Michael Creed (Cork North West, Fine Gael) | Oireachtas source

I am very pleased to accept the invitation to meet with the committee. This is a valuable opportunity to review how we are progressing with the current challenges and opportunities presented across the various sectors in agriculture, food development, marine and forestry.

Budget 2017 demonstrated the Government’s firm commitment to the agrifood and marine sectors, recognising the challenges faced by rural communities and the ongoing challenge of Brexit. In 2017, the Exchequer contribution to the Vote of my Department will amount to €1.468 billion. This is €1.23 billion in current expenditure and €260 million capital expenditure when a €22 million capital carry-over is taken into account. This represents an overall increase of almost €120 million over last year and recognises the role the agrifood sector continues to play in our economic recovery. The agrifood sector has performed strongly in recent years with Bord Bia estimating that exports reached an estimated €11.15 billion in 2016. This represents a new high for exports and market growth of over 50% since 2009. In addition to the funding received through the Department Vote, in 2017 Ireland will receive some €1.2 billion in direct funding from the EU for the basic payment scheme.

My key focus for 2017 is on maintaining farm payments and protecting vulnerable farm incomes against market volatility, supporting sustainable investment and jobs in rural and coastal communities and strengthening the sector to meet the challenges of Brexit. I have prioritised the ongoing implementation of the rural development programme and the seafood development programme, and fulfilled the commitments in A Programme for a Partnership Government in relation to sheep welfare. I have also continued to provide support to forestry, horticulture, the various State agencies under my remit and the horse and greyhound racing fund.

The UK’s decision to leave the European Union undoubtedly presents an enormous challenge for the Irish agrifood sector. The UK is by far our largest trading partner. In 2016, we exported €4.8 billion worth of agricultural products. Ireland is also the UK’s largest destination for its food exports, which were worth €3.7 billion in 2016.

I and my Department have been actively engaged in assessing the impact of the referendum vote on the Irish agrifood sector, consulting appropriate stakeholders and engaging with relevant politicians and institutions. This work is being done in conjunction with the overall Government response co-ordinated by the Department of the Taoiseach. In response to the challenges posed, I have undertaken a number of important steps within my Department, which include the establishment of a Brexit response committee and a dedicated Brexit unit. I have also created a stakeholder consultative committee which is complemented by frequent and ongoing contact with representative organisations and companies. I also hosted three meetings under the all-island civic dialogue process. All these opportunities for consultation allow me and my Department to establish the issues of critical concern to industry stakeholders.

The impact of Brexit on the food industry has initially been in terms of currency volatility and uncertainty, presenting challenges to maintaining hard-won markets and a need to intensify the process in recent years of diversifying into new and emerging markets which offer good potential for growth. In line with their market intelligence and promotion mission, Bord Bia has responded quickly, engaging with companies and developing a four pillar strategy to provide food and drink companies with market information, advice and practical supports. The four pillars are managing volatility, obtaining consumer and market insight, deepening consumer engagement, and extending market reach. The additional €2 million being provided in 2017, which builds on increased funding in recent years, will enable Bord Bia to undertake a number of activities in 2017. These activities include an export marketing strategy programme to help individual companies to maintain and grow their position in the UK and diversify their market reach, research to identify priority market opportunities, participation in three new trade fairs in Asia, and increased presence at key food shows such as Gulfood, where space will be doubled, and Anuga in Germany.

The activities planned build on the supplementary market and business support programmes which were developed by Bord Bia following the United Kingdom referendum and for which additional funding of €1.6 million was made available to Bord Bia in 2016. Bord Bia is also planning to almost double its drawdown of EU promotion funds to €1.9 million, mainly for activities focused on China.

Skills are an important element in delivering market related research and services. In 2016, sanction was given to Bord Bia to recruit 20 additional staff. The recruitment programme is well advanced, with just four positions to be filled in 2017.

I am engaged in a series of bilateral meetings with my European Union counterparts which are aimed at building alliances to ensure agrifood and fisheries issues are at the top of the EU negotiation agenda. I want to discuss and gauge the importance of Brexit to these member states and assess the degree to which they could support Ireland’s efforts to have these issues specifically and adequately taken into account in the negotiations.

I have just returned from a series of such bilateral meetings in Germany, Netherlands and Denmark and I will be having meetings in Estonia and Poland at the end of the month. I have plans to meet other European Union Ministers next month. I am also in regular communication with the Commissioner Phil Hogan and my officials have taken part in meetings with the Commission and the Barnier task force.

I am also very committed to continuing a very strong focus on trade promotion in 2017. I have participated on trade missions to the Gulf states this year which has enhanced and improved our existing levels of market access, and I am also considering a range of other destinations for the remainder of 2017.

