Other Questions

Agri-Environment Options Scheme

John O'Mahony


12 Deputy John O’Mahony asked the Minister for Agriculture, Fisheries and Food the number of applications under the agri-environment options scheme processed to date; the expected expenditure on the scheme in 2010; and if he will make a statement on the matter. [45271/10]

A total of 9,236 applications were received by my Department under the agri-environment options scheme, AEOS, by the closing date of 17 May 2010. All these applications have been recorded and examined by my Department. To date, 5,706 applications have been found to be fully compliant with scheme requirements and the applicants have received notification from the Department approving their participation in the scheme.

A further 2,585 applications have been processed and my Department will be issuing the letters of approval over the next few days. In a number of cases, approval for entry into the scheme will be conditional on minor queries and obvious errors being resolved by the applicant. This will bring the total numbers approved by the end of November to 8,291.

There are 921 applications that require more detailed investigation by the Department, some of which must be resolved in correspondence with the applicants before approvals can issue. The Department is working through these applications with a view to reaching a decision on entry into the scheme in each case as soon as possible.

The remaining 24 applicants have withdrawn their applications. The Department has been concentrating on processing the applications and once this process is complete, arrangements will be put in place to commence payments.

I would like to ask a few questions to follow up on that. Can the Minister guarantee that a scheme will be opened up next year to those who are exiting REPS 3 on this year's payments? According to the four year plan, €35.7 million will be saved in this area next year. Does that figure relate to the 10,000 people who are exiting the various schemes? Can the Minister explain the figure? As I was not here for the previous answer, the Minister may have said that the figures will be confirmed in next week's budget. If the Minister is saying he cannot confirm that a scheme will be opened up, will he be able to do so next week? I ask because farmers who are going to the banks for funding — we know how popular the banks are at the moment — are being asked to provide credit guarantees. They need to know what the Government's plans are.

The specific level of funding available to the Department under the different subheads in 2011 has not yet been finalised. No decision has been made on the re-opening of the agri-environment options scheme to new participants in 2011. That will be done during the normal process of finalising the Department's budgetary matters, including its Estimates.

When will it be decided on? Will the decision be made next week? When will it be decided on? This scheme is co-funded by Europe. If it is not opened up to the people I mentioned because we cannot provide our own Exchequer funding for it, will Ireland lose funding from Europe as a result?

No. If there were no new applicants for the AEO scheme, we would still draw down our full funding from Europe. We do not need new applicants for the scheme to draw down our maximum funding from Europe. That is the position. We will know our exact current and capital budgetary allocations next week, when the budget is announced. Decisions on the various Votes — the amount of funding to be provided under each subhead — will be made subsequently.

When will those decisions be made?

At an early date.

Will it happen within a month?

Yes, at an early date following the budget.

Has the Minister read the article by Darragh McCullough and Caitríona Murphy in this week's farming section of the Irish Independent? The article in question refers to a “€35.7m cut in the Department of Agriculture’s budget for REPS and the Agri Environmental Options Scheme (AEOS) next year”.

I am sure the Deputy is aware that quotes are not allowed on Question Time. He can refer to the article.

I apologise. I can paraphrase the document.

It is too late. The Deputy has said it and it is out there.

The article, which suggests that the remaining €294 million in the Department's budget will cover just 9,000 farmers, gets to the nub of the issue. The farmers in question need a response from the Minister. I ask the House to forgive my ignorance when I say I did not follow what the Minister said, to be frank.

I said that the definitive amounts to be provided for under each of the Department's subheads — the funds for each scheme — have not yet been finalised. That is normal. They will be finalised when the budgetary process is complete. The actual funding under each subhead will be decided on subsequent to the budgetary process.

Can the Minister guarantee the future of the AEO scheme?

This time last year, we had no AEO scheme. The Minister for Finance allocated funding of €50 million per annum, over a five-year period, in last year's budget. The scheme runs for five years to enable 10,000 applicants to participate in it. We were told a year ago that the new scheme would not even receive 2,000 applications. As I said earlier, in response to questions asked by other Deputies, some 9,236 applicants have joined this scheme.

