Vol. 955 No. 2
1. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine the measures which will be taken to meet the challenge of addressing the pressing issue of farm incomes in view of the current crisis in farm incomes and severe market volatility across most sectors; and if he will make a statement on the matter. [28360/17]
I congratulate the Minister of State, Deputy Andrew Doyle, on retaining his post. We have debates and disagreements in the Chamber at times, but I think his appointment is merited and I wish him well in continuing in the role.
My question is particularly in light of the recent Teagasc farm income survey report, which highlights a 10% reduction in average farm incomes last year. What measures do the Minister and the Minister of State plan to take to address the issue of struggling incomes in the farming sector and, in particular, what measures will be taken to protect the primary producer in the food chain?
I thank Deputy McConalogue for his sincere best wishes. I hope we can continue to have a cordial, if sometimes robust, exchange. I apologise on behalf of my colleague, the Minister, Deputy Michael Creed. He drew the short straw and is on a trade mission in the United States and Mexico. I got the more important weekly job, where we engage with our colleagues across the floor. This is my first time taking all the parliamentary questions, so if my timing is not perfect, the Ceann Comhairle might give me a little bit of latitude.
I do not know about that.
I have only been here for ten years, but I am still learning.
Food Wise 2025, the new ten-year strategy for the agrifood sector, was published in July 2015. It includes more than 400 specific recommendations, spread across the cross-cutting themes of sustainability, innovation, human capital, market development and competitiveness, as well as specific sectoral recommendations. The implementation process for any strategy is vital for its success. The Minister, Deputy Michael Creed, chairs the Food Wise high level implementation committee, with high level representatives from all the relevant Departments and State agencies. The committee reviews progress on detailed actions on a quarterly basis in order to identify and solve problems quickly. Stakeholders regularly present to the committee meetings on their priorities for particular themes or sectors. We will be publishing Steps to Success 2017, the second progress report, next month.
Any concerns on the impact on the agrifood sector are at the top of the Government’s Brexit agenda. Our ongoing consultation with stakeholders, together with our engagement with UK, Northern Ireland and EU counterparts, will be informed by the need to have the implications for the agrifood sector understood and taken account of as the negotiations unfold. In light of the UK vote to leave the EU, Brexit has been included as a standard item on the agenda of each meeting of the high level implementation committee. It is clear that driving the implementation of the Food Wise recommendations, in particular those related to market development, competitiveness and innovation, will assume even greater importance in light of the UK decision. My Department and State agencies are working together to ensure that the short-term and long-term impacts of Brexit are taken into consideration and that appropriate supports are in place to help the sector to respond and adapt to the new realities.
On farm incomes and volatility, Teagasc's national farm survey of 2016 showed average farm income of €24,000, a 9% decrease over 2015. Average farm income has been relatively stable over the last few years, fluctuating between €24,000 and €26,000.
Additional information not given on the floor of the House
There are significant differences in farm income depending on the farming system and size of farm. It should also be borne in mind that over 60% of the farms represented by the national farm survey are classified as part-time, based on labour input required. On half of farms, either the holder or spouse or both have off-farm employment.
Ireland is a small, open economy which exports the vast bulk of its agricultural commodities and, therefore, will always feel the effects of volatility on world markets. However, there are measures in place to help Irish farmers through these periods. I believe that moving up the value chain where possible, in terms of the type of products sold and how they are produced, is an important insulation against volatility. The Food Wise strategy contains detailed recommendations aimed at improving value added and productivity at farm and food industry level through a focus on sustainability, efficiency, knowledge transfer and innovation.
It has been one of my priorities to address the impact of the change in the sterling exchange rate and lower commodity prices in some agriculture sectors. The agriculture cashflow support loan scheme was developed by my Department in co-operation with the Strategic Banking Corporation of Ireland, SBCI, making €150 million available to farmers at interest rates of 2.95%. The loan scheme, distributed and administered through the commercial banks, provides farmers with a low-cost, flexible source of working capital and will allow farmers to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.
The scheme was launched on 31 January and, by the beginning of March, all of the participating banks had reported that their funds were committed. The SBCI reported that €60.2 million has been drawn down by farmers to the end of April. The average loan size is €32,000, with more than half the loans being advanced for terms of four years or more. I am pleased at the very positive reaction by farmers to the scheme, which has proven that significant demand exists for low-cost flexible finance. I have met with the chief executives of the participating banks to discuss this and other access to finance issues relating to the agrifood sector. I have asked the banks to respond positively to the demand that has been demonstrated by reducing interest rates and providing more flexible terms for cashflow loans in the future.
My Department will continue to engage with the Department of Finance on key agri-taxation policy objectives, including responses to income and price volatility. Risk management is one of the topics covered by knowledge transfer groups. Animal disease risks are covered by the targeted animal health and welfare advisory measure. Fixed price contracts are increasingly becoming a feature of the relationship between producers and processors in the dairy sector, with numerous milk purchasers offering such contracts, which provide producers with the opportunity to lock in prices over the medium term, taking costs of production into account. Such relationships are a welcome development in terms of their potential to mitigate volatility.
