I welcome the Minister of State. Spokespersons have ten minutes and all other Senators, seven minutes. The Minister of State will be called on to conclude not later than 3.20 p.m.
Farming and Agrifood Sector: Statements.
Go raibh maith agat as seans a thabhairt dom labhairt ar chúrsaí talmhaíochta agus bia sa Seanad.
This debate is particularly timely and an opportunity for the House to focus on the undoubted potential of the agrifood sector to contribute significantly to the recovery of the economy. First, however, I express my sympathy to all those who have been so badly affected by flooding in recent weeks. I am aware from my Department's assessment of the impact of the flooding on the agricultural community. The Government has discussed the issue and agreed to allocate €2 million for a targeted fodder aid scheme which will complement a wider humanitarian aid scheme of €10 million to assist those communities most badly affected. It is hoped payments will commence in the very near future.
This has been a particularly difficult year, with low commodity prices, currency difficulties, particularly with sterling, and weakened demand at home and abroad. The global economic turmoil continues to have its effects on all sectors. Throughout the year the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, has worked actively at EU level to determine the most effective use of market support measures, notably for the benefit of the dairy sector. In view of the significance of export markets for Irish food products, the importance of such market support measures cannot be underestimated.
The potential of the agrifood sector has long been recognised by the Government, but it is all the more important in current economic circumstances that it is kept in sharp focus. The Forfás report, Sharing our Future: Ireland 2025, points to the importance of the agrifood sector realising its further growth potential and maintaining its place as an important part of the national economy and strategic relevance in terms of food security. The sector is operating in a dynamic environment; if we want to harness its potential, we cannot afford to stand still. We need a new direction for the sector and new thinking is required on what needs to be done. More of the same will not be enough. It is precisely for this reason that my Department and five State agencies — Bord Bia, Teagasc, Enterprise Ireland, BIM and the Marine Institute — have completed an enormous amount of work on a new strategy for the development of the agrifood and fishing sectors for the period to 2020. My Department has long been of the opinion that the agrifood sector should consistently take a medium-term view, to be renewed periodically. The development of medium-term strategies has been a feature of our work for a considerable time, as evidenced by the previous strategies, Agri Food 2010 and Agri Vision 2015.
There have been some recent comments, with which I wholeheartedly agree, about the need for a new medium-term strategy; those making them seemed to be unaware of the advanced nature of the work on the Agri Vision 2020 strategy. The work done to date involved the preparation of a series of papers on the main sectors which are almost complete. These will give an informed basis to a web-based public consultation process and request for submissions which I hope to initiate shortly. I take the opportunity to repeat the invitation to all those with a stake in the agrifood sector to participate actively in the 2020 process, stimulate debate and help chart the course for the future. I know there are no easy answers, but I am convinced that unless the 2020 strategy gives concrete direction to the industry as a whole, it will be a lost opportunity to maximise the potential of the sector.
It is important that the Agri Vision 2020 strategy maintains the impetus gained from the successful Agri Vision 2015 report and action plan. The new strategy will take account of current global and market realities, with agriculture and food taking a central place in the major global challenges of food security and climate change. The plan will focus on the critical issue of competitiveness, the challenges from the global economic downturn, currency fluctuations, climate change and how best to maximise the opportunities arising from a growing international food and energy crops market. We must also ensure that as much as possible of what we need to eat in Ireland is sown in Ireland and sold for a fairer price.
The Government is acutely aware of the competitiveness issues affecting the economy and the particular effect — especially when combined with currency difficulties — on the food industry. The broad thrust of the Government's approach is to take every possible step to help improve our competitive base. This is not an easy process but is being afforded the highest priority and persistence.
The establishment of NAMA is a critical step in the Government's efforts to achieve a properly functioning banking system. We all appreciate the importance of getting credit flowing through the system, particularly in view of the ongoing credit difficulties being experienced in the farming sector. Close contact has been maintained with the Irish Banking Federation and the major banks, which has given me the opportunity to impress upon them the short-term liquidity difficulties experienced by farmers and the wider industry and, in particular, the need to extend normal working capital facilities to farmers.
Following a request from the Minister, the European Commission agreed in May to advance 70% of the single farm payment from 16 October to assist farmers experiencing difficulties in the dairy market and other sectors. As a result, more than €850 million has been paid to 120,000 farmers since last month, a full six weeks earlier than provided for under the rules of the scheme. The level of advance payment, at 70%, is unprecedented. Following the issuing of the advance payments, my Department began issuing payments of the balance of 30% from 1 December. Assuming all applications are cleared for payment, a further €380 million will have been paid to farmers in December, bringing to €1.24 billion the total amount paid between October and December.
In further recognition of the income difficulties experienced by farmers, the Dáil has approved a Supplementary Estimate for my Department which will allow the advance payment of some €85 million under the farm waste management and rural environment protection schemes which would otherwise have fallen to be paid in the new year. My Department's expenditure on REPS this year will reach a record level of €369 million, paid to a record number of 62,000 participants. In addition, spending on the farm waste management scheme in 2009 will be €286 million. By the end of January, Exchequer spending on the scheme will be approximately €1 billion.
The prices farmers receive for their products represent the most important way in which they can enhance their incomes. Unfortunately, we have experienced a significant weakness in prices achieved for dairy, beef and cereals this year, as well as in horticulture. We are all aware of the particular difficulties experienced by the dairy sector, although, thankfully, there have been some signs of price recovery in recent weeks. The past year has clearly demonstrated the value of market management mechanisms which prevented a bad situation from becoming worse. In the course of last year's CAP health check negotiations we were to the forefront in arguing for the retention of these measures. As a result of pressure from Ireland and, subsequently, a number of other member states on the Commission, many of these measures were activated to help stabilise a difficult position.
In addition, in recent months, an increasing number of member states, among which Ireland was a central player, pressed the Commission to address the difficulties in the dairy sector. The outcome was positive, with agreement on the need to maintain the effective use of market measures, including intervention and private storage aid, as well as the introduction of what will now be a €300 million dairy fund as a means of providing direct support for dairy farmers. Crucially, we have impressed upon the Commissioner who has accepted the point that there must be a controlled release of butter and skimmed milk powder from intervention stocks to avoid any negative shock to prices.
One of the key outcomes negotiated in the health check was the agreement to abolish milk quotas in 2015. In this regard, there is no turning back. The industry must now deal with the challenges and opportunities presented by abolition and the Minister will play his part. He is already playing his part, following his agreement to make milk quota available to support a major dairy research project, conducted by Teagasc, aimed at the development of profitable expanding dairy farms as we move towards quota abolition.
A further forward-looking initiative that has been facilitated by the health check outcome was the opportunity provided by this year's 1% increase to allocate 14 million litres to 70 new entrants to dairying under a new entrants' scheme. These are young farmers who have a genuine future in the industry. The scheme has been an outstanding success in terms of both the quantity and quality of applicants. The successful applicants are today participating in their first training workshop, facilitated by Teagasc. In terms of the further 1% of additional quota that will be available next year, the Minister stated his intention to consider how the scope of the scheme may be expanded to new and recent entrants.
For an industry that exports 85% of its produce, valued last year at €2.3 billion, the anticipated growth in world demand should bring real benefits. The beef industry is even more dependent on exports with more than 90% of production exported. As important as export earnings are to the economy, this level of export dependence makes the sector susceptible to fluctuations and trends in international and EU markets. The global economic downturn has seen consumers curtail spending and a consequential decline in beef consumption throughout Europe this year. This fall has been especially noticeable at the high-value end of themarket, a segment of the market specifically targeted in recent years by Irish producers and processors.
That being said, the organic sector, although small, has bucked this trend and continues to grow 11% year on year. With 70% of consumption of organic food coming from imports and a €2 billion under-supplied market in the nearby UK, organic production is increasingly attractive for farmers.
Nonetheless, as in the dairy sector, the medium-term prospects are encouraging. Rising population levels, forecasted improved standards of living, growing urbanisation and changing dietary patterns, especially in Asia, are all contributing to increasing food demand. Furthermore, the European Commission has estimated that EU beef and veal production is expected to decline by almost 5% by 2015. This will lead to a supply gap within the EU of 600,000 tonnes by 2015, providing market opportunities for efficient market producers. Irish producers are well placed to benefit from these opportunities.
Apart from the sectoral challenges and opportunities, one of the most significant issues that will impact on the future of the agrifood industry is the shape of the future Common Agricultural Policy, CAP. While funding arrangements for the CAP are fixed until 2013 under the current EU financial perspectives, all aspects of the EU budget are being reviewed. This will be followed by negotiations to determine the composition of the next financial perspectives of the EU from 2014 to 2020, including the funding available for agriculture and rural development.