Meat Imports

Kathleen Lynch


13 Deputy Kathleen Lynch asked the Minister for Agriculture, Fisheries and Food the quantity of beef and lamb imported in 2009 and to date in 2010; and if he will make a statement on the matter. [45180/10]

The importation of beef and lamb into Ireland is a function of supply and demand dynamics. It is influenced by factors like price, currency exchange rates and consumer preferences. According to CSO figures, the vast bulk of imports of lamb and beef into Ireland are from the EU. These figures show that in 2009, some 34,374 tonnes of beef and 1,144 tonnes of lamb were imported into Ireland. Up to the end of August 2010, some 25,099 tonnes of beef and 905 tonnes of lamb were imported. Of the 34,374 tonnes of beef imported into Ireland last year, almost two thirds came from UK, 58% of which was from Great Britain and 5% from Northern Ireland. The majority of these UK imports were cow carcases. The reason for this trade is that the UK cull cow price tends to be approximately 15c/kg lower than the equivalent Irish price. Several Irish meat plants import UK cow carcases to debone and resell, mainly to manufacturing and wholesale customers on the Continent. Uruguay and Brazil are the principal non-EU suppliers of beef into Ireland, mainly steak cuts which tend to be used in the lower value end of the food service and catering sectors. Other EU countries, such as the Netherlands, also sell some steak cuts into the Irish market. This usually occurs during the summer months when these products tend to be in strong demand and the price is at a seasonal high.

Of the 1,144 tonnes of sheep meat imported into the Irish market last year, some 90% came from the UK, 84% of which was from Great Britain and 6% from Northern Ireland. Most of these imports were carcasses or cuts from UK lambs or hoggets. The Irish price was slightly higher at certain times of the year, driven by a weakening in sterling. These exports would mainly have been destined for the lower value end of the food service and catering sectors. Just 4% of sheep meat imports into Ireland last year came from New Zealand. It is noteworthy that the uptake of Bord Bia quality assured Irish lamb has increased among the main retailers in the Irish market. This has enabled more effective promotion and further improved consumer understanding of this important mark. It is worth pointing out that these import figures are relatively small when compared to our export figures for beef and lamb. In 2009, we exported over 13 times as much beef and over 40.5 times as much lamb as we imported. In the same year, we produced almost 15 times as much beef and 48 times as much lamb as we imported. This highlights the benefit of being a small open economy and the importance of free trade with our EU partners to the beef and sheep meat sectors and, by extension, to our economy as a whole. Both sectors make an extremely valuable contribution to the overall economy. Almost 99% of Irish beef exports now go to valuable EU markets, with annual exports valued at €1.4 billion in 2009. The Irish sheep sector is worth around €250 million, with over two thirds of its output exported to the EU.

Additional information not given on the floor of the House.

Food Harvest 2020 sets out a vision for Irish agrifood and fisheries for the next ten years. It provides a sound framework for the development of both sectors. For beef, the report sees the maintenance of Irish beef's premium position in EU markets and closing the price differential between Irish and other premium competitors in those markets as the main challenges facing the sector. Against this background, the report recommends the development and enhancement of a number of policy initiatives to underpin the market performance of Irish beef. In particular, it envisages a focus on genetic advances to drive productivity and product quality. A combination of better quality breeding and better carcase quality at a younger age, together with genetic advances, can potentially deliver greater profitability at farm level. An important spin-off from the significant growth expected in the dairy sector will be an increased supply of calves for rearing and finishing. Complementary Teagasc initiatives, such as the better farm beef programme, offer the best route for producer viability and growth through the adoption of best practice at farm level.

Increased product differentiation, based on predominantly grass-based Irish beef, has the potential to build on the success of current marketing strategies. Collectively, these strategies can provide enhanced returns to the producer and close the current price differential for beef in high value EU markets. The beef industry has, in the 2020 report, set itself a target of 20% growth in output value over the next decade. Achieving this target will depend on increased communication, collaboration and consolidation across the supply chain. The Deputy can rest assured that my Department will continue to work with industry stakeholders in pursuit of the vision for the beef sector set out in the report. Food Harvest 2020 also includes specific recommendations for the sheep sector. It envisages that over the coming years, demand for sheep meat on the European market will outstrip production levels, which could provide opportunities for exporting countries such as Ireland. This should provide the potential for better returns, as long as the industry can continue the market and product diversification which has been evident in recent years. At producer level, there is likely to be improved price prospects, as long as an increased focus on production, efficiency and product quality is evident. Based on a renewed commercial focus by the sheep sector, building consumption on the domestic market and through the implementation of the recommendations of Food Harvest 2020, the industry has targeted a growth in output value of 20% by 2020.

