I thank the Chairman and members for their invitation to come before the committee. I am glad to have the opportunity to present this report to the members of the Joint Committee on Agriculture, Fisheries andFood and explain its contents.
On the last occasion I was before the committee I was here as Minister of State regarding the introduction of some directive from Europe on wine growing in Ireland. We had good fun that day in the exchanges. It is not something we expect to happen here unless climate change happens more rapidly than we expect. That was my last opportunity to appear before the committee.
Approximately 12 months ago I was appointed to do this report by the agriculture committee. I have been working hard with a large number of people since then. I want to introduce Claire Donlon, who has been advising me throughout the process, and thank her for her work and her contribution to the report.
In tandem with this report, the European Parliament's agriculture committee agreed that a consultancy firm would carry out a study on the future of the sheep sector — a true sign that it is committed to the report. Ernst and Young won the tender and produced a fine and detailed study, which provided the basis for my report.
From the outset there was a very positive reaction to this report because in many ways the sheep sector is the forgotten child of agriculture and the report presented an opportunity to turn the spotlight on the sector. In the past year I consulted widely with European Union and Irish farming organisations, processing groups, consumer organisations, EU governments and the European Commission.
I acknowledge the presence in the Gallery of the representatives of the farming organisations, the IFA, the ICMSA and the Irish Meat Board. Bord Bia representatives are not here but all of those organisations were most helpful to me in the consultation process. They did quite an amount of work in contributing to this final document.
I also conducted meetings with the Agriculture Commissioner, Ms Fischer Boel, and various European Agriculture Ministers, including the Slovenian Minister for Agriculture who is currently chairing all EU Agriculture Council meetings as Slovenia hosts the EU Presidency. I met our former Minister for Agriculture, Fisheries and Food, Deputy Mary Coughlan, many times about the contents of the report. She has been very supportive at all times and I am certain that support will continue under our new Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith. I take the opportunity to congratulate him, his family and supporters on his appointment and Deputy Mary Coughlan on her appointment as Tánaiste.
I had a very productive meeting with the French Minister for Agriculture, Mr. Barnier, which was crucial as France holds the EU Presidency from July to December this year, and will be key in the implementation of the report. I have been invited by him to address a special conference organised by the French Presidency on the future of the sheep sector, which will take place in Limoges in September. The important aspect is not my attendance at that conference but the fact that prior to his taking over the Presidency this conference was already arranged. He had recognised the difficulties in the sector and had pencilled in our attendance and that of the main players in Europe.
As the Chairman stated, I hosted a lamb evening in the Parliament last November, which many members attended. This event was attended by almost 200 people, including Commissioner Fischer Boel, the President of the Parliament, Mr. Pöttering, the Chairman of the European Parliament agriculture committee, Mr. Neil Parish, and other MEPs from the agriculture committee. European Commission representatives, farming groups, representatives from the lamb processing sector and consumer groups were also in attendance. This event was sponsored by Bord Bia, and I thank the board for that, and its equivalents in France and England. Although this was a social occasion, it provided a forum for the stakeholders of the sector to engage and thus contributed to highlighting the seriousness of the problem in a European context.
The report is now complete. Last week there was an exchange of views on the report in the European Parliament's agriculture committee. There will be a vote on it on 27 May by all members of the agriculture committee and by all MEPs in the July plenary session in Strasbourg. Some 80 amendments have been submitted within the time frame, which expired yesterday. Most of the amendments have to do with the environmental payment scheme I proposed. Those amendments will have to be dealt with in due course.
The objective of the report is to identify the problems, bring forward solutions and put in place the necessary EU structures to ensure that practical reforms can now be effectively implemented.
The sheep sector is a very important sector in Ireland, both economically and environmentally. Last year, sheepmeat exports were worth €174 million. Sheep farming is particularly important in more remote and mountainous areas where it is often the only agricultural option and therefore makes a crucial contribution to the economy in rural areas. It is also an environmentally friendly enterprise and plays a key role in maintaining the rural landscape.