I am confident that my Department is taking every step to support measures which mitigate price volatility and improve competitiveness in the sector.
The Minister of State referred to the Teagasc farm survey. As it shows, farming is a very difficult career. It is difficult for farmers across the various sectors to make a living and to keep a family. We see that almost 40% of farms have an average income of less than €10,000. On sheep and cattle-rearing farms, the net income is the single farm payment from Europe, and incomes were down for dairy and tillage over the past year as well. We find that there is increased volatility in respect of farm incomes and product prices, in particular. It should be Government policy and EU policy to try to ensure the agriculture sector across Europe and, in particular in our country, is underpinned by farmers getting a fair price for quality produce. Farmers are producing quality produce to the highest standards but the price is not there. Could the Minister of State say what initiatives he and the Minister have taken to ensure we can grow agriculture based on farmers being properly paid for what they produce?
I am acutely aware of it. One perhaps ironic fact that emerged from the statistics in the survey was that the reduction between 2015 to 2016 was almost entirely in the dairy sector, which represents 19% of all farms. Income has gone from an average of €62,000 to €51,000, whereas the other sectors are stable. It is hard to believe, with the exception of tillage, that is the case. Tillage, or arable, farming has taken a significant drop. It represents 9% of farms, and I think we are all acutely aware of it. There have been tools, such as the agri-cashflow, which have tried to help people through it. In response to the Deputy's question, a fair price for a fair product is important. As a farmer, I understand this as well as anyone. Commissioner Phil Hogan is planning to present a report with a recommendation for EU-wide legislation on fair trade practices later this year. I have been advocating for that since I came into this House. I started off with the fruit and vegetable sector, the horticulture sector, which had perishable products often being sold through a producer group to domestic retailers, and it was suffering. We must continue to ensure we advocate for that. A report is due from the Competition and Consumer Protection Commission on how that fair trade legislation is working. That also needs to be reviewed in terms of taking new measures, if needs be, to strengthen that. It is something that we would want also.
The introduction of a fair trade baseline to tackle unfair trading practices in Europe is crucial.
Fianna Fáil has taken its proposals to Europe and is continuing to push them. It is key that at European level we see progress in that regard.
In the Minister of State's previous reply, he also referred to Food Wise 2025 which my party certainly supports, albeit we feel it needs to be reviewed to meet the challenges of Brexit. Food Wise 2025 looks at increasing agrifood exports from €11 billion to €19 billion, but the following is also key. While overall production needs to increase and is beneficial for the country, we also need to see that benefiting the farmers and those who are driving that strategy and driving that projected increase in exports. That means fair prices. It also means that we see proper support from the Government for schemes, in particular, the rural development programme I have mentioned, to ensure that the spending is at committed levels. I ask the Minister of State about the funding of the rural development programme and the steps the Government is taking to ensure the CAP is maintained, at a minimum at its current level, in upcoming negotiations and address what has been a very slow roll-out by the Department of some of the rural development programme funds.
We are extending into matters that will be raised in further questions with regard to the CAP and the CAP fund. If the Deputy will be here, we will deal with that then.
I agree that if one will grow agri-production from €11 billion to €19 billion and primary producers do not feel that they have an interest, skin in the game and a viable future, one does not have any other industry. I know that from my background at the coalface. It is really important that we reassure: that is the purpose. It was Deputy McConalogue's colleague, the then Minister of State, Deputy Brendan Smith, who brought in Food Harvest 2020. It is important that we build on that continuous process to engage, through the various different beef and dairy forums, to build this understanding between all players in each sector and then collectively as a sector itself.
2. Deputy Martin Kenny asked the Minister for Agriculture, Food and the Marine his plans to increase farm income for those sectors, the income of which according to the Teagasc farm survey is below €10,000, with 19% of persons with an income below €5,000. [28469/17]
Admittedly, it is a similar question. I congratulate the Minister of State on his reappointment and wish him many "years", I would say, but it will probably be months, here because we do not know where we are going.
I suppose the essence of my question is farm income and where it is at. Deputy McConalogue dealt with some parts of it. What gets me, and what gets most farmers, is the way Irish agricultural produce, particularly meat produce such as beef and sheepmeat, is marketed across Europe and the world as being the cleanest, the greenest and the best produced to the highest quality possible, and yet the prices returned, which I can see when I look at the factory prices for cattle in Ireland or in other parts of Europe, are average or below average compared with those of EU farmers. That should not be the case. If we are producing such a high quality product, the Irish farmer should be a prosperous individual and that is not the case. I want to ascertain here today what plan the Government has to drive this forward to ensure the primary producers get the maximum benefit for the work they put in because they are the ones who put all the work in.
I thank Deputy Martin Kenny for his good wishes. I would be a little bit more optimistic than a couple of months but nobody knows.
