Vol. 857 No. 4
6. Deputy Mattie McGrath asked the Minister for Agriculture, Food and the Marine the measures his Department is willing to take to safeguard the income of beef farmers in the event that the current negotiations with the meat processing industry break down without agreement on a sustainable and fair price for beef produce; and if he will make a statement on the matter. [42988/14]
The Minister heard me raising this issue with the Taoiseach when he was present. I am very concerned about how farmers are being treated by the cartels, as Deputy Martin Ferris noted, and by what the Minister just said about dealing with the issues on which we can make some progress. That is to throw in the towel before he even starts. I ask the Minister to outline what he will do to safeguard the beef industry, as it is not being protected. From the way he has been speaking in reply to Deputy Ferris, one would think the farmers had been at the meat plants every day for the last number of years.
They have not protested for the past ten or 15 years. They are there now because they have been driven to it. What is the Minister going to do to safeguard them and the industry?
We are doing many things to safeguard the industry. I have just been talking about that.
Explain it.
For a start, this Government has prioritised the beef industry in each of the past three budgets. Next year alone in terms of the rural development programme, we will be putting about €73 million directly into the beef and suckler beef sectors. We have designed a rural development programme specifically to prioritise the beef sector to ensure it gets the supports it needs.
If one looks at the overall CAP in terms of direct payments, one is talking about at least €700 million per year of supports going into this sector. We are trying to look at where there is a dysfunction in the marketplace in the relationship between farmers and factories, which has been a very fractious relationship for many years. In other sectors within the food industry, particularly dairy, there is a very successful co-operative structure in place where farmers are directly involved in ownership structures and decision making around price and there is a much better functioning marketplace in terms of farmers understanding the market and what it can give them at any given time. There is a total lack of and breakdown in trust in the beef sector and it is my job to try to address that. It should have been addressed in the past but it was not addressed. That is why we are putting a lot of store by the producer organisation model which works in other parts of Europe and which will create a much more professional negotiating relationship on behalf of farmers with processors. There will be an equalisation of relationship on many of these discussions because at the moment, out of frustration, farming organisations feel they need to protest. We are trying to change that.
If the Deputy is asking me whether I can directly increase the price of beef, the answer is that no Minister in the EU or the Western world can do that without being taken to court or challenged by competition authorities. The market determines the price of beef primarily. Irish beef is at a European average in terms of prices and we have been above the European average over the past three or four years. Traditionally, up until four or five years ago, Irish beef would have been at about 90% of the European average. Beef prices have moved up. It is recognised that Irish beef is a premium product and we are looking at structural change that can ensure farmers feel they are getting a fair share of what the market has to offer. I will continue to work on that.
The Minister does not recognise the elephant in the room. I know he cannot directly interfere but even though I was part of a previous Government, I know that successive Governments failed spectacularly to deal with the cartels in the beef industry and this Government is no different. The Minister talks about the Competition Authority and said that it wrote to him twice. It did because it operates to save the consumer and rightly so. It is not taking on the cartels. It has failed spectacularly to do so in the concrete and supermarket industries. The supermarket and beef industries singly or jointly have farmers in a bind. It is not that consumers are getting cheap cuts of beef and other products. We saw the charade that went on last year and that is still ongoing with vegetables in the big supermarkets, some of which were mentioned by the Minister this morning.
The Minister does not see the problem so he cannot solve it. It is like the Cork hurling team. It was playing well and getting points from all angles but when it came to the big games, it fell off the pitch. That is no criticism of Cork but it is a criticism of the Minister and his Minister of State, Deputy Tom Hayes. I do not know where the Minister of State is. The Minister and the Minister of State are not cutting the mustard. The beef industry cartels are doing what they want and are laughing at the farmers. The farmers have not been at the gates of the factories for 15 years. Based on what the Minister said, one would think they were there every year. They are not and have not been. They are very patient. They have been driven to this and something must happen, not nice cosy talks around a big table when the Minister will not deal with the problem.
