Excuse me. I was trying to deal with Deputy Creed's comment and I will come to Deputy Sherlock's question shortly.
A query was raised about the Dunmanway and Mallow offices. Teagasc is at present reviewing its entire office network. We service 88 offices throughout the country. In the present difficulties, which I will deal with shortly in regard to our budget situation, we must obviously consider how efficiently we deliver our services. All of our offices are being carefully examined but it would be premature at this stage to comment on any individual office because we have to consider the totality, which is where we are at present. We are actively looking at that issue.
Moving on to Deputy Sherlock's comments, I appreciate the positive remarks he made about our service, which are welcome. The Deputy made a number of important points with which we would totally agree. We published a report last May, entitled Teagasc 2030 Foresight, in which we argued that agriculture is on the cusp of profound change. If we consider global trends, there has been a structural shift in the demand for food versus the supply of food. Given the current situation, it is of course understandable that people would focus on the very real difficulties we are experiencing, not just in the pigmeat sector in recent days but also what has been happening in dairying in the past year, particularly with regard to input prices. However, if we consider the medium term, all of the indicators are that a structural change has taken place from a position where we were facing a structural oversupply of food in terms of the tendency for supply to constantly outstrip demand. We are now heading into the reverse position, which seems to be the assessment of authoritative commentators on the issue.
This provides a huge opportunity for agriculture on that front alone but it also provides an opportunity on the energy front. We all know we are heading rapidly towards peak oil so there is a very real issue concerning the structural shortage in energy. This is where renewables, particularly bio-renewables, enter as a key strategic issue for us nationally, which obviously has major implications for research.
Teagasc has invested substantial additional resources in recent years in examining the whole area of renewables at Oak Park Research Centre, Carlow. I do not know whether the committee has visited the centre but if it is specifically interested in getting a briefing on the whole renewables area, that would be the centre to visit. We are doing work on the production side in terms of considering the productivity of different renewable crops such as miscanthus, willow and so forth, and all that one would expect Teagasc to be doing. However, we feel the next move has to come on the processing side. If we want to be a significant player in producing biofuels in the years ahead, we need to have a research facility that is testing the processing of those biofuels. Even with first generation technology, it is important to be in there now to acquaint ourselves with the logistics involved, which are substantial, and to access the raw biomass. If we are in there now with first generation technologies, when the new technologies — the so-called second and third generation technologies — come on board, we will then be in a position to lever off that knowledge.
We have been working with colleagues in other educational institutions in putting together a series of proposals that would involve developing a pilot plant processing facility to enable this to happen. We are very excited about this prospect and have been working with Enterprise Ireland and other agencies to try to convince them of the need for this to happen. Of course, the financial climate has changed in recent times and there may not be the same enthusiasm about a project like this. However, we are pushing it because we believe a test plant facility would enable the processing industry in the biofuels area in particular to take off. We would like to model this facility on what we have done at Moorepark in regard to the dairy processing sector with a similar type of initiative on fuel processing and bio-processing. It is a project we are strongly supporting.
On methane, we attended a meeting of the Joint Committee on Climate Change and Energy Security a couple of weeks ago at which Deputy Doyle and perhaps some other members of this committee were present. We pointed out to that committee the huge challenges that are presented to Ireland specifically. The only other country in the world with the same challenges in regard to methane gases is New Zealand, which is considerably ahead of us in terms of the research resources it has devoted to this area. We would estimate it has probably been spending at about ten times the level we have been spending in recent years.
In a nutshell, the difficulty is a simple one. Some 50% of the problem of greenhouse gases in agriculture is due to what is called enteric fermentation, which is the fermentation which takes place within ruminant animals such as cattle and dairy cows. There is little that can be done scientifically to reduce emissions from that source and it is a challenge with which scientists have been presented worldwide. In so far as we can given our resources, we are linked into that research. We are making substantial progress in some areas. The other half of the research on emissions relates to the uses of slurries, regarding which we have substantially advanced our knowledge.
Work is ongoing at Johnstown Castle, where environmental and nutrient management has demonstrated very clearly that it makes sense for the farmer's pocket to conserve on the purchase of chemical fertilisers but it also makes environmental sense. The message we have been constantly selling to farmers is that one can have win-win outcomes — win for the environment, win for the farmer. We have made substantial progress in recent years in pointing out to farmers that they can make significant efficiency gains by conserving on chemical fertiliser use. If we consider the trend in nitrogen and phosphorous use in recent years, there has been a significant decline in usage by farmers.
Recent years have been a very good example of how economics drive consumption and usage. It is an area where we can report progress but we must admit that enteric fermentation remains a fundamental research challenge and the only way we can make progress is by aligning ourselves with international best practice in this area. This will require significant additional resources and, in so far as we can do so given the limited resources available to us, we are pushing resources in that direction. We have of course drawn the attention of Government to the huge challenge in this area.
We are very happy to invite the Chairman and the committee to visit any centre they would care to visit but perhaps the committee would be particularly interested in following up on the ideas in the newer areas of renewables and methane mitigation.
With regard to our 2009 budget, with other State agencies we have had a significant reduction in our grant-in-aid. We generate resources other than grant-in-aid from farmer contributions by way of charges for advisory services and we also generate external income through our research colleagues winning external contracts from the State — for example, the Department of Agriculture, Fisheries and Food runs a number of competitive research competitions of which we have won several. We also participate actively in international competitions and so on.
