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Dáil Éireann díospóireacht -
Tuesday, 30 Jun 2009

Vol. 686 No. 2

Other Questions.

Tax Yield.

Paul Connaughton

Ceist:

30 Deputy Paul Connaughton asked the Minister for Agriculture, Fisheries and Food the amount raised in 2006, 2007 and 2008 from liquid milk supplier levies; and if he will make a statement on the matter. [25980/09]

Under the Milk (Miscellaneous Provisions) Act 1979 as amended, a fee of €0.001 per litre is imposed on all milk intended for manufacturing or for the preparation of drinking milk. The fee contributes to the cost of providing the food safety inspection service and other work involved in the administration of EU market management schemes and is a requirement under EU legislation.

Under the Bovine Diseases Levies Act 1979 as amended, all milk received for processing from a herd is subject to a levy at a rate of €0.0006 per litre. The levy also provides that all bovines slaughtered or exported live are subject to a levy of €1.27 per animal. This levy is the farmers' contribution towards the cost of the compensation paid under the TB and brucellosis eradication schemes.

The National Milk Agency is a statutory body established under the Milk (Regulation of Supply) Act 1994 to regulate the supply of milk for liquid consumption throughout the State and to ensure all-year-round supply. The funds raised by the agency by means of a levy of €0.00145 a litre of milk are used to finance the annual running costs of the agency including wages, PRSI and pension.

The total receipts from these levies for the years 2006, 2007 and 2008 are set out in the following table.

Receipts from milk and other levies 2006-2008

Levy

Basis for collection

2006

2007

2008

€m

€m

€m

Dairy Inspection Fee

Milk (Miscellaneous Provisions) Act 1979 (as amended)

4.869

5.158

4,867

Bovine Disease Levy

Bovine Disease (Levies) Act 1979 (as amended)

Milk

5.375

3.265

2.890

Beef

5.066

2.946

2.336

The National Milk Agency

Milk (Regulation of Supply) Act 1994

0.583

0.584

0.626

Ireland incurred a milk superlevy of €11.2 million in the 2007-08 milk quota year for milk deliveries in excess of Ireland's national quota. There was no milk superlevy in 2005-06 and 2006-07.

Retail Sector Developments.

Michael Moynihan

Ceist:

31 Deputy Michael Moynihan asked the Minister for Agriculture, Fisheries and Food his views on the recent debates at the EU Agriculture and Fisheries Council on food retail margins; and if he will make a statement on the matter. [25938/09]

The issue of retail margins on food products was first raised as a formal agenda point at the Agriculture and Fisheries Council meeting in January of this year when the Commission introduced its communication which analyses the causes for recent volatility of food prices, provides a medium-term outlook for such prices and outlines a road map for future policy decisions to improve the functioning of the supply chain. The road map comprises five possible avenues as follows: to promote the competitiveness of the food supply chain; to ensure a vigorous and coherent enforcement of competition and consumer protection rules in the food supply markets by the European Commission, the Competition Authority and National Consumer Agency; review at national and-or EU level, as appropriate, regulations that have been identified as potentially problematic for the functioning of the food supply chain; provide better information to consumers, public authorities and market operators by setting up a permanent European monitoring of food prices and the supply chain; and examine measures to discourage speculation to the detriment of commercial operators in agricultural commodity markets.

It is intended that the road map will be followed through the work of a joint taskforce before the end of the year. A review of anti-competitiveness in the food chain, to include the dairy and pigmeat sectors among others, is planned and the Commission also plans to review regulations restricting the entry of companies to supermarkets to aid transparency on food prices. In addition, the recommendations of the high-level group on the competitiveness of the agrifood industry established by the Commission are due to be adopted in early July. A report will be published before the end of this year.

At the Council in January last and again last Monday, the Minister, Deputy Smith, pointed out that competition alone cannot act as a sole mechanism to maintain efficient markets. The careful and sensitive use of market management measures can help to maintain balance on the market when appropriate and the use of such mechanisms can assist in the provision of fair returns to producers.

Additional information not given on the floor of the House.

Underlying the debate is the increasing concentration of retail power in the hands of a few large supermarket chains. This is an international phenomenon, which has fundamentally changed the balance of market negotiating power in the food chain. This is one factor, although not the only one, behind the declining share of retail prices which is passed back to producers. While there is, of course, always potential for some conflict in any market relationship, there has been a noticeable trend recently towards greater conflict, and even allegations of sharp practice, which we cannot and should not ignore. Many of my colleagues on the Council of Ministers also expressed strong views on this matter.

