I am keenly aware of the challenges that the mushroom sector is experiencing in the aftermath of the UK Referendum decision last June to exit the EU, particularly in light of recent fluctuations in currency. I am focused on working with the industry to meet these difficulties in the months and years ahead.
Budget 2017 underpins my Department’s efforts through strategic investment in key areas, such as in its agencies and in the agrifood sector. As part of Budget 2017 I secured an additional €700,000 in funding for capital investments in the Commercial Horticulture sector. This means that this year’s budget for the scheme will be €5 million. In addition, the Horticulture sector will have access to the €150 million low interest cash flow support loan fund announced in Budget 2017 providing access to highly flexible loans for up to six years, for amounts up to €150,000, at an interest rate of 2.95%.
The impact that the devaluation of Sterling is having on mushroom producers and grower margins is a problem that has happened over a very short space of time. Grower production of this highly perishable product must be well aligned with demand and the mushroom sector, like many other exporting sectors, is particularly at risk because of the high dependency on the UK market. I am monitoring the situation regarding Sterling volatility closely and I have also established in my own Department a dedicated unit to consider the direct impact of Brexit on our industry. Although it is still a serious situation, the Sterling exchange rate has stabilised and is now holding at around 85p to the Euro.
My Department, along with the various State agencies, in particular Bord Bia, Teagasc and Enterprise Ireland, are working closely with the industry to provide the necessary support and assistance. Bord Bia is actively supporting the sector in the areas of Market Intelligence, UK consumer research and Quality Assurance. Towards the end of 2016 they held a currency and negotiation workshop specifically targeted at the sector which I understand was very well received by the mushroom industry. Bord Bia is also running a Marketing Intensification Programme which aims to provide targeted marketing supports to companies with high dependency on UK markets. Grant supports will be prioritised to assist companies in strengthening their position in that market, and in their efforts to identify new markets. The CEO of Bord Bia and I have held a series of meetings with senior executives from the UK retailers, to highlight the obstacles that our producers are facing. I understand that representatives of mushroom growers have recently met with a more positive reaction from their UK Multiple customers, to their need for fair and reasonable returns for their produce from the marketplace. Funding has also been made available for a pilot programme on LEAN processes through Bord Bia and Enterprise Ireland. The programme has commenced with 6 mushroom growers, to assess efficiency across all aspects of the business, including supply chain, innovation, marketing and logistics. It is hoped that a template could be developed through this programme that will enable growers to optimise their production costs further.
I would also draw attention to support being provided to the industry through National and EU Schemes.
Under the National Development Plan (NDP) 2007 – 2013 my Department implemented the Scheme of Investment Aid for the Development of the Commercial Horticulture Sector. During this period my Department paid out over €4 million in grant payments to mushroom growers which supported €10.1 million in investment.
To ensure ongoing support for the sector, my Department extended, under EU sanction, the Scheme of Investment Aid for the Development of the Commercial Horticulture Sector to run until 31 December 2019. In the years to 2016, a further amount of €2.0 million in grant aid was paid to mushroom growers. The grant aid paid supported some €5.0 million in investment by these growers.
Under the 2017 Scheme of Investment Aid for the Development of the Commercial Horticulture Sector, my Department received a total of 164 applications, 20 of these from mushroom growers. All applications received are currently being assessed. I have also provided a commitment to ensure that payments under this scheme are made as early as possible, so as to try to alleviate any financial pressure that growers are currently facing.
The EU Producer Organisation Scheme is also a vital support for mushroom growers, with around 80% of Irish growers in a producer organisation at present. This scheme provides an important mechanism for growers to achieve greater bargaining power in the marketplace by becoming part of a larger supply base. Between 2005 and 2016, a total of €40.5 million was paid to mushroom producer organisations as part of the EU Producer Organisation scheme.
