Oireachtas Joint and Select Committees

Tuesday, 23 September 2014

Joint Oireachtas Committee on Agriculture, Food and the Marine

Vote 30 - Update on Pre-Budget and Policy Issues: Minister for Agriculture, Food and the Marine

3:45 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I remind all those present to turn off their mobile phones completely, as they interfere with the broadcasting of proceedings.

The purpose of the meeting is to conduct a review of the position on expenditure under Vote 30 in 2014 for the Department of Agriculture, Food and the Marine and consider the Department's proposals for 2015. I welcome the Minister, Deputy Simon Coveney, and thank him for appearing before the joint committee. I also extend a welcome to his officials and thank them for the briefing material supplied to the committee.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

We agreed to the format of the meeting in private session. I understand the Minister will make an opening statement, following which we will try to deal with sub-programmes A to D, inclusive, individually, assigning approximately 30 minutes to each. If we are not too constrained by time at the end, we can have a discussion on the overall budgetary position. I invite the Minister to make his opening statement.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I am sorry, but I do not have two hours. If it were helpful, I could skip my opening statement in order that we might go straight to examining the expenditure programmes.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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That is fine.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I could make the statement. I am in the Chairman's hands, but as I will also be making a statement to the Dáil at 6.45 p.m., I must be out of here by 6.30 p.m. at the latest. I would rather it to be 6.15 p.m., if possible. I could make a statement at this meeting that would take seven or eight minutes, but I am happy to skip it, if the committee wants.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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No; it would be useful if the Minister made the statement. We can be well gone in two hours, given the lateness of the hour and the fact that there is much happening this week.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Yes. We would have started earlier, but one of the committee's members tabled a private notice question that I had to take.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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No problem.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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We understand things became a little muddled.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I will make a quick statement, if the committee wants, to give some context to the discussion.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The Minister might condense it.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I am pleased to accept the invitation to attend the committee's hearing. This is a valuable opportunity to review how we are progressing through the various challenges and opportunities presenting across the agriculture, food development, marine and forestry sectors and discuss market prospects and new investment opportunities in same.
As we head into the final quarter of 2014, we have many successes on which to reflect and, in equal measure, many challenges to face. I am pleased to have secured agreement at Government level for a new rural development programme worth €4 billion in the 2014-22 period. The plan is in Brussels and I look forward to securing approval which, in turn, will enable me to launch new schemes aimed at dealing with the many challenges we face in order that we can be well positioned to respond to growing market opportunities. I want to secure the same future for the marine sector and have negotiated a new, substantially improved allocation of €147 million under the European Maritime and Fisheries Fund, EMFF, increased from €70 million. My officials are working on a draft operational programme that will set out a series of measures to drive investment in the sector to 2020.
This is a valuable opportunity to consider some of the wider issues beyond the financial data, including trade developments, issues relating to implementation of the Common Agricultural Policy, CAP, and the Common Fisheries Policy, CFP, and the proposals for the main sectors, particularly milk production, where we are on the cusp of achieving for the first time since 1984 a dramatic increase in milk output viathe elimination of quotas next year. If members want an update on superlevy issues, I will try to provide one.
In the financial data we have supplied in the briefing material we have tried to tie the financials and outputs together. While expenditure in 2014 is the central issue at this meeting, budget 2015 is not too far from members' minds. However, they are aware that I am somewhat constrained in what I can say about the budget. In 2014 we are operating within the expenditure ceilings set down of €1.019 billion for current expenditure and €200 million for capital expenditure. Our outlook for the year is that we will be as close as possible to reaching the target current and capital expenditure limits. The overarching objective for 2014 has been to build on the progress achieved in recent years in developing the agrifood sector and, in particular, further contributing to future growth and prosperity that the sector can achieve for Ireland.
In terms of the budget, the key priorities were supporting vulnerable sectors and protecting the incomes of family farms; supporting small farm holdings in disadvantaged areas; taxation measures to restructure, modernise and promote growth in the agrifood and farming sectors; providing support programmes in line with the targets of Food Harvest 2020, in particular job creation; supporting the future of the sector through new research and development funding and investment in food safety and animal health and welfare controls; and an ongoing programme of reform within the Department and its agencies aimed at continuing improvement in service delivery and reduced costs.
As members know, my Department's activities are organised under four programmes. Given my understanding that this is how the committee will review expenditure in 2014, I will not make specific comments at this point. However, it is useful to highlight the fact that 2014 marks a transitional period between two rural development programmes. We must take this into account when considering the issue. I am pleased that, since this discussion session last year, the overall funding package for the seven year programme has been completed and that we are close to completing a similar arrangement for the new seafood development programme.
Elsewhere in the Houses today we have already discussed the beef sector. Developments in the past 12 months have presented us with a real challenge. Many of the solutions lie outside the framework of Government spending and policy, but I have been active in seeking to influence and in taking direct action. I assure the committee that the sector is foremost in my priorities and I will continue to work with the industry at all levels to ensure that not only will we resolve the current issues facing the sector but that we will continue on a path towards achieving the key targets for the sector to which the industry has committed itself in the period to 2020.
In framing last year's budget in difficult financial circumstances I allocated €23 million to supporting the new beef genomics scheme, which will further progress the genetic quality of Irish beef and deliver world best practice in beef traceability.