I appreciate the Minister of State's reply. I accept that the laws of supply and demand are among the dynamics in this instance. He said that "4% of sheep meat imports into Ireland last year came from New Zealand". How does that translate in terms of monetary value? I do not know if the Minister of State has those figures. If he does not, I will accept it and suggest they may be forwarded to me in the near future.

I do not have the figures, unfortunately. The percentage value is4%, as I have said.

The Minister of State will forward the information to the Deputy.

I would like to ask the Minister of State about the issue of imports into the Community from third countries. He has referred to beef imports from South America and lamb imports from New Zealand. I refer specifically to the issue of equivalence, which means the product that comes in should meet the standards foisted on producers in the 27 EU member states. I am speaking in the context of the report on the sugar industry that was compiled by the European Court of Auditors, the function of which is to protect the EU taxpayer. Given that producers throughout the 27 member states are assisted by the EU taxpayer in respect of the supports they receive, could it not be argued that allowing these imports undermines the commitment of the EU taxpayer? Is it time to invoke the assistance of the court of the European Court of Auditors in respect of third country imports that do not meet the equivalent standards and are driving producers, including Irish farmers, out of business?

It is an interesting perspective on the matter. I would not be in a position to disagree with the Deputy in this respect. I am dealing with a similar problem in relation to fish. I am sure this difficulty is being encountered throughout the EU, across the various product headings. Like all Members of the House, I am acutely aware of the high standards that are required within the Irish market for the production of our beef and lamb. Funding in this area continues to be forthcoming from the Department. We are proud of the role Irish beef plays. As an aside, when we were eating in Brussels on Monday night, Irish steak — entrecôte irlandaise — was on the menu. It is important that the high quality of our product is recognised throughout the world. Perhaps it should be explored to a larger degree at European level. I would be supportive of any initiative in relation to that.

The question of live imports, in particular those of lamb and sheep being brought through Northern Ireland from the United Kingdom mainland, was not addressed. These imports come at specific times when the market needs them in order to suppress the price. The Mercosur deal means that the type and nature of the imported product would be a serious threat. They would have access for specific——

Please ask a question, Deputy.

I am trying to make the point that we should be aware of the fact that any deals done with regard to the import of prime cuts of beef would undermine our market. The Minister referred to the steak in Brussels.

The figures for sheepmeat importation are 84% from Great Britain and 6% from Northern Ireland. Most of those imports, including the 6% from Northern Ireland, were carcases, so the live imports are counted in that figure of 6%. We are aware of the difficulties with regard to the Mercosur talks and to which Deputy Creed alluded, as regards our standards and standards in other countries. The EU-Mercosur talks are currently under way. We are keeping a close eye on those talks because we are aware of the impact of those talks on the beef sector. We have ambitious plans for the future growth of the beef and sheep sectors in Ireland.

Sugar Beet Production

Michael Creed


14 Deputy Michael Creed asked the Minister for Agriculture, Fisheries and Food given the potential of the sugar beet industry as a source of renewable energy as well as an employer and agri-food sector and on foot of the report published by the European Court of Auditors, if he is prepared to explore any future development of the industry here; and if he will make a statement on the matter. [45256/10]

As part of the reform of the EU sugar regime in 2006, a temporary restructuring scheme was introduced by the EU Commission with the aim of reducing EU sugar production in order to comply with WTO and other international obligations. The scheme provided an incentive for sugar processors to renounce sugar quota and dismantle the associated sugar processing plant and it provided compensation for affected stakeholders.

Greencore plc, the sole Irish sugar processor and holder of the entire Irish quota allocation, decided to avail of the restructuring scheme. Accordingly, the company renounced the quota and dismantled the last remaining Irish sugar factory at Mallow in compliance with the conditions of the scheme.

With regard to the potential of the sugar beet industry as a source of renewable energy, the Deputy may be aware that Cork County Council undertook a study to provide a factual evaluation of the viability of ethanol production from beet and wheat at the former sugar factory in Mallow. The results were published in September 2006. The study found that production of ethanol from beet and wheat is technically feasible at the Mallow site with the appropriate plant and equipment modifications and additions. Furthermore, an investor would need to consider capital investment of €55 million to €65 million for plant and modifications in addition to some €25 million to €30 million to purchase the site. By comparison, capital investment for a greenfield site would cost in the region of €100 million to €110 million, plus land purchase of €1 million to €2 million for agricultural zoned land or up to €15 million to €20 million for industrial zoned land.

