Dairy Industry Ireland represents the primary and secondary dairy manufacturers including the specialised nutrition sector in Ireland. We will attempt to cover the questions outlined by the committee in the course of this opening statement. We welcome the Government's commitment to retain the nitrates derogation as per last week's memo. As an industry, we are fully committed to working with Government to formulate a clear plan to enable the EU Commission to extend Ireland’s nitrates derogation for at least another four-year period beyond 2025, but preferably an indefinite solution reflecting Ireland’s unique outdoor, grass-based, family-farm system. The current lack of certainly is doing little to improve our already high water quality standards but is playing sheer havoc with the fundamentals of Irish agriculture at present. We fear it could instigate structural, social and economic decline if we do not address it. We are in agreement with the Chair's opening statements.
There is a clear determination in our sector to work with Government and other stakeholders to address these significant challenges, including other agri and rural industries. I wish to acknowledge the director of Meat Industry Ireland, Mr. Dale Crammond, who is with us here this evening to also outline the existential threat to Ireland’s key meat industry processing for more than 100,000 farm families. It is not just an issue of dairy, it is really across the whole agriculture industry.
Achieving continuous water quality improvement must be led by scientific knowledge, improvement programmes, quality knowledge transfer and communications to farmers and other stakeholders. There must also be a recognition and acceptance that there will a time lag before implemented actions have the desired impact on the ground. Political engagement will be key to the continuation of the current derogation beyond 2025, enabling the agrifood sector as a whole to achieve the ambition necessary to demonstrate what success looks like.
Our industry is broadly supportive of the recommendations in the recent Department of Agriculture, Food and the Marine water quality working group's final report. We also hope the recommendations of this committee will be of huge use to our endeavours. There is a real concern within the industry that the Government has not yet allocated the necessary resources to address this critically important issue. Unless we collectively work to an agreed action plan to improve water quality across all sectors, and thereby preserve the derogation, our capacity as an industry to remain efficient and competitive internationally will be fatally undermined and it will be damaging to the overall Irish economy. A 2023 EY report attributed €17.6 billion annual activity in rural Ireland for dairy alone. Some of that information is attached in appendix A.
The potential impact of a further adjustment to the derogation will not only be economic. There also will be social and environmental impacts. Appendix B of our report lays out the positive scale of the current model across Ireland. We are the envy of many dairy and agricultural economies across the world. Scientific evidence linking adjustments to the derogation and water quality is, to be honest, limited. Any changes to the nitrates derogation require careful consideration because the current onerous regulatory requirements on farmers availing of the derogation provide an additional layer of water quality protections. If the derogation falls, those also go away. Ireland's unique and economically competitive outdoor grass-based model of food production may be undermined, with a risk that Irish dairy would have to turn to intensive high-input systems like in peer economies in Europe. It is not only in Europe; look at Northern Ireland. Dairy farms may be required to endure additional farm costs to compete with other sectors to acquire more land to comply with the nitrates directive, thereby completely undermining Government and EU targets for the organic, tillage and forestry industries and even the protection of our suckler industry. We see this daily as we speak. The family farm model of food production may be undermined in favour of farm consolidation. This is evident in other parts of Europe that do not have the derogation.
Current policy uncertainty - a word I will keep coming back to - is a contributing factor to current milk supply trends. Appendix C of the submission lays out the worrying change in Irish milk supply. It was -4.1% in 2023, and already in 2024, it is -9%. This affects rural communities all over Ireland. With global dairy demand still accelerating year by year, dairy production will move to regions with multiples of the carbon footprint of Irish dairy, which also needs to be remembered. With stakeholders, we wish, as an industry, to take ownership of the issue and bring a solutions-based approach, working with partners across the State. The industry will not solve this on its own. We need help from everybody in this room.
We propose to the committee that the following ten-point action plan be fully resourced and driven by the Government with a singular goal of securing EU Commission approval for the continuation of the derogation to give the sector clarity in the medium term. This cannot be just a short-term solution. First, we welcome the recent Cabinet memo confirming Government support for derogation renewal. Given the importance of maintaining the current nitrates derogation and the dire economic and social consequences were it to be further eroded, we request that the Taoiseach chair a Cabinet subcommittee chiefly tasked with co-ordinating the crossover roles of the relevant Departments that will be impacted. It is not just the Department of agriculture but also the Department of housing, the Department of the Environment, Climate and Communications, the Department of rural affairs and the Department of enterprise and trade. They should be tasked with securing the derogation in the context of the forthcoming review.
