Professor Gerry Boyle:

The slides summarise our presentation. I will first talk briefly about the trends in the sector and current performance, go on to look at some opportunities and, finally, document for the committee the Teagasc response to the situation in which the tillage sector finds itself.

I start with an arresting chart on which we show average family farm income across the main Irish enterprises for the period 2013 to 2016. The most recent data available from the national farm survey is from 2016. This is the chart to which I come back time and time again because it points to the huge challenge faced by the tillage sector, albeit not only by that sector. That said, the contrast between an average family farm income, which includes direct payments, of €55,000 for dairying and €30,000 for tillage highlights the gap that exists now but which, traditionally, was much narrower. On top of that, members will of course be aware that the single farm payment has become increasingly important to the incomes of tillage farmers. On average over the period, it came to approximately 75%. As such, that graph is the one which is of most concern to us and, I am sure, to tillage farmers.

I move on to some other facts about the sector. It is a relatively small sector, accounting for approximately 9% of farm land. The area under tillage has been decreasing over the last five years as members will see from the chart setting out the trend at the bottom of page 2 of the slides document. It has declined by just over 14% over the last five years. We estimate that there are currently 3,000 specialised tillage farmers. Production is between 2.2 million to 2.5 million tonnes per annum and the product is used predominantly for animal feed but also for malting for brewing, some food grade oats and oils and some milling wheat. From the point of the view of the agronomics of the sector, it is classified very much as high input, high output. One of the paradoxes to some extent and something which often interests people from outside the country in particular is the fact that we have some of the highest yields in the world. As against that, however, we have very high costs of production. Of course, the other distinguishing feature of the sector, which has given rise to some difficulty in recent years with the competition for land, is the large area which is leased. It is of the order of 50% of the area sown.

Overleaf on page 3, our document provides some favour of what has been happening at county level. Members will see that between 2007 and 2016 most counties experienced significant declines in area, notably Cork, Kilkenny and Wexford, albeit with some exceptions on the other side of the graph, in particular in County Meath. The diagram at the bottom of page 3 emphasises the point that we are substantial net importers of product. Members will see that the gap set out in the final bar for 2015 is between a use of approximately 6 million tonnes and a production level of between 2 million and 2.5 million tonnes. The graph at the top of page 4 shows that we are price takers when it comes to cereals. The world market dictates the price situation, especially having regard to the issue of stocks, which have been on the increase. That has put tremendous price pressure on an already tight world demand and supply situation.

As far as the current harvest is concerned, Teagasc advisors have kept a constant watch over the season. This year, we consider that yields have been relatively good, but not exceptional. The cereal harvest is, we are happy to say, almost complete. There is approximately 5% left to be harvested. In some parts of the country, however, there are significant areas which still face difficulties, in particular Donegal, the west and some parts of the midlands.

Trafficability and crop breakdown are emerging issues. We estimate about 30% of beans are left to be harvested and 20% of straw is still to be baled nationally. Of course, we are all aware of the price of straw, and some quality issues have also been reported.

In summary, while this sector has faced and is facing severe challenges, there are also opportunities. I would emphasise that these opportunities are largely emerging in niche areas and we are endeavouring to identify premium markets. For example, there may well be a development around “Irish only” product, which is something Teagasc has been looking at. In the drink sector, there are opportunities in distilling, although that gives raise to particular technical challenges for the producer, and also around craft beers. Increasingly, as the committee is aware, in markets for some of our main export products, for example, the German market, consumers are looking for genetic modification-free, GM-free products, which presents an opportunity for the grain sector. I am happy to say there are opportunities emerging around human food grade markets, such as oats and cold-pressed oils. We include the potato sector within the overall tillage sector and opportunities are emerging around chipping and salad potatoes. Certified seed crops also present opportunities.

Looking to the future, there are certainly opportunities around organic products. We consider this to be a niche area but there is definitely a market for some crops. Unfortunately, we are all too aware that when price pressure emerges, in particular during economic downturns, there tends to be a convergence between the organic and the conventionally produced. I have mentioned the issue around genetically modified, GM, crops. As the committee is aware, imported GM products continue to be fed to animals but no GM crops are grown in Ireland. As I said, a consumer issue is emerging in some of our main markets regarding GM-free produce. We certainly foresee that the dairy sector will have to respond to this demand for GM-free.

The Teagasc response is to work with partners in the industry, particularly with our producer clients and the processing sector. From a research perspective, we are of course looking at yield and sustainability of cereal crops in all their dimensions, not just economic or environmental. We are looking at the opportunities that might exist for alternative crops for import substitution and higher value markets. We are looking to develop higher value end uses for cereals, and I have already mentioned the opportunities that exist for distilling. Of course, we are always striving to produce better and more robust varieties, and there are some very exciting approaches in the molecular sciences that will assist this process. Of course, one can have the best research in the world, but without good advice it will not be effective. Again, the emphasis is continuously on increasing adoption of best technology to reduce costs, to produce more sustainably and to produce product that the market requires. We are working closely with industry to target programmes around areas that are emerging and growing in importance, such as malting barley, potatoes and distilling.

We would emphasise the importance of training our young farmers. It is a very demanding sector and education is essential. We want to develop the role of new technologies. Again, I want to emphasise the great potential we see for improving the breeding of new varieties through marker assisted and genomic selection, which is now being used to increase the rate of varietal improvement.

There is huge interest among scientists all over the world in the potential that the novel technology of gene editing offers, and we believe it has the potential to increase significantly the rate of varietal improvement. The role of GIS technology is being investigated. We have produced the so-called nutrient management planning online tool, which is allowing us to focus on the extraordinary variability that exists in yields and in the application of nutrients at field level. That will enable us not only to improve average yields but also to improve the costs in terms of chemical application of fertilisers. We are going to see much more precision in the application of nutrients, which will have positive environmental and economic effects. We are even seeing the use of handheld devices to detect unseen diseases to target early responses better.

We think it is important to emphasise the potential for the bio-economy, although this will depend hugely on the appropriate incentives being in place. After a number of years when this sector was somewhat in the doldrums, we hope the impending renewable heat incentive will provide a new fillip to the opportunities that exist. There is no doubt that, without support, the industry will continue to stagnate due to a lack of investment and the opportunities that exist in this important sector may not be fully realised.

That is a summary of our presentation. My two colleagues will answer all the hard questions.