Ethanol from beet or wheat in Mallow would require economic support to compete with petrol or imported ethanol. The support needed would be 26 cent for every litre produced compared to the full excise relief of 44 cent per litre available under the current excise relief schemes. Ethanol production in Mallow would employ some 50 people, which is less than 25% of the number employed during the sugar campaign. At full capacity the plant would require feedstock from 50,000 hectares. Ethanol would help overcome dependence on foreign energy, it burns cleaner than petrol and results in fewer emissions.

I understand that since decisions regarding the future use of the former sugar factory at Mallow were primarily a matter for the owners, anyone who expressed an interest in the possibility of utilising this factory for bioethanol production was advised to pursue the matter directly with Greencore.

There is no mechanism under the present regulations to allow for the re-instatment of the sugar quota for the growing of sugar beet in Ireland for the sugar industry. Any proposal to review the EU sugar quota regime would be a matter for the EU Commission in the first instance and any proposal to re-establish a sugar factory in Ireland would, subject to the availability of quota, be a matter for commercial decisions by interested parties. The Deputy will be aware that a quantity of sugar beet has always been grown in Ireland for fodder purposes and this continues. It is not affected by the EU sugar regime.

The Minister's response is interesting. I ask him to place in the Oireachtas Library a copy of the agreement reached between the Commission and the Government in February 2006 because it is a difficult document to access and one that is critical to this debate.

The Minister has outlined the reasons for potential. I am aware of the report from Cork County Council. The problem is that the plant in Mallow has been razed to the ground. Whether the future industry can develop in Mallow or Midleton or elsewhere is a parochial issue which I do not wish to deal with in detail here. However, it is clear that a monumental mistake was made. Whether one blames the Government, Greencore or the farm organisations, the blame game is irrelevant now. What we need to do now is to salvage something from this situation. Will the Minister seize this issue and pursue it to its end objective? It is a very valuable crop from a tillage industry which will come under increasing pressure in the future. It offers a source of income to the tillage sector and also employment and it meets our future non-renewable energy objectives.

Let us leave aside the blame game. The monumental errors made by Greencore, by the Government, by the Commission and outlined by the EU Court of Auditors, are only of comfort in respect of "I told you so" — which is what some people in this House did, but that is water under the bridge. Can we salvage something now and will the Minister pursue it, take it on board and bring it to an end-game?

With regard to Deputy Creed's comments, I do not accept that the Government made mistakes with the sugar regime. I said earlier in the House——

The Government decommissioned a fully viable plant, it should look at the EU Court of Auditors document.

Deputy Creed is very well versed in this subject. He knows well that Greencore was the quota holder. It decided to exit the industry, not the Government.

The then Minister, Deputy Mary Coughlan, was at the negotiating table.

The Deputy should not shout Members down. The Minister without interruption.

The then Minister, Deputy Mary Coughlan, was extremely active in opposing the European Commission in regard to sugar reform. Thirteen other member states initially supported the Irish stance and the Tánaiste chaired that group and led it at that time. When the decision came to the Council——

The Minister should be ashamed of himself.

——meeting about the sugar regime, Ireland did not have the support to block the Commission proposals. In that event, the then Minister had negotiated a compensation package to be available to the different stakeholders——

We have had this debate in the House. I am anxious that the specific question be answered.

Deputy Creed raised that issue and it was important that I give my view. I will come back to Deputy Creed in case I am inaccurate in any detail. I checked my information when we debated this previously. I understand that Greencore did some study on the possibility of starting a bioethanol facility. It stated at the time that this was not viable. The issue has to be addressed in the term used. From recollection there was out-of-quota sugar. The sugar quota regime issue would still come under the present regime. I will check my information and I will write to Deputy Creed on that specific issue. I am speaking from memory.

Deputy Creed made the point about renewable energy. The Department of Communications, Energy and Natural Resources is the lead Department in this regard. Deputy Creed is familiar with the Food Harvest 2020 report in which we outlined a number of issues which we need to advance and which my Department will advance in conjunction with the Department of Communications, Energy and Natural Resources.

