, which are operated by Enterprise Ireland on behalf of my Department, to improve efficiencies and added value from processing.
In dairying, 19 projects were awarded €114 million for investment of €286 million. Five of these projects have been completed and three are well advanced. Grant aid amounting to €30 million has been paid and a further €30 million is expected to be paid by the end of 2009. Grant aid of €69 million awarded in the beef and sheepmeat sectors is expected to contribute to investment of €168 million and contribute to a net increase in sales and exports of €400 million as well as a net additional 800 jobs by 2012.
Additional information not given on the floor of the House.
With regard to small businesses, my Department awarded grant aid of €16.7 million in December 2008 for capital investment in marketing and processing to 66 horticulture, livestock marts and small meat sector enterprises. This is expected to contribute to investment of €70 million and will assist the businesses to improve efficiency, add quality and value, produce innovative products and develop new markets.
Our food and drinks industry continues to need export markets in which it can trade competitively. An additional €2.5 million has been provided to Bord Bia to identify market opportunities within the EU and work with the industry on developing new products. The transfer to Bord Bia of responsibility for fish marketing from 1 June will produce synergies for food and seafood companies. EU co-funding of €235,000 over three years has been made available to Bord Bia for programmes to increase sales of quality assured EU pork, offal and beef products.
A key ingredient of sustainability is innovation to improve competitiveness. In research and innovation Enterprise Ireland provides a range of measures to support industry directly and my Department funds research programmes in the agri-food, seafood and forestry sectors, which provide a basis for future commercialisation. Funding for the food graduate development programme has been approved for a further two years to provide specialised business skills to postgraduate students engaged in food research funded by my Department. My Department, through the RELAY project, is working with Enterprise Ireland and technology transfer offices at the food research institutions to maximise commercial potential of this research.
Retail trading conditions are a particular concern for the industry and where action at EU level is important to secure balance. The European Commission is planning a review of anti-competitiveness in the food chain, including the dairy and pigmeat sectors, and measures to aid transparency on food prices through possibly an EU observatory on food prices. I have supported Commission proposals to improve communication between farmers, buyers and consumers about agricultural product qualities and the coherence of EU agricultural product quality policy instruments, including how products are described and this development may lead to the use of what is termed "place of farming" on agricultural products.
That is all very fine but last week the Joint Committee on Agriculture, Fisheries and Food heard a presentation from Mr. Jim Power. He highlighted the fact that 100,000 jobs are in jeopardy because of unfair trading circumstances. Last week's report from Food and Drinks Industry Ireland highlighted our cost base in waste, energy and labour, but also the need for fair trade legislation to outlaw current practices. This will drive down the profits. While everybody else has to show their margins, the retailers do not publish theirs. There is no legislation in place to underpin it. There is no sheriff. This is the wild west of the sector. It is worth €11 billion nationally, and nobody is policing it.
Unless we do something it will be too late. These jobs create extra jobs. It is estimated that 230,000 people work in this sector. One can talk about schemes, initiatives and Cabinet sub-committees, but people are losing their jobs every week and others are in danger of losing their jobs. The Minister mentioned initiatives for companies that are sound and trading abroad. There are hundreds of smaller processors trading in this country. In this week's Irish Farmers Journal Dr. Pat Wall made the point about country of origin. He said that is not a buy Irish campaign. There is a serious resistance on the part of the Government and the Department of Agriculture, Fisheries and Food to initiate a country of origin campaign and that, in itself, is educational.
There is no resistance in the Government to country of origin labelling. We would introduce it overnight if we did not have the resistance from other member states. We are working on that and I will not give up on it. Deputy Doyle is right. A very serious situation confronts the food and drink sector and I talked about the quicker element of the response, which had to be brought about by special permission of the European Commission to allow for temporary state-aid rules in December 2008.
Deputy Doyle referred to the wild west. The Food and Drink Industry Ireland report uses a less colourful but equally accurate term when it says the grocery sector is dysfunctional due to excessive retail buyer power. We are working on the legislative approach with the Department of Enterprise, Trade and Employment and the EU because there are other countries in the same boat as ourselves. We need a code of practice and a retail ombudsman, and those can be brought in before the legislative approach runs its course. We are working on these aspects with the Department of Enterprise, Trade and Employment.
I seek clarification. I welcome the fact that the Minister has said there is a legislative approach. On last Thursday's Order of Business I asked the Minister for Finance whether he had any plans to bring in fair trade legislation and he said he did not. On foot of today's report, the Competition Authority's remit seems to be all about competition in the grocery sector being healthy in the short term for consumers, but there is nothing about competition for producers or transparency in how their prices are set and driven down on a whim. I have heard of invoices being reduced a further 20% by one of the major retailers this week. It is a carte blanche approach across the board and one has no say in it. That sort of behaviour cannot be allowed to continue.