When taken together with the beef data programme, worth €10 million, this allowed me to provide the equivalent of payments worth €60 per calf for some 32,000 herds, covering up to 550,000 suckler calves. In addition, we had the continuation of the €5 million beef technology adaptation programme, giving a total sector-specific package this year of €40 million for the suckler beef sector. That, of course, was distinct from the benefits to the sector of the disadvantaged areas scheme payments of €195 million and the single farm payment of €1.21 billion.

Another special feature of this year's budget was the Government's response to the severe storms and the damage these caused to harbours the length and breadth of the country. In addition to the increased provision for fisheries harbours, which rose from €8.6 million to €12 million, I announced an additional capital package of €8.5 million for the repair of publicly-owned piers harbours and slipways damaged during the winter storms in early 2014. The €8.5 million comprised €7 million for 111 projects to repair local authority-owned storm damaged harbours, piers and slipways and €1.5 million for remediation work at four Department-owned non-fishery harbour centres.

Looking to 2015, arising from the public finances situation, total Exchequer expenditure by my Department has reduced from €2.1 billion in 2008 to €1.219 billion in 2014. The 2015 expenditure ceiling for the Department was provisionally set down in the 2014 budget report as €1.005 billion in current expenditure and €168 million in capital expenditure but the financial determination of the 2015 allocation was postponed until after the completion of the Comprehensive Review of Expenditure 2015-2017.

Among the particular priorities this year is to provide an appropriate level of funding to launch both the new rural development programme and the seed food development programme under the European Maritime and Fisheries Fund. The successful negotiations of both the new seven-year rural development programmes and the seed food development programme will heavily influence the Department's current and capital spending plans for the coming years. The RDP provides for an overall funding envelope, EU and Exchequer, over the period of some €4 billion. As part of that decision, it was agreed that the total Exchequer allocation would be subject to an affordability review in 2016 but the members will be familiar with the figures we have committed to in terms of the 46% co-funding rate.

The June 2014 announcement by the Commission of an allocation of €146.3 million for Ireland under the new European Maritime and Fisheries Fund is significant for the sector. In aggregate terms, this is roughly a doubling of Ireland's allocation of EU funds relative to our allocations under the former EFF and EU financial instruments for sea-fisheries control and data collection. The Department is preparing a new operational programme within the EU co-funding framework, and this must be submitted for approval to the Commission shortly. The expanded EMFF will give rise to increased Exchequer co-financing of the sector which is being finalised within the budget process at the moment.

I hope that gives an indication of some of the issues we are managing at the moment. If members have any questions, I will be happy to answer them. Otherwise, we can go through the four different programme areas.