With all due respect and not for the first time, the Deputy outlines what he thinks of as a big problem but gives no solutions to anything.
Deal with the cartels.
First of all, one can only deal with something if it exists.
It does exist.
The Deputy's opinion on whether there is a cartel is only relevant if he can provide evidence to me or the Competition Authority that a cartel does operate. The Competition Authority has looked at this in the past and has deemed that no cartel exists. The authority has received evidence from farming organisations in recent years, has looked at it and has said that there is insufficient evidence. We publish beef prices every single week. When was the last time the Deputy looked at them?
Regularly - I happen to be involved in the industry.
As part of beef forum proposals, we publish beef prices in all factories at different grades on a beef price app every week so that we can see that there are different prices in different factories in different parts of the country at different times. If there is evidence around a cartel rather than a political accusation, let us hear it. In the meantime, let us solve the problems we actually can solve. I sit down with farming organisations to solve with them. The conversations I have with farming organisations are not around a cartel. They are around a series of other issues we are working out in the beef forum.
That is not what they are telling me. I am very concerned because the Minister said the Competition Authority wrote to him. It raided the IFA offices some years ago when it was seen in a blaze of glory taking on the factories and checking out what was going on there. I am checking the prices the Government is publishing. The Competition Authority has failed spectacularly in other areas. We have seen it with the supermarkets and in the magnificent concrete industry we had which has literally been destroyed by cartels. If the Minister is seriously telling me that he does not believe there is a cartel, I do not think there is any future in Food Harvest 2020. There is no point in playing games with these talks - going in and getting a higher price and the big companies then change the goalposts with the grading. That is what is happening. The Minister mentions costs. The cost of wages has been halved. I am not being disingenuous or racist but it is mainly foreign nationals who are working for them at low wages so they have made huge savings there and they are also screwing the farmers. If the Minister cannot see a cartel, I worry for the future. Perhaps he should go full time into the Department of Defence and let somebody else take over the Department of Agriculture, Food and the Marine.
If the Deputy is so convinced a cartel exists, he might provide some evidence of it. That is all I have to say because every time I ask for it, nobody ever produces it.
Our beef industry operates in an international competitive environment. We sell product into about 70 different countries. We sell product right across Europe. The Deputy should not suggest for one minute that the processors in other parts of Europe with which our processors are competing are not also driving down costs as much as they can because they are doing so. When one exports 90% of the beef one produces - 90% of the beef we produce must find a market outside Ireland - one must operate in a cost-competitive environment. In that context, my job is to make sure that farmers are properly represented in that discussion, that they get a fair and transparent portion of the margin available from the marketplace and that they have professional negotiators negotiating on their behalf collectively in the future because that is where their power will be increased in that discussion and negotiation. We also need to look at the power of retailers and their influence on the overall market at a European level. This is happening at Commission level. Part of the solution to that is producer organisations.
7. Deputy Seán Kyne asked the Minister for Agriculture, Food and the Marine his views regarding the reduction in forage areas on commonages due to perceived under-grazing; his views that this reduction in forage areas could lead to farmers being able to put less stock on commonages leading to more scrubbing up of these areas and resultant loss of habitat status for special areas of conservation and SPA sites leading to possible breaches of the birds and habitats directive; and if he will make a statement on the matter. [42998/14]
The question relates to the issues of under-grazing or perceived under-grazing on commonages and the impact that could have on the birds and habitats directive as the forage areas on these commonages are being reduced.
I thank the Deputy for this question. I know there are many commonage farmers in his constituency so he knows a lot about this issue. The farming of commonages lands has a long tradition in Ireland and, by its very nature, is a complex area. There are issues about the legal right to claim and there have always been disputes about the grazing of the commonages. In the vast majority of cases, however, commonage shareholders work well together on a co-operative basis. It is important to note that the optimum management of commonages will not be achieved unless the farmers are actually involved in the decision marking regarding the management of these lands as their knowledge of commonage areas is better than that of anybody else.
