Bernard J. Durkan
Ceist:214 Mr. Durkan asked the Minister for Agriculture and Food his views on the need for changes in the beef or dairy sector to ensure their future development; and if he will make a statement on the matter. [25875/03]
Written Answers. - Agriculture Industry.
Bernard J. Durkan
Ceist:225 Mr. Durkan asked the Minister for Agriculture and Food his plans for the future of farm families in the dairy and beef sectors in the aftermath of the mid-term review; and if he will make a statement on the matter. [25886/03]
I propose to take Questions Nos. 214 and 225 together.
Last July I initiated a public consultative process. I gave careful consideration to the 200 submissions received prior to my announcement that all direct payments for cattle, sheep and arable crops would be fully decoupled from production as and from 1 January 2005. I also studied the outcome of the independent research I commissioned by FAPRI Ireland. I was mindful of the overwhelming weight of opinion in favour of full decoupling among farmers I had met or who had attended my Department's information seminars. I based my decision on what I saw as being in the best interests of Irish agriculture and the development of a sustainable, market orientated agri-food sector.
Full decoupling represents a fundamental change in the nature of support for Irish farmers under the Common Agricultural Policy. It provides a better basis for a competitive agriculture and food industry than a system that required farmers to take farming decisions based on eligibility for premium. Farmers are now free to focus more sharply on the market and the demands of the final consumer. On occasion farmers kept loss-making livestock as well as additional burdens associated with compliance with a myriad of schemes involving various application dates and retention periods. Under the new regime the better market orientation of primary production should assist food processors in developing and supplying quality markets.
While some reduction in production can be expected under full decoupling, I am satisfied that the resulting increase in prices and reduced input costs will lead to an aggregate increase in farm incomes as is evidenced by FAPRI Ireland's research.
In future farmers will have the cushion of single farm payments, decoupled from production, providing greater freedom of choice and the scope to enhance incomes by more market orientated production.
There is strong determination within the beef sector to meet the challenges under the new regime. My Department will work with the food industry and Bord Bia to ensure that there is a strong beef industry for the benefit of producers, processors and consumers.
A major study of the dairy processing sector was published in March. It was jointly funded by my Department, Enterprise Ireland and the dairy industry. Prospectus and Promar International prepared the report. It identified a number of weaknesses associated with the dairy industry. It also suggested key strategies aimed at ensuring the long-term success of the industry in an increasingly competitive trading environment. Issues such as scale, cost efficiency, greater investment in research and development and new product development are central to the consultants' recommendations.
Less dependence on commodity type products and intervention and a move to more value added products is a fundamental requirement for the sector's development. Our international competitors invest more in new product development and it will have critical importance in the future. Ireland's dairy output must be dictated by the needs of the marketplace. I have no doubt that product innovation will be a critical element of dairy processors future business plans.
The prepared consumer foods sector is the fastest growing sector of Irish industry. My Department has been actively involved in the Prepared Consumer Food Strategy 2003-2006. It addresses the continuing market-led move away from basic food products, towards prepared food products. This shifting trend has been prevalent in the dairy sector for a number of years. Enterprise Ireland and Teagasc actively assist organisations to exploit the opportunities that exist. Their continued work in this area, combined with my Department's contribution to the funding of the food research programme, will provide valuable support to the industry in the years ahead.
To assist the discussion on the future development of the sector and to address the strategies required to bring about the changes necessary, I have over the past few months had a series of meetings with representatives of most of the main processing undertakings. I also convened a dairy forum and all of the main producers and processor organisations were present. The forum afforded an opportunity to all sections of the industry to give their views in relation to the present state of the sector, the changes necessary for the future and how these changes might be achieved. Of course the final decisions relating to investment in change rests with the management and boards of the processing undertakings themselves. These are commercial decisions which must be taken within the constraints inherent in every organisation. I will continue to encourage and support the industry to take the steps necessary to ensure a viable and successful future for the sector in an increasingly competitive environment.