Tuesday, 26 March 2019

Questions (61)

Jackie Cahill

Question:

61. Deputy Jackie Cahill asked the Minister for Agriculture, Food and the Marine the EU mechanisms in place to ensure adequate price supports will be introduced for all Brexit scenarios, including a hard exit. [13914/19]

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Oral answers (7 contributions) (Question to Agriculture)

We have heard a great deal about the price supports that will be put in place for the beef and dairy sectors in the event that thereis a hard Brexit, but we would now like to see meat on the bones in order that we will know exactly what the supports will be. The current uncertainty is causing great anxiety in the agrifood sector. What plans are in place in the European Union to support incomes in the event that there is a hard Brexit?

My officials and I have been working very hard for quite some time to sensitise other member states and the European Commission to the potentially very severe impacts of a no-deal Brexit on the Irish agrifood and fisheries sectors. It has included a detailed analysis of the possible impact of the proposed UK tariff schedule in the event that there is a no-deal Brexit, as announced by the UK Government on 13 March. The schedule announced by the United Kingdom provides for zero-rated tariffs in a range of areas, including fruit and vegetables, live animals and all products exported to Northern Ireland. However, the United Kingdom has indicated that it will impose tariffs on sensitive products, including beef. I have emphasised that specific supports will be required to deal with these negative impacts.

The threat faced by the Irish agrifood and fisheries sectors is explicitly recognised in the Commission's communication on contingency planning.

I have held a series of bilateral discussions with Commissioner Hogan on this issue, including at the European Council of agriculture ministers in Brussels last week. I stressed the need to be ready to deploy a range of measures to mitigate the potential impacts on farmers and processors, including through traditional market supports and the exceptional aid provisions under the Common Agricultural Policy, CAP, single Common Market organisation regulation, as well as increased flexibility under state aid regulations. Commissioner Hogan has reiterated the EU's readiness to respond and support Ireland and we will remain in contact on these issues as the situation evolves. The terms and conditions of any aid package will be announced in due course in the event that a disorderly Brexit occurs. I very much hope that this outcome, with all its associated negative impacts for Ireland, the EU and the UK, will be avoided by the acceptance of the UK Parliament of the withdrawal agreement.

Farmers' confidence in the Commission getting up to the mark is not high. For two years in a row it reneged on its commitments on price supports for skimmed milk powder. Also, the support agreed in the previous CAP was withdrawn for two years running.

The Minister said that a pause button has been pressed by many in the agrifood sector. Unfortunately, this option is not available to the dairy sector, where volumes are increasing. Owing to a good spring, the volume of milk produced this year will be up significantly on 2018. I am aware that the Minister visited a processor in my county yesterday, which has plans in place for significant investment. Another co-operative in the county is doing likewise. As I said, the pause button is not an option in this sector.

The Minister also spoke about damage limitation. Damage limitation is not good enough. The beef sector is in crisis. The proposed intervention supports for beef will be inadequate. It will be a doomsday scenario if we have to rely on these intervention price supports. References to pause buttons and damage limitation is not good enough. We need to know what financial assistance will be put in place and at what price level the intervention will be set. The critical question is at what price level will the intervention be set in these scenarios?

I did have the privilege of visiting Tipperary yesterday, where I saw first-hand the €30 million investment being carried out by Arrabawn Co-operative and I am aware of the investment at Tipperary Co-op. I appreciate that Tipperary is one of the engines of the agrifood and rural economy. Notwithstanding the uncertainty around Brexit, these investments are a signal of confidence. I am somewhat surprised that Deputy Cahill would hark back to the Commission's handling of the skimmed milk powder issue because what underpins the performance of the dairy markets is the fact that the overhang of skimmed milk powder in global dairy markets, in EU intervention stores, has been removed. As a result of the Commission's skilful handling of that, substantial commodities of skimmed milk powder were removed from the equation and this allowed the market to trade more freely without that depressant hanging over it. The Deputy's remark was an unusual starting point in the context of the dairy industry. I am sure dairy processors around the country would confirm to him that this has been a welcome development insofar as managing a difficult situation in the dairy industry is concerned. The Commission deserves some credit in that regard.

The range of interventions will be across the commodity areas, beef included, and will include the traditional ones of intervention and aids to private storage. I take the Deputy's point about intervention not being of much value in the context of beef. Our ambition in the context of what might happen in a worst-case scenario in the UK is to keep our product on the supermarket shelves there, and to do that will require exceptional aid.

There will be members deprived of a question.

I do not propose to get into an argument with the Minister about skimmed milk powder. The point I was making, which I think the Minister ignored, was that the European Commission reneged on a written commitment on price supports. While it did remove the volume of powder that was in intervention, for 18 months skimmed milk powder traded well below the intervention price agreed.

The reality is that beef farmers are in crisis and we face serious challenges in the markets for our cheddar cheese. We need to know what price supports will be in place. Currently at cattle sales throughout the country store cattle are coming out in large numbers. The buyers of those cattle need to know what supports will be put in place. As I stated in my previous supplementary, existing intervention supports for beef are inadequate. We need to know what will be put place. We need flesh on the bones in terms of what level of price supports will be put in place, which for cheddar cheese and intervention beef are essential.

As I said, intervention and aids to private storage, APS, would not be, I believe, of much benefit in the context of the beef sector. They are instruments that are available under the CMO regulations that could be of benefit in other commodity areas, perhaps the cheddar cheese area or on the pork side, for example. I do not want to rule anything out. In my opinion, intervention is not the best way to deal with what could be a very challenging sector for beef. The challenge for us, in the context of the UK market, is to keep our product there while we get to a situation where we negotiate a comprehensive free trading agreement. We hope that this will happen in an orderly way, but in the event of a crash out, exceptional aid will be required. This has been provided for as well and has been deployed previously by the Commission in the context of the Russian market and the Baltic states, for example. There is some experience but this situation is of a scale that is much different and much more significant than that incident. For this reason, I believe exceptional aid will be necessary in the context of the beef industry. This aid, as I have always said, will be a combination of exceptional aid, APS, intervention mechanisms available under the Common Market regulations and Exchequer funding.