In the negotiation on the new financial perspectives there will be competing pressures for funds, including pressure for less money overall for CAP as a share of the EU budget and in absolute terms. In this regard, the recently leaked Commission draft paper is of concern to us in that it advocates major policy changes and lower funds for CAP. We have serious concerns at some of the options mooted in the leaked document from the Commission on the budget review. There is speculation that it will be subject to significant rewriting and we will press for that. We have a particular concern at the notion of co-financing of direct payments. In current circumstances, this would obviously be unaffordable for Ireland and also for many other member states. More fundamentally, it would arguably represent re-nationalisation of the only real common policy of the EU.
Decision making on the financial perspectives will, for the first time, come within the co-decision process where the European Parliament as well as the Council of Ministers has to agree to the results. This is obviously a more open and democratic process but, as it is new, it leads to some uncertainty about the outcome. Our overarching view is that we need a strong and adequately resourced CAP after 2013. This is a point we have pressed strongly in discussions to date and for which there is good support in the Agriculture Council. In view of the new co-decision making process, we want to work with our MEPs to ensure the best outcome for Ireland and for the Irish agrifood sector.
Food security and climate change are key challenges to be addressed in the coming years. By 2030, the planet will need to produce 50% more food, with less land, water and energy as inputs. Food companies are faced with the challenge of meeting the needs of an ever-increasing population while, at the same time, limiting the impact of their activities on the environment. On the occasion of the World Food Day 2009, I made the point that we need to consider where our food comes from and our joint responsibility to achieve food security. Even in a developed country like Ireland it is incumbent on us to consider our own food security and, furthermore, how our natural advantages and expertise in food production can be leveraged to assist in meeting long-term increased global demand.
This is an important and timely debate. There are obvious challenges facing the agrifood sector but, more importantly, significant opportunities for the growth and development of the sector which is of enormous economic and social benefit to the country, particularly in our rural and coastal communities. We need to have a serious analysis of the sector based on the facts and realities, not on rhetoric and soundbites. No more than any other sector in the economy, the agriculture sector has not been immune from the difficult choices the Government has had to make. No analysis of the sector and its prospects can conveniently ignore the fiscal realities.
Despite the difficulties in the public finances, the Government is investing a record level of €369 million in funding for REPS. Within a matter of weeks, total spending on the farm waste management scheme will have reached €1 billion, by an enormous distance the highest ever on-farm investment in the history of the State.
When the future of the pork industry was threatened in December last, the Government acted swiftly to secure the industry by restoring public confidence and by providing a financial facility worth up to €200 million. These are the actions of a Government committed to securing an industry's future and viability, in this case a production and processing industry worth €1.1 billion employing 6,500 people and 500 pork producing farm families.
The agrifood industry is worth in excess of €8 billion annually in exports to more than 170 countries. It has proven itself to be robust and resilient. It has faced and overcome challenges in the past and no doubt it will emerge from this economically challenging time well-placed and conditioned to take advantage of the undoubted opportunities.
The 2020 Agri Vision strategy presents an opportunity for everybody with a stake in this most important of sectors to contribute constructively to the development of an updated vision for the next decade. The sector must be flexible, creative and innovative, and one of the most efficient across Europe.
I am optimistic and positive about the industry's future, notwithstanding the serious difficulties faced this year. I am confident about its potential to contribute to the recovery of the economy. The Government recognises that potential and we want to work with the industry and all those who are involved, from the primary producer right through the chain, to ensure the sector reaches its potential and maximises the contribution it can make to the growth and development of the economy nationally, and equally importantly to many local economies and communities throughout the country.
I welcome the Minister of State, Deputy Sargent, to the House and thank him for his contribution. In his various presentations here in the past two years he has always been constructive and tried to paint a picture of how it can be with various improvements in Government and European initiatives. I wish him well in that regard.
In one sense the most important point, which he stated here previously, was when he properly reminded us of the value of the agrifood industry, worth in excess of €8 billion with export capabilities to more than 170 countries. Our political and economic ambitions for agriculture must be no less than the possible doubling of that output, which is attainable. The Minister of State has provided us with an interesting overview of where Ireland stands in the European and world supply chains. We recognise that global food shortages are becoming commonplace and that there will be strong growth in demand for agricultural products in continental Europe and Asia. There is a strong market for Ireland in responding to these requirements and challenges. We must aspire to doubling our agricultural output in current monetary terms.
The need for a stimulus plan has been mentioned to turn around the ship of State. We have seen such plans being introduced in France, Germany and the United States. It was an easy stimulus plan for those economies to introduce because it was partly based on their respective motor industries. If we want to do something similar here, it must be based on agriculture. There would be little point in stimulating other sectors where the result would be imports. If we can use agriculture in the official stimulus plan for the economy, we can transform rural Ireland and the nation's economic fortunes. Therefore, we must aim high.
The Minister of State has indicated where we can stand in the future in Europe and the world generally. Our task is to build that bridge by putting in place the required policies. I welcome the Minister of State's vision for 2020 and beyond, to which we must work towards. In the short-term, however, we must respond to the current crisis. From a planning perspective, CAP reform in 2013 is worthy of serious debate both here and elsewhere. The Minister of State has presented truthfully the frightening possibility of a serious change in European thinking, policy making and the funding available for Irish agriculture. That is something the Government, the Opposition and our MEPs must work to avoid. If, in the Minister of State's own words, there is to be substantial renationalisation of funding for agriculture, Ireland will be a significant net loser. We must all join in assisting the Minister of State and his Government colleagues in that big political project. We will certainly need to have further debates on the matter.
This debate is taking place just a few hours before the 2010 budget is announced by the Minister for Finance; therefore, we are speaking in a vacuum. Obviously, however, there are grave concerns for farmers in advance of the Budget Statement. The representations we have received most frequently in recent months concern the proposed carbon tax. I am sure the Minister of State — wearing his other hat as a member of the Green Party — could put up a strong defence for the carbon tax. I do not suppose any politician, on either side of the House, would oppose the general concept of such a tax. However, the additional burden that will be placed on a litre of tractor diesel and heating oil will need to be negated by some form of rebate. Unfortunately, farmers cannot walk or cycle around their fields with a plough.
They could use an ox.
As the Minister of State knows, tractors are required for such work and use a lot of diesel fuel. However, the agriculture sector will not be able to sustain a further fuel price increase. I appeal to the Minister of State to ensure there will be a rebate to ease the burden of a new carbon tax. We need to keep farmers working at this difficult time. Not surprisingly, there has been profound doom and gloom, given the major difficulties experienced across all sectors. Input costs arising from the introduction of a carbon tax will have to be dealt with. We must ensure it is not a financial penalty.
The Minister of State referred to the continuing rise of the organic sector, which we welcome. I appreciate and applaud his efforts in this regard. However, he would be the first to recognise that no matter how successful it is and notwithstanding the scale to which it can grow, it will still be but a small part of the overall jigsaw of Irish agriculture. The organic sector is a success story, which I welcome, but the vision of the Minister of State and his Department must stretch well beyond the sector into mainline sectors also. Significant work is required in that regard.
Large numbers of farmers are affected by the flooding crisis. Some of the pictures on our television screens and in the newspapers are heart-rending. The level of assistance being suggested by the Government will have to be increased substantially. Perhaps there will be a budgetary announcement this afternoon. Perhaps the Independent Member, Deputy Noel Grealish, has worked his magic wand. Clearly, we need significant and direct assistance for those affected by flooding.
The Minister of State mentioned the REPS which has been an outstanding win-win scheme and success story concerning departmental policy and Irish agriculture in the past decade. However, there is serious concern that it appears set to be radically reformed and reduced. I am not fully aware of the Minister of State's thinking on what form a new scheme will take, but our aim must be to ensure the maximum number of participants can enter and qualify for the scheme, thus receiving support and assistance. The McCarthy report was particularly critical of the REPS and suggested its almost complete shutdown. However, if one looks at what has been done on farms via the scheme, it includes the physical transformation of the landscape, the protection of habitats and improvement of soil fertility. It has been a very successful agricultural story. Under the scheme, the money available is put into circulation almost immediately. A farmer who receives a REPS cheque is obliged to spend almost all of the money on carrying out further improvements. I appreciate the scale of the economic crisis and that we must face reality, not live in cloud-cuckoo land. However, we will tamper with the scheme at our peril. Its substitute needs to be substantial, not just a scheme in name only. It must involve money and have a real purpose. I ask the Minister of State, representing the Green Party wing of the Government, to try to impose his thinking on a new scheme in order that it will make a difference, as I think he would agree, the current scheme has done.
We will be spending even more next year on REPS.
We await information on the parameters of the new scheme, including who can join, how long a person can remain in it and the administrative arrangements.
We will know after 15 December.
I look forward to what I hope will be a progressive announcement.