As the implementation of the new Common Agricultural Policy has progressed, my Department has been addressing a number of issues relating to commonage land in the context of both the new rural development plan, GLAS and the new basic payment scheme. The experience to date since the single payment scheme was introduced in 2005 is that there is a growing problem of commonage land being under-grazed and in some cases being abandoned by farmers. A variety of reasons have led to a problem with under-grazing, including the introduction of decoupled payments under the SPS in 2005, the requirement to de-stock in certain areas for environmental reasons and the age profile of farmers with commonage land.
This trend is not good for the environment, as these areas lose the specific characteristics as natural habitats for flora and fauna. In addition, the creeping ineligibility of these lands under the single payment scheme and other direct payment schemes poses a significant risk to the State in view of the risk of financial corrections being imposed by the European Commission.
Under the reformed CAP regime, it was decided that direct payments should be more focused on active farmers. In that regard, it will be necessary for all farmers who apply for aid under the basic payment scheme to have an agricultural activity on each land parcel on which they claim aid. In the case of marginal land including commonages, this agricultural activity can only be achieved by grazing the land. The minimum activity envisaged under the basis payment scheme is a modest one which is equivalent to a minimum of one ewe per 1.5 hectares grazing requirement.
I am not sure if Deputy Kyne was present when we mentioned we were looking at how we could apply flexibility where appropriate.
Additional information not given on the floor of the House
Currently discussions are taking place with the Commission regarding the setting of a relatively modest requirement under the Pillar 1 schemes and the areas of natural constraints scheme for maintaining marginal land including commonages.
My Department is in the process of securing agreement from the European Commission for Ireland’s new rural development plan. The next step is for the draft RDP to be agreed formally with the European Commission as soon as possible. Payments under GLAS, the new agri-environment scheme, can only be made in respect of actions going beyond the baseline requirements under the basic payment scheme under Pillar 1 of the CAP. To secure funding for hill farmers under GLAS, the challenge is to design a scheme which manifestly goes beyond the baseline. The key characteristic of commonage land is that it is farmed in common and the actions undertaken under GLAS will have to reflect that.
On this point, we clearly need to have sufficient people working together to achieve the best results for these commonages, in the interests both of the farming community and of the environment. I have explained how this will work in practice with the participation of a minimum of 50% of active farmers on commonages.
While there are considerable challenges to be overcome to meet both the active farmer requirements under the basic payment scheme and the implementation of grazing plans on commonages under GLAS, it is only in this way that the problems arising from undergrazing of commonages and resultant spread of scrub can be addressed effectively. It is clear that unless decisive action is taken, the level of ineligible areas will continue to expand.
I thank the Minister for the reply. I appreciate that the issue of commonages is somewhat of a minefield and very complex. I acknowledge the threat of fines against the State and that the Government has appealed those. Hopefully there will be a positive result from the Commission.
Although I am not a member of the committee, I raised this issue with departmental officials at the Joint Committee on Agriculture, Food and Marine last week. It relates to the consequence of reducing forage areas. Two of the commonages I have been dealing with are not in my constituency but in the neighbouring constituency in south Galway. In simple terms, if following inspection the Department of Agriculture, Food and Marine inspectors reduce the forage area in the farm, it means they are stating that the commonage is able to hold less stock. Therefore less stock will graze, thus exacerbating the problem of undergrazing. This could lead to more scrub and more areas not being grazed under commonages which could have implications down the line under the birds and habitats directives because these areas are supposed to be kept in proper habitat status.
That is a very fair point. We are trying to introduce a basic minimum stocking rate that everybody has to apply. However, in many commonage areas we want to encourage farmers to put considerably more stock on it. The stocking rate is about proving a minimum level of agricultural activity. I hope everybody agrees that we should focus our financial supports on active farmers as opposed to people who are lucky enough to inherit some land, a shareholding in a commonage or whatever. We are trying to link proof of active farming with a very low stocking rate. However, after that, whether through GLAS plans or other discussions with commonage farmers, we should be encouraging an appropriate stocking rate on that commonage area based on what it can carry. In most cases that will go way beyond the minimum stocking rate because otherwise we will continue to have undergrazing, more land being ungrazeable and therefore in effect the size of commonages shrinking because large parts will no longer be in an agricultural condition.
