Jackie Cahill (Tipperary, Fianna Fail) | Oireachtas source

We are all focused on the fall in the value of sterling, but it is one of our least problematic issues. Companies and people who selling into the UK market will, when renewing contracts, allow for that fall.

Food inflation in the United Kingdom is increasing. Those in the mushroom sector tell us they are getting price increases from retailers. Has Teagasc done any analysis of whether food inflation is increasing in the UK and, if so, what effect it will have on consumer demand in future?

Free trade is a two-way street. The UK will want to maintain free trade. It exports a great deal of lambs to France. Those involved will want to keep that trade going. For over a generation we have stopped the UK doing trade deals with South American countries. What impact would it have on the beef industry if any deal was done? Can we spancel the UK in such a way that if those involved want free trade in Europe, they cannot do bilateral deals with South American countries?

I read a report this morning that set out how 20 countries within the EU had tried to bring in legislation to control retailers. The report gave an indication of the power of large retailers. Over a certain period the UK liquid milk market has been wrecked. Proportionally, almost 50% of UK milk goes to the liquid market there. As we sit here this evening, the price of on-the-spot milk in the UK is at 43 pence per litre. It looks as if there will be a serious shortage of fresh milk and cream in the United Kingdom in the run-up to Christmas. Over a long period, retailers in the UK have forced the primary producer into a position whereby it no longer makes economic sense to produce a year-round product.

We are focusing on alternative markets. However, 50% of our beef goes into the UK and approximately 42% or 43% of our dairy produce goes there. We need to be realistic. Under the Food Wise 2025 plan, we are projected to increase our production of milk, beef and so on. It will be difficult enough to get markets for that extra produce, never mind trying to find an alternative market for the product we sell to the UK. We saw the results of the Russian ban and the unease it brought to the market. It is difficult to imagine how we could reduce our dependency on the UK by more than 4%, 5% or 10% over a decade. It would represent a major target to try to reduce our dependence over a decade. There are 65 million or 70 million people in the UK. That will always be our main market. We have to factor that into our thinking. The suggestion that we can get alternative markets for the produce we sell there amounts to living in fantasy land. We will have to try to tailor any fall-out from the British decision to ensure that the economic effects are kept to a minimum.

CAP funding has been raised. Again, we need to face reality in this regard. If the budget is increased for CAP funding, or even if the budget is maintained, our proportion will drop. Eastern Europe will have its claws into the funding. Those involved will be able to make a stronger case for any extra funding that we could. We must face reality. In any economic projections we have to factor in that CAP funding to this country will be reduced as a percentage of the overall EU budget. Unfortunately, that is the stark reality as we face into the next CAP reform, which is only two or three years away. The year 2020 is only down the road. Numerous challenges will arise.

As other speakers have suggested, we are looking into a crystal ball. Food inflation will be present in the UK. The effect of this on demand will be crucial. The produce we sell will be on fragile ice with regard to the market equilibrium. I am keen to see some analysis of this. If food inflation is 4% or 5% in the UK, what effect will it have on demand for produce there?