The report by the Competition Authority, as its name suggests, puts much emphasis on competition but it points out that exporters will frequently price to the market. The retail sector is being shown to have a selective approach to what it means by competition in any one market and will play to its strengths and have higher margins in some areas than others because it considers it can get away with it. The information is not available.
There is no fair trade legislation.
That is why we need a retail ombudsman. I heard the Tesco representative on "Morning Ireland" this morning. He did not give a "Yes" or "No" answer when asked about a retail ombudsman. Consumers, the Government and the industry need to come together and recognise that unless we have transparency and an end to this dysfunctional operation of the retail sector, the suppliers will not be around for much longer.
He effectively said, "No".
He did not answer the question, but he will have to do so.
He did not answer the question but he effectively said, "No".
29 Deputy Michael Creed asked the Minister for Agriculture, Fisheries and Food his plans with regard to the Common Agricultural Policy post 2013; the initiatives he will bring forward in order to sustain the agri-food sector; and if he will make a statement on the matter. [26302/09]
Concrete proposals have yet to emerge on the shape of EU agriculture policy beyond 2013. Among the ideas emerging are demands from some member states for a lower budget share for agriculture and for eventual dismantling of CAP; demands from new member states for re-balancing of member states' shares of agricultural funding; increased calls for changes to the single payment system to move from the historic model and to apply a "flatter" model of direct payments; calls for a greater focus on pillar 2, the rural development measures, and introduction of more specific selection criteria and indicators to measure the effectiveness, outputs and impacts of rural development programmes; and continuing pressures to reduce supply and market management mechanisms with a greater reliance on crisis management.
The Minister's, Deputy Smith's view, which he has expressed at meetings of the Council and bilaterally to his ministerial colleagues, is that we must maintain a strong agricultural production base in the European Union in the future to take account of the challenges ahead in meeting increased demands for locally produced food. Any reduction in food production in the EU would be taken up elsewhere where less efficient production systems exist and would result in a heavier carbon footprint. We must also undertake food production and distribution in a manner that is sustainable in all its dimensions — economically, socially and environmentally, especially with limited energy supplies in mind.
There will be major challenges ahead from climate change, increased competition on world and EU markets, the financial crunch and other factors. We must ensure we have the capacity to cope with the challenges and fully exploit the opportunities as they emerge. To do so our whole sector, from farm to fork, must be highly efficient and competitive. It must also be innovative, producing the products that changing consumer tastes demand, and it must be relentlessly focused on quality and safety. To achieve these objectives, there is a continuing need for an active and appropriately resourced European agricultural policy. That policy needs to recognise the role that a cohesive agriculture and rural development policy can play in addressing future energy needs, addressing environmental concerns and providing a secure and sustainable food supply in Europe.
Additional information not given on the floor of the House.
With this is mind, and to meet all challenges to the sector in the coming decade, it is the Minister's job to continue to plan to help the sector remain competitive so that it can capitalise on the inevitable global recovery and meet the challenges in the coming decade. Addressing the industry's capacity to compete successfully at home and overseas has assumed a new urgency and the Minister's belief is that a new development plan for the period to 2020 is required to maintain the impetus gained from the very successful agri-vision 2015 strategy. Preparatory work has already started on this plan which is focusing 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 crop markets.
I thank the Minister for his reply and in many respects he ticks all the boxes regarding the concerns that face Ireland. Would the Minister accept that with the appointment of a new Commission shortly we are entering a critical phase? This debate will not be determined in 2013. In the interim period between now and then critical connections will be made at a European level and alliances and friendships forged that will deliver the kind of package that will best serve the Irish agri-food industry.
Would the Minister accept that food security and the family farm structure in Europe, as enshrined in the Treaty of Rome, are the two key pillars that will best serve the interests of Irish agriculture? When one factors in the more up-to-date concerns on climate change, etc., one has the makings of a very strong case to protect the incomes of Irish farmers in the post 2013 situation given that there will be legitimate concerns from the new accession states for a more equitable share-out. The Minister has the makings of a strong case to protect Irish farmers' incomes after 2013 given that the new accession states will have legitimate concerns for a more equitable share out. We need to protect our interests which is best done by arguing for food security rather than outsourcing food production.
I could not disagree with what the Deputy is saying. The one thing we could say is that the family farm structure, which he mentioned, coming from the origins of the European Union and the Treaty of Rome, is more essential than ever, but probably for different reasons. It originally came about with the emphasis on affordable food and supply of food without the current issue facing us, which is how to pay for and where to get the inputs. The energy challenge before 2013 will definitely sharpen the focus on food security, not just in transportation terms. One third of the fertiliser inputs are fossil fuel reliant, an issue which will impinge on agricultural policy as well as transportation from far distant sources. I agree it will be before 2013 that alliances will need to be forged and the shape of the post-CAP will be defined. It will be based on energy, which will be the foremost issue.