It would be remiss of me not to mention the credit crisis which was referred to by the Minister of State. I noted his comments on NAMA. If it is to work — for the sake of the country's economic future, let us all hope it will — small businesses, including shopkeepers, plumbers, electricians and farmers, will need immediate access to credit. Bankers claim they are making money available; it seems, however, that those seeking working capital, including farmers, are unable to access it from Irish financial institutions. Perhaps there will be some type of pronouncement or suggestion in the Budget Statement this afternoon. There is a political obligation on the Government to place a strong moral obligation on the banks to respond to what has been done by the taxpayer and the political establishment for the banking system. If that is to be successful, it can only be judged by credit flowing again. Irish agriculture and many small operators, whether they are contractors, or farmers, in seeking money for stocking loans and so on, are on the verge of shutdown as a result of their inability to access money. I know the case has been made to the Minister of State a thousand times, but it has to be repeated strongly, if credit is to be made available again by the banks.
I thank the Acting Chairman for allowing me to wander on, and I look forward to discussing this very important subject again, in the near future, after this afternoon's budget. We look forward to some positive pronouncements. The key one for me in the short term would be a rebate on the prospective carbon tax. We do not want carbon tax to be a shut-down burden, almost, on Irish agriculture.
We do not want climate change, either.
We do not want climate change, either, and we trust the Minister of State's colleague is dealing with that matter in Copenhagen, as we speak.
I, too, welcome the Minister of State, Deputy Sargent, back to the Seanad. He has been here on many occasions and has made major contributions. It is obvious that he has put a great deal of research into his speech today, and he is always positive, which we need to be at present, in dealing with agriculture.
I value the opportunity to make a contribution to a debate on a sector which is worth in excess of €8 billion annually and supports thousands of jobs. Before making my main contribution, I pay tribute to the many unfortunate farming families that have been severely affected by the recent flooding. Coming on top of an already severe year, the catastrophe of the flooding has been a traumatic occurrence. I commend the farming community across the country for coming to the aid of farmers affected, in supplying them with fodder. It was good to see that the spirit of communities working closely together is still alive and well.
In this regard I welcome the €2 million targeted fodder aid scheme, which was quickly put in place by the Government and the Minister for Agriculture, Fisheries and Foods, Deputy Brendan Smith. I would encourage all farmers who believe they are eligible to ensure they apply under the scheme before the closing date, this Friday, 11 December. It is important that they get their applications in. All of us in the Seanad are acutely aware that this has been a very challenging year for agriculture. A series of factors have combined to put severe pressure on incomes, most notably, low commodity prices and difficulties with sterling as well as weakened domestic and international demand. Some 90% of the beef industry produce, alone, has to be exported and as the Minister of State rightly said, we are very dependent on exports. Given the state of the world economy, consumption is down across Europe and in Ireland. I hope people will come back to buying beef and be prepared to pay a reasonable price for it. If not, many of our beef farmers will go out of production and this will give rise to a shortage of food. As the Minister of State said, as we approach 2020 we shall have to produce much more food for the markets available, probably on less land. It is important to emphasise that fact and I am delighted he did.
The dairy sector, in particular, has had a tough year, as has been acknowledged by the Minister. He has had some notable success at EU level in pushing market support measures. I remain optimistic about the future of farming and the agrifood sector, notwithstanding the serious difficulties currently being faced. A cornerstone to ensure that the sector is well placed to develop into the future is the Agri Vision 2020 strategy, which has the potential to be an exciting blueprint to take it forward well into the 21st century. The Minister is strongly committed to the strategy and I look forward to the development of an initiative that will be a real milestone for agriculture and the agrifood sector.
Few here need convincing about the importance of CAP to our farmers. The debate is well under way about the post-2013 situation and the implications it will have for Ireland. At this stage I have no reason to believe the outcome will not be positive for this country. Likewise, the abolition of milk quotas in 2015 holds great opportunity for our dairy farmers. In this regard, however, it is vital that the industry focuses now on dealing with the challenges as well as the opportunities that milk quota abolition will bring. Whatever about the future, of immediate and critical importance is the need to assist farmers with cash flow difficulties as much as possible. The Minister has had much success in this regard in recent times, as has the Minister of State and I acknowledge it in this House. The Minister's efforts have borne fruit through the early advance of the single farm payment, which has been allocated since 16 October. A full 70% of the amount due has now been paid to more than 122,000 farmers at a cost of €850 million. These payments, a full six weeks earlier than provided for under the rules of the scheme, have been of enormous relief to the sector. Balancing payments were issued last week worth in excess of €380 million. In total, more than €1.2 billion has now been paid out to more than 122,000 farming families throughout the State.
I was delighted to note in the Minister of State's speech that, as a result of the establishment of NAMA he is in consultation with the banks. As my colleague, Senator Bradford, has said, the banks will have to do better to ensure that stocking loans and the different types of loans farmers need, to keep going, are made available. The banks must come to their aid and help them in every way possible, not put obstacles in their way, as has been happening. I am confident the Minister of State and the other Ministers at the Department of Agriculture, Fisheries and Food will keep pressure on the banks to do that. It is important and I am delighted he alluded to it.
The Minister is also bringing forward a Supplementary Estimate of €85 million which will go, directly, into the pockets of farmers. These moneys will allow payments due under the REPS and the farm waste management scheme next year to be paid before Christmas. Expenditure on REPS this year will reach a record €369 million, paid to a record number of 62,000 participants. I noted in the cross-fire between the Minister of State and Senator Bradford that the Minister of State said more will be paid out, I hope next year.
From the perspective of the farm waste management scheme for 2009, €286 million will have been paid by the end of January. There is no escaping the fact that this has been a very difficult year for agriculture and the agrifood sector. However, it is a robust and resilient sector and there is every reason for us to remain optimistic about the future. As our wider economy recovers, built on the back of today's budget, I firmly believe the agrifood sector can play a major role in this recovery.
I welcome the Minister of State, Deputy Sargent, to Seanad Éireann and I appreciate the opportunity to present my party's views on farming and the agrifood sector, which is a vitally important indigenous industry.
Many difficulties face Irish farming and they have been well articulated by my colleagues. There is the free fall in farming incomes and the collapse in milk and beef prices as well as the problems to do with food labelling, the ever-changing deadlines imposed by the Department for applications for grant aid, the world trade talks and the list goes on. Cattle farmers are in chronic crisis owing to the flooding and bad spring which required that cattle be rehoused and fed. The resulting glut of cattle cannot be sold owing to the market forces at work. No industry has a future if it fails to come up with new methods of dealing with crises in its sector.
The Government has done more than any group of bureaucrats in Europe to harm this industry. My long held belief is that this Fianna Fáil-led Government has lost touch with rural Ireland, a view regularly expressed to me when I meet people. The abolition of the farm retirement and installation aid schemes will have a detrimental effect on the rural way of life. I know the Minister of State will have heard all this before. These cuts have made and will continue to make farming an unviable option for most, if not all, young people. Farmers in their late 50s and 60s will not be able to afford to retire. In turn, without the installation aid, their sons or daughters will not be able to afford to start up in farming, as already evidenced in south Tipperary where there has been much change of mind by people in terms of their careers. These schemes were meant to assist and entice new people, the next generation, into the industry. Without the schemes, farming is not an option.
The Government is allowing an entire indigenous industry and way of life die out. It is important to note that this industry has been the backbone of the economy for generations, a fact mentioned by the Minister of State in his contribution. The Government is driving the final nail in the coffin through the removal of these schemes, which is a vote of no confidence in rural Ireland. It is equivalent to pulling the rug out from under the many farmers who worked hard in poor times to ensure they would have something to hand on to the next generation. There was a great sense of pride in farmers being able to pass on their farms to their children and being able to trace back their contributions down through the years. As a rural representative, rural Ireland is important to me. I do not believe it is good enough to hear Members of this House say one thing on the plinth and then do the exact opposite in this House in terms of following the party line when voting on issues that affect the people of rural Ireland. There has been much evidence of Members of the Lower House saying one thing when in the Chamber and another at constituency level.
Rural Ireland relies almost entirely on agriculture. This is because the Government has failed to invest in these areas of the country. It has shown no vision in attracting other industries to rural Ireland, a matter which is perhaps a debate for another day. If farming dies away, so too does rural Ireland. I have referred previously in this House to farmers' markets. As mayor of Clonmel I had the great pleasure of inviting the Minister of State to the area to discuss where the farmers' market might be sited. Farmers' markets are an indication of what good management and local farmers working together can do. I do not wish to be all negative. I recognise that positive initiatives have been taken.
Fianna Fáil's vision of rural Ireland is not good. Its legacy is that of a boom squandered and a time of unparalleled wealth wasted. There is palpable anger and fear in the farming community. I frequently receive calls at my office from farmers who believe they have nowhere else to go and nothing to fall back on. They believe they have been abandoned by Government. It is the job of Government to provide the necessary leadership to allay the evident fear and uncertainty. I am sure I am not the only Member receiving these types of phone calls to my office.
