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

I will go through it quickly and then we can move on to questions. I am very pleased to accept the committee's invitation to this hearing. This is a valuable opportunity to review how we are progressing with the various challenges and opportunities presented across the various sectors in agriculture, food development, marine and forestry and to talk about market prospects across these areas and new investment opportunities for the coming year.

The agrifood sector continues to play a considerable role in our economic recovery. The sector remains Ireland’s largest indigenous industry and accounts for almost one in nine jobs, many in rural and coastal areas where few other employment opportunities exist. Earlier this year Bord Bia confirmed a fifth consecutive year of growth in agrifood exports. The value of Ireland’s food and drink exports grew by some 4% during 2014 and reached almost €10.5 billion, which is another all-time high. That is some €3.2 billion higher than in 2009, representing an increase of more than 45% in that period.

In July the Taoiseach launched a very important plan for a new ten-year strategy for the agrifood sector, aptly named Food Wise 2025. Food Wise 2025 predicts that over the next decade Ireland can: increase the value of agrifood exports by 85% to €19 billion; increase value added to the sector by 70% to €13 billion; and increase the value of primary production by 65% to €10 billion. This should deliver a further 23,000 jobs in the agrifood sector by 2025 and will present many challenges for us to face. I think that prediction of 23,000 jobs is quite conservative.

In April this year the milk quota system ended and opened up opportunities and sustainable growth for the dairy sector for the years ahead. Nationally, we can conservatively predict that the next five years of dairy expansion will deliver approximately 10,000 new jobs across rural Ireland. Ireland’s plan for a 50% increase in milk volume in five years is unmatched in the EU; other member states expect no more than 20% extra milk. Almost simultaneously with the ending of the quotas, a number of factors, including a Russian ban, reduced demand for dairy product and increased stocks and production in China have resulted in significant downward pressure on dairy prices. I think we are all familiar with that. This is putting significant pressure on farmers. It is a global issue but it is also very much an Irish issue and it is not possible to address to it in isolation here in Ireland. I am engaging on a continuous basis with EU counterparts and the Commission to ensure that every possible measure is taken at EU level to mitigate the effects of the current situation.

The key measure recently given effect by the Commission is the facilitation of advance payments of 70% under the direct payments scheme and 85% for rural development schemes before completion of controls. In other words, €750 million will given out next month on 16 October, which would not, or certainly that amount of money would not, have been given out but for that advance payment. This will be of significant benefit in terms of easing the cashflow of farmers.

Furthermore, the European Commission announced earlier this month that it is providing a €420 million direct aid package for European farmers. Ireland’s share of this fund will amount to just under €14 million. Among other measures announced, the increase of more than 100% in the rate of private storage aid for skimmed milk powder is very significant, as well as storage aid for cheese. We had our first meeting of the dairy forum yesterday and I was very blunt and forthright with the farming organisations in terms of trying to get some feedback from them as to how they wanted us to spend that direct income support for farmers. I agree with them that we should look at basing our distribution model on flat-rate payments, which, I think, will positively discriminate in favour of smaller farmers. That would be a good thing to do. It is not a huge amount of money but it will help cashflow for many dairy farm families. We need to separately allocate some money for the pig sector as well and we will probably give some priority to young farmers by way of some percentage top-up in terms of those flat-rate payments as well. I would be interested in people's views on that approach. We have not finalised any decisions.

I can assure members that I will continue to work with the industry, other member states and farming organisations to consider how we can refine and improve mechanisms to help farmers to cope with downward price cycles when they arise. We spent a good deal of time yesterday talking about price volatility.

Today’s meeting will allow us to look back over the year to date, look at the remainder of the year and, as we are now close to budget 2016, it will allow me to get some feedback from the members and to take questions from them in that regard. In the financial data we have supplied, we have tried to tie the financials and the outputs together in the briefing and I am happy to elaborate on any elements the members may wish to discuss. This year the Exchequer contribution to the Vote of my Department amounted to €1.26 billion, €1.044 billion in current expenditureand €216 million capital expenditure.This represents an overall increase of €41 million over last year’s figures and is the first time my Department’s budget has increased since 2009. Expenditure so far this year is in line with profiles and it is expected that this will continue over the remaining quarter.

My overarching priority for 2015 has been to deliver the first part of the Government’s commitments to the farming and fishing sectors in the commencement of actions under the new rural development and seafood development programmes. These supports prioritise vulnerable sectors and support the incomes of family farms. Overall, I secured €439 million for investment in the rural development programme, up from €405 million in 2014. Schemes under the new rural development scheme, including the green low-carbon argi-environment scheme, GLAS, the beef data and genomics scheme, TAMS II and areas of natural constraint, ANC, are up and running, and I am pleased that, despite an additional two weeks allowed for application, €114 million of ANC payments issued to farmers last week.

