Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

To reply to Deputy Éamon Ó Cuív, we are trying not only to talk about numbers, but to set policy targets also. To be fair, the process probably began before we came into office. The targets are pretty general but the mid-year outputs are specific. An example relates to securing beneficial outcomes for the agrifood, forestry and fisheries sectors in EU and international negotiations. What we did in relation to the EU-Canada free trade agreement was very specific. I assure the committee that Ireland was in the middle of that. It would have been a very different deal if we had not been in terms of access to Europe for Canadian beef. We took a trade mission to the USA, which was very useful in terms of any future EU-USA trade deal. Likewise, some very constructive things were done in New Zealand, particularly with Fonterra.

While we did the specific things itemised, I take the point that if there are very general targets, it is easy to make the case that one is meeting them. It may be that for next year we need to consider more specific targets. However, one needs to set targets at the start of the year, which often change during the year. I am very involved in speaking to the European Commission about how we are responding to the Russian ban on agrifood exports. We now have butter and cheese in the scheme for aid to private storage, whereas it would previously have been only butter.

These are things that happen and which must be responded to, but they are covered by the general target of responding to international challenges as they arise. The document details many measures taken in order to make specific the more general targets that were set, but I take the point the Deputy makes; perhaps we should be more detailed in setting targets, particularly in the Food Harvest 2020 plan. However, last week we published this very detailed response outlining our position relative to the Food Harvest 2020 targets.

We are ahead of most in this regard. There is speculation as to whether we can meet the Food Harvest 2020 targets on beef, but in fact we are already meeting them. The beef target was a 40% value growth between when the target was set and 2020. We are at 39% already, so it is understandable that farmers are questioning whether it is wise to expand the beef industry when prices are weak, but we have met the Food Harvest 2020 targets for beef. Regarding dairy, we have had a 42% increase in value before any volume increase. We are ahead of schedule for practically all of the actual Food Harvest 2020 targets. That is why we will soon put a new programme in place for 2025, so that we will have a ten-year horizon with new targets, taking up new challenges like climate change, generational change, land mobility, and so on, which are all linked to productivity and modernisation within Irish agriculture and primary food production. That process will get under way soon.

I have to say, and I hope people will recognise that I am generous about this politically, the Food Harvest 2020 plan has been the best thing to happen to agriculture in many years. It was put in place by the previous Government, but we have picked that up, we have run with it, we have added to it and we have changed the targets. We invite professors from Harvard to come over and assess it each year under the pathways programme and challenge the industry at all levels on how they are meeting the targets that Food Harvest 2020 sets for them. That has been a very good focus for the industry from point of view of productivity, competitiveness and production. Of course there is another side to agriculture that we must look after, but the Food Harvest story has been a very good one and I would encourage people to read Food Harvest 2020 Milestones for Success 2014. It goes through in great detail, sector-by-sector, what we are doing and what we must do to keep the growth story going.

On Deputy Ferris's questions on dairy quotas, there is an assumption out there that if we produce less milk prices will stay stronger. There is a feeling that there may be a danger for small farmers that if we focus on volume output, we are becoming more commercial and that prices will decrease and margins tighten. Dairy is very different from beef, for example. Dairy prices in Ireland are almost entirely determined by the international price of traded dairy product. If we increased our output by 50% over the next five years, as planned, or if we did nothing to increase output, the price per litre of milk, in terms of price volatility, would remain more or less the same between now and 2020. We export 90% of what we produce and we are a small player in relative terms; if Ireland doubles its output we will still be a significantly smaller producer than the US state of Wisconsin, which produces 12 billion litres of milk per year at the moment. We currently produce just over 5 billion. If we get to 10 billion litres per year, which I think we could, we will still be smaller than one state in the United States.

It is important that people understand that we are operating in a world market in dairy products more so than in any other product, and there are both positive and negative aspects to that. For the last two years it has been fantastic because prices have been strong and there has been a shortage. Dairy consumption growth has been well ahead of dairy production growth and so we have had the strongest prices we have ever seen for dairy products for the last two years. That price is weakening now. We have two very good years for grain production and there is a direct correlation between cheap grain and milk prices weakening, which is exactly what is happening at the moment. Grain has been relatively cheap globally for two years, milk production has increased as a result, especially in the United States, and so the price of milk is coming under pressure. For us, on a grass-based system, the price of grain is far less relevant, so when grain is expensive we will be very price competitive in terms of producing milk on the back of grass. When grain is cheap, we will find it more of a challenge. Either way, Ireland is very well placed over the next five to ten years to produce more milk and to get a good return from that milk.

Choosing not to expand our dairy production and meet the Food Harvest 2020 targets would not contribute significantly to maintaining a higher price for smaller farmers because prices will be determined by markets outside Ireland, where we sell practically all our milk. I am probably over-emphasising that point, but we cannot make assumptions based, for example, on the view in the beef industry that once one goes over 30,000 animals a week the price seems to weaken. That is a matter for debate but this does not hold for dairy. New Zealand, for example, has quadrupled the volume of milk production in the past 30 years and the price has roughly doubled in the meantime. This is about world markets for dairy products and it is about getting into markets that can pay premium prices for premium product.