Thank you, Chairman. The president has laid out the background to this sector very well. Anybody who has been reading the agricultural press over the past 12 months cannot but remark on the negativity running through the sheep industry. We are confident that, with a positive input from the Minister, it can be turned around. We have been working very hard with the Department of Agriculture and Food and the strategy group to try to do that.
This is a good report. It contains 37 recommendations, much too detailed to go into here. If 25 of those recommendations were implemented there would be a very good future for sheep farming. We should always strive for 100% implementation but I accept,that, for various reasons, it may not be possible to implement some of the recommendations. No one needs reminding that we have lost the sugar beet industry. In the Carlow area sheep were traditionally kept alongside involvement in sugar beet. We have lost the sugar beet industry and now the sheep industry is under threat. Appendix B shows figures from Teagasc which do not make for pretty reading. There are 84 farms involved in the e-profit monitor programme. The figures show that the average sheep producer is losing €2 per ewe, without taking account of the single farm payment. The average sheep producer makes approximately €20 per ewe with the single farm payment added. I met a sheep farmer this morning who has 600 ewes, which is way above the average. He is trying to make a living out those. His total income from sheep is approximately €12,000 per annum. One wonders how he lives on that but, in fairness, he is in receipt of a single farm payment and REPS, but therein lies a problem. He could get those without having sheep. There are other enterprises in which he could more easily be involved. He could drift into one of those, but they do not add anything to our export earnings.
Across Europe people are getting out of sheep production. There is a message in that for us. I was in France for two days last week. We currently supply lambs to France, although not as many as in the past. One in eight lambs eaten in France is Irish and the perception of Irish lamb on the French market is very positive. It is not my job to argue for or against meat factories because we have our own problems in that regard. We have five exporting plants, two in the west, one in the midlands and two in the east. We have 3.2 million ewes. If that were to slip to 2 million ewes we would lose two to three of those plants. The industry would become uncompetitive and the sheep exporting business would fail. We would be back at the stage we were at years ago, supplying only a domestic trade. In effect, we would not have a sheep industry. As matters stand we have the bones of a sheep industry.
I will run quickly through our proposals. Lest it come across as such, what we are proposing does not amount to asking for a hand-out. It is not a hand-out, but a payment for breeding according to animal health and welfare requirements. It encourages improvements we farmers can make to our industry. We are clear that we can make improvements. Most of the 84 farmers on the profit-monitoring list are probably doing the job very well already. There are people doing the job in worse circumstances given that recording the figures and carrying out profit monitoring at all implies that one is a very good farmer. That means even good farmers are in trouble.
With a small bit of help and a little restructuring, the industry can stand on its own feet again. Trends in sheep supply in the European Union indicate that there will be price rises in future. The recommendations in the Malone report focus on co-operation between processors and farmers to deliver an average of €15 more per lamb over the next four years. It will not be easy and will take time. If we could achieve €15 more per lamb over six months, we would have done it long ago. It needs to happen. Our worry is that in the meantime, ewe numbers in the sector will have decreased below the required critical mass. Since 2000, ewe numbers have decreased from slightly more than 4 million to 3.3 million. Members can see the pattern in that statistic.
The Minister has said clearly that any action she takes in this area must be linked to the Malone report. I represent farmers on the IFA's sheep committee which looked at the report's recommendations on improvements in breeding, greater participation in Teagasc discussion groups and improved presentation of lambs at factories. Costs and time and labour inputs are associated with adopting the recommendations. Improvements in breeding and animal welfare involve a slow, laborious process which provides little return to farmers currently and must therefore be incentivised. From discussing the matter with officials of the Department of Agriculture and Food, it appears there is room to implement such incentives in place of a simple one-off payment for keeping sheep. While the opportunity for the latter approach no longer exists, there is an opportunity to reward farmers for the time they put into improvements in animal health and welfare and breeding.
Some recommendations for funding have already come forward from the strategy group. While one might ask why funding should go to the Irish Cattle Breeding Federation given that we are talking about sheep, it is proposed that the sheep breeding improvement programme which the Department of Agriculture and Food has run up to now be put under the auspices of an independent organisation. The ICBF is such an organisation and could establish a sheep section to absorb the funding under the proposals. There are also proposals to provide extra funding and resources to Teagasc. The Minister is already providing Teagasc up to €130 million per year. While I do not have a problem with providing more money for Teagasc's sheep section per se, it should be noted that the section has been badly eroded in recent years. The current Teagasc proposal serves only to put us back in the position we were in two years ago. There is also a proposal for more funding for Bord Bia and €50 million was announced before Christmas for processors. The pattern that emerges is notable for its absence of any mention of the farmer, which is a real issue. With the funding, we will have breeding, advice and everything else bar the sheep themselves. That is the problem.
The industry requires resuscitation and a message of confidence from the Department of Agriculture and Food. Over the years, there has been a perception among sheep farmers that ours is a neglected industry from a departmental perspective. We have been seen as people who merely run sheep out to eat grass. It has been described to me as the seeking of funding for lawnmowers. That view is incorrect. Ours is a commercial industry with commercially oriented farmers who want to farm properly and export sheep. While many farmers do things properly already, they have begun to lose heart due to the price of sheep and poor returns. Perhaps some jobs are starting not to be done as well as they should be. If we create an incentive through the Department of Agriculture and Food, we can place the sector back on the footing it was on when we were making money from our sheep.
Part of our plan demands that farmers appraise their economic efficiency properly and consider production models. Farmers will draw up five year plans for sheep flocks with Teagasc which will involve finances and production costs. We have long heard that our main competitive advantage is our grasslands, on which there is a great deal that can be done. We know what is happening in the world grain trade and that the USA will use 40% of maize this year for bio-fuel production. These trends will weigh heavily on anyone producing lamb meat from grain, like the French and Spanish, the majority of whose output is farmed that way. The ball will, therefore, be pushed back into our court given the competitive advantage grass will represent.
While we are in trouble and need some help, we have the basis of a very strong industry. As the president, Mr. Walshe, explained, we seek support from the committee to move matters along with the Department of Agriculture and Food. The farmer must appear in the report somewhere if progress is to be made.