Dáil Éireann Debate, Thursday - 18 December 2014
236. Deputy Bernard J. Durkan asked the Minister for Agriculture, Food and the Marine the measures he will take to prevent dramatic reductions in the prices paid to producers in the dairy and beef sector; and if he will make a statement on the matter. [49418/14]
View answerThe reply is as follows.
Beef
As the Deputy will appreciate, questions of price are ultimately matters to be determined between the purchasers and the sellers of cattle. It is neither appropriate nor possible for me or any other Minister for Agriculture in the EU, to intervene directly on these issues. Indeed, the new Competition and Consumer Protection Commission has emphasised this point again in recent weeks via correspondence directed to my Department. Cattle prices are determined by supply - demand dynamics which are in turn influenced by a range of different factors such as consumer preferences, distance to market, consumer confidence, retail promotions, competition with other meats and the overall macroeconomic situation.
Nonetheless, it is vital that farmers are sufficiently remunerated for producing quality animals. My role as Minister for Agriculture is to create a policy support environment that will allow the beef sector to flourish in line with normal market principles. In the recent budget, I announced a total package of approximately €74 million for the beef sector in 2015, including a provision of €52 million for a proposed Beef Data and Genomics Programme which will place Ireland at the leading edge globally in the use of genomics in beef production. The current Genomics Scheme is being further developed and enhanced as part of a 6-year RDP measure which, once approved by the European Commission, will deliver a payment per animal of €100 for the first ten animals, with the remaining animals being eligible for an €80 payment per animal in participating herds. In 2014, I have brought forward a number of initiatives to help the sector, including the creation of the Beef Genomics Scheme with a budget of €23 million in 2014. I have also ensured that the budgets of the Beef Data Programme and the Beef Technology Adoption Programme are retained at €10 million and €5 million which, when added to residual payments under the Suckler Cow Welfare Scheme, amounts to an investment of €40m in 2014.
We have also had notable successes in securing new market opportunities for Irish beef in recent times, with Japan, Lebanon and Philippines opened in the last 12 months. There has also been significant progress in securing market access to Canada, and I expect that Irish beef will be landing on supermarket shelves in the US next year. In addition, Ireland secured a major breakthrough during my recent trade mission to China and, as a result of this, an inspection team from China has been hosted by my Department over the course of the last week or so. This is an important step in securing access for Irish beef to that market.
I should also note recent agreement on a number of outcomes through the Beef RoundTable process. This agreement addresses a range of the issues raised by farmers in recent months, particularly as regards market signals and product specifications. The RoundTable also endorsed the development of Producer Organisations which should, in my view, go a long way to addressing negotiating power along the supply chain and ensure a fair return to beef producers over the medium to long term.
Finally, it should be noted that prices for R3 steers In Ireland have risen by 26 cents per kilo since the beginning of September. This is an increase of over 7% during this period and Irish prices are now at 101% of the EU15 average price.
Dairy
As the Deputy is aware, dairy prices are a function of global market dynamics, with supply and demand issues in markets across the globe affecting prices across different dairy commodity groups in domestic markets. Price volatility is a continuing feature of dairy commodity markets, and it is clear that managing the price peaks and troughs in a way that allows farmers and others to plan ahead is a significant challenge for the sector.
After two years of extremely high prices, the combination of strong production in key dairy producing countries, including the USA, New Zealand, Australia and the European Union, driven by good weather , increased cow numbers in the US and strong cereal harvests, has seen the emergence of a surplus in dairy products on international markets coming into 2015. Furthermore, with Russia and China accounting for 27% of the traded world market in the dairy sector, the effect of surplus stocks in the Chinese market along with the displacement effect of the Russian ban can be seen as critical factors in setting the context for price evolution in the sector.
The anticipated decline in price in 2015 largely reflects the impact of the aforementioned developments on global dairy markets but that these negative results are expected to be temporary in nature.
Under the new Common Agriculture Policy there is a range of tools available to mitigate the worst impact of downward price volatility, including Aids to Private Storage, Intervention and Export Refunds and, as recently as earlier this week at the EU Council of Ministers meeting, I have called on the EU Commission to deploy these tools as appropriate. The Single Farm Payment will also provide a measure of income stability during this difficult period. I have also asked the banking sector to tailor their financial products to take account of the kind of price volatility that will be a feature of international dairy markets, and of course co-ops have a role to play in ensuring that their contractual arrangements with suppliers provide a requisite measure of stability. A focus on innovation and the production of added value products will also have a role to play in mitigating the impact of volatility, and a greater use of futures markets may also feature among the tools deployed by the sector.
In terms of how this will evolve in the medium term, Teagasc, in common with a number of other commentators, anticipate that lower milk prices will lead to a slowdown in the expansion of milk production globally through 2015, with global dairy markets set to witness signs of recovery as the year progresses. In the medium to longer term population growth and increasing affluence in developing countries will continue to drive strong growth in demand for dairy products, and I very much believe that Irish producers will be well placed to take full advantage of this demand. .