Next month will see payments under agri-environment schemes begin to issue. This year €155 million worth of payments will issue to 17,000 rural environment protection scheme farmers, closing out that important scheme, 19,000 farmers under the agri-environment options scheme and to up to 26,000 farmers under the new GLAS. This scheme, when fully open, will support up to 50,000 farmers and require funding of €250 million. It will build on the success of these earlier programmes and encourage farmers to farm in an environmentally friendly manner.

The total allocation for the various on-farm schemes planned under TAMS II is €395 million over the course of the rural development programme. For 2015, I allocated €34 million of grants under TAMS, which represents a 100% increase on the 2014 budget. This provides for final payments on TAMS I, new schemes under TAMS II as well as a new farm safety scheme, which, unfortunately, we are reminded again today is extremely important. I recently extended the period for receipt of applications under TAMS I and the farm safety scheme by two weeks and I am pleased that this additional period of time allowed many farmers to submit applications for finished projects. Officials in my Department are working on those applications now with a view to processing payments for issue over the coming months.

In August I announced the opening of a new TAMS II scheme for pig and poultry investments and recently opened two more new TAMS II schemes. One is the animal welfare, safety and nutrient storage scheme and the second one is the low emission slurry spreading scheme, or LESS as it is known now. The benefits of the schemes range from the construction of new animal housing, the provision of nutrient storage facilities and the ever important safety elements to a more sustainably-friendly approach to the spreading of slurry, with knock-on benefits for Ireland’s ammonia and climate targets.

As members will know, 2014 was a year when tragedy struck too many Irish farm families. Conscious of the loss of life and injuries sustained on farms in recent years, particularly during 2014, I opened a farm safety scheme in October of last year. Following on from the demand from the farm safety scheme, which saw applications from over 6,000 farmers, I was pleased to be able to relaunch the safety component of this new scheme - the animal welfare, safety and nutrient storage scheme. This will give all farmers an opportunity to assess what can be done on their farms to improve safety and save lives, we hope, on family farms. I am determined to do everything possible to reduce the tragic accidents that we have seen on farms, particularly in the past 18 months or so. Unfortunately, I think, the figure so far this year is 14.

There is a family grieving as we speak.

As the beef industry experienced a very difficult year in 2014 I was conscious of the need to give particular priority to providing the level of support that can contribute to restoring confidence in the sector. I was pleased that we were in a position to fund support measures worth in excess of €83 million. The cornerstone of this support package is a significant increase in the funding allocated to the new beef data and genomics programme from €23 million to €52 million. This 126% increase will place Ireland at the international forefront of genetic improvement in beef and will make an important contribution to improving the carbon efficiency of Irish production. Payments under this scheme will issue to participating farmers later this this year. There are just under 30,000 farmers in that scheme.

I also prioritised innovation as part of the smart agenda through a substantial fund for research and development and training amounting to €28 million under FIRM, Stimulus and forestry funds and Teagasc training courses. The new call for research proposals will shortly issue.

The allocation of almost €147 million for Ireland under the new European maritime and fisheries fund is significant for the sector. In aggregate terms this represents a doubling of Ireland's allocation of EU funds relative to our allocations under the former European fisheries and EU financial instruments for sea fisheries control and data collection.

The Department has prepared a new operational programme in consultation with the industry which has been submitted for approval by the European Commission. The new and substantially improved allocation of funds, combined with more than €90 million of national co-funding, will enable me to launch new schemes under the seafood development programme aimed at driving investment in fisheries and seafood development to 2020 and securing the future of the marine sector.

Taking account of the fact that the Irish bloodstock industry is of enormous economic benefit to this country - we saw that in terms of sales yesterday - I increased State support for the horse and greyhound industry by €14 million to €68 million last year. It has been estimated that the industry provides in excess of 14,000 jobs, approximately €1.1 billion in economic output and is responsible for exports worth in excess of €200 million. The increase in State support for both industries is a recognition of a significant shortfall in funding going into the horse and greyhound sectors in recent years as a result of a downturn in the economy.

Budget 2015 saw a suite of taxation measures designed to support modernisation, restructuring and the promotion of growth and expansion. The tax package which was worth about €300 million to the farming community, was largely negotiated and put in place by the person on my left, who did a fantastic job on it with the Department of Finance. Overall, 2015 has been a challenging year. We have had to develop and launch the new basic payment scheme which will see some €1.2 billion of funding issued to Irish farmers, 70% of this will be issued in mid-October, recognising the difficulties farmers are currently experiencing. Many countries in the European Union cannot make those advance payments because they do not have the systems in place to do that on time. It is a recognition of how robust our systems are that with a few weeks notice a decision can be made for 70% advance payment and we can make it happen. I hope we will deliver that on time with the full amount of money involved.

We have also had to develop and open new schemes under the rural development programme. Opportunities following the abolition of quotas were undermined by the downturn in world demand for dairy and the Russian trade embargo and have required a swift EU response to put in place supports. I remain confident in the future for dairy in Ireland in the medium to long term. We are already seeing signals that the market is starting to turn.

The Government remains committed to agriculture and the marine sectors. I am determined through the Department's initiatives, schemes and programmes to continue to support and develop these important pillars of Irish society and of the Irish economy.