3:55 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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We agreed to go through the programme individually so I now invite questions or comments on programme A, starting with Deputy Ó Cuív.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I thank the Minister for the outline. I am not saying this as a personal criticism of him as the same thing was happening when we were in government. However, when all of this talk about output targets came in, I remember being very critical of it at the time because I always believed that the output targets would be just another layer of bureaucracy, another box-ticking exercise we would all get involved in, taking staff time without really having any benefit.

Programme A states that the target is to secure a beneficial outcome for the agriculture, food, forestry and fishing sectors in EU and international negotiations. As any person would say, first, the Minister is unlikely to try to do anything else and, second, he is very unlikely to come back and say the outcome was not beneficial. It is a pity the target was not more specific. I am sure that when Senator Mary Ann O'Brien was running her business, the targets were more specific than that. I am sure she did not just say the business should increase sales but that it should hit a specific target, as that is what the private sector would do, and if the target was not hit, that would be admitted. I believe that either this exercise should give us real and meaningful targets next year or we should just abandon it. We have no way of measuring success or failure against nebulous targets like that, and it would take us all day to find out what the specific targets were and how they were measured. I doubt the Minister succeeded in getting everything he set out to get but we do not know.

With regard to trade, the target is to continue the initiative to facilitate trade and market access for exports of food, beverages, genomics and live animals. The Minister talks about all of the different things he did in regard to incoming and outgoing trade visits and market access. Do we have any quantification as to what proportion of markets these visits represent? For example, what proportion of our sales are to the markets of Mozambique, the Philippines, Nigeria, Ethiopia, Palestine, Japan and Australia? What are the target increases we are going to achieve in these markets from all the activity? While I am of course in favour of the activity, I believe it should be much more specific. I do not expect the Minister to have all these answers today but this is very disappointing because we have all these targets yet the committee has no way to measure them.

The Minister's brief states that he will continue to implement Food Harvest 2020. He said a progress report was launched on 17 September and that 74% of the Food Harvest recommendations have either been achieved or that substantive action has been taken. Is it the case that this action was taken on the recommendations? How do we measure the recommendations or the achievement of output results against what was in Food Harvest 2020?

While I do not want to delay the meeting, I believe this exercise needs to sharpen up in terms of targets if it is to be worth having at all. If we are not going to do that, we would be better going back to the old system and just going through the figures and measuring against those figures.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank the Minister for his presentation. As Deputy Ó Cuív said, it is almost impossible to get into the actual specifics so I would like to focus on the prospects and the intentions that formed part of the Minister's presentation. The Minister referred to the opportunities regarding the implementation of the CAP and the CFP and regarding the main sectors, particularly milk, where, for the first time since 1984, there has been a dramatic increase in milk output with the elimination of quotas. How confident is the Minister that the vision or intent can be realised in regard to achieving the potential that exists?

I say that in relation to my concern, on which I have been consistent since the very beginning, about the abolition of quotas. In effect, it will be the end of the smaller producers in particular. As is happening in the beef sector at the moment, margins are getting smaller and smaller. Is the Minister satisfied that the potential can be realised and that this will not have an impact on the weaker, marginal producers? What is the Minister's target for production in that regard in 2020?

Referring to the weaker sector again, concerns have been raised in the committee and the Dáil Chamber on the curtailing of farm assist payments. What interaction has Deputy Coveney had with the relevant Minister in that regard? Is there any prospect of returning to the 2009, 2010 or 2011 level of farm assist, which helped the marginal, weaker farmers to survive?

Regarding the rural development programmes-----

4:05 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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That is in programme C. We will stick with programme A and I will come back to the Deputy for programme C.