The agrifood sector is one of Ireland's most important indigenous industries, employing in the region of 50,000 people directly and providing the primary outlet for the produce of 128,000 family farms. These jobs are dispersed throughout all regions of Ireland, in particular rural areas. The sector accounts for half of purchased Irish goods and services by the manufacturing industry and just over half of exports by indigenous manufacturing industries. It is an industry that is vital to the future of the economy. There has never been a more important time than this special day when more vitality in the economy is needed. It has huge potential. Like my colleague in the Lower House, Deputy Sherlock, I call on the Minister for Agriculture, Fisheries and Food, Deputy Smith, and the Government to be more creative in finding ways to create jobs in the agrifood sector.
The Labour Party recently proposed that employers creating new jobs and taking people off the live register should be given a PRSI break, a proposal that could have a positive impact for small companies at local level in rural Ireland. We should put in place a scheme that would exempt employers who employ a person that has been unemployed for more than six months and can demonstrate clearly that they are creating a new job from paying employer's PRSI for 18 months. This measure would incentivise the creation of local jobs and would get people back into employment in areas where it is most needed, in particular in rural Ireland. We should apply more effort and ingenuity in supporting indigenous industry and should never forget that the agricultural sector accounts directly for 5.2% of total employment and indirectly a further 6% in processing, marketing and services, a total of 230,000 Irish jobs, which is no mean achievement these days.
We need to create a stimulus to encourage farmers to diversify into local needs agriculture and horticultural produce by encouraging and fostering more farmers' markets. I visit the farmers' markets in Clonmel and Cahir and when I am away I seek out the farmers' markets in the area I am visiting. I like to visit farmers' markets which are amazing places to meet local producers and see their pride in making available to people fresh, locally grown produce. Traas's apple farm in Tipperary recently received an award for its quality produce. It is wonderful to visit that farm and to meet the many people who support that industry and appreciate the hard work involved in it. There is no incentive for those working in agri-related businesses to create jobs. This is the very sector the Government should be supporting given its real potential in terms of job creation.
I thank the Minister of State for listening to my contribution. I believe not all I have had to contribute has been negative. I acknowledge the positives initiated by the Minister of State. I again acknowledge and welcome the €2 million in funding being made available in respect of the fodder aid scheme. Farmers affected in this regard are truly on their knees. I do not know what good news the Minister of State can offer this dying breed.
I, too, welcome the Minister of State, Deputy Sargent, to the House to hear statements on farming. As the Minister of State said, it is timely we are having this debate. While I do not wish to be negative towards Senator Prendergast, I was not happy to hear her run down the Government in terms of its support for agriculture and farming in general. Fianna Fáil and the Green Party are supportive of farmers.
Senator O'Brien would want to tell that to the farmers.
In terms of negatives, I, too, am disappointed the REP scheme has been suspended. It is hoped the Minister and Minister of State will reinstate it in 2010.
It has not gone away.
No, but the amounts involved have been reduced. I would like this scheme reinstated in its entirety as it is one of the best schemes available to farmers. It has greatly improved the countryside as farmers must spend the money on the land and their farms rather than put it into their back pockets and so on. As I have often stated, there is also a spin-off from this scheme in terms of the products farmers must purchase to do the work or provide employment. Like my colleagues, I welcome the €2 million for the fodder crisis and the €10 million for the counties affected by the flooding, although it might not be enough when the total amount of damage is assessed.
Farmers were having a very bad year before the flooding occurred, with low prices in the beef, pig and dairy sectors. The low prices are a major blow. It is very important that farming be supported, particularly given the amount of direct and indirect employment it generates, and that young people be in a position to continue the farming traditions we have inherited from our ancestors. Today's way of farming is a moderate way. There are plenty of young farmers in farming today. It is important that the industry be supported and grown in the years ahead. The Minister of State referred to the strategies for 2015 and 2020. The more support the Government can give to farming, the better the country will be.
Agriculture has been the backbone of this country for as long as I as well as my father and his father remember. When things were bad in this country agriculture was there to support it and assist it out of its difficulties. I hope the Government will do everything in its power for the farmers who are most in need of support, those who have been severely affected by the major floods in recent weeks. I hope the flooding is over but one never knows when these events will finish.
I am delighted the Minister referred to the banks. They have a major role in the farming industry. The banks are as tight with farmers as they are with other sectors of the community. The cashflow is very limited, as is the availability of additional borrowing for farmers. A total of 80% of the products produced by farmers is exported; in the case of beef it is 90%. Beef, pigs and dairy products are very important for this country at present, as are the amount of jobs created by farming.
I congratulate the Minister of State on his statement and wish him well. I hope farming will remain at the top of the Government's agenda.
I welcome the Minister of State, Deputy Sargent. In fairness to him, he has probably been the best Minister at the Department of Agriculture, Fisheries and Food in my seven years in the Oireachtas, which is a fairly shocking indictment of where Fianna Fáil stands on agriculture. He has put in a great effort over his two years in the Department and I hope he can do more in whatever limited time he might have left in government.
Perhaps the Senator will pass that on to the IFA.
Unlike Senator O'Brien, I cannot welcome much of what the Minister of State said. This is a shocking time for Irish agriculture and farming families. Leaving aside the recent flooding and the credit crisis, which is crippling small businesses, and farms are small businesses, product prices are lower than they were 20 years ago. In several sectors, farmers are receiving prices that are below the cost of production. That is most acute in the dairy sector. It is a time of little hope.
I come from a farming background. We can trace the family back over eight or nine generations and it has always been involved in agriculture. As I am the youngest son, I had to find another career to pursue, but both my brothers are involved in farming and I am still the relief milker at home. I have had hands on experience in agriculture and dealing with agricultural issues. I agree with many speakers about the importance of agriculture to the rural economy. It is the backbone of rural Ireland, and it is an indictment of the last 12 prosperous years that so little was done by the Government to diversify the rural economy and that we are still so dependent on agriculture. The Government should hang its head in shame in that regard.
It is also galling that the other source of income in many rural areas was the construction sector, as the Minister of State, Deputy Killeen, will be aware. Many younger people who have left the construction sector were from farming backgrounds and they are now looking to agriculture for their future. However, at the very time they need them, the Government has suspended the schemes designed to attract new entrants into agriculture. It is appalling.
I hope for three principal announcements in the Minister for Finance's Budget Statement today. I concur with Senator Bradford about the carbon tax and the devastating impact it will have on agriculture if it is extended to agricultural diesel. I hope that will not happen and that consideration will be given to this issue. I hope the Minister will introduce some type of conglomerate scheme that includes the early retirement scheme and the installation aid scheme in order that people are encouraged to transfer farms to younger people who want to get into agriculture, and can do it economically and continue to survive. The early retirement scheme was very useful and was co-financed by the European Union. It did not cost the Exchequer much money and it did a very good job. Now that it has been removed I am aware of many farmers who are in a type of limbo with regard to handing over properties to the next generation. I hope the Minister will include something about that in his Budget Statement.
An announcement is due to be made next week about the replacement for the rural environment protection scheme. It is all very well for Government Senators to state that more is being paid out on REPS this year than in any other year, but in a couple of years nothing will be paid because the scheme will be removed. I hear that the replacement scheme will be a shadow of the original scheme. The REPS money was not saved by the farmer or spent on anything other than investing in their farm and ensuring it complied with the scheme. The money was spent in the local rural economy. That money has now been removed. It is an indictment of the Green Party's role in Government that it has overseen the removal of the rural environment protection scheme. This is an area for which I would have expected it to have great concern, but it has shown scant regard for it in the last 12 months.
With regard to flooding, I hope the Minister will be able to give some type of commitment to a new scheme of river dredging and cleaning. We are giving much needed funds to people who have suffered a great deal from the flooding, be they farmers, rural dwellers or urban dwellers, but unless we spend money on ensuring the flooding does not happen again, we will have to give out more money in the future. It is false economy not to take action to prevent the flooding recurring. Without angling clubs and some landowners over the last 30 or 40 years, no work would have been done on the rivers in this country. It is shocking that, last year, one Department gave permission for a dredging scheme on a tributary of the Shannon while the Department of the Environment, Heritage and Local Government stated that, due to flora and fauna, the scheme could not go ahead. The flood plain in question has been under ten feet of water for the past three weeks, so the flora and fauna are suffering as a result. More joined up thinking is required of the Government when pursuing problems in future.
Electronic sheep tagging has not been mentioned. It has been brought to my attention that the scheme proposed to be implemented in the coming years has been shown to have a 20% failure rate. I question the necessity of introducing this tagging. It will place a burden on already hard-pressed sheep farmers, as the price of sheep meat has gone through the floor.
Will the Minister of State offer assurances that the Government will do something to protect the disadvantaged area scheme? Significant cutbacks to it were announced in recent budgets. It covers not just the west, but many parts of the country, including my constituency. I hope the scheme has a future.