The Minister has time between now and when the single payment forms come out in the spring to look at this area. Where there are commonages and where the forage area is reduced, by definition they are able to hold less stock. If they are able to hold less stock, it will cause even more undergrazing and a reduction in the habitat status of the commonage. It is an important issue. Ideally the Minister should retain the forage areas but ensure the commonage is grazed and put a plan in place to graze these commonages. Will the Minister look at this area between now and when the forms come out in spring to investigate the possibility of doing this and the consequences for the State of not doing this? There are very competent people on the environment side of things within the National Parks and Wildlife Service and elsewhere who would understand the potential consequences for the State.
While I understand what the Deputy is saying, there is another consideration - the accuracy of mapping. On many occasions we have discussed in the House the problems we have had with the new LPIS whereby we now have more accurate imagery of land than we have ever had before. As a result of that accuracy, the Commission has deemed that Ireland effectively owes it €181 million in terms of money that has been spent on land that is not eligible. We do not accept that figure and we have gone to arbitration. We hope to reduce it significantly and we have put much work into that.
It shows the seriousness the Commission attaches to payments on lands it deems to be ineligible on the basis of what can be seen on a map's imagery. We cannot simply say that none of these commonage areas have shrunk in size because there has been an encroachment of vegetation because of a lack of grazing. If it can be seen that land is no longer fit for agriculture practice, then there are issues that need to be addressed in terms of eligibility to ensure accuracy and avoid future fines. At the same time a farmer should do as much as possible from the point of view of stocking rate.
8. Deputy Patrick O'Donovan asked the Minister for Agriculture, Food and the Marine if he will provide an update on the situation regarding EU exports to Russia; the response of the EU to assist those affected producers; and if he will make a statement on the matter. [42797/14]
My question relates to the impact the ban on EU exports to Russia, the second largest market for EU produce, is having in Ireland and across the EU. The Minister might use the opportunity to update Members on any discussion between the EU and Russia or any bilateral discussions between Ireland and Russia on the matter.
The Russian ban on agricultural products from the EU came into operation on 7 August. Russia is the second most important destination for EU agrifood exports. These exports are valued at just under €12 billion based on trade in 2013 and the products covered by the ban are valued at more than €5 billion, representing 43% of the EU’s trade in agricultural products to Russia and over 4% of total EU agrifood exports.
The ban came on top of a series of other restrictions imposed by the Russian authorities earlier this year, including an EU-wide ban on pork due to an outbreak of African swine fever in Lithuania and an EU-wide ban on beef trimmings due to alleged adulteration of beef consignments with pork in certain member states. While beef trimmings from Ireland were banned, we were not one of the countries involved in the alleged irregularity. In addition, Russia imposed temporary restrictions on exports from Ireland of beef offal, dairy powder products and seafood arising from a series of routine audits. Two weeks ago - the week before I went to China - I had direct discussions with the Russian ambassador on that matter.
The EU response to date has focused largely on the fruit and vegetables and dairy sectors, and the measures taken are as follows. Support for market withdrawals, green harvesting and compensation for non-harvesting for perishable fruit and vegetables has been put in place. There has been an opening of private storage aid for butter and skimmed milk powder until the end of the year. There has been an extension of private storage aid to certain cheeses. There has been an extension of the intervention buying-in period for butter and skim milk powder until the end of the year. There is a commitment to add €30 million to the existing EU budget for promotion programmes in 2015.
Additional information not given on the floor of the House
The Baltic member states and Finland are acutely affected by the ban on dairy products and the Commission is under pressure to introduce a targeted compensation package. There is, however, an issue about the funding available for this and for any further measures that may be required. There is a proposal from the Commission to reduce the budget appropriations for agriculture in the 2015 budget. This is the subject of negotiation between the Council, European Parliament and Commission in the conciliation process for agreeing the EU budget for 2015.