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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I welcome the Minister and his officials to the committee. Regarding the Food Harvest 2020 targets, 74% of the recommendations have been achieved or substantive action has been taken in relation to them. How does the Department quantify what has been achieved so far, considering that we are now six years from 2020? There has been a great deal of discussion and debate on the beef situation over the past 12 months or so. From a beef point of view, how are we doing with regard to the Food Harvest 2020 targets? How do we see ourselves in the next year? The past year has been a difficult and challenging time. Are the targets set out in Harvest 2020 achievable and attainable from a beef point of view? New markets are crucial to developing the beef industry. Extra funds were spent by Bord Bia over the last year to generate new markets. How have we been progressing from that point of view?

As we approach next March and the end of the super-levy, which is welcome, the milk targets seem to be very achievable. While I am probably getting off the point to a certain extent, a potential consequence for a number of farmers building up in advance of the abolition of the quota is a huge super-levy bill in the coming period. What progress have we made to alleviate or soften the blow for those who may be liable for super-levy bills in March? Might that have an effect on the possibility of future development in the area? While development is welcome, I concur with Deputy Ferris's view regarding the small milk producer. Is there a need to be careful and conservative as we progress in the coming years to avoid creating a bubble similar to the property bubble? A number of farmers may be transferring from other sectors to the dairy sector unaware of the consequences going forward and unsure or unaware of their future financial situation, considering that in the past two months we have seen a 4 cent drop in the price of milk per litre. That may continue and they may not have budgeted for it. Is it sustainable, and do we need to flag it to warn people that it may not all be honey going forward and of the need to be careful and conservative?

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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I thank the Minister and his officials for coming before the committee. I will not rehash the areas touched on, but will ask a general question on trade and trade missions. I am mindful, looking at beef, that the key thing about getting into America is not necessarily quantity, but rather the quality of the cuts they take and, reputationally, how much that helps us. What is the difference between the key markets? When it comes to milk, beef and our key exports, what markets have the potential to be about real quantity? Is it the Middle East, where there is a growing middle class? How many of the markets are more like niche markets in relation to our beef? If one looks at England, to which we provide so much, is there scope for growing our export opportunities over there?

Photo of Mary Ann O'BrienMary Ann O'Brien (Independent)
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I have a quick statement for the Minister, in case I am missing something. The Department's budget was €2.1 billion in 2008. In 2014, it has a €1.219 billion budget. Food Harvest 2020 came about when I first attended the Global Irish Economic Forum in 2011. It appears from the other questions that it has gone terribly well, particularly in light of the budget the Minister now enjoys, which is rather smaller than previously, yet we seem to be enjoying humongous growth.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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We spend it better.

Photo of Mary Ann O'BrienMary Ann O'Brien (Independent)
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From where I am looking in, the Minister is doing more with less.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Going back to the old format, I note that the research and training allocation is €28 million, but to the end of August, €9.7 million is all that has been spent. I am not sure if there is a reason for that. It might be back-ended. Does the Minister have any insight into that?

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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The Minister's progress report sets out in relation to Food Harvest 2020 that 55% of recommendations were achieved and substantial progress was made on another 37%. That is good progress, adding up to nearly 92%. In relation to the 37% figure for substantial progress, can the Minister provide a breakdown of what can be done to achieve full progress?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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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.

4:15 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I do not think that is the concern that has been voiced. I have no doubt that if established dairy farmers grow their businesses and do not have to borrow inordinate amounts of money, they will be able to take the vicissitudes and volatility that are inevitably involved in any world trade commodity. The big worry people have, as we should know from what has happened in recent years, is that those who borrow large amounts to expand, or who do not have huge experience in the industry and lack that knowledge of a lifetime passed from family to family, will rush in and have money thrown at them. Then when the price drops or anything else goes wrong, they are totally vulnerable. I see this particularly in the people who went bust when the housing bubble burst. If they had bought their houses with cash, all they would have to do is to wait long enough for the value of their houses to rise again. The problem is that they bought them on borrowed money. On the other hand, the forestry industry, which I am very familiar with, survived despite a massive shock because they had not borrowed. They were cash-rich businesses, so that when shock came, they could absorb it, gain new markets and get over the hump. This has meant that we have not had one casualty.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That is a fair point. I have met all the banks in Ireland on multiple occasions to discuss this issue. Many farmers in New Zealand are effectively working for the bank rather than themselves. We cannot allow that to happen to a new generation of Irish farmers with the excitement around quota expansion. Ironically, in some ways the weakening of dairy prices forces dairy farmers to ensure that their business plan is robust. In terms of investment proposition and increasing output, anybody can build a business on 40 cent a litre, but can this be done on 30 or 28 cent a litre? I have said to all the banks, and they say they are listening, that they should insist on business plans on the basis of 30 cent a litre and no more. Some are looking for plans based on 28 cent a litre. If milk has a higher price than that, which I hope it will have, then all the better, but that should be the basis for the business plan.

