Dáil Éireann Debate, Wednesday - 25 May 2016
318. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine if he has examined the development of additional volatility tools to deal with the current income crisis across several farming sectors, including risk insurance programmes, and forward selling of fixed-price contracts of commodities; and if he will make a statement on the matter. [12116/16]
View answerAs a small open economy which exports the vast bulk of its main agricultural commodities, Ireland will always feel the effects of volatility on world markets. However, there are measures in place to help Irish farmers through these periods. I believe that moving up the value chain where possible, in terms of the type of products sold and how they are produced, is an important insulation against volatility. The Food Wise strategy for the sector contains detailed recommendations aimed at improving value added and productivity at farm and food industry level through a focus on sustainability, efficiency, knowledge transfer and innovation.
Direct payments estimated by Teagasc at an average of over €17,000 per farm in 2015, provide a valuable source of farm income support and act as a hedge against price volatility.
With regard to farm borrowings, I will have regular meetings with the CEOs of the main banks, who are all aware of price volatility issues, and are planning accordingly in terms of managing their farm loan books. My Department has also engaged actively with other financial institutions with regard to the development of innovative new lending products for the sector; and is preparing to procure an ex-ante evaluation for the introduction of Financial Instruments under the Rural Development Programme.
My Department will continue to engage with the Department of Finance on key agri-taxation policy objectives, including responses to income and price volatility.
While there are no specific risk management tools included in the Rural Development Programme, risk management is one of the topics covered by Knowledge Transfer Groups. Animal disease risks are covered by the Targeted Animal Health and Welfare Advisory measure.
Fixed price contracts are increasingly becoming a feature of the producer/processor relationship in the dairy sector, with numerous milk purchasers offering such contracts, which provide producers with the opportunity to lock in prices over the medium term, taking costs of production into account. Such relationships are a welcome development in terms of their potential to mitigate volatility.