Second, there should be a clear Government-led strategy that will be built around a national farming for water movement. There is already strong industry and Government support for the recent farming for water European Innovation Partnership funding of €60 million. With the support of all stakeholders, it is important that the roll-out of this EIP at a national level is designed to maximise water quality improvements measurably at national level, with farmer involvement and support at its core.
Third, as part of the farming for water movement, every farmer should be supported to develop a nutrient use score, with codes of practice for each sector, not just dairy but beef, cereal and others. Nutrient use is what the farmer has in his or her control. We see that as a key element of our plan.
Fourth, the closed periods for the application of organic manures to land must be respected by all farmers. Not only should this be clearly communicated by reference to the long-term implications of failure to comply, but all stakeholders should work closely to ensure risks to water quality during the closed period are addressed and a compliance culture prevails. Chemical nitrogen allowances should be reduced in line with the water quality working group's recommendations. We have made huge strides in our industry in chemical nitrogen reduction in the past couple of years, which is not really acknowledged by the system. Industry will support and encourage this recommendation.
Fifth, in the absence of anything from the Government or anywhere else, the industry will finalise an independent economic assessment of the effect of changes to the nitrates derogation, identifying potential future scenarios of a stepped reduction. This will help to provide clarity and re-emphasise the importance of working collaboratively on these critical issues. We are already in the latter stages of this project with EY and will be happy to share results with the committee when it is complete.
Sixth, there must be a clear focus on water quality improvement within the requirements of the Bord Bia quality assurance schemes for all sectors, not just dairy. These schemes provide an important opportunity to increase the focus at farm level to address water quality challenges. AgNav, for those who do not know, is a system rolled out by Bord Bia, the ICBF and Teagasc to give farmers accounting metrics for environmental improvements to support recording and to give credits to farmers. This is important. Farmers are doing huge work on water quality improvements and it is about giving credit where credit is due at farm level. They should be encouraged.
Seventh, it is clear that for a Government and stakeholder strategy to be effective on the ground and in every river catchment in the State, further funding will be required, as well as the reallocation of current financial steams. The future Ireland fund recently announced by the Government should be mobilised immediately to underpin the Government's farming for water strategy and to drive the recommendations of the water quality working group. This funding would be a fraction of the loss of output and export sales that would occur from the reduction of nitrates. We feel it could cause a generational splinter of the economy of rural Ireland.
Eighth, enhanced levels of intensive engagement with farmers on the ground by Teagasc, LAWPRO, us in industry and private advisory services can make a real difference in driving change. We have seen that with the ASSAP in place since 2017. This will need planning and funding stemming from a farming for water Government strategic plan. The State agri-science body, Teagasc, should develop a clear strategy and reorientate its climate advisory programmes temporarily to ensure its resources are focused on water quality improvement. To be fair to Teagasc, it is launching a strategy tomorrow in Ashtown on the same topic. We as meat and dairy processors will continue to invest in our own advisory resources and develop champion river catchments within our respective areas. This would be in full alignment with a farming for water national strategy.
Ninth, and perhaps the elephant in the room, is that a national nutrient storage programme is required with attractive rates of grant support to de-risk investment. Farmers need help for slurry storage. Farmers are currently reluctant to invest, given the uncertainty about the future of the derogation. A clear pathway for derogation retention is crucial and critical. Industry supports the water quality working group's recommendation of a 70% grant rate. Yesterday's publication of a national biomethane strategy may offer an opportunity to assist in nutrient storage improvements at farm level while also assisting the Government-mandated commitment to the development of an anaerobic digestion industry to meet energy requirements and climate obligations.
Tenth and finally, we call for a targeted national farming for water communications campaign built on the clear and focused action plan we have outlined, with specific messaging for the different agrifood sectors. This should be launched by the Government without delay. We see the Teagasc event tomorrow as a good first step.
This should contain clear messages about the immediate actions farmers can take to improve water quality on their farms. It must be clear that water quality is impacted by a multitude of sectors, not just agriculture or even agriculture enterprises. It is not just the livestock sector that is impacting on water quality, yet the livestock enterprises are the ones that will be most affected.
I thank the members for their attention. We look forward to answering any questions.