Teagasc released the preliminary results of the National Farm Survey 2016 recently which showed average farm income of €24,000, a 9% decrease over 2015. However, there are significant differences in farm income depending on the farming system and size of farm. The preliminary results also showed that 19% of farms produced a farm income of less than €5,000 while 14% of farms produced an income of more than €50,000.
However, it should also be borne in mind that 64% of the farms represented by the national survey are classified as part time with a family farm income of €11,355, based on labour input required. The remaining 36% are classified as full time, with an average family farm income of €46,500. In addition, on almost half of all farms, either the holder and-or spouse has off-farm employment.
I am aware that 2016 was a challenging year for some sectors. As a small open economy which exports the vast bulk of its main agricultural commodities, Ireland will always feel the effects of volatility on world markets. However, there are measures in place to help Irish farmers through these periods, including the following. In 2016, direct payments per farm as estimated by Teagasc increased by 4% to almost €18,000 and accounted for 75% of income on average. These provide a fundamental hedge against volatility. The agriculture cashflow support loan scheme was developed by my Department in co-operation with the Strategic Banking Corporation of Ireland, SBCI, making €150 million available at interest rates of 2.95%. The loan scheme distributed and administered through AIB, Bank of Ireland and Ulster Bank, provides farmers with a low-cost, flexible source of working capital and allows farmers to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.
The scheme was launched in January and by the beginning of March, all of the participating banks had reported that their funds were committed. The SBCI reported that €60.2 million has been drawn down by farmers to the end of April. The average loan size is €32,000, with more than half the loans being advanced for terms of four years or more. I am pleased at the very positive reaction by farmers to the scheme, which has proved that significant demand exists for this sort of low-cost flexible finance. The Minister met the chief executives of the participating banks to discuss this and other access to finance and he asked the banks to respond positively to the demand that has been demonstrated by reducing interest rates and providing more flexible terms for cash flow loans in the future.
Additional information not given on the floor of the House
My Department will continue to engage with the Department of Finance on key agri-taxation policy objectives, including responses to income and price volatility. Risk management is one of the topics covered by knowledge transfer groups. Animal disease risks are covered by the targeted animal health and welfare advisory measure. Fixed price contracts are increasingly becoming a feature of the producer-processor relationship in the dairy sector, with numerous milk purchasers offering such contracts, which provide producers with the opportunity to lock-in prices over the medium term, taking costs of production into account. Such relationships are a welcome development in terms of their potential to mitigate volatility.
I believe that an important insulation against volatility is moving up the value chain where possible, in terms of the type of products sold and how they are produced. Food Wise 2025 contains detailed recommendations aimed at improving value added and productivity at all stages of the food supply chain. It is clear that driving the implementation of the Food Wise recommendations, particularly those related to market development, competitiveness and innovation, will assume even greater importance in the light of Brexit.
The UK's decision to leave the EU reinforces the need to develop as many outlets for our agrifood exports as possible in order to minimise our dependence on any one market. Indeed, this principle of market development is already a key component of Food Wise. We have been very active in recent years in efforts to diversify markets, and in aiming to respond to consumer demands in emerging markets.
The challenges linked to Brexit are immense, given the very close trading relationships between Ireland and the United Kingdom and on the island of Ireland. We are determined to work closely with the industry and with other governments to identify strategies and approaches that will maintain the success of the Irish agrifood and drinks sector, at both farm and processing levels.
The Minister of State is quite correct. Putting measures in place, for example, for loans, to help the farmer to get over the difficult times has always been the solution to try and deal with volatility and what I suggest here is that the Government needs to have a plan to address volatility in the first place to ensure it does not arise as often or as deep when it happens. I hope the Government concurs with my belief that to do that, when we move into the next number of years where the Minister of State was talking about Food Wise 2025, we would look at not only increasing the volume but the value of produce, particularly the value to the farmer.
At the essence of all of this is that the Irish farmer does not get the level of payment for the work that he or she puts in, given the quality he or she is producing. It is a family farm that produces the product in Ireland in the first place. The animals all are grass fed. They are free roaming. They are free from all hormones. They are free GM. We have all these elements in place, there is traceability from farm to fork and yet the farmer finds that he or she will only get an average price with the farmer in other parts of Europe which we all have visited where we have seen the product, particularly the meat product, is produced in vast feed lots where there are thousands of cattle which never see daylight and are never on a family farm. Surely the Irish farmer should be getting a price way above the European average when one looks at the model of farming we have and it is also the kind of product that the European consumer has clearly stated he or she wants. Is there a plan in place to ensure that the Irish farmer will get an enhanced price for his or her product and have transparency around all of that?
I accept the point. Even in the context of international production, Ireland is one of the biggest exporters of beef but it is by no means the biggest producer.
It is tiny.
That is why, if we are going for volume, we cannot compete with countries such as Australia and the United States or countries in South America.