I believe that consolidation at processor level is necessary to ensure maximum efficiency and to balance the market power of the large retail multiples. Competition policy must be sensitive to this.

There are many gaps in our information about the market. Information, like negotiating power, is not evenly distributed among the players in the market. This is an area where perhaps we can consider ways of ensuring greater transparency and a more open flow of cost and price information from and to all participants in the food marketing chain. At EU level there is a need to give urgent thought to this and to how we might be more active in ensuring markets function well and that unfair practices are prevented.

We can all agree on the paramount importance of the European agrifood industry, both in Ireland and across Europe. The EU must safeguard its production base so that it can meet the future demand of its population for food, feed and bio-energy. While fully recognising that retailers must strike a reasonable balance between granting price reductions to consumers and giving to suppliers and producers a fair return, this should not be done at the expense of a viable European agrifood sector.

The matter will again be considered by Council.

Without meaning to sound facetious, the Minister of State could have dealt with this point when answering Question No. 28. However, this is a question of marketing negotiating power.

Ordinary questions are not grouped with priority questions because they would exclude the ordinary question from supplementary questions.

I thank the Leas-Cheann Comhairle. I am at pains to understand some of the arcane practices of this House at times.

If the Deputy had tabled the ordinary question and were excluded from asking supplementary questions, he would have been aggrieved.

I take your point, a Leas-Cheann Comhairle.

The Minister of State could have given me the answer.

It is worth discussing again.

Again and again.

Allow Deputy Sherlock to speak without interruption

The Minister of State need not worry; it will be on the agenda.

The Commissioner has outlined a number of points which are aspirational and laudable in their own way. For Irish agribusiness to flourish there needs to be a fundamental shift in the position vis-à-vis the retailer and the primary producer and processor. This has been already outlined in great detail. Rather than waiting for report after report, will the Government not grab the bull by the horns, take the initiative and implement legislation? It should stop waiting for the European Union’s guidance on every matter relating to the agribusiness sector in this economy. We have a very viable market, with the Minister of State, Deputy Sargent, at the forefront given that he has responsibility for food. We need to see action now and that relationship needs to be reinstated. This House has the power to implement its own rules and regulations vis-à-vis the relationship, as it does not contravene EU rules. I ask the Minister of State to act urgently to reinstate that relationship.

I share the Deputy's sense of urgency about the matter. Along with the Tánaiste and Minister for Enterprise, Trade and Employment, who understands the agricultural sector more than most other Ministers for Enterprise, Trade and Employment given her background, I have been at pains to state that we need urgent action to introduce legislation and a code of practice. That would provide for the Ombudsman to be able to hear evidence. This is an area which ostensibly has been bedevilled with intimidation — I use the word very explicitly. Suppliers are afraid to say publicly what they will say privately to me for fear of being identified, which is causing a lack of transparency in the system. On a radio programme this morning there was a question about "hello money". There was a denial that "hello money" was being requested because it would be illegal. However, I have heard references to "market support money", "advertising money", and "promotional money". At the moment the people who are saying that privately will not do so publicly. That is why this code of practice and this retail ombudsman position are urgently required. I have said so to the Minister and to other members of the Government. I say it again here in the House.

I make this point in the context of having been previously advised by the Minister for Agriculture, Fisheries and Forestry, who is unavoidably absent today, that the code of conduct in the UK was not all it was made out to be. I have in the interim had time to reconsider the matter and that apparently is the case.

Does the Minister of State not find it ironic in the extreme that the architect of the dismantling of the groceries order in Ireland, who has now moved on to the UK competition authority and is in the throes of reorganising the legislative framework there, within which the retail sector operates, has concluded that a voluntary code of conduct and ombudsman is not the way forward and that global retailers such as Tesco are able to run rings around and abuse their suppliers by virtue of the lack of legislative clout that system brings with it?

While I am anxious to allow a little latitude on this question, I must ask Members to be brief.

Lest there is any doubt in regard to whether consumers are being ripped off through this framework, dairy prices to the primary producer have tumbled by 17% in the past 12 months while prices to the consumer have dropped by only 2%.