There is also a big job for us to do in training new dairy farmers, and that is why we are investing significant money in knowledge transfer, discussion groups and education programmes. Our plans for expansion will, in my view, be realised.

Along with the Taoiseach and a few others, I had the privilege of opening some new facilities for Dairygold during the week. The total value of the investment in the two projects in Mallow and Mitchelstown was about €120 million. As a farmer-owned co-operative, Dairygold has direct access to information from the farmers, and based on this it is planning for a 57% expansion in volume in the next five years. This is because Dairygold comes from a part of the country that can do that. Glanbia will have similar figures, somewhere around 60%. Dairygold and Glanbia will probably have the highest figures, but the others are not a million miles behind. Even in Deputy Ó Cuív's part of the country they have very ambitious plans for growth and expansion. The key is for them to operate on the back of good business plans as opposed to having inefficient systems spending money that they do not have, and to put pricing models in place in the dairy sector that can insulate farmers from the price volatility that will undoubtedly happen.

Prices will weaken for the next six to eight months, but I think they will strengthen again after that period. We will get weather patterns that will result in crop failures, and grain and milk prices will increase again. That is the kind of pattern that we have to get used to. We are very well placed to insulate ourselves where possible from that price volatility because of the steadiness of grass production systems in terms of input costs and because we are developing a premium brand around Irish dairy. This is no longer about commodity trading of skimmed, semi-skimmed and whole milk powders, although we have some of that. It is now about premium cheeses and butters - we produce the premium butter in the world in Kerrygold - as well as infant formula and nutrition, sports nutrition and so on. All of that premiumisation of the dairy industry helps to insulate us from the price volatility that exists when one is trading commodities.

4:25 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It is now 5.30 p.m., so we have twenty minutes remaining for the other three programmes. It would be helpful to concentrate on the Vote. Programme A is agrifood policy, development and trade, and training and the various different sectors' pay. The narrative is around trying to support that but there is also the matter of how the budget is channelled. Going back to what Senator O'Brien said, getting more for less and being more efficient is key.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The one financial question that you asked me, Chairman, concerned the training and research budget. This looks to be way under-spent. The research programmes and the call for new expenditure always happen in the autumn, so there will be a dramatic increase in expenditure between now and the end of the year. Some of the schemes and funded research programmes are very much autumn-focused.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Do the enhanced young farmer and training initiatives, such as the dairy management diploma among others, come under A.3, or is that from the Teagasc fund?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I suspect they do. If we are going to have about 300,000 more cows in our herd between now and 2020, which is an increase of approximately 25% to 30%, we will get the other 25% growth from increased yield in cows. As a rule of thumb, it takes about one person to milk 100 cows. That is a conservative figure so it may take more in many family farm situations. That means that we are going to have an extra 3,000 people milking cows in five years. Many of those people will not have farms but will be coming in to milk on other people's farms. This will be similar to the current situation in New Zealand, where professional dairy experts advise on management, grazing, feeding, delivering the best yield and feed conversion efficiency, and all of the other things that our dairy industry will be about. This requires training programmes and we are putting some of those in place as we speak, although more are needed.