Bord Bia's strategy, and part of the purpose of the mission that the Minister is on in the US at present, is to move up the value chain at all times and select markets where we can aim higher so that there is such a return all the way down. One has to start by trying to get the highest possible quality product at the end of the line. Beef, through Lidl, which is opening a chain and hopes to have 100 stores open by the end of this year in the US, has been given premium-value brand approval in the US by the United States Department of Agriculture, USDA. That is really important. We are doing that in Germany also. It is important that through the forums, through Bord Bia's marketing and through engagement with all the stakeholders together in the one room, everybody understands that everybody needs to feel a piece of that if we are to continue to produce at that quality.
I appreciate what the Minister is doing and note that he is in the USA trying to progress new markets for Irish produce. While all of that is excellent, we come back to the point that there does not seem to be transparency. The Irish farmer is not getting a fair price. We say we are going to start to try to aim higher and get to a higher place on the shelf, which is fine. However, the question is whether the farmer will get a higher return. That is the problem. The elephant in the room is the monopoly of many of the big meat processors. It needs to be dealt with. Is the Government prepared to deal with it?
Farmers have many environmental issues and costs. Green low-carbon agri-environment scheme and other payments are in place to support farmers, yet we find they are slow in getting their money. It has been said to me by many in the farming community that if officials in the Department of Agriculture, Food and the Marine had to wait as long for their pay as the farmer has to wait for his, there would be war and that they would be on the streets. We need to deal with these issues comprehensively. While I fully appreciate that Bord Bia and many other organisations are doing their best, at the end of the day, their best does not appear to produce a return for the farmer. That is the issue in hand.
It was not today or yesterday when the priority for Bord Bia was set as aiming at the higher end of the market. There has been that realisation for a long time. Origin Green is based on the slogan of safe, sustainable and secure produce which has resonance throughout the globe. However, it is a competitive market. I remember my father buying shares in Cork Marts IMP, into which he put some money over 50 years ago. It bought into the meat business and it was its worst day's work ever. It was literally burnt alive. I hate to use that pun, but that is what happened. It is a really competitive business. Everyone lost money on that venture. We need everyone in the room together discussing and agreeing on a way to produce beef or dairy products - whatever the commodity - such that everyone will feel he or she is part of the process. We must have a return for the primary producers because young people will not enter farming unless they have a lifestyle. I have been saying this for years.
Will the monopolies be dealt with?
We saw a merger here recently of Dunbia and Dawn Meats. It is an open secret and the Commission has been notified of it. It is easy to say the monopolies are price-fixing downwards. Let us consider the price Irish products are getting throughout Europe. It is getting as good a price as is available, but we would love to see them getting a better one. If we were competing at the low end, we would not be getting the price we are. That is the reality.
3. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine to outline his plans to review the current information technology payments system in view of the significant problems faced by persons submitting applications and drawing down payments for GLAS, the KTG scheme, TAMS and other RDP schemes; and if he will make a statement on the matter. [28361/17]
We have experienced many difficulties during the past year, in particular, with payments, as a result of the Department's information technology systems. Examples include problems with GLAS, TAMS and the knowledge transfer scheme. There have been numerous problems. The response we receive all the time is that the problem is with the IT system and that there is little officials can do about it. I hope the Minister of State can tell me what the Department is trying to do to try to solve the problem which has had a detrimental effect on farmers.
I will get into some of the specifics in the supplementary exchanges. This is something that is exercising the minds of many in the Department.
Under the rural development programme the Department has delivered over 20 new schemes that have been supported by IT capability in the past two years. In the first two years of the current rural development programme the Department implemented substantially more RDP schemes than had been delivered in the entire ten-year lifetime of the previous programme. To date, Ireland has drawn down funding at a rate that is 2.4 times higher than the EU average. This rate of delivery and draw-down would not have been possible without the availability of high-quality complex IT software systems to support the business units in the operation of these schemes.
Since 2014 the Department has adopted a policy of implementing fully digital end-to-end support for all but the smallest of schemes. It has an excellent record in the delivery of high-quality ICT systems. In that respect, it is ahead of our European partners and also highly regarded across the Civil Service and the public service.
We have been constantly among the first to make payments in the European Union. The Deputy will be aware from previous discussions on the GLAS programme that a number of issues have delayed payments. They have included a declaration by applicants of an incompatible parcel usage for the GLAS action chosen; changes in parcel boundaries on which a GLAS action is chosen, including splitting or the merging of parcels; an applicant no longer claiming the parcel on BPS 2016; incomplete documentation such as incorrect information on the low-emission slurry declaration; incomplete interim commonage management plans; and incompatible data and parcel history on Department databases. Separately, a number of issues arose relating to the GLAS IT system, with additional functionality being required to deal with non-standard cases. As advised previously, I regret the difficulties this may have caused for a number of farmers.
I am happy to advise that the IT aspect of the delivery of these schemes has been reviewed and that a revised team structure has been put in place. This matter will continue to be monitored.
Additional information not given on the floor of the House
All but a small amount of outstanding work has been addressed and plans are in place to address this issue in the coming period. The delivery of payments in 2017 is ongoing, with GLAS I and II advance payments almost complete. GLAS + advance payments in respect of 2016 have issued to the majority of eligible applicants in recent days. In addition, the GLAS I and GLAS II balancing payments are scheduled to issue in the coming weeks, subject to the receipt of the applicant's nutrient management plan.
