My Department works closely with Teagasc on monitoring family farm incomes and we have been engaged on the possible income effects arising from the current COVID pandemic. In common with all economic forecasting at this time, because of the uncertainty around the extent and length of the shutdown, it is not possible to use conventional modelling, so a range of price decrease scenarios are explored. The Teagasc report examines the effect of price decrease scenarios on family farm incomes but is not forecasting price decreases or their extent.
The report's analysis of a range of scenarios (price decreases of 10, 15 & 20%) finds that income across the sector as a whole could, in the scenarios examined, drop relative to the income forecast for 2020 (in the absence of the COVID-19); impacts on sector incomes could range from a drop of 22% (€0.7 billion) to as much as 50% (€1.6 billion).
As an essential service, the agri-food processing, manufactruring and retail sector has remained open and functioning over the period. However, the Irish agri-food sector exports some 90% of production. The food service industry across Europe is experiencing a near-total collapse in demand due to the temporary shutdown of the hospitality sector. While food retail demand has increased, it is not offsetting the decline in food services. This demand imbalance has significant consequences for primary producers and agri-food businesses. Prices to date have dropped; beef by about 8% and dairy by 6%. The recovery of food services and export markets globally are vital for the Irish agri-food sector. We will continue to monitor the actual outcome.
The agri-food sector is an essential part of the economic and social fabric of Ireland, especially in rural and coastal areas. I am working with all the agri-food stakeholders and ensuring that the sector, as our largest indigenous industry, is considered as part of the ongoing whole-of-Government response.
The response to the economic impacts on the sector should include a strong, shared EU response, using the instruments available in the Common Agricultural Policy. I have already highlighted to Commissioner Wojciechowski the serious consequences for farmers and the food industry and the need to ensure that the full range of market supports available under the Common Market Organisation Regulation are made available. Following Ireland’s efforts in leading an agreed EU-27 statement on the need for further supports, the Commission have introduced Aids to Private Storage for Dairy (SMP, Butter, Cheese), Beef and Sheepmeat.
I am also working with my colleagues in Government to ensure that all businesses, including those in the agri-food sector, get access to suitable supports, and the measures in place are being kept under review.
Working with my colleague Minister Humphreys, I have ensured that up to €180 million in new lending capacity is available for the agri-food sector: 40% of the €250 million COVID-19 Working Capital Scheme will be available for food businesses. Similarly, 40% of an additional €200 million tranche of the Future Growth Loan Scheme will be ring fenced to provide long-term investment support for farmers, fishers and food businesses. I continue to liaise with the banks on liquidity for the primary sector, and also want to highlight the availability of working capital assistance to farmers and fishers through Microfinance Ireland’s COVID-19 Business Loan. We will continue to keep the finance needs of the whole agri-food sector under review.
I have already provided €85m in supports for the beef sector in Budget 2020. This includes a €45 million provision for the Beef Data and Genomics Programme and €35m for a Beef Environmental Efficiency Programme (Sucklers), which will deliver a maximum payment of €90 per suckler cow for the first 10 cows, and €80/head thereafter.
Conscious of the cash flow pressures on farms at present, I have brought forward €26m in GLAS payments by a month. Balancing payments under the Organic Farming scheme have also been brought forward. I have also increased funding in my Department’s Calf Welfare Investment Scheme from €1.5 million to €4 million, to assist farmers with extra calves. A range of practical flexibilities have been introduced in departmental schemes, including, for example, the extension of completion deadlines for TAMS by 3 months, and the submission for Nitrates records to the end of June.
My Department and agencies will continue to monitor the impacts on the agri-food sector as the situation evolves, and to provide appropriate supports to the sector. My Department remains in constant contact with stakeholders right across the sector to share information on emerging issues and contingency planning, and we will continue to develop appropriate supports as the situation evolves.