Dáil Éireann Debate, Thursday - 22 June 2017
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]
View answerAdmittedly, 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.