TAMS IT functionality is also available to pay the vast bulk of applicants. A relatively small number of TAMS II applications are subject to penalty and it is expected that payments for the majority of these cases will be issued in the coming weeks.
The Deputy will be aware that I have recently extended the deadline for the knowledge transfer schemes to 31 July. This will allow facilitators and vets further time to finalise actions for knowledge transfer group participants. It is anticipated that payments under the scheme will be made as scheduled in the autumn. A recent difficulty in the operation of the new systems provided by my Department for knowledge transfer farm improvement plans and animal health measures has been addressed. I anticipate that payments under the scheme will be made as scheduled in the autumn.
The Deputy can rest assured that I will do everything in my power to ensure the Department's ICT systems will have the necessary resources and capacity to deliver on our responsibilities to the farming community and other customers in the future.
I thank the Minister for the reply. I will call it as many in the farming community and I see it. Too often it seems like the Department is being run by a computer. Every time we come up with an issue, it is a question of the computer not letting officials do this or that. Even where there seems to be a reasonable problem that the application of a little common sense and reason would sort out, we are told that officials cannot do it and, unfortunately, payments are delayed. We have seen this happen across several schemes, for example, TAMS. I have learned of cases and know that Deputy Jackie Cahill has encountered similar cases. In such cases one small discrepancy means that the computer will not allow the payment to be made. There are delays for months and farmers are left in the lurch for money that they have already invested. We need to see the Department apply some common sense. It should be prepared in respect of its IT systems. It should be able to look at a file and deal with it to ensure farmers will be paid.
The Minister of State said he would address this issue in supplementary exchanges. I would like to know what specifically the Department has been doing to eradicate the problems we have seen with the IT systems. How will it operate a far more common-sense and farmer-friendly system that will not always seem to be directed by what the computer indicates?
The Deputy says it seems the Department is being run by an IT system, but people have to manage the IT systems too. I accept what the Deputy is saying to a point. However, the IT system has to score an application correctly. What if it throws up a discrepancy? I have listed some instances in which there may be a discrepancy. This is what happened in beefing up the IT unit and changing the team structure. The process is really important. When the IT system indicates that there is a problem or a discrepancy, the problem or discrepancy is identified and dealt with by way of direct contact, e-mail, with the adviser or farmer and a response is sought. I met the IT people before I came here. The Minister, Deputy Michael Creed, has committed to the balancing payments being made in June under GLAS I and II. Up to 35%, or 13,000 odd, of the nutrient management plans are coming in out of the 35,000 odd. I urge everyone to ensure the plans are complete. There has been no IT problem with nutrient management plans, but they need to come in before the payments can be processed. A total of 13,500 can be commenced. The other applicants need a nutrient management plan. It is not that difficult to get the plans in. The essence is that everything has to be traceable and the IT system needs to be satisfied. However, the process needs to be managed in such a way that when a problem shows, we can address the discrepancy and receive a response. That will allow it to be corrected.
I do not doubt the effort put in by departmental staff. We deal with them on an ongoing basis, especially at committee level. However, the Minister of State and the Department need to look again at the use of flexibility in the processing of the various applications.
It should be possible to put a note on a file that explains what the situation is and why the money should be paid, and which would allow it to be paid. Surely there must be a record showing that it complies with the regulations. It should not be as rigid as the computer blocking it and then it not being dealt with for months and being put to the back of the pile. That needs to be examined.
In respect of preparedness for these schemes, I am aware that the likes of GLAS are big schemes and that it was the first year of GLAS. I take that point. However, we were assured many times by the Minister of State, Deputy Doyle, and the Minister, Deputy Creed, that they were on top of it and would be prepared and that all the systems would be up and running, yet it all fell flat and farmers were left to suffer without their payments. We cannot see that type of thing happening again. In particular, I ask for a review to ensure there is flexibility to apply common sense. The rules must absolutely be complied with but this must be done in a way that ensures that farmers are not made to suffer repeatedly.
To be clear, the regulations do not allow payment to be issued until the scheme has been complied with. There is no flexibility to say we believe it will be complied with. We cannot do that. What we can do is ensure that when a problem is identified, the discrepancy is dealt with as quickly as possible. At times, it is a matter of waiting for the other side to respond. I am dealing with a couple of cases of this nature. It is the same point as the one I am made about the nutrient management plan. It is a matter of trying to speed the process up. That is why the team structure has been changed and extra staff and resources assigned. In the year the basic payment scheme, BPS, first came out there were hold-ups but they have not occurred since.