Last October, I announced a ground-breaking measure for the agrifood industry in the form of a cashflow support loan fund. Developed in conjunction with the Strategic Banking Corporation of Ireland, SBCI, by leveraging EU and Exchequer funding totalling €25 million to deliver a total loan fund of €150 million, it was designed to support highly flexible loans for up to six years for amounts up to €150,000. The interest rate applying is 2.95% and the product, which became available in January, was made available to livestock, tillage and horticulture farmers. This innovative loan scheme provides farmers with a low cost, flexible source of working capital and allows them to pay down more expensive forms of short-term debt, such as merchant credit or overdrafts, contributing to the ongoing financial sustainability of their farming enterprises.

The scheme is administered through AIB, Bank of Ireland and Ulster Bank and they will report on progress to the Strategic Banking Corporation of Ireland, SBCI on a regular basis, although no official returns have been received by my Department as yet. However all of the banks have confirmed that they have applications up to the amounts available under the scheme. There may be some residual availability but this will only emerge as applications are processed and loans drawn down.

I am very pleased at the very positive reaction by farmers to the scheme, which has proved that significant demand exists for low cost flexible finance. I hope that the commercial banks will respond positively to this demand by reducing interest rates and providing more flexible terms for cashflow loans in the future. I plan to meet the chief executives of the banks shortly to discuss this and other issues relating access to finance in the agrifood sector.

A key priority for 2017 is to prioritise the ongoing implementation of the rural development programme and the seafood development programme and to fulfil programme for partnership Government commitments. I have also continued to provide support to forestry, horticulture, the various State agencies under my remit and the Horse and Greyhound Fund.

The €4 billion rural development programme provides vitally important stimulus in the Irish rural economy. In 2017 rural development funding will increase by more than 21% from €494 million to more than €600 million.

In 2017, the agri-environmental scheme, GLAS, will benefit from additional funding. Applications under the first two tranches of the GLAS scheme resulted in almost 38,000 farmers being approved into the scheme in its first year of implementation. Furthermore, just under 14,000 applications were received for GLAS 3 which closed in mid-December last. Approvals have now issued in respect of over 90% of these applications, with the remaining applications currently being examined by the Department with a view to issuing further approvals where appropriate. This will bring the overall participation levels in GLAS to well over the targeted participation level of 50,000 farmers.

The 2016 payments represent the first full year of payment under GLAS. At the end of December 2016, there were approximately 37,500 active participants in the GLAS scheme, of which over 86% have now received payments valued at over €112.9 million. Further payments are issuing on a weekly basis where all the required validation checks have been successfully passed.

The sum of €52 million will be available for the beef data and genomics programme in 2017. I believe that this innovative scheme will accelerate the genetic improvement that will drive efficiency and increase profitability at farm level and enhance our reputation as a world leader in sustainable food production.

I have provided €50 million for the TAMS II scheme in 2017. There has been a significant level of interest in the six investment measures that had already opened under the TAMS scheme with more than 10,600 applications received to date. Approvals are issuing on an ongoing basis after the closure of each tranche. Approvals have now issued to over 6,400 applicants.

This month I opened a seventh measure focusing on tillage. Through the Tillage Stakeholder Forum I am aware of the issues facing the tillage sector including the effects of a poor harvest in 2016. This new TAMS II measure includes capital investment measures which will assist the sector in supporting the use of the most modern and efficient equipment and facilities to enable the tillage farmer to improve competitiveness. I would encourage all tillage farmers to examine the provisions of the scheme as I am confident that this new measure will provide a strong platform for investments on tillage holdings.

Some €25 million will also be available for payment to over 20,000 participants in the beef, dairy, equine, sheep, poultry and tillage knowledge transfer scheme. The implementation of the scheme builds on the knowledge and skills base of farmers in key areas and focuses on profitability and sustainability and also important issues such as farm safety and farm succession planning.

I have fulfilled the programme for partnership Government commitment with the introduction of a scheme for sheep farmers and a budget of some €25 million has been provided. The scheme provides support of €10 per ewe to farmers with breeding ewes flocks. Farmers are required to undertake two actions in each year of the scheme, with actions to be chosen from a menu of actions linked to lowland and hill type flocks.

The €241 million European maritime and fisheries fund operational programme, launched in January 2016, will be further rolled out in 2017 with an increased total budget of €43 million made available across my Department and its agencies. This investment will fund a range of programmes including capital investment in the seafood processing, aquaculture and fishing sectors to foster growth in production, value and employment, and to enhance sustainability and competitiveness.

I have also made €85 million in funding available for the food safety animal and plant health work performed by the Department. While we have seen some savings under this heading in recent years due to the reduced instance of disease it is important to remain vigilant and defend out health status and keep our food standards at the very leading edge.

This is a very brief overview of the range of measures that apply in the agrifood and marine sectors for 2017 and I look forward to the discussion and questions from committee members.