Dáil Éireann Confidence Motion-Speech by Brendan Smith, T.D

Posted on 10/06/09 by Brendan Smith This country is facing an unprecedented economic challenge. The global and financial crisis has impacted on all areas of economic activity. Irish agriculture and the agri-food sector are not immune from the economic challenge and circumstances have changed significantly in the past year or so. The rapid decline in certain commodity prices could not have been foreseen and the appreciation of the euro, particularly in relation to sterling, has placed additional pressures on export markets.

The Government is acutely aware of the challenges facing the industry and our commitment to the agri-food sector remains absolute. Listening to some commentary, one would be excused for thinking we had stopped funding agriculture. In the recently published Revised Estimates, the Government provided almost €2 billion for agriculture, fisheries, food and forestry. Within the constraints of the public finances, this Government continues to support the agri-food, fisheries and food sector to the fullest extent possible and, when combined with EU funding of €1.4 billion, total public expenditure in support of the sector in 2009 will amount to over €3.3 billion.

 

Dairy Sector
We are all particularly conscious of the particular difficulties being experienced by the Irish dairy sector, with weak dairy prices, considerably back from the record high levels achieved in 2007.

There are those who continue to perpetuate the argument that EU quota increases are the cause of the current low prices for milk. This is a flawed argument - the fact is that milk production is below the level it was before the quota increase took effect in 2008. Furthermore, it is the case that, if EU production is to be constrained by quotas, it will prevent Ireland from benefiting from future upturns in dairy markets and, in such a scenario, the only winners would be our global competitors, of whom there are many.

Since the conclusion of the CAP Health Check, during which I argued very strongly, and ultimately successfully, for the retention of dairy market management measures, I have repeatedly pressed the Commission for the early introduction of supports to restore confidence and put a floor under prices. Following my consistent interventions,
• the private storage scheme for butter was brought forward;
• export refunds for dairy products were reintroduced; and
• intervention schemes for butter and milk and skimmed milk powder were opened.

The importance of these measures cannot be overstated, as they play a vital role in stabilising the market. Only last month, I urged the Agriculture Commissioner to more aggressively intervene to take product permanently off the market through supporting exports as well as maintaining the intervention process at attractive levels enabling the maximum quantities to be temporarily removed from the market, giving the commercial markets breathing space to rebound.

Significantly, export refunds for butter, skimmed milk powder and whole milk powder were increased last week and all quantities of butter and skimmed milk powder offered were accepted into intervention, while the intervention purchase prices were maintained.

It is critical that these market management mechanisms are being expanded to deal with the very difficult dairy market situation that we are experiencing and dairy producers can be assured that I will continue, as I have done consistently for the past six months, to maintain the strongest political pressure to ensure that the EU plays its full part in helping to restore the dairy sector to a sound trading position.

Beef and Sheepmeat Processing
The beef and sheepmeat processing industries are important indigenous industries and vital components of the Irish agri-food sector, which have an annual turnover of some €3 billion, exports of €2 billion and account for over 20 per cent of Irish food and drinks exports. The beef industry has changed from dependence, in the early 1990s, on intervention to one where 98 per cent of output is sold on European markets. This has involved investment in quality, standards, market development and promotion.

The Taoiseach's recent announcement of Government grant-assistance of over €69 million for fifteen capital investment projects, under my Department's Beef and Sheepmeat Investment Fund, is an important statement of support for and confidence in this sector. The Government investment will stimulate further investment by the industry itself of another €100 million and will ensure the long-term competitiveness of the industry in Ireland, as well as increasing net sales and exports by €400 million and ensuring a net expansion in employment, with over 800 additional jobs being provided by 2012.

Sheep Sector
As well as the dairy sector, I have for some time been very conscious of the particular difficulties being experienced by the sheep sector and in recognition of those difficulties, I allocated €7 million from the Single Farm Payment National Reserve to 14,000 hill sheep farmers this year. This €7 million was the only such funding to which I have access this year. I have also confirmed that sheep farmers will be the substantial beneficiaries from the allocation of some €25 million in unused CAP funds from next year.

Rural Development Programme
In all, there will be €75 million available in unspent CAP funds between 2010-2012 as well as additional modulation from next year, with €17 million available in 2010 and funding from the European Economic Recovery Package (EERP). My Department is currently preparing, for submission to the EU Commission by 15th July, a new Rural Development Programme (RDP), which will incorporate the additional modulated moneys and the new funding from the EERP. I am currently considering a range of proposals which might form part of a revised RDP.

Pork and Pigmeat Sector
Last December, following the recall of all Irish pork and bacon products, the Government reacted, not alone swiftly, but in a balanced and proportionate manner and, from the outset, was determined to take such action as was necessary to protect what is an integral element of the Irish agri-food sector - one that is worth €1.1 billion per annum and employs 6,500 people, with approximately 500 farm families involved in pig production.

Conscious of the threat to the very viability of pig production and processing in Ireland, the Government put in place funding of up to €180 million for a Product Recall Scheme, to facilitate the immediate recommencement of slaughtering and a further €20 million for those farmers whose herds were slaughtered. This investment of up to €200 million has effectively secured the future of an industry.