4. Deputy Willie Penrose asked the Minister for Agriculture, Food and the Marine his plans to ensure that single farm payments and the overall CAP budget are not affected in the current EU budget up to 2020 when the UK withdraws from the EU; and if he will make a statement on the matter. [28470/17]
I congratulate the Minister of State, Deputy Doyle, on his well-deserved reappointment. The biggest challenge facing rural Ireland is Brexit. The €1.7 billion received by Irish farmers annually must be guaranteed in any post-Brexit adjustment to the EU budget. The Government must ensure that this vital EU funding stream is protected. The UK contributes about 12% of the EU budget with a net contribution of about €12.9 billion. That will be lost post-2020. A 12% cut to the CAP will have a devastating impact on Irish farmers as EU payments account for 65% of Irish family farm incomes. It is clearly critical for thousands of Irish farmers that those payments be preserved. Brexit is also a big challenge for the agrifood sector, the biggest it has faced in decades. It will be acutely felt by that sector. I want to make sure we are on top of our brief and ahead of the curve on this matter.
I thank Deputy Penrose for his good wishes. I am extremely conscious of the importance of the CAP budget to Ireland's agriculture sector. The UK's withdrawal from the EU has been independently estimated to be likely to lead to a reduction of circa €10 billion, which will undoubtedly put pressure on the availability of funding for the future CAP. In the meantime, the amount of CAP funding per member state for Pillar 1 direct payments and Pillar 2 is fixed until 2020 in regulations of the Council and European Parliament. It would require a co-decided amendment of these regulations to change the figures. The only adjustment variable within that overall budget is expenditure on market supports, which is not allocated on a member state basis.
In my view, maintaining a strong CAP budget is one of the key challenges in the context of the multi-annual financial framework post-2020. The CAP budget is likely to come under increasing pressure, given the possibility that the overall EU budget will be reduced after 2020. Furthermore, there has been ongoing pressure from some member states to reduce the proportion of CAP spending within the overall EU budget and to divert this spending to newer priorities such as migration, defence and security. Brexit is also a significant factor and the loss of the UK contribution to the overall EU budget will undoubtedly put further pressure on the availability of funding for the CAP in the future.
Ireland will continue to negotiate for a strong and well-financed CAP and seek to build alliances with member states with a common interest in supporting the EU's farm sector and consumers.
Ultimately, the CAP is funded by taxpayers across European member states. It is critically important against that background to reinforce the legitimacy and importance of the CAP and its role in achieving European priorities and objectives in areas such as employment creation and retention; food security; food safety and quality; the protection and enhancement of the environment; the development of the rural economy; and the prevention of land abandonment and rural depopulation. I strongly believe the CAP has evolved considerably and very effectively in recent years in response to changing market, consumer and environmental demands. It also plays a central role in delivering the smart, sustainable and inclusive growth sought under the Europe 2020 strategy.
I can assure Deputy Penrose that Ireland's objectives are clear as we enter into a new discussion on the financial perspectives and the shape of CAP post-2020. I will be working with Government colleagues, other member states and the EU institutions to secure the best possible outcome for the Irish agrifood sector.
The negative impact of Brexit on the CAP budget is glaringly obvious. I reckon the UK contributes €12.9 billion to EU coffers. Clearly, unless addressed by significantly increased contributions by the member states, there will be a significant negative impact on CAP and direct payments to farmers.
The EU budget is around 1% of EU GDP. That is far too small for a Union of 520 million people, or approximately 445 million people and 27 member states once the British have left. There is glaring incapacity at European level to support the ambitions of the EU treaties. That is the kernel of this. There will be debate as to whether we are for a Union capable of helping member states to tackle serious economic and social deficits. The current range of crises facing the EU is great and includes Brexit. There will be a serious rethink by member states about the budget and there will be resistance to the EU reforming and developing its own resources as envisaged in the treaties. There is huge resistance. We will have to be behind that, otherwise our State is going to be asked to contribute from its own coffers. Such a proposal will not meet with uniform acceptance. There will be sectoral resistance. We had better start getting this right and informing farmers who will have to come on board in a conjoined way and supportive way. Whoever is in government here by then will face a huge challenge.
I can only agree with everything the Deputy has said. It is a huge challenge. It was going to be a challenge even if the UK had voted to stay because of the competing demands for the EU budget and because the perception of what CAP is about has been misconstrued and misunderstood for many years. It depends on the member state. During the last period of CAP negotiations, former Commissioner Ciološ's support for a more or less intact CAP budget was based on the principles of producing food sustainably, sourcing as much food as possible from within the EU, and protecting rural economies. That is why the likes of greening came in along with other environmental measures.
As I said in my reply, we have moved the CAP considerably from its earlier manifestations. It still needs to evolve and, furthermore, it needs to move towards what consumers and taxpayers across Europe want. We still have a huge challenge which is compounded by the fact that there will be a net loss from Brexit. The figure varies between €10 billion and €14 billion, depending on who one talks to. We took the lower estimate, which is still a frightening amount.
I am in between, at €12.9 billion.
There is no doubt that we need allies. There will be trade-offs. The last CAP was concluded under the Irish Presidency and under the aegis of the former Minister for Agriculture, Food and the Marine, Deputy Simon Coveney. Much of the groundwork was done with Commissioner Ciološ. It is important to build alliances and create understanding of what we are about.