The suckler cow welfare scheme was a good initiative introduced by the Department a few years ago, but it was halved in last year's budget. Actually, it may have been the budget earlier this year. We have had many budgets in the past 18 months. The scheme was halved before it was even introduced. Beef farming faces a particular problem. Many suckler farmers are killing their best breeding stock, which will have a serious knock-on effect in terms of the quality of beef produced in future. The Government must do something urgently to protect breeding stock in the beef sector. The suckler cow welfare scheme was meant to do this, but it has been cut. It should be increased. If something is not done, the quality of product will deteriorate significantly over the next few years. Only when those calves reach 30 months of age or so will we see the knock-on effects. I mention the credit crisis, although other Senators have addressed it. For many farmers, the early granting of the single farm payment, which I welcomed at the time, has seen the money spent on meeting overdrafts and loans into which many of them entered because of the farm waste management scheme. Financial institutions got their hands on that money straightaway and it has not found its way into farmers' pockets. I deeply regret that NAMA will not lead to a massive circulation of money within the economy. All small business people, including farmers, have difficulty in accessing credit, but the Government has done nothing to try to alleviate the problem.
The last area I wish to address is that of multiples controlling farmers' products and the difficulties experienced by the latter in getting proper prices. The time is right for a legislative provision to attack the control of the large multiples. The three largest control 70% of the grocery sector and are crucifying the manufacturing, processing and agricultural ends. Fine Gael produced a Private Members' Bill to address this issue directly. I ask the Government to do something in the coming months to break the large multiples' control over the grocery sector and ensure that farmers get a fair price for their products.
For the seven years I have been a Senator, labelling has been a constant issue and has not been dealt with by the Government. Perhaps the Minister of State, Deputy Sargent, is the most likely man to pursue it. I hope the Government will take an initiative to ensure that Irish products are correctly labelled as being Irish.
I am a strong supporter of the idea of food tourism, but I have come up against many obstacles. Fáilte Ireland has a sizable initiative in the south east to try to develop food tourism. It has developed in many parts of the EU, but there is no tradition of it in Ireland. Many within the tourism sector do not seem to take it seriously as a product. I ask that the Government take initiatives to ensure that food tourism can be developed across the country.
I welcome the Minister of State, Deputy Killeen, and the opportunity to make a statement on the agriculture and agrifood sectors. Like many others, I acknowledge the range of challenges facing both sectors. Senators referred to climate change, trade agreements, the pressure of large multiples pushing down the prices farmers get for their produce, the CAP reform proposals that have leaked out from Brussels and so on.
It is unfortunate that my colleague, the Minister of Sate, Deputy Sargent, has left the Chamber, because I wanted to pay him tribute. His tenure as the Minister of State with responsibility for food and horticulture in the Department of Agriculture, Fisheries and Food has been important and timely. It is clear that, in terms of agriculture generally and in the agrifood sector, we need a new vision of how to adapt agriculture to face new and serious challenges. We need new thinking. Some of us are stuck on the same treadmill. I listened to the calls by some Senators. On the one hand, they tell us not to do anything about climate change, such as implementing a carbon tax, and, on the other hand, they ask the Government to stop the flooding and recognise the latter's appalling impact on farmers and so on. We must realise that we need to tackle the root causes of these problems. We cannot continue to throw money away in an attempt to convince ourselves that the old model of farming can continue and that we will somehow get over everything. We need to introduce new thinking into the sector, which I would argue has been achieved by my colleague, the Minister of State. In the little over two years that he has spent in the Department, he has put in place and is in the process of putting in place new structures, schemes and so on to encourage the agricultural sector to make the transition to a more sustainable model of farming, which will be essential. He has committed himself publicly and in the programme for Government to the growth and development of the organics sector.
Many of the mainstream political parties still view organic agriculture as being a niche area, an add-on to conventional farming. Much of the major international research highlights the fact that it is a central and growing area of food production and consumption across the world. A food island like Ireland could exploit many commercial opportunities, giving it a head start in developing itself as a location committed to organic farming. In the programme for Government, which was agreed a little over two years ago, we set a target of converting a minimum of 5% of acreage to organic farmland by 2012. I am happy to say that, despite many of the challenges facing the new sector, we have converted approximately 1.25% of farmland to organic and the rate of interest being expressed by those signing up to the main organic farming scheme is encouraging. There is every reason to believe that, by the end of the Government's term, we will have reached what was an ambitious target for a new sector.
The organic food production and processing sector is one of the few areas showing steady growth in Ireland and in the countries to which we send most of our conventional produce. Ireland is uniquely suited to organic farming, as we are a food producing island and have a famous clean, green image. The European public in particular has grown concerned about the impact of intensive farming on biodiversity and the environment. At the same time, farmers' incomes are coming under pressure from cheap imports. Farmers are also under relentless pressure from retail multiples to accept less for their produce. This is an issue we must address. There is an increase in the concentration of power in the hands of a few large supermarket chains. It is not peculiar to Ireland; it is an international phenomenon which has fundamentally changed the balance of market negotiating power in the food chain. It is a factor, although not the only one, contributing to the declining share of prices received by farmers.
The Minister of State is very clear that competition alone cannot act as the sole mechanism to maintain efficient markets. The careful and sensitive use of market management measures can help to maintain balance in the market, where appropriate. The use of such mechanisms can assist in the provision of fair returns for producers. The Minister of State believes there is a need at EU level to give urgent thought to ensuring markets function well and unfair practices are prevented. Because the agrifood industry is hugely important to Ireland and the European Union, the Union must safeguard its production base to meet future demand for food, feed and bioenergy. Retailers must strike a reasonable balance between granting value for customers and giving it to suppliers and producers. A balance between all stakeholders, including suppliers, producers, retailers and consumers, may be difficult to achieve but the Minister of State and the Government are committed to working towards achieving these mechanisms at EU level.
As intensive conventional farming becomes less profitable and farmers look for alternative ways to make their enterprises pay, they must consider alternatives such as organic farming. They also need to look at conventional outlets because of the pressure exerted by the larger retail multiples. They will have to look at alternative channels, including selling their produce directly to consumers in farmers' markets and farm shops and through co-operatives and distribution systems independent of supermarket control. In addition, farming must become more diversified, producing more varieties of food but also fuel, building and clothing materials. I refer to the fledgling hemp industry which appears to hold out great promise for farmers. Hemp is an extremely versatile material that can be used in food products, building and clothing materials and so on. Teagasc has done a certain amount of research in this regard. It is innovative and a move we should consider more closely and support.
I again pay tribute to the Minister of State for the work he has done in many areas. He has supported farmers' markets and helped to ensure local authorities support and provide the facilities such markets need. He mentioned the growth in demand for organic food. The Irish organic retail market was estimated to be worth €104 million in 2008, compared to €66 million in 2006 and €38 million in 2003. There was annual growth of 40% in 2007 and 2008 which compares very favourably with the figures for previous years.
There are several issues I would like to discuss, one being the threat to organic agriculture posed by genetic modification and GMOs. However, I do not have time to go into that matter in great detail, suffice it to say the Minister of State has introduced a voluntary labelling scheme. I agree with Senator John Paul Phelan that country of origin labelling is important. The Minister of State has championed this issue at EU level within the Council of Ministers, as well as at national level. It is very important that people know where their produce originates. When the pigmeat crisis happened, the issue of provenance became very important. The Minister of State intends to continue to lobby at EU level to ensure country of origin labelling is introduced but among EU member states we are supported only by Italy.
I, again, welcome the attempts made to promote organic produce by the Minister of State. We must look in a new way at how we can make farming livelihoods more sustainable. In this regard, it appears the organic sector holds great potential for farmers.
Cuirim fáilte roimh an Aire go dtí an tSeanaid chun an cheist tábhachtach seo, ó thaobh cúrsaí talmhaíochta, iascaireachta, coillte, bia agus ólacháin de, a phlé.
Agrifood is a very important topic, one on which my party colleague, Deputy Arthur Morgan, is preparing a report for the Oireachtas Joint Committee on Agriculture, Fisheries and Food. With his assistant, Ms Kathryn Reilly, he is putting the finishing touches to the report which will be submitted to the committee next year. I draw the Minister of State's attention to it.
The agrifood sector is very important to the entire economy. It is the largest Irish-owned productive sector, accounting for almost 50% of exports from Irish-owned manufacturing enterprises. Given its regional spread, it plays a significant role in the spatial distribution of development and employment. Unlike other sectors of the economy, it is multifaceted, with growers, producers and farmers at farm level, complemented by primary processing and added-value ancillary services and industries. Employment in the sector accounted for 179,200 jobs, or 8.5% of total employment in 2008, according to figures taken from the CSO's quarterly national household survey. However, in an industry survey by Agri Aware, farming, the food industry and service industries that depend directly and indirectly on agriculture were found to provide approximately 268,000 jobs. This represents one in seven jobs in the economy. The fact that one in seven people is in employment either directly or indirectly because of the agrifood sector means we cannot continue merely to refer to it in soundbites. This is the time for action; unless the Government takes the sector seriously, we are at risk of losing one of our greatest wealth generating industries.
