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Dáil Éireann debate -
Tuesday, 6 Nov 2012

Vol. 781 No. 1

Other Questions

Agriculture Schemes Expenditure

Michael Moynihan


92. Deputy Michael Moynihan asked the Minister for Agriculture, Food and the Marine the amount provided in the estimate for payment under the targeted agricultural modernisation scheme in 2012; the amount paid out under the scheme to date and the expected outturn expenditure under this scheme in 2012; and if he will make a statement on the matter. [48251/12]

European Commission approval for the introduction of a number of targeted agricultural modernisation schemes, TAMS, which are designed to support productive on-farm investment in the agricultural sector, was received in March 2010. Priority was given to the bio-energy, poultry welfare and sow welfare schemes, which were launched by my Department during the first half of 2010. The sheep fencing and handling scheme opened for applications on 1 November 2010 while the dairy equipment and rainwater harvesting schemes were introduced in March 2011. All schemes operated on the basis of a series of tranches to ensure that approvals to commence work could be issued regularly to farmers. Where required, a selection process was used where a particular tranche was oversubscribed, and this has occurred particularly under the dairy equipment scheme, in respect of which demand for grant aid has been very significant.

I provided funding of €20 million in the Department's capital envelope to meet expenditure under the various TAMS in 2012. Almost €12 million has been paid out to date. Expenditure is demand led and dependent on approved projects being completed and valid, and with documented claims being submitted by the farmers concerned. As farmers have two years under their grant approvals to complete the investment works concerned, it is not always possible to determine the calendar year in which the expenditure will arise. In those circumstances, actual expenditure in any one year is outside the control of the Department, but I expect that TAMS expenditure for this year as a whole will be of the order of €15 million.

Additional information not given on the floor of the House

In anticipation of savings arising under the TAMS allocation for 2012, I have arranged for transfers of funding to other capital expenditure headings where additional funding is required, in particular to meet liabilities arising under the farm improvement scheme and the pre-TAMS sow welfare schemes. As a result, I expect that the overall savings in this general area are likely to be relatively modest.

I am especially conscious of the importance of TAMS as a vehicle for investment in on-farm enterprises to improve commercial viability and also to assist farmers to meet the new EU animal welfare requirements in regard to the poultry and pig sectors. To this end, I regularly review progress in regard to the level of demand and the allocation of funding under the various schemes to make best possible use of the resources available. Last week, I decided to extend the deadline for the submission of applications under the TAM sow welfare scheme from the end of October 2012 to the end of January 2013 to help those farmers who have not yet been able to lodge valid applications under that scheme. The deadline for completion of work under the TAM poultry welfare scheme was also extended by my Department until 28 September 2012. Over two thirds of the TAMS expenditure this year has taken place under this particular scheme.

The Minister's civil servants seem very focused on answering all sorts of questions I did not ask, thereby wasting time. I did not ask for a description of the TAM scheme or when it was introduced. What I asked was very simple, namely, the amount of money provided in 2012, the amount paid out to date, which the Minister told me eventually, and the expected expenditure under the scheme, which the Minister also told me eventually. If I wanted a full description of the scheme, I would table a question to that effect.

The Deputy got his answer.

I did, but the Minister wasted a lot of time telling me what I already knew, namely, the background to the scheme. It is not the first time today that I got a long answer in which the Minister could not get to the meat of the question I tabled. The first answer was a case in point.

Why, according to the Minister's figures, will only 75% of the money be spent? Why is the demand so low and why are payments so slow? How many applications has the Department received? Will they all be cleared by Christmas?

In anticipation of the savings arising from the TAMS allocation in 2012, I have arranged for the transfer of funding under other capital expenditure headings where additional funding is required, in particular to meet liabilities arising under the farm improvement scheme and the pre-TAMS sow welfare schemes. As a result, I expect the overall savings in this general area to be very modest.

We have approved increased expenditure under particular programmes, including the sow welfare schemes. In January next year, the tethering of sows will no longer be acceptable, which means breeding sows will have to be kept in loose housing arrangements. Significant investment is needed to meet that requirement and we are under pressure in this regard. For this reason, I have extended the targeted agricultural modernisation scheme in this area by providing additional funding and extending the deadline. This will ensure that as many pig farmers as possible qualify by the deadline of next January.

I assume the Department is aware of the number of approvals it has issued under the TAM scheme. How many of these will now carry over for payment into next year? In other words, in cases where the work has not yet been done and the farmer has not yet made the claim, what is the amount of approvals in value terms that will have to be paid out in 2013?