Yet there can be no doubt that the long-term sustainability of sheepmeat production in the EU on a professional scale is more under threat today than ever. EU sheep production has decreased by 12.5% since 2000. There is a mass exodus of farmers from the sector due to the low profit margins and intensive labour involved. Consumers, particularly young people, are eating less lamb as it is considered an expensive meat and difficult to cook. At the same time there is increased competition from third country imports, particularly New Zealand.
It is estimated that lack of action will result in a decrease in the production of sheepmeat of approximately 10% by the year 2015. The imminent health check of the CAP, which will be published by the European Commission on 20 May and concluded by December this year, provides a timely opportunity to review the sheep sector and implement proposals before it is too late.
I will deal briefly with the main elements of the report. Members of this House and members of county councils get many reports and they tend to end up on the shelf gathering dust. My main concern was to ensure that whatever is agreed in this report will be implemented.
For that reason, I have proposed that a new EU implementation task force comprised of members from the European Commission and the Presidency in Council be set up to ensure that the practical reforms of this report are implemented. It would present progress reports to the agriculture committee of the European Parliament and to the EU Council of agriculture Ministers every six months over the next two years. This measure will ensure that the European sheep sector will be high on the agenda for the coming years.
Farm incomes in the sheep sector are among the lowest in the agricultural industry and the financial support received falls well behind other agricultural sectors. In spite of the economic, social and environmental role played by the sheep sector, the Common Agricultural Policy has failed this sector. The decoupling package introduced in the CAP reform of 2003 has contributed to a decline in production. I am also aware, and it is a matter of great concern in the west of Ireland, that the habitats directive has also contributed to that decline. The forthcoming CAP health check must direct additional financial support to sheepmeat production, taking into account the different models in member states. There is no "one-size-fits-all" solution to the future financing of the sheep sector.
I have proposed the introduction of a new environmental sheep maintenance scheme which would allow sheep farmers to be paid on a per ewe basis. This initiative would be financed by either direct national Exchequer funds or by both national and EU funding. This initiative would be clear recognition of the very positive role the sheep sector plays in environmental protection. An additional payment for traditional mountainous breeds, to preserve the sheep in sensitive areas, must also be introduced and be financed either directly by national governments or co-financed by the EU and national governments. Member states must be given the flexibility to use Article 69 or modulation, according to their requirements. This would not suit Ireland, however. I have no intention of setting one sector of Irish agriculture against another, which is what would happen in this case. Nevertheless, it is attractive to other member states.
There is currently no EU legislation dealing with the issue of origin labelling for the sheepmeat sector. As a result there are many different labelling techniques in operation within the EU for sheep products. To promote EU preference amongst consumers and to justify supporting the promotion and marketing of sheepmeat, consumers must be convinced on the basis of food security, indigenous EU production and traditional methods of production. Consumers should be given maximum information about the origin of the products they purchase so they can make informed purchases and I have proposed that an EU logo be developed for sheepmeat products, which would be underwritten by a number of criteria, including a farm assurance scheme and a country of origin indication. This would ensure that consumers are fully aware of the point of origin of the product.
I also considered, although it is not in the report, the inclusion of a slaughter date. The jury is still out on the issue, but I would welcome the opinions of the committee. It is something we have been examining. I have heard of product from New Zealand that has been around for almost two years before its sell by date. It would be an advantage, if we could agree the right formula, to include the slaughter date on the product, particularly on Irish products.
The European Commission intends to introduce compulsory implementation of an electronic identification system for sheep on 31 December 2009. This proposal will burden producers with additional costs at a time when the sector is in economic difficulty. Furthermore, the benefits and feasibility of electronic tagging have yet to be proven. In Ireland and in many other European countries, there are already adequate identification systems in place to deliver the requirements for traceability and animal health. Some countries want electronic tagging, such as Spain and Italy. I have proposed that each member state be given the flexibility of introducing an electronic identification system for sheep on a voluntary basis and that member states that already have adequate systems in place be allowed to continue with their current systems. There is no doubt that Ireland has adequate systems in place and there is no question about changing them now or in the future.
