Thursday, 9 May 2019

Questions (2)

Martin Kenny

Question:

2. Deputy Martin Kenny asked the Minister for Agriculture, Food and the Marine the steps he is taking to address the crisis in the beef sector here in view of the fact that it is in danger of total collapse; and if he will make a statement on the matter. [20266/19]

View answer

Oral answers (12 contributions) (Question to Agriculture)

Go raibh maith agat, a Chathaoirligh. The issue in the Irish beef sector is the biggest topic that is concerning most farmers and indeed the Department of Agriculture, Food and the Marine in recent months. We can see that around the country, where more and more farmers are considering leaving the beef sector. It is on the verge of collapse. It will need determined action now from the Minister and the Government to arrest the situation and to make beef farming a profitable enterprise into the future. It will require a big plan and a huge shift in where we have been going up until now.

I thank the Deputy. The agrifood sector is of critical importance to the Irish economy, and its regional spread means it underpins the socioeconomic development of rural areas in particular. Brexit has the potential to have a very significant impact on the sector, given its unique exposure to the UK market, which accounted for 38%, or €5.2 billion of agrifood exports last year.

There are ongoing discussions with the Commission regarding the difficulties Ireland would face in the event of a no-deal Brexit and the assistance that might be required for its agriculture, food and fishery sectors. Avoiding a no-deal Brexit continues to be the Government’s overriding objective. I have held a number of discussions with the Commissioner for Agriculture and Rural Development, Mr. Phil Hogan, regarding the potential impact of a disorderly Brexit on the sector. I have stressed the need for the Commission to be ready to deploy a range of measures to mitigate the potential impact on agrifood and fisheries, including through traditional market supports and exceptional aid under the single CMO, regulation of the CAP, as well as increased flexibility under state aid regulations.

It is also important to acknowledge, however, that the past few months have been difficult for beef farmers, in particular, following a difficult year in 2018 due to weather conditions. There has been a prolonged and exceptional period of depressed prices since last autumn, with the ongoing uncertainty surrounding the outcome of Brexit, among other factors, contributing to this market disturbance. In the light of the ongoing depressed market prices, in discussions with the Commissioner, Mr. Hogan, and my EU counterparts, I have said I believe that the deployment of exceptional measures under the CMO regulation, to provide targeted aid to farm families who have suffered a sustained reduction in returns from the market, is required. I made an intervention to this effect at the April meeting of the Council of Agriculture Ministers, which my officials have been following up with the Commission.

I am deeply committed to fully supporting and developing Ireland's beef sector. The existing range of supports available to beef farmers under the rural development programme, RDP, together with ensuring access to as many markets as possible, both for live animals and beef exports, are appropriate for the continued development of the sector. The beef data and genomics programme, BDGP, is currently the main support specifically targeted for the suckler sector and provides beef farmers with some €300 million in funding over the current RDP period. Furthermore, there is the beef environmental efficiency pilot, a €20 million pilot project for 2019.

My Department has rolled out a range of schemes as part of the €4 billion rural development programme. In addition to the BDGP, other supports available for suckler farmers under Pillar 2 of the CAP include the green low-carbon agri-environment scheme, GLAS, areas of natural constraint, ANC, scheme and knowledge transfer groups. Suckler farmers also benefit from the basic payment scheme and greening payments under Pillar 1. According to the national farm survey, suckler farmers receive support equivalent to approximately €500 per suckler cow on average. My Department is examining all appropriate measures to support the various agrifood sectors, including the suckler sector, in preparation for the next iteration of the CAP, and through the next agrifood strategy to 2030. Such measures should support and encourage suckler farmers to make the best decisions possible to improve the profitability and the economic and environmental efficiency of their farming system.

There are a number of matters I wish to raise. It is my view, and the view of others, in general, that the beef market is the victim of a market system that does not work for beef farmers. There is a prime product, namely, premium Irish beef, or the champagne of beef, that is sold as an average product, in the same way that bottom shelf wine is sold alongside champagne. That is the situation of Irish beef and it needs to change, although it will not change overnight, and I do not expect the Minister to flick a switch and change it overnight. Nevertheless, it is the direction in which we need to go. We need to sell our beef product around the world as a premium product at a high price and ensure that high price is returned to the primary producer. In the meantime, to make that happen, there needs to be an aid package in the context of Brexit and the crisis of the beef sector, as the Minister indicated. A good aid package needs to be put in place to get farmers through this period because the next 12 to 18 months will be vital. We need to see money on the table from Europe to assist us in that regard.

The carcass-grading review has been promised for a long time. Most farmers who send their cattle to factories say they do not know what kind of price they will receive and they are dubious of how the grading system works, which we all understand.

A cartel controls the movement of offal. How that part of the sector is licensed and monitored needs to be reviewed as a priority.

The Deputy has raised some interesting issues which I will try to address. Trying to secure the premium markets, where the price is highest, is a logical step for us to take. In that sense, we support Bord Bia, as the marketing State agency which works with the industry. We in the Department also examine what doors to market access we can open for our product. The more markets that are open to us, the better chance we have of navigating what might be a difficulty in the Asian market or geopolitical issues that might, for example, give us problems providing live exports to Turkey, as happened last year. Interestingly, a delegation from Turkey is visiting the country and Department this week, which, we hope, will yield progress in that area.

Bord Bia works with the industry and we open doors to allow new market access. That is a given. Where the industry decides to sell afterwards is an issue for it. It may decide to try to navigate a dip in a market if it has a long established foothold, or it might consider new opportunities. According to figures I have seen, in the first quarter of 2019, we sent nearly 1,000 tonnes of beef to China, compared with 1,400 tonnes in all of 2018. New markets, therefore, are important, as is working with the industry. I will travel on a trade mission to China with the representatives of the beef industry next week.

I appreciate that but the problem is that the new markets that have been opened, by and large, are niche, for small volumes of product. That has been the case until now. The vast majority of our beef is sold in Europe, while an awful lot of it is sold in Britain. That is well and good, and we understand that. The point, however, that cannot be made often enough or clearly enough is that Irish beef and meat, in general, is grass fed, from family farms and traceable all the way. It is a unique product and it needs to be sold as such at a higher price. I do not cast any aspersions on Bord Bia but it has failed to do that adequately until now and that needs to change. Before that change occurs, the Minister can immediately examine the issues of an aid package for the beef sector, grading and the movement of offal. If those three steps can be taken quickly, we can at least see that the Minister is committed to trying to do something to help the beef sector. Passing the buck, however, and saying it is up to Bord Bia to try to find markets will not solve the problem. The farmer who has cattle to sell in the next two months needs an answer quickly.

The Deputy presents the matter as though it is very simple. We sell most of our product in the UK and the rest of the EU because that market is the best paying in the world. It would be foolish of us, therefore, to vacate that market in pursuit of alternatives, given that we have a significant foothold there. It is important that other markets are open to us. I have spoken in some detail on the issue of pursuing an aid package and I will not dwell on that further because of limited time. As I have stated on numerous occasions, the grid is not the property of the Department. It is not for us to tear up and say we will change it.

If it is being abused, the Minister has an obligation to do something.

I do not have a role in interfering in the market between suppliers and processors. By law, I am specifically precluded from that. If they have an arrangement that determines how they are paid-----

Who licenses the processors?

The Department provides licences but the operation of the grid is not our function-----

There are conditions for those licences.

The operation of the grid is an issue for farmers and processors. We have previously assisted in the development of the grid and if we are asked, we will assist in its review. It must nonetheless remain an issue between both parties.