We made €20 million available this year for the scheme, €15 million of which will have been spent before the end of December. I do not have the exact figure in terms of carryover into next year, but I will find that information for the Deputy. The reality, however, is that we do not know whether farmers will spend it next year. They have two years in which to do so and some may wait until the following year. The Deputy is seeking figures that are a moveable feast and will depend on when farmers decide to make the capital investment. The sow welfare aspect is different because farmers have a deadline with which they must comply. In the dairy area, however, farmers are planning investments in the build-up to the removal of quotas in April 2015 and they have two years to spend the money. We must have the flexibility in place to accommodate that.

Will the Minister get back to me with an answer on the amount of approvals on hand for which claims have not yet been received? He is quite right regarding the two-year timeframe. He forgot, however, to mention a third aspect, namely, that under every grant scheme ever created, there will be people who get approval but who, for one reason or another, never do the work and thus never claim the full grant. If I have the figure for the total amount of money approved that has not yet been claimed, I will be able to do the extrapolation myself.

I will try to get that information to the Deputy.

Transport Costs

Seán Fleming


93. Deputy Sean Fleming asked the Minister for Agriculture, Food and the Marine if in the context of Budget discussions, he has raised the issue of the cost of transport in the agricultural, food and forestry sectors with the Department of Finance; and if he will make a statement on the matter. [48262/12]

The Government is aware that the cost of transport in Ireland remains high and that fuel costs are a major factor in the input costs of farmers. Ireland has to import a large quantity of its fuel for transport and, as such, we are subject to world oil prices and the risk of adverse exchange rate fluctuations. The price of oil can increase as a consequence, for example, of tensions in Gulf states, a fire on a major oil rig or speculation in futures markets. Transport costs are also a factor for our exporters. As an island nation, we have higher transport costs for our exported goods than many of our competitors.

Transport costs are primarily a matter for the Minister for Transport, Tourism and Sport and the Minister for Finance. Nevertheless, I have had regular contact with the latter concerning such costs in regard to agriculture and the cost of agricultural inputs in general. One of the measures introduced as a result of recent budget changes is a new double-income tax deduction in respect of the increased costs arising from the change in carbon tax. The Government gave a commitment to the farming sector in 2011 that it would not suffer further costs due to increases in carbon charges, and this relief from the carbon tax increase was given in fulfilment of that commitment last year. Farmers are also allowed to claim a flat-rate addition to the costs incurred by non-VAT-registered farmers based on their imputed VAT costs. Included in this calculation, which currently provides for a rebate of 5.2% in 2012, is the cost of fuel and farm machinery, including tractors. This is a further allowance to farmers on their fuel costs. In addition, the long-standing reduced rate for farm diesel remains in place. This is of significant benefit to farmers, who are not the only users of marked gas oil.

Although the global economic recession continues to impact seriously on Ireland's finances, I assure the Deputy that we are aware of the challenge posed by high input costs for farmers. We will continue to bear these issues in mind in the framing of the upcoming budget.

I did not ask the Minister about on-farm diesel costs, which is a subject for another day. My question focussed explicitly on the agricultural industry - in other words, the cost of moving milk from the farm to the processor and on to the market. In addition, timber is a major cost issue because it is bulky and obviously it is provided to the food sector by the agricultural industry.

When the Government came into power it said it was about creating jobs. In opposition it emphasised the issue of competitiveness. We live on an island off another island, which is off the European mainland. Does the Minister accept that natural resource industries, such as forestry, food and agriculture generally, have particularly high transport costs? While we cannot do anything about world oil prices, the cost of the Government-imposed taxation on transport costs is having an effect on the competitiveness of Irish agriculture, food and forestry.

Of course it is. That is stating the obvious. If we were to reduce the cost of transport in any sector we would increase its competitiveness. However, the job of the Minister for Finance is to try to get the balance right to ensure that we have enough income from the tax-take to meet our deficit challenge. Of course I would like it if we could dramatically reduce fuel taxes, but we do not have that luxury at the moment.

Ireland is a highly competitive country in terms of food production and exports. That is why we have seen food exports increasing over the last two years. We would like to become more competitive and we are continuing to give farming and agriculture special tax treatment on fuel costs, whether through carbon tax, green diesel or the VAT rebate. I hope we will continue to be able to do that, but whether we can extend those transport fuel cost reductions outside the immediate agricultural area is a decision for the Minister for Finance.

I call on Deputy Ó Cuív and note that Deputy Wallace also wishes to contribute.

