Vol. 651 No. 2
71 Deputy Olwyn Enright asked the Minister for Agriculture, Fisheries and Food if her attention has been drawn to the financial difficulty facing farmers in view of the recent escalation in fertiliser costs; and if she will make a statement on the matter. [13046/08]
Changes in fertiliser costs, in common with all elements of intermediate consumption for farmers, are principally a function of market forces, in this instance primarily at international level. The main reason for the sharp increase in fertiliser prices this year is the fact that world demand far outstrips supply. Increased world demand is such that fertiliser plants do not have the productive capacity necessary to respond. Increasing use of fertiliser is a prerequisite for improving the demand-supply balance of food worldwide and also for increasing crop production for energy and biofuel. The most significant component of increased demand for fertiliser for food production is coming from expanding economies such as India and China, while increased demand from South America and Canada is for biofuel production. Russia and America, previously exporters of fertiliser, are retaining their own production this year.
Other factors leading to increased costs for fertiliser worldwide are the increasing price of oil, which is a major contributor to the overall cost of fertiliser production, and increased shipping costs worldwide due to high economic global activity in areas such as China and India, which is leading to a deficit in shipping capacity. Within the EU, the decision to return former set-aside land to crop production has also contributed to increasing demand for fertiliser.
Since the closure of IFI in 2002, Ireland has had no indigenous inorganic fertiliser production and as such is totally dependent on imports. Furthermore, Ireland's location on the fringe of Europe implies increased shipping costs and a lack of economies of scale in the area of shipping. One option for Irish farmers is to use imported inorganic fertiliser for crop production as efficiently as possible, having regard to good agricultural and environmental practices at all times. Organic fertilisers produced on farms, such as slurry and farmyard manure, have now become even more valuable as sources of nutrients for crop growth and should be used as efficiently as possible.
Additional information not given on the floor of the House.
Figures produced by the Central Statistics Office in February of this year indicate that volume of fertiliser used by Irish farmers decreased by 7.8% in 2007. This shows a clear effort by the farming community to apply fertiliser in an efficient manner, reducing the volume used while maintaining production levels. This resulted in a decline in fertiliser spending from €379.4 million in 2006 to €358.9 million in 2007, a reduction of 5.4%.
There are several Deputies who wish to ask questions.
There is more but I cannot read it all now.
I remind Deputies that the Minister has two minutes, as all the Department officials will know.
The Leas-Cheann Comhairle normally states that the balance of the reply will appear in the Official Report.
It will, but I did not want to eat up the time by saying so.
That is what I was waiting to hear.
The balance of the Minister of State's reply will appear in the Official Report.
I thank the Leas-Cheann Comhairle.
He is a very tough lad.
The Minister of State will be acutely aware of the problem of greenhouse gas emissions from chemical fertilisers, particularly nitrous oxide, which is one of the most potent greenhouse gases. Would the Minister consider the undertaking by his Department, in conjunction with bodies such as Teagasc and experts in the industry, of a review of the nitrates directive? Organic nitrogen has an advantage in terms of locking carbon into the soil. Without compromising water quality, will the Minister of State undertake a review of the nitrates directive so we might switch from organic to inorganic nitrogen sources?
I have asked that question myself and the answer I have been given by people who are in the business of studying these matters scientifically is that the application of slurry outside the allowed times would not be beneficial in that it would be going onto ground which essentially is not for growing and would not improve the growth of crops. There is a need to examine the science behind it as well as simply looking for a way of getting rid of something which is valuable. Given the increase in fertiliser costs, the options for farmers need to be more widely considered than even my reply envisages. In other words, the uptake of organic farming becomes more attractive as the inputs for non-organic methods increase. Therefore, we need to examine the bigger picture, which is something farmers will be doing in any event.
Is there a danger that availability could be an issue? The Minister of State said there are major issues concerning the importation and exportation of fertiliser. In hindsight, was it a mistake to close IFI?
Of course it was.
This question will require a far broader view than simply asking what Ireland can do. Ireland still had to import gas and fossil fuels to operate IFI, so there was no great merit in simply locking ourselves into that dependency. We need to look at global food production, which will require further evaluation of other methods. I am currently reading a lot of material on climate change, nutrient use and sustainability, which indicates that more organic production methods are inevitable. It is not an option or a lifestyle choice because in future we will not have the fossil fuel that underpins the current agricultural system.
I suppose the Minister of State's next press release will be expounding the virtues of organic manure.
Not a bad one. Does the Deputy have a shovel?
The chickens are coming home to roost following the loss of IFI, which has resulted in increasing costs for importing fertiliser. We do not know the exact content of fertilisers imported from third countries because there is no policing of urea and other contents. The Department should put in place some policing mechanism to ensure the content is what it says on the tin. This has permutations for growers and crop production generally.
I suspect Deputy Doyle has a similar question.
I was interested to hear that the Minister of State is studying various papers but we are an island nation. A couple of years ago, I conducted some research on the use of marinure.
I am sure there is a question coming.
There is.
We just have to wait for it.
Perhaps the Minister of State could include marinure, which is seaweed fertiliser, in his study documents as it might kill many birds with the one stone. Instead of continuously talking about organic farming, we might use the term traditional farming more often because it is far more practical and workable in the long run. Organic fertiliser is not actually organic according to the Minister of State's terminology.