On the beef question that Deputy Deering asked, we have spent more time on beef this summer than anything else and I suspect we will also be spending more time on it this autumn than anything else. The big target market for the next six weeks or so is the US. We have been working on that for two years and are more or less through all the barriers. Irish beef will be the first European beef into the US market in 16 years, since BSE, and for the first time ever the price of beef in the US is as high as the price of beef in Europe. It is a great time to be getting into the east coast of the US in particular. It will be a big new opportunity for us.

In recent days we have also finalised veterinary certification for exporting beef to Iran, and ironically I have had two meetings with the Iranian ambassador in the past ten days and am meeting a political delegation today. We may take a trade mission to Iran in the spring. They have 80 million people and import a fortune's worth of beef, from Brazil at the moment. They are very interested in trying to get European and Irish beef back into Iranian markets at premium level. We are also going to China in six weeks' time. We will have at least 60 Irish companies with us and all the big beef companies will be there. We are currently selling about €40 million worth of beef hides into China, but if we can sell beef into China and can get the restrictions removed, this would be most exciting as there is a very high-end premium market in big cities like Shanghai, Beijing and Nanjing.

The two markets that will excite the industry most are the US and China, however last year we opened markets in Japan, Qatar, Saudi Arabia, and UAE. Previously 40% of beef in Saudi Arabia was Irish, so these markets have been a proven success story in the past, and there are multiple new market opportunities opening up for us. This is why we should be able to slaughter more than 30,000 animals a week in the future, and still get premium prices for our products. However, we have to be very proactive in opening up some of these new premium markets.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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It is evident that there is going to be a surge in the dairy sector. Within the farming community, the returns in dairy have been far more beneficial than in any other sector. The Minister, Deputy Coveney, mentioned that dairy in New Zealand has quadrupled, and that is true, but so has the number of farmers there whose property is practically owned by the banks. My fear is that the same thing can happen here. People may go into huge investment. The small farmer might not be able to invest in developing his farm to reach the potential that is necessary, because he will not be able to get the money. There is a certain group within the dairy sector that will benefit considerably in this regard. There will also be people switching into dairy from other sectors. Anybody who is coming from potatoes, corn, vegetables or beef and switching over to the dairy sector will have to make a huge outlay to get into that sector. I would love to see it working as the Minister, Deputy Coveney, has put it, but I do have worries. I come from that background myself, so I have seen it all on a different scale going way back to when I was involved in farming and when I was a child. People were switching from one sector to another, following the market. It was easy enough at that time because they did not have to make huge investments in milking parlours, or robot parlours as they seem to be now, for want of a better word.

4:35 pm

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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I compliment the Minister. It is important that we open new markets and it is to be hoped the US market will be an exciting one for Irish beef. I have a question on the new markets. They will also be opened to other countries. The Minister and the new Commissioner will be part of the discussions on world trade agreements, especially those on South American beef, which will become our largest threat in supplying certain markets. What is the current position in regard to the disease status of South American beef? Will that have an effect should it gain status in regard to world trade agreements and competition for our beef? Japan is a considerable distance away in terms of exporting beef. I presume we would only export certain cuts and offal, and the same would apply to the Chinese market. The US would not be as difficult to export to. It was mentioned that 40% of the beef consumed in Saudi Arabia was exported from Ireland, but a lot of that comprised live exports. Is it envisaged that the sanctions on live exports will be eased in terms of the compliance regulations regarding animal welfare for shipping companies?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I am anxious that we concentrate on the budget, because we are constrained by time.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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I asked a supplementary question. It came from what the Minister said.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I know it did, but we are in more abstract territory. In regard to the point made by Deputies Ferris and Ó Cuív, it is important that the banks learn from their mistakes and that everybody does not follow a fad or fashion. Someone who is considering entering the dairy market may factor in a budget of 30 cent, rather than 35 cent or 40 cent, a litre as a tipping point; otherwise, the business plan may not work.

Deputy Eamon Ó Cuív:

I refer to the beef genomic scheme in which the Minister is investing.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The Deputy is covering a lot of schemes.

Deputy Eamon Ó Cuív:

For some reason it is under programme A.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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My apologies.