There is optimism about the future of the sector to stimulate the economy. We know such optimism is rife but the practical initiatives required to create the basis for a prosperous indigenous industry are deficient. There are challenges facing the sector in Ireland. Among these are: changes to the Common Agricultural Policy and WTO arrangements which will fundamentally change the economics of supply and production in Ireland and the European Union. Increases in business and regulatory compliance costs, coupled with a deflationary consumer food market, mean that manufacturer margins are being eroded. This leads to products and services being sourced from other low cost jurisdictions. In addition, the increased concentration levels and buying power of multiple food retailers, coupled with changes in distribution arrangements, are inhibiting Irish cost recovery.
In its document, Building Ireland's Smart Economy, the Government advocates the agrifood sector as a major economic stimulus. My party and I agree. The sector is dependent on rural and indigenous enterprises and businesses. However, with just two pages dedicated to this issue, there are no realistic proposals in the document to address how the Government will support the sector. With a series of proposed cuts to be announced presently in the 2010 budget, how is the sector supposed to develop further?
The creation of new employment opportunities using indigenous resources should be the main focus of the Government. It should include actions to develop new rural enterprises and promote the development of new products and processes. The agrifood sector is indigenous, has a regional focus but is international in orientation. The value of the sector is most readily visible in local economies, for which the value of production and processing, to which job alternatives are few, is unparalleled. In 2008 the sector accounted for 10% of total merchandise exports, amounting to a figure of nearly €8.6 billion. Similarly, on average, it has accounted for around 9% of total exports. Since Ireland is seen as a green island, there should be greater efforts to capitalise on this image and expand our agrifood exports.
The embedded nature of the food sector in our economy is demonstrated by the fact that in the period between 2000 and 2008 there was an increase in the Irish raw materials sourced by the food and drink sector but both total manufacturing and total manufacturing excluding food, drink and tobacco witnessed a decline in Irish sourced raw materials. The Irish economic expenditure is beneficial not only for the national economy but for local economies from which these raw materials are sourced.
The agrifood sector is an industry with low profit outflow from the country and low import requirements. However, Bord Bia estimates that as much as 90% of poultry and 60% of pigmeat sales at food service level consist of imported products. That is accentuated by the fact that import growth to date has been strongest in the meat, vegetables and prepared food categories with per capita increases by 50% to €1,070 from 2000 to 2007. The lack of initiatives to address these problems is symptomatic of a Government that is willing to talk up the industry but has very little interest in doing anything for it.
The aquaculture sector is crucial for the local economy in Donegal but that sector is tied up in bureaucracy and administration. While in theory there is enormous potential to expand exports and create ancillary services and employment onshore, in practise it is not happening. While we are an island, we might as well be surrounded by a desert for all we are able to capitalise on our resources at sea. We are all aware of the difficulties with licences and the artificial barriers being created by legislation. The implementation of European Union directives is creating difficulties for fishermen who just want to get on with their jobs.
There must be renewed focus on this area by Government if we are to lift the local economy in those areas which were once thriving but which, as a result of administration and red tape, have now seen a huge valuable sector for the economy become a shadow of its former self.
Ba mhaith liom fáilte a chur roimh mo shean-chara, an tAire Stáit, an Teachta Killeen. Tréaslaím freisin leis an Aire Stáit, an Teachta Sargent, atá díreach imithe.
As my colleague, Senator Carty, said, the background is glum in terms of debating any part of the country's economy but particularly agriculture when we consider what farmers have gone through in recent weeks. Without going into the statistics, agriculture remains a huge contributor to the economy, with in the order of €8 billion in exports to more than 150 countries around the world giving gainful, worthwhile employment to many families, without which they would be forced to look for industrial jobs of which there is none.
Despite all the doom and gloom, like many other speakers I have the ultimate faith in the Irish farmer. There is nobody in the world who can farm like Irish farmers. There is nobody with their resilience, courage, optimism and endeavour, and that is a huge asset for us as a nation. Despite the glum backdrop, I am confident we are going forward in agriculture and that we can realise hugely optimistic targets such as doubling outcome over several years.
I did not get an opportunity to contribute to the debate on the flooding. I, too, extend my sympathy to everybody concerned on what must have been a traumatic experience and which may be an ongoing experience people will suffer for many months. The experience was brought to mind recently in terms of the unfortunate farmer in the west who was only concerned that there would be fodder for his cattle. When he was asked about his own needs he said that will come another day. He was more interested in feeding his cattle than in feeding himself in his marooned state. That is typical of the Irish farmer.
I compliment the Minister and the Department for a speedy response to the flooding problems. The €2 million fodder grant is a small amount of money but at least it was made available immediately and has been of some help. I hope in today's budget, which we are all awaiting with apprehension, there will be some further aids and supports for farming generally but particularly for farmers in the west and those who were affected by flooding.
I welcome the reference by the Minister of State to seeking the extension of farm credits because there is no doubt that farmers are suffering and they will become more reliant on credit than ever before. It was not the farmers who created the problem that led to the setting up of the National Asset Management Agency and it was not the farmers who did the devil with the banks, so to speak. They have done their work and contributed——
Hear, hear.
——and if they borrowed money the farmers paid it back. There is no question but that they should be prioritised for additional credit in these times.
Before leaving the topic of the flooding I want to tell a story about it because it is receding from the headlines already and with the budget I am sure it will not be spoken about for a while to come. We had an experience in north Kerry, where I come from, in the early 1960s. An independent TD in my town, Paddy Finucane, was the Jackie Healy-Rae of his day because his support was very important for the then minority Government of Seán Lemass. He was able to land fairly big projects but the biggest one he landed was the Cashen and Feale drainage scheme, which was put in place in the early 1960s. That was a huge success and it restored hundreds of acres to gainful farming but as the years passed the essential monitoring and remedial works that should have been done were not carried out and as a result, ten years ago we were back to square one. However, as a result of a great deal of pressure from politicians, including me, we got approval for a smaller remedial scheme and that stood to the farmers of north Kerry in recent weeks. I am aware there was extensive flooding in the Minister's county and throughout the west but Kerry escaped the worst of it. There must be ongoing monitoring of the schemes put in place, even the new schemes. They cannot be put in and walked away from. They have to be constantly maintained and improved, but that is a debate for another day.
A major issue is the question of farm prices and the under-pricing of farm product. Despite all our protest and the best the Minister has been able to do, the Tescos and the multinationals are still calling the shots when it comes to what the farmer gets for his or her product and in many cases he or she is not getting as much for his product as it costs him or her to produce it. Something will have to be done about that and it deserves a separate debate because it is one of the issues affecting farmers, particularly now with the differential in sterling which has made it an even more critical issue for farmers.
I welcome the good work the Minister has done with his counterparts in Europe in securing a €300 million dairy fund, which will go some way towards alleviating this pricing problem. I forgot to mention the fast forwarding of the single farm payment, which is a huge achievement for the Minister. More than 70% of them have been paid, which is unprecedented, and the balance will be paid shortly. I welcome the reference by the Minister of State to ensuring that the butter and milk products in intervention will be released in a controlled manner to ensure they will not flood the market.
There has been some small recovery in milk prices recently but beef prices are still down. Beef is clearly an expensive product and Irish beef, because of its high quality, has always been top rated and top priced. In these recessionary times people all over Europe are starting to consider the cheaper options, and that is something we will have to consider also.
We are talking about a non-quota situation after 2015. That will be a monumental change. We have been living in an era of quotas for the past 30 years and it will be a huge change when they are gone. I hope Teagasc and the Department will help prepare farmers for that eventuality.
Food quality has always been our strong point in Ireland. We proved that when the pork crisis arose recently. The response by the Government and the entire country was speedy and successful.
I compliment the Minister of State, Deputy Sargent, and I endorse everything Senator de Búrca said about the initiatives he has taken on organic foods, farmers' markets, labelling and the other initiatives which are driving Irish quality and giving us the reputation we deserve.
The Minister is to be commended on the release of cheese for the poor at this time of the year. I appeal to housewives and everybody else to buy Irish products this Christmas. They are better than any others. I ask them to be patriotic and to buy Irish.
The question of agriculture needs to be considered in the immediate, medium and long term. I am confident the agriculture industry will prosper in the medium and long term. It will be the engine for the recovery of the economy. There is great potential in the export of Irish food, particularly grass-based food products. The Agri Vision 2020 strategy will be important in that context. It is important for us to defend our ground in the CAP negotiations.
I would like to speak about the state of the agriculture sector at this time. Recent CSO figures confirm that farm incomes have decreased by 30% in the last year, on top of an 11% drop in the previous year. We already knew this because we had heard the stories of the people we represent. Farming families are facing huge hardship. It is a real issue for many. People are having to spend their insurance money and family savings. They are running up bills in local shops and hardware stores. That is how bad the farm income crisis has become.