The Deputy is giving information now.

Is it not the case that the best legislative framework to deal with this will require real clout and teeth and that a voluntary code of conduct may not, if we are to learn from experience across the water, be the best way to go?

I would like such framework to be legally enforceable and to have teeth. I am in no doubt about that. However, doing that takes longer in the legislative cycle than putting in place a voluntary code. We need to do both. We must, first, send out the signal that this is an urgent matter that cannot wait until a perfect solution is found and, second, we must create the expectation that a framework with legal enforceable teeth will be in place as soon as possible. Reliance on the supermarket as the gateway for food is equally a part of the overall issue that needs to be addressed. There is less reliance in other European member states on the supermarket as a route to market than exists in this country. It is not an easy issue to tackle. Until we create healthy alternatives to supermarkets as a route to market, thus ensuring the supermarket is not the only show in town, the multiples will continue to make matters difficult for suppliers resulting in suppliers being price takers rather than price makers.

I am anxious to allow other Members to ask a brief supplementary question. I call Deputy Doyle followed by Deputy Sherlock.

Against the background of people being intimidated and afraid to come forward and speak up for fear of losing whatever pitch they have, does the Minister of State accept that the remit of the Competition Authority, whose involvement I am led to believe was initiated by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, against a background of public anger of rising prices vis-á-vis shopping in the North, should have been much broader and should have included power to examine practices that pertain in the retail sector, including the supply chain and the behaviour of the multiples? Currently, three multiples are controlling 70% of the market. Does the Minister of State accept that ultimately everybody else will be wiped out resulting in increased prices, the consumer losing out and the loss of up to 100,000 jobs?

The model to which the Minister of State aspires is the French model whereby one goes to the Carrefour for one's larger cheaper products and to the boulangerie for one's baguette and so on. The problem with the Irish model is that there is absolutely no transparency vis-á-vis profits. A lack of transparency vis-á-vis the profits of the larger multiples affects the relationship between the product, primary supplier and the retailer, thus allowing situations as that described by the Minister of State. Until we get that transparency we will not get a better deal for the primary producer resulting in a loss of jobs in this economy. We are already seeing this in the Border counties. Members are aware of what happened with Tesco.

A final reply from the Minister of State.

I beg the Leas-Cheann Comhairle's indulgence, but an ombudsman will not be enough to rectify the problem. This will require a legislative framework such as fair trade legislation. That is the only way we will be able to guarantee jobs and smaller producers some degree of livelihood.

In response to the questions from Deputies Doyle and Sherlock, I must point out that the ombudsman is the vehicle for the legally enforceable approach to the situation. For example, I would envisage that the ombudsman will be able to insist on particular information being divulged, be it in respect of promotion funding and how the supplier is expected to pay for it or overall profits. I believe these issues must be addressed. We know that the multiples are not telling the whole story. They claim this is because their competitors are not telling the whole story. However, two wrongs do not make a right. This issue must be addressed.

The report from the retail-related import and distribution study states in its concluding remarks that this concentration of retail power ultimately means that consumers have less scope to shop around. That is where I believe all of us, including suppliers and farmers, need to focus our attention. Until we create different avenues of access to market, we will continue to battle with the titans of retail power. They are the ones who ultimately will have the last laugh unless we introduce alternatives which undermine their position.

We must move on to Question No. 32.

Milk Quota.

Pat Rabbitte

Ceist:

32 Deputy Pat Rabbitte asked the Minister for Agriculture, Fisheries and Food the number of applications that have been received to date under the new scheme to attract new entrants to dairying; and if he will make a statement on the matter. [26072/09]

On 10 June 2009, the Minister announced details of the scheme for the allocation of milk quota to new entrants. While since then in excess of 80 application forms have issued to individuals who have expressed an interest in the scheme, no completed applications have, as yet, been returned to the Department. As the closing date is 31 July 2009, I expect that the majority of applications will arrive nearer that date.

The eligibility criteria for the scheme require that each applicant must satisfy certain education and training qualifications; have no milk quota, nor have been a producer previously; have a holding comprising lands owned and-or leased; have a separate independent herd number in which the dairy animals will be registered and have separate milking and milk storage facilities. The applicant must also submit a five-year business plan.