To generate lamb consumption, it is important to invest in marketing. Young people, who are low consumers of lamb, need to be targeted, emphasising the convenience, quality and health aspects of the product, with the core objective of not only increasing consumption but of adding value to EU lamb. Bord Bia and the French and UK food promotion agencies — Interbev and Eblex — are currently conducting a joint generic promotional campaign to increase lamb consumption in France. The generic promotion of lamb does not have access to the EU promotion budget, which is valued at €45 million for 2008. To qualify for this budget, sheepmeat must have a European quality mark, such as PGI, the Protected Geographical Indication, and PDO, the Protected Designation of Origin. I have proposed that a part of this budget be ring fenced for the promotion of EU lamb given the fact that the sector is in serious economic difficulty and in need of a boost.
When one talks to people involved in the sheepmeat industry one finds there is great concern about what the farmer is paid at the farmyard gate and what the consumer pays for the product on the supermarket shelf. As a result, I have asked the European Commission to publish a price series on retail, wholesale, processor and producer prices for each member state on the Internet every three months to ensure more price transparency within the European sheep sector. This could be applied to other sectors as well.
Sheepmeat imports are in excess of 20% and have a significant bearing within the EU market place. The higher costs involved in the production of EU lamb puts the domestic product at a competitive disadvantage compared to the imported product. This imbalance is all the more obvious given that imports are concentrated mainly in two sensitive periods in the European calendar, that is, Easter and Christmas. In this context, it is important to review existing import quota management regimes to ensure that domestically produced lamb is not exposed to unfair competition.
The Irish Government is building a series of alliances in Europe to ensure the interests of the Irish beef and sheepmeat sectors are protected in the context of the WTO process. The Taoiseach, Deputy Brian Cowen, had discussions with José Manuel Barrosso, President of the European Commission, as recently as last Friday. The French Government has made it clear to the European Commission that it opposes Commissioner Mandelson's negotiating stance. The French Minister for Agriculture, Michel Barnier, was also in Dublin last Friday and met the Government regarding the ongoing World Trade Organisation talks. At a recent agriculture Council meeting, more than 20 countries of the 27 opposed Commissioner Mandelson's strategy. We know there are issues of concern and we are addressing them.
At this point — and I do not say this to offend anybody — it is important to state that WTO and the Lisbon reform treaty are two separate issues and should be treated accordingly. It is not in the interests of the Government or farmers to reject this treaty. With the conclusion of the CAP health check in December, Ireland is best served negotiating from a position of strength, not from a position of weakness. In the CAP health check there are three issues which should be addressed from an Irish viewpoint: first, that modulation should be on a voluntary basis for each member state to decide; second, that milk quotas be increased in advance of the proposed abolition of quotas in 2015 and, third, that the system of the single farm payment be simplified.
By voting "Yes" for the EU reform treaty, Ireland will demonstrate that it is a committed and leading member of the European Union. It is in Ireland's future economic interest and the interest of our agriculture sector and food sector that we vote "Yes" for this treaty. As part of the simplification process in the review of the CAP health check, which is taking place over the next eight months, the European Commission must allow 14 days notice to be given to livestock farmers for on-farm cross-compliance inspections.
Other aspects of the report focus on the need to include lamb in the "Community Action Programme for Public Health" to promote the health and protein benefits of lamb to consumers and the need for innovation. At present, the financial return is almost negligible for by-products of sheep, such as wool and pelts, known as the fifth quarter. The value could be increased by developing new uses, such as highly efficient and ecological thermal insulating material.
Thank you, Chairman, and the members for the invitation to appear before the committee. What I have discovered about the process of consultation is that nobody should ever fear it. It is through people coming together and exchanging views that a good report is produced. The 12 month period we spent on that process, which represented all sectors, was well spent. For that reason I am delighted to have the opportunity of hearing from the members of this committee. By pooling all our resources we will get an end product that does justice to us all.