One statistic that is a little bit concerning is that the EU 28 are currently about 100% self-sufficient in food production. With the UK gone, we will be at 115% or 116%. That void will have to be filled. The British are going to have to buy food but we are going to have to sell it.
I would be suggesting safeguards such as seeking a suspension of state aid rules for two to three years. Small and medium enterprises dealing with the agrifood industry that are highly reliant on the UK market must be brought to the table. Solutions have to be found for the huge cross-Border trade in milk, livestock and other agricultural products. We have factories such as Lakeland and others that operate across both sides of the Border. Trade adjustment funds may well have to be formulated to support businesses in these areas. The Minister of State is acutely aware that the UK is deficient in beef. The British are now going to be looking for alternative sources.
This facilitates Argentinian beef imports.
Another issue is that a significant element of Irish exports are transited through Britain and, clearly, a difficulty will arise with that. Will we face the reintroduction of veterinary certificates for beef exports to other EU member states if they are transited through the UK? The impact of Brexit on bloodstock sales has been clearly set out by Deputy Martin Kenny. We heard about it already from Mr. Kavanagh. There are major areas involved and the Common Agricultural Policy, CAP, is just one aspect of it.
I believe we will have to set up some sort of a special unit within the Department of Agriculture, Food and the Marine that is properly staffed and resourced to tackle this fundamental problem that we will face during the next two to three years. We want to be ahead of the curve but we are falling a little behind the curve in terms of our preparation and anticipation of what will happen.
On the Deputy's final point, I should point out that as soon as David Cameron announced he was going to hold a referendum the Department put together a contingency team. Once the referendum vote had taken place the Department established a Brexit unit. It is managed by an assistant secretary general but is answerable at all times to the Secretary General. As I said, Brexit is a standing item on the agenda of the high-level implementation committee. Of all the Departments, the Department of Agriculture, Food and the Marine was the most concerned about it and the most hopeful that it would not happen, but it was ready and it is working as best it can. As has been said to me several times, Brexit is not an Irish policy, it is a UK policy, but we have not got those in the UK to sit down to talk in any meaningful way about it. They are only starting, and we saw the opening salvos yesterday with the Queen's speech.
They might yet reverse the decision.
5. Deputy Charlie McConalogue asked the Minister for Agriculture, Food and the Marine the steps he is taking to safeguard the interests of the agrifood and fishing sectors ahead of the UK’s move to leave the EU; and if he will make a statement on the matter. [28362/17]
My question is related to Deputy Penrose's question. What steps is the Minister of State taking to safeguard the interests of the Irish agrifood sector in light of the Brexit challenge? Our overall economy is exposed to the Brexit challenge with 14% of all our exports going to the UK, but with 40% of our agrifood sector exports going to the UK, the challenge facing that sector is particularly acute. The Minister of State might outline the specific steps his Department is taking to safeguard the sector?
I fully recognise the potential difficulties that may arise in the agrifood and fisheries sectors from the Brexit vote. These sectors are of critical importance to our economy given their regional spread and the fact that they underpin the socio-economic development of rural areas in particular. I am determined to safeguard the interests of these vital sectors.
My Department and its agencies have conducted various analyses of the likely impact of Brexit on the agrifood sector. These analyses range from initial and ongoing internal departmental assessments to published work by Teagasc and Bord Bia. This is an ongoing process, and will continue through extensive consultation with stakeholders via the Department's stakeholder consultative committee and through the all-island civic dialogue process, in respect of which I have already hosted five agrifood and fisheries sectoral dialogues.
While the main impact to date of the Brexit vote has been the effect of sterling volatility on those businesses that have a significant trading relationship with the UK, the medium-to long-term threats include the possible introduction of tariffs on trade between the EU and UK, potential divergences in regulations and standards between the EU and UK post-Brexit, and the implications of border controls and certification requirements. Difficult challenges also arise in regard to potentially restricted access to fishing grounds and resources.
In response to the challenges posed, I have undertaken a number of important steps within my Department, which include the establishment of a dedicated Brexit co-ordination unit and a Brexit response committee to prepare for, monitor and respond to developments as required. As referred to earlier, I have also established a stakeholder consultative committee, which is complemented by frequent contact with representative organisations and companies on an ongoing basis, and operates in parallel to the separate consultation structures under the all-island civic dialogue.
Additional information not given on the floor of the House
Last October, as part of budget 2017, I announced a range of measures aimed at alleviating exchange rate volatility pressures. These included the agri cashflow support loan fund of €150 million, enhanced taxation measures, and the allocation of additional funding to Bord Bia in order to ensure that it is in a position to provide Brexit-related supports to affected companies, including its new Brexit barometer. My Department has recently asked Bord Bia to conduct a market profiling exercise to inform commercial and Government market access priorities and it is intensifying its efforts to open third country markets for agrifood products. I also provided for increased funding under the rural development programme and the seafood development programme.
I have also held a series of bilateral meetings with my EU counterparts which are aimed at building alliances to ensure that agrifood and fisheries issues are at the top of the EU negotiation agenda. Building common ground with other member states will be critically important in the context of the negotiations.
