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Cereal Sector.

Dáil Éireann Debate, Thursday - 11 March 2010

Thursday, 11 March 2010

Questions (23)

Olivia Mitchell


23 Deputy Olivia Mitchell asked the Minister for Agriculture, Fisheries and Food the way he proposes to assist recovery in the grain sector; and if he will make a statement on the matter. [11967/10]

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Written answers (Question to Minister for Agriculture, Fisheries and Food)

Since Ireland is a deficit market for cereals, prices here are greatly influenced by world market conditions. In 2007, for example, when world grain market prices were driven up by increased demand from the biofuels sector and from the new emerging markets like China and India, prices in Ireland also increased to record levels. Growers here reacted to the high prices by increasing the acreage sown and this resulted in a bumper harvest in 2008.Similarly when world prices subsequently declined, this trend was mirrored in Ireland. Despite a significant drop in Irish grain production in 2009, grain prices also declined and on average were 30% lower than the 2008 level.

Within the EU, market management policy for the cereals market is determined within the framework of the CAP. The intervention mechanism provides a safety-net in the event that market prices go below the intervention price but in Ireland market prices have remained well above the intervention level and there have been no offers into intervention in recent years, in contrast to the situation in many other Member States.

The maintenance of an efficient and viable cereals sector in Ireland is clearly very important. Not only does the sector generate an income for our tillage farmers but it is also a key source of feedingstuffs for our livestock sector. Annual cereals production in Ireland has fluctuated around 2 million tonnes in recent years and it is desirable to try to sustain this level of production in order to avoid over-dependence on imported cereals. To that end, the State supports the development of the cereals sector in a number of ways.

My Department operates a range of services aimed at improving the efficiency, quality and viability of cereal production. These services include seed certification, seed testing and recommended lists of varieties. In addition, Teagasc provides research, training and advisory services for cereal producers. The value of all these support services is reflected in the fact that Irish cereal producers have consistently achieved some of the highest yields in the world. Last month I launched a major initiative to draw up a long-term strategy for the agri-food, forestry and fisheries sectors and the position of the cereals sector will be examined in this context.

Despite the current economic down turn across the world, the ever-increasing demand for grain within the biofuel industry and growing consumption patterns in developing countries is likely to continue over the coming years. While the various price spikes experienced in recent times are unlikely to be repeated in the short term, it is certainly possible that average world grain prices will grow over the next decade at a faster rate than over the previous one. In the wider sense at least there is cause for cautious optimism in the grain-producing sector. While it is too early to speculate about the prospects for the 2010 harvest in Ireland, there will be some recovery in returns for growers due to very significant reductions in the main input costs but clearly this still leaves the tillage sector some way to go to achieving acceptable margins. Nevertheless, I believe that Irish cereal producers in the main are well positioned to meet the competitive challenges ahead.