The suspension of admission to the rural environment protection scheme was a great error on a number of fronts. It is obvious that it was an error in environmental terms. I find it difficult to understand how the Green Party can rest easily in this respect, while making an issue of more trivial matters. It is astonishing. REPS 4 had great merit as a means of getting money back into the economy. It funded many activities in rural economies. It also provided a supplementary income from the European Union. It seems farmers are to be moved from the rural environment protection scheme to the farm assist scheme. Large numbers have moved to the farm assist scheme, which is a shocking problem. On 23 November some 8,681 farmers were receiving farm assist payments and a further 1,771 claims were pending. I suspect that many in the latter category are among those whose REPS payments were suspended. The removal of the farm retirement and installation aid schemes, like the reduction in the disadvantaged area scheme, was also an error.
While we do not object in principle to the imposition of a carbon tax, its application to farm fuel and farm diesel would sound the death knell of the agriculture sector. That is why we are advocating the introduction of a refund scheme for farmers. That will have to be done. My distinguished and erudite colleague, Senator McFadden, will discuss the welfare issues that arise in this context. We also suggest gas and solid fire fuels, in which coal and briquettes are used, should be excluded from this proposal. I emphasise that farm diesel should be excluded from the carbon tax regime.
The Minister will have to address a couple of issues in the beef sector. The Government should take a hands-on approach to the negotiation of a quality payment scheme in beef factories in order that good beef products are rewarded and exports increased. We have developed a significant 54% dependence on the UK market in the last decade. I suggest we target the lucrative markets of mainland Europe. It is shocking that Irish-controlled meat factories in the United Kingdom, in which we have rightly invested €50 million in recent times, are refusing to kill Irish cattle that have been exported. That means they can pay less for Irish cattle here. I ask the Minister of State to comment on what is being done about this specific matter.
Fine Gael has introduced the Food (Fair Trade and Information) Bill 2009 to cope with many of the huge issues associated with the things the multiples are doing wrong. Often farm gate prices do not reflect the cost of production, for example, in the milk sector. Many dairy farmers in my home county are barely meeting the cost of producing milk. I ask for our farmers to be supported in the immediate term in order that the industry will have a long-term future.
I will never allow the heartache of those affected by flooding, the biggest issue I would like to discuss, to go off the agenda. I have witnessed at first hand the flooding of farms, farm dwellings, farm yards and milking parlours under two metres of water. It is psychologically stressful and detrimental to the well-being of Irish farming to see, for example, silage bales floating in flood waters. The €2 million in humanitarian aid provided is a pittance. I ask the Minister of State, Deputy Killeen, to highlight this problem. He knows from his constituency that there is a great need. I compliment those who have contributed to meeting that need.
I suggest farm diesel and solid home fuels should be exempt from the carbon tax proposal which has been leaked to the media, especially in the case of farm families. Turf cutting for domestic use should be allowed to continue. I am sorry the Minister of State, Deputy Sargent, has left the Chamber because he needs to understand this deal needs to be renegotiated in order that Irish people can maintain the cultural tradition of turf cutting forever. I do not think it has ever done harm to this country's flora and fauna. I suggest those who engage in turf cutting are preserving the countryside.
It should be a condition of the imminent sale of Greencore Malt that the malting of barley will continue. I ask the Minister of State to take this on board. As we have lost our sugar beet industry, we cannot to afford to lose this one.
I welcome the Minister of State. The agrifood sector plays a key role in the economy. Its high export value gives it the potential to contribute significantly to sustainable economic renewal. It accounts for approximately 10% of the size of the economy and 66% of our indigenous exports. Last year it exported food and drink worth €8.2 billion to 170 markets around the world. Global food demand is growing. We cannot develop our agrifood exports in the absence of a viable farm sector. Senator McFadden used her first-hand experience to tell the House that farmers and others in the agriculture industry are enduring hard times. Farm incomes decreased by 13% in 2008 and are now 22% lower, in real terms, than they were in 1995. It is worrying that product prices for farmers have fallen significantly this year.
The agriculture industry, including the export-dependent agrifood sector, is of huge importance to the economy. Some 270,000 people are employed in the industry, including the agrifood sector and related services. I am sorry to have to say the Government's closure of the rural environment protection scheme has dealt a serious blow to farmers, particularly lower income cattle and sheep farmers. More than 30,000 farmers will be forced out of the scheme in the next two years. Their only option will be to participate in the inadequately funded agri-environmental scheme which might not satisfy EU requirements. Even worse, it is possible that the loss of the rural environment protection scheme will cause us to lose the potential to market our food as environmentally finished. There has been a view that the scheme could be used as a marketing tool to sell Irish food in discerning EU markets. The scheme would stand as a mark of quality, in effect, particularly now that the European Union is moving towards improved food information labels. In closing down the rural environment protection scheme we are closing off this significant potential.
I welcome the Minister of State at the Department of Agriculture, Fisheries and Food, Deputy Killeen. The presence of his ministerial colleague, the Minister of State, Deputy Sargent, whom I congratulate on much of the work he has done for the food industry, was also welcome.
I welcome the opportunity to say a few words on this topic which is of great importance if we are to get out of the recession. For many generations agriculture has been the basis of growth and work for the population and the business that kept families going. However, we must move forward and find a better way. It has been noted that world food demand is growing at an enormous rate and that in a number of years 50% more food will be required. In Ireland the dairy and beef sectors are in a state of crisis. As one of the finest producers of beef and milk in the world, the appropriate marketing is lacking and the Government is falling down in the marketing of Irish products. While organisations such as the Irish Co-operative Organisation Society Limited have done tremendous work, they require some help to market products. The Government should facilitate organisations such as the agricultural co-operative societies in their efforts to gain markets abroad for the great produce and products produced in Ireland.
In addition, the Government is falling down in respect of education. I refer, in particular, to the proposed closure of Mountbellew College, the last agricultural college in the west. For many generations it has trained farmers, farm managers and agricultural graduates. Its closure is being proposed at a time when it is operating at full capacity and offering some great courses in conjunction with GMIT, Galway. It is a highly retrograde step for the Government to stand idly by and allow Teagasc to close the only remaining agricultural college in the west. Not too long ago there were three such agricultural colleges in the west, as well as 11 or 12 nationally, but that number has fallen to approximately three.
The Government should be examining this area of education. I recently read an article pertaining to the Netherlands, in which there are 14 or more agricultural colleges. Night courses are available in such colleges, as well as courses on every aspect of agriculture, marketing, processing and so forth. If we are to gain from our agricultural base, education must play a part. Even at this late stage the Government should tell Teagasc that education is the way forward and that it should train both young farmers and those who will work in the agriculture sector in the years to come. Such persons need education and a good foundation in agriculture. While this measure may save €2 million or €3 million in the short term, in the long term such facilities would provide a great basis of education for those who intend to enter this line of business.
The market gardening sector is one in which millions of euro can be saved through import substitution. A glance at shelves throughout the country will show that vegetables are imported on a massive scale. Were the Government to prioritise education and work in close co-operation with co-operative societies, Ireland undoubtedly would be able to substitute the entire range of fresh and frozen vegetables being imported on a massive scale. I refer to potatoes, potato chips, vegetables and so forth which are being imported in processed, frozen and fresh form on a massive scale. The Government has not done enough in this regard. While I must compliment the Minister of State, Deputy Sargent, who has done some work in this area, the matter requires urgent attention. This is a measure that would pay for itself in the long run, were a proper education to be provided and the proper marketing measures put in place. While I acknowledge it probably would be necessary to put in place the proper processing units on a co-operative basis, it could provide a great foundation, prevent imports and lead to the creation of many thousands of jobs.
I thank all Members who participated in the debate, particularly those who were positive in what is a difficult time for farmers, as it is important to send a positive message. Many Members who considered this topic in considerable detail noted there were good reasons to be positive in the medium to long term. Senator Bradford dealt with commodity prices, as did virtually every other speaker, and with concerns relating to CAP reform post-2012. As for the carbon tax, in common with virtually everyone else who mentioned it, he considered the concept to be positive but had concerns about the additional burden in respect of agrifuel costs. He also acknowledged the positive role of REPS.
Senator Carty mentioned several issues, including one important subject, namely, the role of the banks which surprisingly was not dealt with by many speakers. One must acknowledge the positive impact of the guarantee scheme in September 2008 and subsequently the NAMA legislation and the investment in the banks by the Government. I was interested this morning to hear the Taoiseach being questioned about its cost by a party which had advocated nationalisation of the banks at several times the cost of the strategy that has been adopted. Certainly, Senator Carty is correct in that there have been enormous difficulties with the banking sector, most of which arose from the difficulties facing the sector. This issue has been addressed by the Government and will gradually show positive results.