I remind Deputies they have one minute in which to answer questions and I have already allowed the Minister three minutes.

I ask for clarification. From where has the Minister derived the figure of the price of 26 cent per litre? Is this the amount that would make it sustainable? Is the Minister now saying that pre-2015 there is no possibility of subsidisation of beet growing for the production of ethanol? Is he saying there would be no Government support for the production of ethanol from sugar beet?

There is Government support for the renewable energy sector. Deputies questioned us regarding support for the growing of miscanthus and willow. This coming year provision has been made for a very substantial increase, the largest ever.

I wish to be accurate in my reply to Deputy Sherlock regarding the implications for the EU sugar regime, were a bioethanol production facility to be established in Ireland. I will communicate with both Deputies. I did not check that issue but I recall reading it prior to the last debate. The note I had at that time referred to out-of-quota sugar and the fact that Greencore had carried out some initial studies on the viability of such a plan.

In view of the statement by the European Court of Auditors that the sugar industry should never have been closed in Ireland, will the Minister use the CAP reform negotiations to pursue the agenda of reopening this industry?

The Minister mentioned the issue of money and the unavailability of sites. The first mistake was the closure of Thurles sugar factory. Is the Minister aware that Anglo American, the owner and operator of Lisheen Mine, which has a centre of excellence for renewable energy and a subsidy from the ESB, is focusing on this and has land that is zoned for the purpose? Will he enter into discussions with Anglo American with a view to basing this industry in Thurles, County Tipperary, in the midlands, where it should be? Will he avail of its offer and expertise? It has the capital investment to put into it.

Tell that to the Fine Gael boys in Mallow.

That is the proposal. Is the Minister aware of it and will he pursue it with the company?

I will take a brief final question from Deputy Creed.

I understand the Minister's defensiveness about this.

Quickly, Deputy Creed.

There are many that should shoulder the blame, not least the Department, the European Commission and Greencore, but can we salvage something from this? I support the point made by Deputy Coonan. I am not preoccupied with the issue of whether a factory is built in Mallow or Thurles, but an industry can be re-established. Thousands of growers and factory workers were sacrificed on the altar of this deal.

Will the Minister leave the past behind, look at the report of the European Court of Auditors and decide this is a viable industry whose cornerstone is alternative energy? Will he run with it?

With regard to the point made by Deputy Coonan, I would not try to influence any company on where it might locate a potential industry.

Not even if it was going to Cavan?

Deputy Crawford and I would indicate the merits of locating industry in Cavan or Monaghan, but I would not try to influence anybody.

What about Wexford? Wexford is very important.

I am not familiar with the potential project Deputy Coonan mentioned. Those people may have been in touch with the Department, although I am not aware of it.

They were in the House this morning to appear before another committee — the Joint Committee on Communications, Energy and Natural Resources.

Please, Deputy. I ask the Minister not to be distracted but to finish his answer.

As Deputy Coonan knows, that is the lead Department for that industry.

Will the Minister co-operate with it?

Of course we will. I said in my initial reply that we have ongoing co-operation with that Department.

I must move on to the next question.

In very difficult financial circumstances, we have made provision for 1,800 ha. of miscanthus and willow to be planted in the coming year.

I will just answer Deputy Creed's question about the report of the European Court of Auditors. There has been public commentary about that, particularly on national radio. The report mentioned that Mallow could have been a viable sugar beet processing facility, but only if the European Commission reforms had not been carried out. That is always left out of the commentary.

Will the Minister use the CAP negotiations——

The reforms were carried out.

That is not the point.

The Minister is now deliberately provoking a debate on the issue.

No, I am not. That is the point.

A Leas-Cheann Comhairle, I did not speak on this.

The Minister had the last word, and then——

The House will have order.

The Minister is provoking a debate on this issue.

Minister, we are moving on to question No. 15.

That was a cheap parting shot.

May I ask a supplementary question?

The House may have order but the country does not.

You could not be up to them.

Animal Carcase Classification

Pat Rabbitte


15 Deputy Pat Rabbitte asked the Minister for Agriculture, Fisheries and Food the measures he has taken to improve farmer confidence in the beef carcase classification system; his views on whether these machines are being operated correctly at all times; the deficiencies that have been found by his inspectors in the past; and if he will make a statement on the matter. [45186/10]

In the European Union, carcases of adult bovines are classified or graded in accordance with Commission Regulation EC 1249/2008 using the EUROP scale for conformation and a scale of 1 to 5 to indicate fat cover. Classification is used in many cases as the basis for payment to producers and it underpins the EU price reporting system for beef. Some member states further divide each main class into sub-classes in order to further refine the classification assessment of the beef carcase.