In all of these engagements I am making clear our demand for continued unfettered access to the UK market, without tariffs and with minimal additional customs and administrative procedures, as well as keeping the UK market viable for Irish producers by minimising the risk from UK trade agreements with third countries. In relation to fisheries, Ireland wants to maintain current access to fishing grounds in the UK zone in the Irish Sea, Celtic Sea and north of Donegal, and to protect our quota share for joint fish stocks.
I wish to assure the House that the Government remains very focused on supporting the agrifood industry through the challenges ahead. I will continue to consult with the industry as the negotiations develop, and press Ireland's case for continued free access to the UK market, without tariffs and with minimal additional customs and administrative procedures.
I will deal with the agrifood sector in my first supplementary and with the fishing sector in my second supplementary. The Department's response in terms of resourcing and having the dedicated staff needed to meet the challenge we face has been inadequate. The Brexit unit in the Department, to which the Minister of State referred, has only four people. I accept that everyone is working on this issue but there are only four people in that Brexit unit. There are only six people in the market access unit in the Department which is responsible for opening up new markets. Having regard to the number of agricultural attachés and embassies across the world, there are only five people dealing with those in the Department.
There are only four additional staff being employed in Bord Bia this year to equip it to meet the challenge and it has a massive role to play in this regard. Therefore, the Department's response has been insufficient to date and it needs to be beefed up.
Food Wise 2025 was developed in a pre-Brexit environment. Why has it not been revised to proof it for Brexit to meet that challenge?
It is easy to say that there are only six additional people in the Department and four additional in Bord Bia. Everybody in the Department is focused on Brexit. It is a standing item on our agenda. I am based on the fifth floor of the Department building along with people from various different sectors. Brexit is on everybody's agenda. There is a dedicated Brexit unit and a co-ordination committee, but it is answerable to way beyond those four people.
The trade division is represented with the Minister in North America this week. Accompanying them are representatives of Bord Bia and of some companies. When a team goes on a trade mission, and I have led one, it can comprise 20 to 25 people. Sustainable Food Systems Ireland may be part of such a mission. It involves selling the whole Irish package and Origin Green is a very important element. We were engaged in such missions prior to the challenge posed by Brexit.
Regarding the Deputy's question on Food Wise 2025, an adjustment in terms of Brexit is being made to it as it evolves. That strategy needs to take cognisance of it because everything is a reaction to what has been happening. The volatility in sterling that we have seen has affected the mushroom and forestry sectors, in particular, and especially wood products. The purpose of the €150 million low-interest loan fund was to help specific sectors, including those sectors, but the wood or timber industry comes under a business sector. A great deal of work is under way and much of it is reactive as the situation requires it. It is very difficult to say we are going to do it a certain way now because we have not really figured it out. We do not know what way this process will be negotiated.
I thank the Minister for his response. I certainly got the impression during the recent leadership contest in the Minister of State's party that the now Taoiseach was acknowledging the fact that there needed to be additional resources in terms of people and expertise allocated to deal with this challenge. I would have hoped that as a result of that there would have been a recognition in the Department that more support was needed specifically to work on this issue. While I understand and accept the point that it is an issue for everyone in the agricultural sector and in the Department, the dedicated unit and particularly the State agencies like Bord Bia need to have the necessary resources to meet this challenge and they have not had them up to now.
I wish to comment on the fishing sector. We have 11,000 people employed directly in the fishing industry across the country, many of them in my county, and the industry accounts for more than €0.5 billion in exports. While there is the challenge of market access and tariffs in regard to agriculture, there is also that challenge in regard to fishing but there is also the massive challenge of access to fishing waters. The UK has made this a big priority in terms of taking back their waters, as it were, and that makes it a very specific challenge for us with respect to how that is negotiated and the approach we take to it.
What approach and efforts has the Department taken towards protecting our position with regard to access to waters in terms of the Minister's engagement with the negotiating team to ensure that a positive outcome achieved?
The Deputy is correct. Of all the sectors that one that is the most vulnerable, given the UK's opening position on Brexit, is the fishing sector. Ireland's position is quite clear; we want to maintain access to fishing grounds in the UK zone, in the Irish Sea, the Celtic Sea and north of Donegal and to protect our quota share for joint fishing stocks.
That is our opening position. This crosses through a number of strands. If one looks at the opening statement in Prime Minister Theresa May's Article 50 letter, one sees it recognised the Irish position. Having met recently with the Secretary of State, David Davies, MP, from the UK side, Michel Barnier remarked that the Irish situation came up more than any other issue in that opening salvo. The fishing sector will certainly be part of that. It is the one that is the most vulnerable in the context of Britain establishing a very hard position on protecting its own territory. Maintaining our position is something that will have the support of everyone in this House and beyond.
We will move on. We must have some regard to the clock at this stage. Question No. 6 is in the name of Deputy Moynihan, and Deputy Jackie Cahill has been nominated.