Obviously, our grant-in-aid is crucial but it has been reduced by approximately €10 million for next year, which represents a 10% reduction when one takes out the pensions contribution. As one can imagine, this will have severe implications for our ability to deliver a wide range of services to our farmer and food industry clients. In fact, our view is that unless we can get a voluntary early retirement scheme in place to enable us to save on payroll costs, our operational budgets will be severely impaired to the point that in many cases we will not be able to deliver the same level of service which we have been delivering. We have been arguing very strongly that if we wish to maintain our services intact, and given the challenges in the rapidly changing environmental research area, there is a need to constantly upgrade our staff.
Increasingly, we are recruiting biochemists, biotechnologists, soil microbiologists and so on. An entirely new recruitment pattern must be put in place because of the rapidly shifting nature of the international science platform and capabilities. This represents a dramatic turnaround from our traditional recruitment pattern. If we are to keep up to date with research, we must have some headroom to recruit, even in a difficult economic climate. The budget situation is a serious concern for us and we hope to convince the Government that a voluntary early retirement scheme must be part and parcel of the necessary budgetary adjustments. That is vital in terms of the delivery of our front line services. There is an ongoing dialogue in this regard, which is tied up with the wider issue of public sector reform.
Like Deputy Sheehan, I acknowledge the tremendous contribution made by the county committees of agriculture for many years. Their involvement with local communities is well recognised and their attachment to local areas particularly valued. We have taken this model on board in setting up our new area management units, and our advisory service is particularly conscious of the need to maintain contact with local communities. I am pleased to note Deputy Sheehan's long association with Teagasc. Members may be aware that it is the 50th anniversary of the establishment of An Foras Talúntais, the forerunner of Teagasc. Deputy Sheehan has been involved for most of that period.
I will follow up on the Deputy's remarks on the sea-sand subsidy. I am not aware of the details of this. A colleague of mine used to say that if one keeps wearing the same suit, one will sooner or later come into fashion. Soils were very much in fashion in the early 1960s, went out of fashion for a time and are now returning into focus, with particular reference to the environmental challenges we are facing. It is an area in which we have invested significant resources given that it is a key issue in terms of understanding the pathways of pollution in the agricultural area. The late Tom Walsh, the first director of An Foras Talúntais, had a firm understanding of the importance of soil to productivity. We now recognise that understanding soils is also important in terms of pollution.
In regard to education, we take some credit for our efforts in providing attractive programmes for farmers. However, the reality is that it is farmers themselves who make the decisions in terms of education. It is parents who decide to send their children to agricultural college having weighed up the costs attached to doing so. During the Celtic tiger years, the main cost was the foregone opportunity to earn a good wage from the farm. It is a significant commitment to give that up for several years. The farm business may also be affected by that type of decision. Ultimately, however, farmers will engage with education if there are benefits for them in so doing. This is an area we have examined carefully. All our research shows that the educated farmer is a better farmer, with enhanced productivity and income. It is a message we are constantly putting out.
Several questions were asked about the scale of our budget and the value for money it represents. This is a very broad issue but I will try to deal with it succinctly. As at June 2007, our full-time permanent staff establishment was some 1,400 across the entire organisation. Under the Agriculture (Research, Training and Advice) Act 1988, which established Teagasc, we are statutorily charged to provide three distinct sets of services to the agriculture and food sector, namely, research, advisory, and education and training. The staff complement of 1,400 refers to the entire breadth of our services.
In addition, we have some 200 contract staff, the vast majority of whom are self-funded. In the advisory area, for example, we operate a successful REPS service. All the contract staff engaged in this scheme must pay for themselves, otherwise we cannot hire them. We also engage a significant number of contract staff through our research programme. Typically, when one bids for an external research contract, one must employ somebody to carry out the work under supervision and that is funded also. In terms of the educational staff, including the support staff who are a critically important part of the system, we have 233 staff across the system. This includes both Teagasc colleges and those staff subvented in our private colleges.
The grant-in-aid, which is the public element, is some €122 million, including the pensions contribution. We can demonstrate substantial value for money in our management of this funding. Before I took on this position many years ago, I wrote a book on the returns to agricultural research. For example, potato breeding work has been under way in Oak Park for several years, and we have produced internationally best selling varieties. Members are familiar with the Rooster variety, which is produced by Harry Keogh, a former colleague of ours. We receive royalties for that and the returns to Irish farmers year in and year out have been substantial. We have quantified all these issues. I can point to many successes in our work with the food industry. The outstanding one is the Dubliner cheese produced by Carbery Milk Products Limited which was substantially assisted in its introduction by Moorepark.
Of particular note are the returns to public research. Everything we do is published and available for all the industry to take up. The returns have been substantial. My estimate is that, on average, for every €1 million spent on public agricultural and food research, one could expect up to 40% of that as an internal rate of return. We are happy to stand over that type of evidence. We would like to be able to convince the Government of this more than we have done, but we will keep plugging at it.
We are confident that we are delivering value for money but are not complacent. I will not deny there are areas in which we could effect greater efficiencies. That is what we are trying to do and will continue to do. We have demonstrated that there are returns to education. As I said, an educated farmer is a more productive farmer. There are also returns to intensive advisory input. All of this is quantifiable and the return is undeniable.
In regard to pensions, the liability is certainly substantial. We operate a "pay as you go" system in the same way as the public sector generally and the Civil Service. Teagasc has been in operation for a long time, which helps to explain the size of the pensions liability. We have approximately the same number of pensioners as we have permanent staff. Clearly, the expectation is that this entitlement will be honoured into the future.
I have tried to deal with the issues raised as comprehensively as possible.