Traditionally, classification was based on a visual assessment of the beef carcase by a human classifier. Critics would regard such human assessment as subjective, prone to error and lacking consistency. A review of the beef industry in Ireland in the late 1990s recommended that mechanical classification of beef carcases be investigated with a view to the introduction of an objective method of beef classification. It was considered that objective classification would enhance farmer confidence in beef carcase classification, promote the pricing of carcases based on classification results rather than flat-rate pricing and provide an incentive for farmers to produce carcases of the quality required by the market.

Following a successful authorisation trial carried out in accordance with EU regulations, mechanical classification was introduced over five years ago in Ireland and is now well established as an independent, objective and consistent system for classifying beef carcases. There are now 23 machines operating in beef plants, accounting for over 90% of the national kill. In most cases the classification results form the basis for payment to farmers; therefore, it is important that the machines are working correctly at all times. To this end, the meat plants have a responsibility to ensure that the machines are maintained and serviced on a regular basis to achieve optimum performance.

Since the introduction in 2004-05 of mechanical classification of beef carcases, the performance of the classification machine in each beef processing plant has been monitored by regular unannounced inspections by officials of my Department. The classification results previously allocated to beef carcases are downloaded from the mechanical classification system onto a hand-held computer and the official assesses the results of at least 80 carcases previously classified by the machine. This assessment of the classification for both conformation and fat is carried out using sub-classes for each main class. The performance of the machine is determined using the same scoring criteria as that laid down in the EU regulation for authorisation purposes.

Additional information not given on the floor of the House

If a machine is found to be operating outside the limits provided for in the EU regulations, the plant is not permitted to use the machine for classification purposes until it has been examined and repaired by an engineer. It must also be rechecked by Department officials before it can be used to classify carcases following any work carried out by the engineer.

Over the past number of months, officials of my Department have held discussions with the various stakeholders involved in beef carcase classification. The aim of these discussions was to improve confidence in the operation of the mechanical grading system. Following on from these discussions, a number of measures have been introduced to enhance controls and procedures with the aim of ensuring the effective operation of the mechanical classification system. These measures include increased frequency of control visits by officials of my Department; enhanced monitoring of control and classification results; formal self-checks of machines in each meat plant; ongoing training of factory operatives on the operation of machines; and enhanced communications between stakeholders.

I am confident that with the co-operation of the stakeholders, these additional measures will further enhance the operation of the mechanical classification system.

I do not know whether the Minister was about to get to it, but one part of the question was about deficiencies found by his inspectors in the past.

There has been constant discussion with the various stakeholders, and we want to ensure there is maximum confidence in the system. A number of measures have been introduced to enhance controls and procedures, including increased frequency of control visits by officials of my Department; enhanced monitoring of control and classification results; formal self-checks of machines in each meat plant; ongoing training of factory operatives on the operation of machines; and enhanced communications between stakeholders. I emphasise that the meat factories have a serious responsibility to ensure that all machinery is operating to the highest standards.

Does the Croke Park agreement allow for a work practice whereby in-house Department officers will be able to carry out routine independent checks on a daily basis? How many people are assigned to routine random inspections?

They are very specific questions.

Yes. Is it the case, or is there a protocol in specific factories, that owners of livestock are no longer allowed down on the killing floor to view the grading as it takes place?

I do not know the exact numbers, but I can check if necessary. I presume some of the departmental officers involved in the work also have other duties.

There is also an EU inspection process. After the last inspection that took place, the conclusion of the EU audit team was that the standard of classification was very good for both conformation and fat cover.

We conduct regular unannounced visits to plants. In 2009, for example, a total of 45,266 carcases were checked in the course of 472 control visits. As a Department we also publish an annual report detailing carcase classification statistics; this information is available on the Department's website. From the Department's point of view, at official level, we are very active.

The annual reporting is all very well, but there should be more real-time reporting. There has been a major issue of confidence, as the Minister knows, and matters were not helped by one specific case. I ask that there be updates either bimonthly or quarterly at the very least.