As Ministers said when in opposition, it is about choices. The Government could choose to try to stimulate the food and forestry sectors where transport is an enormous part of the input costs, and particularly so in forestry. I wish to ask the Minister two simple questions. First, has he suggested a rebate scheme to the Minister for Finance for auto-diesel for hauliers? This would have a particular significance for many indigenous industries, although it would not be of great advantage to somebody selling microchips.

Second, the Minister mentioned green diesel and the fact that farmers can use marked gas-oil on their farms for agricultural purposes. He twice mentioned that this seems to be some great concession but can he confirm that no consideration was given to changing the regime for marked gas-oil being used in the agricultural industry? Since the Minister has now created a doubt, can he also confirm that farmers will be able to continue to use marked gas-oil, and that the Government does not intend to add significantly to the cost of marked gas-oil, otherwise known as green diesel?

I am sure the Minister is well aware that the problems of the haulage industry are directly related to pressures on the agricultural industry.

I can tell the Minister for certain that for every lorry load of dry goods returning from Italy, a lorry load of meat went out in the first place, because most of the aforementioned dry goods usually are imported in refrigerated containers. At present-----

Does the Deputy have a question?

I note that 35% of the fuel used by those hauliers was purchased outside of Ireland last year because of the lack of a rebate here. The Irish Road Haulage Association has done the maths on it and were the Government to introduce a system in which a rebate was in operation, it would make money from stopping the hauliers from buying so much diesel outside the country. There is money for the Government in doing this. Aside from the fact that diesel obviously is being laundered, I still think we must move to a position whereby only one colour is available. It is the only way to deal with those who are cheating with it.

The Minister for Finance is examining ways in which the Government can deal with the amount of diesel that is being laundered. It is a huge issue along Border counties in particular and there have been significant seizures this year to that effect. However, actually doing away with marked diesel or green diesel as farmers call it also creates huge problems, particularly in respect of the potential for diesel to be stolen from farmyards because diesel that is not marked becomes much more valuable and usable. Consequently, there is no easy solution to this issue. I note the Government has been working with its British counterpart to find more effective ways of marking diesel in order that it cannot be laundered. Hopefully, we can make progress with some new initiatives in that area.

The only person who is casting doubt on whether farmers will be able to continue to benefit from green diesel appears to be Deputy Ó Cuív. I have not cast any doubt on it. The Government has made a commitment in its programme for Government to support farmers with regard to fuel prices and will continue to do that. As for broader concerns coming from the haulage sector, I recognise the cost of fuel is causing significant strain on that sector at present. However, the question of what is to be done in this regard is not a decision for my Department. Nevertheless, I certainly will reflect these views in the budgetary discussions in the Cabinet.

Sheepmeat Sector

Éamon Ó Cuív


94. Deputy Éamon Ó Cuív asked the Minister for Agriculture, Food and the Marine the number of sheep that were imported through the port of Larne in Northern Ireland in 2011 and to date in 2012 and transferred directly to meat plants here for slaughter on a weekly basis; and if he will make a statement on the matter. [48247/12]

I thank the Deputy for asking the specific question because I ask myself the same question five mornings a week as when one drives up to the lights at Slane, one sees loads of lamb coming down from Northern Ireland to our factories. However, the direct answer to the Deputy's question is "No". There are figures available to back this up and the single most important point is that it is not viable for lambs to be brought from England or from Scotland directly down through Northern Ireland to the factories here, because the price difference is only €1.20 per lamb. Moreover, when compared with the figures from this time last year, the figures for this year's kill indicate that 65,000 fewer lambs came down from Northern Ireland than last year. In addition, there has been an increase of 7% in overall production here in the lamb trade due to the good prices. While one is disappointed that the price of lamb has not held up when compared with last year, it remains a lot better than was the case in the previous two years.

Our records show that no sheep were imported through Larne for direct slaughter in Ireland during the period in question. The Northern Ireland authorities have also confirmed that no such imports have occurred. Sheep slaughtering in Ireland for the year to date has increased by 10% or more than 182,300 head, to a maximum total of approximately 1.95 million. Throughout 2012, a higher demand from both the domestic and export markets was evenly matched with supplies, particularly during the peak periods of hogget and new season lamb supply. When compared with the highs of 2011, this year’s average price of €4.71 per kilogram is marginally back by 10 cent per kilogram on last year's price. However, in an overall context, Irish sheep prices have performed consistently well throughout 2012 and are well above 2009 and 2010 prices.