At Monday’s meeting of the Agriculture and Fisheries Council an overwhelming majority of member states, including Ireland, called on the European Commission to reverse its proposal and to set aside sufficient funds to address the impact of the Russian ban and to address any other crisis or market disruption that might occur in the next year. Accordingly, the Italian Presidency has sent a letter from the Agriculture and Fisheries Council to the President of the ECOFIN Council to register the dissatisfaction of EU Agriculture Ministers with the Commission's proposal.
The Minister referred to storage aid and intervention. Will that be reviewed on an ongoing basis by the Agriculture and Fisheries Council? The decision to ban produce from the EU came as a result of what Russia did in Crimea. As that will not be resolved any time soon and certainly not before the end of the year, I presume the measures the Minister mentioned should be extended.
I refer to particular sectoral difficulties. Exports from Ireland to Russia are approximately €150 million, which is less than 3% of the total export value. However, I presume that of that €150 million, some companies and some sectors are disproportionately hit. There will be some companies that may have an overexposure to the Russian market. Are there any supports from Bord Bia, the Department or elsewhere for such industries that will experience a bigger hit than the rest of the sector?
They are all relevant points. There are issues around products that we could, and should, still export to Russia, which are not covered by its embargo, as they call it, or ban. For example, even though milk powders are banned, dairy ingredients products and casein are not banned. There are similar issues for other sectors. However, further restrictions apply to Ireland because of inspections that happened here and, therefore, we are trying to resolve these to make sure questions the Russian authorities have following those inspections a number of months ago are dealt with. That is what I met the Russian ambassador about last week and we had a constructive discussion.
With regard to supports for companies and sectors that have specific problems, Bord Bia put in place a unit to deal with companies that have an over-reliance on the Russian market to look for alternative markets for them, and it has been active in that area. The mackerel industry springs to mind. Ireland is Europe's second largest exporter of mackerel to Russia. We have had to look at helping the industry to find other markets. I was in China last week and I noted that significant volumes of mackerel go through China to the Japanese market. We are trying to target and help companies that have an exposure to the Russian market and that are adversely affected by this issue. We are putting as much pressure as we can on the Commissioner and the Commission to ensure we have a sufficient budget to deal with this continuing problem, which is the result of a foreign policy decision as opposed to an agricultural decision. This should go beyond the agricultural budget in terms of the compensation and the solution.
I encourage the Minister to keep storage aids and interventions under review because the issue between Russia and the EU will not be resolved before 31 December and there has to be ongoing support. I note his comments on the banking of fish quotas. I read the report on mackerel on his Department's website last week. Cheese is one product that has a particular exposure to this market. There are a large number of dairy producers in my constituency. The Minister mentioned infant formula and a large volume of this product is manufactured in west Limerick for export. There should be supports for sectors that have an exposure to the Russian market. I welcome that during the Minister's trip to China, he examined opening up new markets. That will be part of the solution. I hope the storage aids and interventions will be maintained by the Department and Commission into the future.
The Deputy is spot on. One of the main dangers is that there has been an attempt by some in the Commission to transfer unspent money in the agriculture budget to other non-agricultural expenditure programmes. We have been seeking additional money for agriculture to deal with this problem because it is primarily a foreign affairs issue and there is a risk the agriculture budget could be raided. Commissioner Hogan is very much fighting against that. Earlier this week at the Council meeting, we gave him a strong endorsement of that policy to make sure money taken out of the agriculture budget would be used for programmes such as this and not transferred to other areas.
With regard to infant formula, a Wyeth product manufactured in Askeaton, west Limerick is the premium plus product on Chinese shelves selling at many multiples of the locally produced infant formula. It is one of the most successful products in the Chinese markets under the label Illuma. Other Irish companies, including Abbot and Danone, are doing this as well. The Chinese market for high-end dairy products, in particular infant formula, is accelerating at an exciting pace.