I am quite happy to talk about traditional agriculture but organic agriculture as it is now practised takes on board traditional agriculture with the research that is being carried out for the efficient use of resources. The use of seaweed in my constituency of Dublin North is the bedrock of the horticultural industry there, so to that extent I am very familiar with the potential of maritime resources. In addition to the horticultural sector, seaweed has also been widely used scientifically on many golf courses.
There is no food in golf courses.
I am not going to make any puns about the greens. As regards Deputy Sherlock's point, there are standards for imported fertilisers. The manufacturers are required to indicate on the bag the actual components. If the Deputy has any evidence of sharp practice or shortcuts in this regard, he should bring it to my attention. I am sure Teagasc would be keen to hear more about that.
What about third countries?
72 Deputy Aengus Ó Snodaigh asked the Minister for Agriculture, Fisheries and Food the changes she would wish to see emerge from a review of the 2003 CAP reform. [13094/08]
I presume the Deputy is referring to the health check of the CAP, which is currently underway. The first phase of this process was completed with the agreement of Council conclusions at the meeting of the Council of Ministers in March. I was generally pleased with the outcome. The next phase will begin when the legislative proposals are published in May. Bearing in mind that the review is intended to be a fine-tuning exercise of the 2003 reforms and not a fundamental reform, I expect the outcome to be limited in terms of policy change but strong on delivery of improvements to current systems.
The main change which I would like to see emanating from this review is the delivery of further operational simplification to farmers in a way that brings genuine and tangible benefits at farm level. By this I mean simplification of those elements of the single payment regulation that are causing unnecessary bureaucracy, such as the restrictive rules on management of the national reserve, the modulation refund, the lack of advance payment options and so on. I am also anxious to simplify cross-compliance by removing redundant statutory management requirements. In this regard I have submitted practical suggestions on simplification, which I trust the Commission will take on board when framing the legislative proposals.
Second, I would like to see some widening of national discretion to address specific issues that may arise. I am thinking of the references in the Commission communication to an expanded article 69, the option of moving to flatter rates of payment, the establishment of minimum payment areas or amounts, and risk and crisis management measures. The health check should provide options to member states to adjust the common support mechanisms in a way that suits them best, and we should not impose the same solutions on all.
I remain opposed to the proposed increase in the modulation rate. While I am fully supportive of measures under pillar 2 of the CAP I do not believe that they should be funded at the expense of a reduction in funding for pillar 1. I would like this review to provide the certainty and stability that farmers need to adapt to the decoupled payment regime.
Another important issue is that of milk quotas. Assuming their abolition by 2015 as envisaged by the Commission, I want to see a soft landing. A gradual increase in quotas is the most sensible and logical way to achieve this. Clear and final policy decisions are needed so that stakeholders can plan their production decisions over the coming years with confidence. In addition, I am seeking to retain the existing market management measures in place to cater for any price volatility that may occur with the expiry of restrictions.
I thank the Minister of State for his reply. I welcome the fact that part of his forward strategy concerns simplification, which is of great importance particularly as everything surrounding the CAP is so bureaucratic. Many politicians and farmers supported CAP reform in 2003 because they believed it would preserve farmers' interests in future. There are major concerns at the moment, however, particularly concerning the WTO talks and subsidies. There are serious worries about these matters. Does the Minister agree that trust has been abused by Commissioner Mandelson given his willingness to go along with the demands of others at the WTO talks concerning EU support grants? Would the Minister also agree that the Lisbon treaty's proposed further diminution of national sovereignty and representation bodies will make it more difficult to defend Irish interests if the treaty is accepted? I would like to know the Minister's stand on the present talks, which are central to the survival of Irish farming. There is huge concern, particularly within the IFA. I heard the Minister referring to this earlier, so I would like to know what is the position.
Commissioner Mandelson and the WTO talks have very little to do with the CAP health check. The Minister for Agriculture, Fisheries and Food, Deputy Mary Coughlan, has raised all the issues and concerns relevant to Irish farmers, such as simplification, modulation, milk quotas and market management mechanisms. She has appointed two groups to advise her, one to look at proposed changes to the health check and the other to act as the dairy consultative committee. The Minister is being well advised on the difficulties farmers face and the need for changes to the health check. From a political point of view, talks will begin in Slovenia in late May.
If milk quotas were increased through reform of the Common Agricultural Policy, would the increase be divided evenly between all interests or would some of it be ring-fenced to facilitate new entrants and small producers?
Regarding the milk quota, Ireland believes a soft landing is essential to ensure a smooth transition.
We heard this before but my question was specific.
I will allow the Deputy to speak again shortly but must let the Minister of State answer first.
We would favour fairly ambitious annual adjustments and have asked the Commission to conduct an analysis of the impact of increases greater than 1% and 2%, which have already been carried out.
May I be more specific?
The Chair cannot dictate the nature of the response given. I will allow Deputy Sheahan and Deputy Creed to put questions.
For the benefit of the Minister of State, I will be more specific. Will some of the increase be ring-fenced to facilitate new entrants and small producers?
No, not on this occasion.
We are not talking about the 2% that has already been secured across the board, we are talking about what may come through the CAP health check.
That has not been decided yet.
We urge the Minister to consider new entrants and the viability of smaller producers in the context of moving towards a liberalised regime without milk quotas. Will the Minister consider the case of farmers affected by the farm development plans, who have received compensation from the Department and who are waiting in the wings regarding the milk quota increase?
The answer to Deputy Creed's last question is no.
Written Answers follow Adjournment Debate.