Farm Waste Management Scheme
The Farm Waste Management Scheme, introduced by this Government, is the largest on-farm investment scheme in the history of the State, with the Government providing funding of €1.1 billion to some 34,000 farmers, of which 90 per cent will have been paid by next January.

The investment of €1.1 billion has to be seen against an initial Government commitment for on-farm investment of €350 million over the period 2007-2013, of which €200 million was committed to the farm waste management scheme. This has been an outstandingly successful scheme and is clear evidence of Fianna Fáil's ongoing commitment to the Irish agricultural sector. The €1.1 billion grant-aid, all of which is from our own Exchequer, will have been paid, in total, over a few short years.

While it has been necessary, given the pressures on the public finances, to phase payments to over 17,000 applicants over three years, I have ensured that a special ex-gratia payment will be made to those farmers whose payments are being phased which should ensure that no farmer will be at any financial loss as a result of the deferred payment arrangements.

The level of on-farm investment made by the Government is testament to our commitment to assist farmers to continue to improve the level of on-farm infrastructure, capacity, efficiency and effectiveness and is in stark contrast to that provided by previous Fine Gael-led governments.

REPS
At the time of the Supplementary Budget in April, I announced that I would be carrying out a review of the Rural Environmental Protection Scheme in the context of the overall level of participation, the funding which is likely to be available to me and the flexibility provided by the additional funding which I negotiated in the recent CAP Health Check. As part of the forthcoming review, details of which I intend to announce very shortly, and particularly in the context of the available funding, I will have regard to the submissions received in relation to the possible use of Modulation funds, a number of which related to REPS-like measures.

Retail Sector
The Irish agri-food sector is Ireland's most important indigenous sector, providing hundreds of thousands of jobs throughout every county in the country, at both producer and processor level. The sector was never more important to the Irish economy than it is now.

We are justifiably proud of our reputation as "Ireland the Food Island" and, notwithstanding the current economic difficulties, this Government is continuing to invest hundreds of millions at both farm and processor levels.

As a food producing country, it is essential that we have a robust food industry that provides an outlet for our producers and adds value to the primary product. While we all acknowledge the importance of identifying and building new export markets for our food and beverages, it is critically important that we maintain a strong domestic market for Irish food and drink. A strong domestic presence is an essential factor in developing export markets. In that regard, we must have an Irish retail sector that maintains a strong commitment to sourcing and providing a comprehensive range of familiar Irish products and brands.

The issue of retail margins on food products has become a point of heated public debate in recent times, as reflected at last month's EU Agriculture Council meeting. While the recent concentration of retail power in the hands of a few large supermarket chains is an international phenomenon, it has fundamentally changed the balance of market negotiating power in the food chain and is a significant factor in the declining share of retail prices which is passed back to the producers.

While the relationship between the food industry and the retail trade is essentially a matter between the parties themselves, there is a balance to be struck between granting price reductions to consumers and giving a fair return to suppliers and producers. That fair return is essential to the maintenance of thousands of Irish jobs, the survival of primary producers in this country and the viability of the European agri-food sector.

The Government fully appreciates the value of the Irish food sector to the economy, not least in terms of the employment provided, and is committed to its ongoing support in terms of investment and innovation. We will continue to work with the industry to address ongoing competitive pressures and to ensure that the industry continues to produce high-quality food products that are more than capable of competing with any comparable product at home or abroad. At the same time, however, the retail sector has a key role to play in supporting Irish jobs through its sourcing and provision of quality Irish products and brands, and I anticipate that they will fulfil that important responsibility.

Conclusion
This Government has been steadfast in its support of the Irish agri-food sector, not alone in the provision of resources but also in our international negotiating approach, whether at the EU or the WTO.

The outcome to the CAP Health Check represents a significant success for Irish agriculture - which will be worth €170 million to Irish farmers over five years - while the pressure exerted on the EU Commission for the introduction of dairy market support measures has helped what is a very difficult situation for the dairy sector and I will continue to impress upon the Commission the necessity of activating support measures at levels that will make a real impact in the market.

Despite the suggestions of those opposite, I believe that what the public expect us to do is to focus on the challenge of addressing the worst economic downturn in seventy years. Every member of this House has a duty to work constructively for the duration of the term for which we've been elected. This debate is no more than opportunism and the Fine Gael and Labour parties know well that our Constitutional mandate derives from the support of Dáil Éireann, a mandate that will be renewed this evening.

In 2012, this Government will go before the people and we will stand on our record, one that I will be happy to defend as having been in the best interests of this country and this and future generations. I hope that when that time comes, the citizens of this country will know what the parties opposite stand for

At a specially convened meeting of EU Agriculture Ministers in November last, I made it very clear to my colleagues that it is essential that we maintain a strong agricultural production base in the European Union.

My unequivocal position is that, after 2013, there will be a continuing need for an active and appropriately resourced European agricultural policy to achieve the EU's policy objectives for the agriculture and food sector and to help our farmers and processors to adapt to the new and emerging challenges. At every opportunity and in any debate, I will continue to forcefully articulate that argument.

This Government stands by Irish agriculture and the Irish agri-food industry and we will continue to do so.