Dáil Éireann Debate, Wednesday - 13 July 2016
23. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine the immediate contingency steps he is taking to safeguard the interests of the agrifood sector and Common Agricultural Policy payments, following the decision by the United Kingdom to exit the European Union; and if he will make a statement on the matter. [21616/16]
View answerThe decision of the United Kingdom to leave the European Union creates considerable challenges for the agrifood sector. The United Kingdom is by far our largest trading partner. Last year we exported almost €5.1 billion worth of agricultural products. This included more than €1.1 billion in beef products and almost €970 million in dairy products. Ireland is also the United Kingdom's largest destination for its food exports which were worth €3.8 billion last year. This bilateral trade takes place on the basis of harmonised EU rules on animal and public health and labelling, without complex certification, quota limits or customs duties and tariffs. It is underpinned by the vital support of the CAP budget, to which the United Kingdom is a significant net contributor.
Given these linkages and as the United Kingdom is a net food importer, both countries have a strong interest in maintaining a close agrifood trading relationship. The resilience of the Irish agrifood sector is well recognised and this, together with the strong commercial relationships built up in years of trading, will help us to negotiate our way though the challenges ahead. It is important also to bear in mind that the precise implications of the referendum outcome will depend on the trade and other arrangements ultimately negotiated between the European Union and the United Kingdom. These negotiations may take up to two years, and perhaps longer, and during this period existing arrangements will continue to apply. Nevertheless, my Department had engaged in detailed contingency planning for the possibility of this result and has published a summary of the key actions we are taking to address the contingencies arising from the United Kingdom's decision. The most immediate concerns for exporters centre on euro-sterling exchange rates. It should be noted that the fall in the value of sterling against the euro, while significant, is not unprecedented. Nevertheless, a sustained period of currency volatility could be of concern. In that regard, the Central Bank of Ireland has pre-established contingency plans to deal with market volatility surrounding the referendum result. It will engage with the Department of Finance and individual financial institutions on potential risks. Actions by the European Central Bank, ECB, and other global actors will be monitored closely.
I have asked the relevant agencies, including Bord Bia, Enterprise Ireland and BIM, to provide practical guidance for SMEs. Last week Bord Bia announced a number of measures to support food and drink businesses.
Additional information not given on the floor of the House
These measures cover areas such as managing volatility impacts, providing consumer and market insight, deepening customer engagement and extending market reach, with the aim of helping companies to maintain their competitiveness. Similar support is also being provided by Enterprise Ireland.
Aside from currency fluctuations, the main areas in which potential impacts are foreseen are tariffs and trade, the EU budget, regulations and standards, customs controls and certification, while complex issues also arise for the fisheries sector. However, we must remember that our trading relationship with the United Kingdom is not altered in any way until the negotiation process that will dictate the terms and conditions of the United Kingdom’s departure is completed. In the meantime and as part of our overall contingency planning, I have taken a number of measures to ensure a sensible, coherent approach is adopted. I have established a dedicated unit in my Department to work on all of the issues I have mentioned. I have convened a consultative committee of stakeholders, which met for the first time last week, to ensure a full exchange of information as the negotiations proceed. I am ensuring the response of the relevant agencies is fully co-ordinated through a contact group established under the Food Wise 2025 High Level Implementation Committee. The Department will continue to feed into the central contingency framework being co-ordinated by the Department of the Taoiseach.
The thrust of my question was focused on the potential impact on the CAP as a result of the United Kingdom's decision to exit the European Union. I do not need to tell the Minister about the tremendous concern in the farming community about the potential impact. Deputies Jackie Cahill and Bobby Aylward and I have met a number of the farming organisations and others involved in the sector during recent weeks and there is real concern about how it may play out. This concern was exacerbated by comments during the past week or two by the German Economy Minister, when he indicated that there would probably be a reduction in the CAP budget as a result of the United Kingdom's decision to leave the European Union. The CAP Is a crucial cornerstone of the agriculture sector in Ireland and throughout Europe. In Ireland 130,000 farm families depend on it and two thirds of net income comes from CAP payments. What steps has the Minister taken, or will he take, particularly in engaging with his German and French counterparts, to ensure the CAP budget will be secure and that there will not be a threat hanging over it? Will there be any further comment from Ministers such as we heard during the past week on protecting its budget?
Given that the United Kingdom is a net contributor to the European Union, its departure, whenever it is finalised, will have consequences from that date forward for the CAP. The financial arrangements underpinning the current CAP are secure until a new CAP is negotiated in 2020. We are very conscious of the implications. I will be meeting the French Agriculture Minister in late August in Paris to discuss all of the consequences arising from post-Brexit issues.
Notwithstanding the comments of the German Agriculture Minister, it is important that we do not raise fears that are not real. There is no threat to immediate funding under the CAP. I am very much aware of the significant funding we draw down in direct payments and areas of natural constraint and under the rural development programme. These payments are secure in the current CAP budget. It is likely to be at least two years, possibly longer, before the United Kingdom manages to extricate itself legally from membership of the European Union.
However, the current budget is secure, notwithstanding the comments by the German agriculture Minister.
I welcome the Minister's comments but I would like to clarify them. Is he saying there is no threat whatsoever to the CAP budget between now and 2020 and that the pot will remain as it is regardless of whether Britain exits in the meantime and its payments are withdrawn? Has that been clearly indicated to him, or confirmed to him, at European Council level or is that his own sense of this from within the Department?
The Minister indicated he will meet his French counterpart in August. What are his plans regarding engagement with the German Government because Germany and France are big players in respect of the future of CAP? Has he plans to meet his German counterpart, particularly in light of the concerning comments made by the German economic Minister?
When is the mid-term review likely to take place? When is it due to commence?
There is no decision as to whether there will be a mid-term review. The Commissioner has not decided whether that will happen.
I met the German agriculture Minister last month at the Council meeting and I will meet him again next Monday morning. There is a great deal of concern in the broader Community about Brexit and there are issues of substance to be dealt with but I urge all stakeholders, and there are many both inside and outside the farm gate, to remain focused because a lot of loose talk can generate the instability to which the market reacts. Whereas I do not wish to underestimate in any way the significance of the issues and the challenges, not least because of our market dependence and complications such as Ireland having the only land border following the departure of the UK, which will be significant, something I have asked my officials to engage with the Northern Ireland Minister on, it is important that we do not overstate the concerns we have to deal with in such a way that they exacerbate the issue in the marketplace which poses the most immediate challenge, which is currency fluctuations.
Will Members please be aware of the time limits for questions and responses?
