I propose to take Questions Nos. 888 to 890, inclusive, 893 and 933 together.
The pig sector remains the third largest individual component of the agri-food sector, with production, prices and exports all growing significantly during 2011. The industry faces a number of challenges in the short and medium term and my Department will continue to assist the sector to resolve these issues. New EU animal welfare rules set down new standards in relation to the housing of sows and these are due to come into force on 1 January 2013. A significant number of producers have undertaken the necessary work required in order to upgrade their facilities in order to comply with the new rules.
My Department is aware of the scale of the challenge facing pig farmers in respect of the new requirements. To this end, the Department introduced a targeted agricultural modernisation scheme for sow welfare in June 2010. Grant-aid is available at a rate of 40% to eligible producers with a maximum investment ceiling of €300,000, i.e. a maximum grant of €120,000. A total of €13 million has been provisionally allocated to this scheme under the rural development programme. It follows two earlier schemes in 2005 and 2007 and payments of €6.2 million have already been made under these schemes.
The provisions of the scheme were modified earlier this year to allow multiple applications from pig farmers with more than one sow house together with an increase in the ceiling to €500,000 for the first house and €300,000 for each of the next three.
Furthermore, in order to ensure that as many pig producers as possible would be in a position to comply with the new EU animal welfare rules, I have extended the closing date for applications to end-January 2013. All applications received during the period of this extension would now be included in a new final tranche for which a sum of €3 million has been made available. The final date for completion of work and the lodgment of payment claims is 30 September 2013.
Applications from almost 120 producers, to the value of €13.86 million are currently being processed in my Department.
While planning issues are a matter for local authorities, my Department has made them aware of the deadline for compliance with the sow housing regulations.
I and my Department are in regular contact with farm bodies, various national banks and the Irish Banking Federation concerning the availability of credit to farmers, including those in the pig sector, who are under financial pressure. I am aware that, like many other sectors, farmers are finding it difficult to get credit due to the strict assessments introduced as a result of the global financial crisis and that pig farmers have particular issues regarding high feed costs. The banks do provide information online, via the Irish Banking Federation, as to the type of information that they require when making a decision on a loan request in the agriculture sector. However, farmers who are not satisfied with the service provided by their banks can ask for an internal review by the relevant bank and if they are still not satisfied can apply to the Credit Review Office to have their case reviewed. Despite concerns, a relatively small number of cases from the agri-food sector have come before the Credit Review Office.
Over the last year I understand that some of the banks have been involved in organising information sessions and conferences to explain the credit facilities available in the sector and just recently one of the pillar banks announced its intention to expand its lending activity in the agri-sector. Nonetheless, I will continue to meet with relevant parties, including the Irish Banking Federation, on a regular basis to discuss all credit-related issues.
My Department has been in regular contact with all pig producers to keep them apprised of the requirements and ascertain their intentions and will continue to monitor the situation closely.
I am aware of the concerns currently being expressed by both the pig and poultry sectors, particularly with regard to feed costs. High feed costs, most notably cereals and compound feed remain an issue. Pig producers are especially affected by the increase in cereal prices since June 2009, given that cereals account for 75% of feed.
Contributory factors include weather events in the Black Sea region and the United States during recent years, currency fluctuations and general supply and demand factors including but not limited to, better diet and increased meat demand in emerging economies and the ongoing shift towards biofuels.
The supply side has been adversely affected by drought in the US during the summer which led to a 27% decline in the forecast corn harvest. This came after spring drought in South America and has been followed by a reduced harvest in the Ukraine after a poor summer. Indeed, the Ukraine announced a ban on wheat exports last week but has since modified this stance somewhat.
Given that Ireland imports much of the feed used in both the pigmeat and poultry sectors, the impact of price increases in these commodities is acute. Domestically a number of initiatives have been explored and developed. For example Teagasc, through its Moorepark pig research facility and the provision of FETAC courses in pig production and benchmarking pig herd performance, plays a critically important role in improving productive capacity at farm level. Teagasc have also circulated pig producers with a number of the options available to them to reduce feed costs and improve feed efficiency.
The price of pigmeat and, of course, feed is ultimately determined by demand and supply considerations. You will be aware that, due to Ireland’s membership of the Single Market, unilateral actions or interventions to support individual sectors is not permitted. For my part however, I and my officials will continue to press the European Commission to make use of all the available market supports when circumstances require it, to ameliorate the worst effects of price volatility.
Pigmeat remains the most consumed meat worldwide and I consider that the substantial trade surplus in pigmeat in Ireland and the measures being taken to improve efficiency and market access leave us well placed to avail of developing opportunities in international markets.
In so far as international trade in Irish pigmeat is concerned, my Department has been extremely active in developing relationships in new and expanding markets in order to build the kind of confidence in Irish production and control systems that provide a platform for long term trading relationships in the future.
And of course Bord Bia continues, through its promotional activities, and through the pigmeat quality assurance scheme, to consolidate the position of Irish pigmeat on the domestic market and to expand its presence on EU and third country markets.
While input costs have increased significantly in recent years, the returns available to producers have also risen sharply. This has helped ameliorate the situation to some extent. At the end of October, prices were almost 24/c per kilo ahead year on year, which equates to an increase of more than 16%. Compared to the same week in 2010, per kilo prices have risen by over 40/c per kilo, or almost 31%. The forecast decline in the European sow population and consequent lower production and ongoing high demand for European pig meat internationally, should lead to even higher returns in the coming months.