In recent months, discussions have been held with all stakeholders with the aim of improving confidence in the operation of the mechanical classification system, which, as Deputies Doyle and Sherlock said, is important. A number of measures, which I have mentioned, have been introduced to ensure we have the best possible results for everybody involved.

Milk Quota

John Cregan


16 Deputy John Cregan asked the Minister for Agriculture, Fisheries and Food the closing date for the milk quota trading scheme for the 2011-12 milk quota year; and if he will make a statement on the matter. [45062/10]

In mid-October I announced the ninth milk quota trading scheme, which is the first of two trading schemes to allocate quota in respect of the 2011-12 milk quota year. The closing date for receipt of applications was Friday, 5 November 2010. The structure of the scheme is largely unchanged from previous years. It operates in respect of each co-operative area and is comprised of a priority pool and a market exchange. Sellers continue to contribute 30% of the total quota offered for sale to the priority pool. The method for calculating the market clearing price, including the 40% price corridor, remains unchanged. The 3:2 ratio governing the distribution of priority pool quota between young farmers and category 1 producers — those with quotas of less than 350,000 litres — remains, as does the option for sellers in certain co-operative areas to sell at 1 or 2 cent per litre less than their original offer price. However, I have reduced the maximum price at which quota is traded in the priority pool, from 6 cent per litre to 5 cent per litre. If the exchange price for a given co-operative area drops below 5 cent per litre, the priority pool price will be the same as the exchange price.

In addition, I have introduced a national component in each phase of the scheme that will allow sellers who have been successful in selling some, but not all, of their quota on the market exchange to dispose of their remaining quota, through a national pool, to purchasers in other co-operative areas who have been unable to have their full requests satisfied. Where necessary, this redistribution will be carried out by the Department immediately after each of the two stages to ensure sellers are not forced to retain some of the quota offered for sale because of insufficient demand in their areas. Such a re-distribution will not involve a separate application process.

I expect to be in a position to announce the results of the first exchange before Christmas. A second exchange will be announced in early January 2011. Full details of the scheme are available from co-operatives or on the Department's website:


On the basis of the targets set out for increased production in that area, what bearing will the Food Harvest 2020 proposals have on this scheme?

As Deputy Sherlock is aware, I introduced a national component to the scheme this year, the first time this has been done. The food harvest report stated that we would review the existing milk quota trading scheme and I have already done so. Let us consider the line north from Dublin to Galway. The co-operatives in this area, including Connacht Gold, Lakeland Dairies and Town of Monaghan, expressed concern that there could be a loss of milk from the area. I am aware from speaking to some of the senior officials in those processing units that they are perfectly satisfied with the level of demand for milk quota this time around. Although the processing has only just begun in the Department, the provisional figures for the first exchange show a total of 542 applications from sellers and 2,707 applications from buyers were received by 5 November. This shows a demand for milk exists and it is a vote of confidence in our ambitions and the realisable targets we have set to double milk production by 2020. That was the first opportunity I had to make a change to the existing quota arrangements and, from the initial analysis, it appears to have proven successful.

We will exit quota and quota increases in the coming four or five years. Does the Minister have any specific plans to deal with the extra quota coming on board, especially in the context of trading? Naturally, there is vast sectoral protectionism in this industry. Has there been some effort to try to get so-called "co-opetition" between processors in the long-term such that they could come together in a joined-up way to process and market produce? If the Minister intends to roll out this level of milk production what we have is a good indicator but we must know how the Minister intends to ease into the approach post-quota.

As part of the Food Harvest 2020 report I established a dairy activation group, chaired by Dr. Seán Brady. I have given the group until the end of November to report to me on several issues.

Is it finished?

Yes, it is completed. The group is comprised of representatives of Teagasc and some processors and farmers, especially young farmers, from various parts of the country. I have not seen the report yet but one issue is to ensure we maximise the plant and machinery in place for processing. There must be co-operation among the plants. I have met the various processors, the farm organisations and the Irish Co-Operative Organisation Society. A realisation exists that we have the capacity in this country to increase milk production by 50%. However we must ensure that the relevant facilities are put in place and that we make maximum use of existing plant. There must be co-operation between various processors and I am confident this will take place. However, the first working group of the Food Harvest 2020 process has already completed its work on that issue.

Written Answers follow Adjournment Debate.