The June sheep census results published by the Central Statistics Office in October indicate that the number of sheep in Ireland increased by as much as 7% compared with a year earlier, reflecting renewed producer confidence in the sector as a result of firm lamb prices since 2010. The breeding flock had increased by 6%, year on year and the number of ewes under two years of age had increased by 12%, suggesting that further flock rebuilding is likely, which in turn may increase the supply of lambs on the market here. Other sheep numbers, which mainly consist of lambs from the 2012 crop, showed an increase of 7% when compared with June last year.

Additional information not given on floor of the House

Lamb production in 2012 as a whole will be higher than last year and the census figures indicate that a further increase is possible in 2013.

On a positive note, sheepmeat exports to international markets almost doubled to 600 tonnes during the course of 2011. This generates a great confidence boost for Irish exporters. While almost 99% of our lamb exports are to the European Union, it is always beneficial to have a wide range of outlets available and to this end my Department, together with Bord Bia and the Department of Foreign Affairs and Trade, continues to work to secure access to more third-country outlets for Irish lamb. I announced the opening of the Singaporean and South African markets to Irish lamb over the summer. There is strong demand for all meats globally at present and my Department and I remain committed in our efforts to ensure that the Irish sheep sector is able to take full advantage of all of the opportunities that will arise as a result of this demand.

I accept what the Minister of State has said about prices for lowland sheep and lambs. Does he accept there is a crisis in the hill lamb market, that the traditional markets for light lambs do not appear to be open, obviously owing to the bad weather, and that there are very few store buyers in the market? Can the Department take action to deal with the issue with a view to getting a floor price for mountain lamb, although it is getting late in the season? Given that efforts have been made to open up the Libyan market to live exports, perhaps the Minister of State will give an update on those efforts and what is delaying the opening of that market? Is there anything more the Department can do to facilitate the opening of the Libyan market?

During our trip to Westport I met the Galway, Roscommon and Mayo sheep farmers who are under pressure in respect of their store lambs because the people in my area are not buying them owing to a lack of grass. I encouraged them to take a leap of faith and put them inside because even though fodder and meal is dear, they may get a turn out of it, so to speak. I spoke today to a man who took in 165 lambs last year and offered not be paid for a couple of months. He cannot do that this year as he does not have the fodder.

I met the Connemara hill farmers group, nine months ago. It has taken on a man through the JobBridge scheme to find markets for the lighter lamb referred to by the Deputy. At the sheep open day in Tuam, that group was actively seeking lighter lambs in the Deputy's constituency and in other areas in the west. Those are the people we will support through Bord Bia and through some of the supermarket chains in the Deputy's constituency which have taken in the lighter lamb. There is a problem with Portugal and Spain. The Connemara hill lamb producers comprise a great group, however, and I have no doubt hundreds of farmers will join them as lamb numbers increase.

My first job as co-op manager in Cornamona was to build a large sheep shed and put 2,000 sheep in it. We proved that the economics of feeding grass meal to sheep is not hugely profitable with the pure breed of mountain sheep. It would work much better with cross-bred sheep from the lower hills.

I agree with the Minister of State on the work being done by my successors in respect of Connemara hill lamb, but there is still a significant problem in selling plain mountain lamb on the market. Something must be done about it urgently. I urge the Minister of State to do whatever he can to allow this trade to continue in operation. This has been a challenge for the past 30 years. We must ascertain if there are other ways of ensuring the sustainability both of farming mountain sheep and of the market for it, because it appears the latter is up one year and down the next year. The market is volatile and that is a feature of it that has not changed in all the years I have been dealing with it.

I note what the Minister of State said about Portugal and Spain. I used to export sheep to Italy. I recall flying them live by jet to Italy in the late 1970s. I did not get an answer to my question on the Libyan market.

I am aware from the Minister that negotiations are taking place, and perhaps he will elaborate on that. In regard to the Libyan market, efforts have been made in recent months to open the live trade for the Friesian bull. Sheep are included in that. There must be suitable ships for exporting live animals, however, and the issue is being worked on and is close to a conclusion.

May I make a comment?

We have been working with exporters who are considering the possibility of taking beef and, potentially, sheepmeat out of either Cork or Waterford. However, there is an issue in respect of accessing boats at an affordable price.

The Department's job is to ensure appropriate veterinary standards for those shipments. Two companies with a track record of live exports are actively seeking to export in the next six weeks.

I submitted two questions, but I received a terse, one-line answer. Will the Minister provide me with a briefing on how the issue stands?