Senator Prendergast mentioned the floods, as did most Members, as well as the negative impact on farmers of bad weather over virtually three seasons. She also mentioned, in respect of commodities, the glut of cattle and the difficulty with cattle prices. A theme across the entire debate in the Seanad has been the impact of low commodity prices at a time when there are other difficulties also. However, I considered the Senator's contribution to be extraordinarily negative, as this is not what farmers need to hear from either the Government or the political classes. Having attended Council of Ministers meetings across seven or eight directorates in the four Departments in which I have served, I have been enormously impressed by the grasp of the Minister for Agriculture, Fisheries and Food, Deputy Smith, of the issues involved, as well as his capacity to put across forcefully the Irish viewpoint. In the last year or so he has convinced doubting fellow Ministers that market interventions are possible in milk price supports and other areas. He has put in a massive performance as a Minister at European level. For instance, his handling of the pork dioxin scare this time last year had an extraordinarily positive result because had it gone badly, it would have threatened the entire basis of our exports. I also have seen him engage in the battle on budgetary discussions and his commitment to agriculture and the outcomes he has achieved have been highly positive. Senator Prendergast also mentioned the potential of the agriculture and food industries, on which we must work together to try to promote.
Senator O'Brien commended the Minister on early payments and drew attention to some policy successes. Senator John Paul Phelan also mentioned milk prices and the loss of the construction sector as a contributor to incomes in rural Ireland. One point that interests me when I come into the Seanad is that I sometimes hear Members saying things that reflect what is being said on the ground but which are the exact opposite of what their party spokespersons are saying in the Dáil. He also mentioned difficulties in electronic sheep tagging. The agreed European scheme has been introduced in the vast majority of other countries and only Hungary, the Czech Republic, Slovakia and Ireland continue to be opposed to it. Despite the success of our 13-digit system, the 12-digit system is in operation in Europe and will come into force here.
Senator de Búrca referred to the role of climate change and the fact that we need to address it in its entirety and not just pick the pieces which suit us. She also paid tribute to the Minister of State, Deputy Sargent, for his work in the organic sector. I mirror that tribute because having worked closely with him in the past year and a half, the new thinking he has introduced has been very positive. He has the advantage of being in the Department a year longer than the Minister and me. New thinking, such as the hemp industry to which Senator de Búrca referred, is very positive.
Senator Doherty mentioned the report done by his colleague, Deputy Morgan, and the Joint Committee on Enterprise, Trade and Employment, something I look forward to seeing. His approach regarding employment was generally positive and he had an optimism for the future, notwithstanding worries we sometimes have about CAP, the WTO and so on. The value to local economies is something we need to remember.
The Senator also mentioned aquaculture. I do not want to use time here now because I will have an opportunity to speak on a fisheries debate in the not too distant future. However, there are considerations to be taken into account regarding Natura 2000 sites and the December 2007 European Court of Justice judgment which impacts on that.
Senator O'Sullivan encapsulated the Irish farm when he referred to resilience, courage, optimism and endeavour. That is one reason we need to be and can afford to be optimistic. He and a number of other speakers mentioned multinational companies in the retail sector, something with which the Minister has been dealing very strongly. The Department of Enterprise, Trade and Employment, led by the Tánaiste, has also been trying to address the issue. The sterling differential, which the Senator also mentioned, has posed particular problems.
Senator O'Reilly also had confidence in the long term, which I welcome, particularly in regard to the 2020 strategy. He juxtaposed that against the current hardship in the area, which is something we are all trying to deal with, with some success. He asked about Irish-controlled beef factories in United Kingdom. The Minister has taken a very proactive role in that regard. There are complications and other dimensions which do not lead to an easy resolution of the issue.
On the various REP schemes, it is important to remember that they were always intended to be environmental schemes. In some instances, there were very substantial costs to farmers and they were never intended as an income supplement. Arguments in favour of REPS tend to founder on that misconception. Senator McFadden mentioned the impact of flooding and the loss of feedstuff. It brings home the threats facing people. She was concerned that €2 million may not be sufficient to address the problem. I assure the House it is a matter which will be kept under review. Senator Mary White outlined the expert value of the sector, which is very positive. I assure the House REPS is not closed and the current schemes ensure it will continue until at least 2014. The new scheme, which the Minister will introduce during 2010, will ensure it continues beyond that date.
Senator Burke outlined the importance of agriculture and the crisis in commodity prices, in particular in beef and milk. He attributed it in part to a marketing deficit. We also need to remember that the economic downturn is not confined to Ireland and has a particular impact on some of the markets to which we traditionally export some of our goods, which do not have the level of demand and consumption they previously had. He also discussed the role of education and agricultural colleges. We all acknowledge that education has a particularly potent and positive role in regard to agriculture. All kinds of new methods are being developed and everything is not done the traditional way. The Senator, like a number of other speakers, mentioned the importation of vegetables and other food products and how we need to try to counter that.
It is fair to say that the last two years and this year in particular have been very difficult for farmers. However, while the medium-term outlook is for an improvement in market conditions for our core products, many farmers are facing immediate cash flow problems. Therefore, the Supplementary Estimate which was brought forward by the Minister is of particular value. As the Minister of State, Deputy Sargent, said, there is no additional Exchequer funding involved but it comes from savings and additional EU receipts arising in the Department. The effects of a cash injection of €120 million to the primary farming sector through the rural environment protection scheme and the bringing forward of payments due in 2010 under the farm waste management scheme have to have a significant beneficial effect on farmers' cash flow.
We all acknowledge that the recent flooding has damaged fodder and caused a resulting feed shortage problem on some livestock farms. This has given rise to financial hardship and to potential animal welfare issues. In response to this situation, a fodder aid scheme has been introduced to provide some financial support towards the purchase of alternative feed material to replace the fodder damaged by flooding. Applications were available to affected farmers from early last week and it is hoped that payments to farmers will be issued shortly. The Supplementary Estimate, while is totally unrelated to the flooding issue, will at the same time provide some increased cash flow in the short term for some of the farmers affected by the flooding and other difficulties.
One of the issues is the closure of the REP scheme to new applicants. The scheme was very successful with more than €2 billion being paid to Irish farmers since it was introduced in 1994. However, there was no option but to close REPS to new applications in July. The decision was taken against the background of the situation in the public finances, the resources available to the Department and the substantial and continuing growth in the number of REPS participants.
Despite the closure of the scheme, payments due to REPS farmers for 2009 and 2010 will be the highest ever. Almost 17,000 applications were received up to the closing date of 15 May 2009, and it is safe to assume they include the great majority of those whose REPS 3 contracts are ending this year. These applications are now being processed with a view to getting payments out as soon as possible. More than 1,600 extra applications came in between 16 May and 9 July, the date the scheme closed, and these will be processed as applications for 2010. All REPS contracts will run their full course. This means that farmers will be receiving payments in REPS right up to 2014.
The Department will continue to support farmers to improve the environment. It is planned to introduce a new agri-environment scheme in 2010 which will reduce compliance costs to participants and provide a menu of targeted actions from which farmers may choose. Funding for the new scheme will include the additional modulation funds which the Minister ensured would be retained for the benefit of Irish farmers in the negotiations on the CAP health check. It will also include additional matching Exchequer funding. It is hoped to secure agreement for this new scheme soon. Subject to the state of the public finances, the aim is to introduce a scheme which will be available to as many as possible of those who will finish their existing REPS contracts in 2010 and 2011.
However, the longer-term viability of the agrifood industry can only be achieved by improving competitiveness, identifying market opportunities outside the UK and developing strategies for coping with volatility, especially in the dairy sector. Unlocking innovation potential will be key to the industry's next phase of development. This will need to be a team effort. The Department and development agencies have supported investment, marketing and research measures specifically directed to support the development of the food and drinks industry. More than €180 million in investment aid has been awarded to improve efficiencies and add value under the dairy, beef and sheepmeat investment funds which are operated by Enterprise Ireland on behalf of the Department.
In terms of smaller businesses, grant aid of €16.7 million was awarded in December 2008 for marketing and processing investment by 66 small meat establishments, marts and horticulture enterprises. This is expected to contribute to investment of €70 million and will assist the businesses involved to improve efficiency, add quality and value, produce innovative products and develop new markets. While money is extremely tight, sometimes even a modest amount can leverage a fine result. In the marketing area, an additional €2.5 million was provided to Bord Bia earlier this year to identify market opportunities within the European Union and work with the industry on developing new products. This has stimulated new initiatives to deliver market gains, including the UCD Michael Smurfit Graduate Business School and Bord Bia fellowships, which are placing 25 highly qualified graduates to work in export markets on developing opportunities meeting specific company needs.
Responsibility for fish marketing was transferred to Bord Bia in June to enable seafood companies benefit from the expertise of a dedicated food marketing agency. European Union co-funding of €235,000 over three years has been made available to Bord Bia to develop sales of quality assured European Union pork, offal and beef products in Asian markets.
Senators can readily see that every effort is being made to develop an agrifood industry that is sustainable and capable of developing further in the future. The Agri Vision 2020 strategy, when finalised, will act as a roadmap for the future development of the industry. This will only be achieved by all sides of the industry working together and with the support of the Department. My ministerial colleagues and I are fully committed to working with and supporting the industry through this difficult period.
Sitting suspended at 3.30 p.m. and resumed at 5.30 p.m.