The closing date for applications is 31 July 2009 and it is expected that the assessment group will meet to consider applications in the week beginning 31 August 2009. Assessment of applications will be carried out by a group chaired by John Tyrrell, ICOS. New entrants who acquire quota under this scheme will be required to commence milk production by 1 April 2011.

Some of the farming organisations in Macra na Feirme have expressed disappointment that a number of farmers who acquired quota after 1 April have been excluded from the scheme. Will the Minister of State set out the reason or logic for excluding these farmers who were new entrants having only acquired quota after 1 April and will he state whether it is possible the Minister will reconsider his decision?

As the Deputy will be aware, there must be a starting and closing date for all schemes. There is a pool of 13.5 million litres of milk which I understand will be sufficient to cater for 67 applicants. It is difficult to know at this stage how many applications have been made because historically applications to the Department of Agriculture, Fisheries and Food tend to come in in the last day or two. Those of us who operate constituency offices, including the Leas-Cheann Comhairle, will be aware that they often arrive a day or two after the closing date.

It is difficult at this stage to predict how many applications will be received. As I stated, 80 forms have been issued, none of which has as yet been returned. It is difficult to make a call in respect of Deputy Sherlock's question until the final applications have been received, examined and adjudicated on by the panel.

I presume the Minister of State will confirm that it is the wish of the Department of Agriculture, Fisheries and Food that those new entrants that will acquire quota under this scheme will grow that enterprise and will in future milk trading opportunities increase their quota share. If that is the intention — nothing else would make sense because a quota of the size envisaged would not be economically viable in the long term — to take up the point made by Deputy Sherlock, it is foolish in the extreme of the Department, in the structuring of this scheme for new entrants, to penalise would-be new interests to dairying who, through their own initiative, have acquired quota through previous milk quota trading schemes but who received a derogation from product from the Department. I agree that anyone who has previously produced milk should be excluded but there are people who, when they saw this scheme coming, thought they would position themselves to have extra on top of what they could secure under that scheme by buying it under the milk quota trading scheme.

It is foolish, and I plead with the Minister of State to revisit the issue. He envisaged people would grow their quota after the allocation of the new entrants' amounts but those with the initiative to acquire quota prior to that date will be excluded from the scheme. It makes no sense. This is a handful of people who took a chance and hoped they would be approved under this scheme but who meet the criteria in all other respects. We are stifling their initiative to go out and acquire quota. It is foolish in the extreme.

Deputy Creed is right. The intention would be that these farmers who would be allocated quota under this scheme would increase their quota and have viable holdings in the near future. Around 60 new entrants came into the dairying sector in the past year who might, had the scheme been in place, have had an expectation that it might cover them. As happens with all incentive schemes, the intention would be to encourage new entrants who, in the absence of this scheme, might not have even considered getting into dairying or found themselves unable to do it. The impact of this scheme would enable them to become participants in dairying.

I also ask the Minister of State to reconsider. In light of the fact that there is no installation aid, and the quantity is so small, does he believe young farmers will be able to take up the scheme? There is no longer any grant aid to build a milking unit or to build a house on a separate farm. How can the Minister of State expect young farmers to be able to use the scheme?

The hope is that the level of incentive provided by the existence of the scheme will encourage people who otherwise might not be in a position to do so to enter. As I said to Deputy Sherlock, at this stage 80 application forms have been sent out and it is too early to predict how many valid applications will be made and how many of those will succeed when the adjudication panel sits. Until that stage it would be premature to consider any other kind of entrants.

The point I am making is not related to people who in recent times produced milk, I am talking about people who acquired the right to produce milk by virtue of purchasing quota and who received a derogation from the Department from an obligation to produce it. They had acquired this asset and hoped to be successful in the scheme for new entrants so they could amalgamate the asset they had not produced with the allocation under the new entrants scheme. It is a punishing initiative given the Government envisaged the new entrants would grow their enterprise and acquire more quota. This penalises the entrepreneurial spirit of those who took a risk. The new scheme does that and in the interest of the small handful of people who are in that situation they should not be penalised by excluding them from benefiting under this scheme.

It is unlikely a scheme has ever been devised that has not thrown up hard luck cases or people who might have benefited from the scheme had they been aware of the conditions that might apply. I have listened to Deputies Creed, Crawford and Sherlock and it is a reasonable point but the outcome depends on the number who qualify for the present scheme because it is limited to 13.5 million litres.

Written Answers follow Adjournment Debate.

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