We must make some progress.

Dairy Sector

Micheál Martin


95. Deputy Micheál Martin asked the Minister for Agriculture, Food and the Marine his views regarding reports of farmers who are supplying the liquid milk trade losing money due to pressure from the multiples; the action he will take to deal with this issue; and if he will make a statement on the matter. [48275/12]

I am glad to see Deputy Martin showing interest in the liquid milk market.

It has a big effect in Cork.

It certainly does. I see that Deputy Kelleher has also joined us for the discussion.

Prices paid for products in the marketplace are a function of a number of market forces and the negotiation of commercial contracts is essentially a matter for the contracting parties. The National Milk Agency, which operates under the aegis of my Department, was set up in 1994 to regulate the supply of milk for liquid consumption. All farmers supplying milk for liquid consumption in the winter months do so under contracts with processors that must be registered with the agency. The agency does not have a role in setting the retail price of milk, but farmers supplying milk in the winter months are paid a premium over the price paid to farmers who only produce milk in the spring-autumn period. This premium reflects the additional costs of producing milk in the winter months.

The programme for Government contains a specific commitment to enact fair trade legislation in the retail sector so as to ensure a balance between various players in the grocery goods sector. I assure the Deputy that this legislation will be produced by the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, before the end of the year or early next year. It will introduce a legally enforceable mandatory code of conduct between large multiples and the people from whom they source food and milk. The contracts will be respected.

There is a broader problem across Europe in terms of the percentage of the final retail price that farmers get for their produce, including liquid milk. Ten years ago, they would have got an average of 30% or more of the price, but they are now getting less than 20%. The Commission is examining this issue to try to find solutions. If Ireland tries to implement solutions on its own, retailers will simply source from elsewhere, which is not what we want.

I thank the Minister for his answer and look forward to the fair trade legislation, which is urgently needed. As the Minister knows, the Oireachtas committee intends to investigate not only the question of liquid milk, but also the wider issue. It is a major concern. Given the squeeze on liquid milk producers, we might need to import winter milk at some point. This would be a tragedy for what should be the dairy island. Will the Minister support the committee's investigative efforts and will he undertake to give serious consideration to any proposal made by it?

Has the Minister raised this issue at European Union level and will there be a co-ordinated effort to deal with the power of the multiples? Most if not all of the major multiples are multinational companies. Will the Minister briefly outline the policy direction that Europe intends to take to limit what it views as competition between multiples but what I view as their control?

On the Deputy's last question, he might well see supports trying to do that under pillar 2 of the Common Agricultural Policy, CAP, reform process. For example, producer groups would be supported so that farmers could negotiate prices collectively and more effectively. This should and could happen in the beef, sheepmeat and lamb sectors, where farmers should be negotiating in a more structured way. This is generally not as great an issue in the dairy markets, as farmers own their co-operatives and, therefore, have an input into pricing models. However, farmers are more exposed to the marketplace in terms of liquid milk.

The Commission is examining this issue, but there are no simple solutions. The idea that we could set margins or prices for any product is unrealistic, but we could certainly examine ways of examining the hand of primary food producers when they are negotiating a fair price for their produce.

Ireland's competition Bill will primarily focus on ensuring that retailers honour contracts with food producers and that people are not exposed to the significant negotiating power of multiples.

I am disappointed by the Minister's answer on the EU. It was quick to create a plethora of competition law. An effect of competition and below-cost selling is that liquid milk producers are being squeezed to the point of not making any money. The EU could very simply introduce legal controls and regulations to avoid this becoming the end result of unbridled capitalism and competition between major multiples and multinationals.

During the Minister's Presidency of the agricultural Council, will he ensure that this issue is addressed? It should be dealt with through the application of legal controls and European regulations. Thousands of them are passed every day. Could a single regulation to protect primary producers not be introduced as well? Without those producers, we would all go hungry in the long run.

I am not quite sure what the Deputy is seeking. Does he want the Commission to start setting milk prices across Europe?

No. I am seeking controls.

We must have a functioning, competitive marketplace. In this context we must find ways to increase the negotiating power of primary producers of food to ensure that they are not solely price takers when they go to market. To help us in this regard, the EU has proposed that the producer group model be supported. It is active in other parts of Europe but not as active in certain parts of Ireland's agrifood sector. We can help to finance it, but there are no simple solutions unless we start setting margins and prices. That would fundamentally undermine the competitiveness of Irish producers.

Under competition law, there are rules against overdominance in the market.