Deputy Eamon Ó Cuív:

I would prefer to take all the schemes together.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Will we put that under programme C? We will move on. We have gone over time on this matter. We have 50 minutes to discuss three programmes. Programme B concerns food safety, animal health and welfare and plant health. Are there any observations from members?

Deputy Eamon Ó Cuív:

About ten years ago there was a major effort to get all-Ireland arrangements on animal and plant health, rather than treating the North as part of Britain which, whatever one's political leanings, does not make sense from the point of view of geography and bio-security. It was proposed that there be one common regime for animal and plant health for the island, because it was the only chance we had to secure the sea border. Is that still on the agenda? Given that devolution is now happening in many places, could Ireland be recognised as one unit for the purposes of animal and plant health and welfare?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Are there any other questions on food safety and animal and plant health and welfare?

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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The mid-year output for TSE testing is at 32,500. These tests were not outlined in the 2014 target. Is there a reason they were conducted despite the fact that no targets were in place? Are there targets?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The target was to carry out 85,000 TSE tests on prescribed animals, and to date 48,000 have been tested. On animal health, we have learned some valuable lessons from the horsemeat issue. Safety and hygiene inspections and supervision in factories protect the reputation of our industry. If our reputation is damaged, our capacity to enter the new markets we have discussed is affected. Within our Department it would not be an exaggeration to say we are somewhat obsessed with hygiene and food safety. We need to be because when things go wrong it is as if there is a red alert in the Department due to the potential for reputational damage. That is why we have carried out 9,500 food safety and hygiene inspections. By the end of June 8,500 were done. We were supposed to do fewer than 9,500 in the full year but by the end of June we had almost reached the threshold. We will go way beyond the targets we have set for ourselves. We overdo inspections from a safety and hygiene perspective for the reputational reasons to which I referred.

In terms of the all-island strategy, animal and plant health is probably the main and most consistent feature of the North-South Ministerial Council meetings. It is constantly inching forward. There are some problems about which it is important to be up-front. We have spent a lot of money and time building the reputation of Irish beef and dairy products. We have an orange and green programme and quality assurance schemes, and a dairy sustainability assurance scheme is being rolled out. Many of these schemes are not being taken up in Northern Ireland. We have to ask what is the target. In terms of the broader politics, I want a united Ireland at some stage in the future which deals with these issues collectively as a food-producing island. In the meantime, we are working to ensure there is co-operation, collaboration and partnership around managing risk in terms of animal and plant health spread. A good example of that is how we are dealing with ash dieback disease, where there is very close co-operation. We have led on the BVD scheme; there is good partnership and it is being implemented. The North is slightly behind us, but on Johne's disease it is slightly ahead. We are working with it in order that we have the same types of scheme.

On TB, unfortunately there are differences of approach for political reasons. Our approach has been hugely successful. There is a slightly different approach in the UK but we work quite closely together. There are lots of good examples of efforts to create ease of movement of animals North and South in terms of trade and trying to manage risk in terms of disease and animal health so we can create the kind of consistency which, it is to be hoped, will allow us to have a brand around an Irish product coming from the island of Ireland. However, the risk should not be ignored in our efforts to be open to partnership with the North. The risk is that if a product is labelled as Irish but comes from Northern Ireland, and there is a problem such as dioxins, disease or whatever which compromises food safety, as the Minister for Agriculture, Food and the Marine I have to stand over it, even thought my vets were not in the factory where the animal was slaughtered or at the processor which packaged the product. We need to have very tight protocols with Northern Ireland to ensure there are common standards, because if I am to stand over something which was produced in a different jurisdiction there are risks.

There are other issues with regard to currency, for example. If all milk in Northern Ireland is deemed to be part of the Irish milk pool on the island of Ireland and sterling weakens, there would be competitiveness issues which we could not ignore. There are similar difficulties with petrol. We have to manage the North and South in a way that focuses on partnership and working together mutually to build up a reputation for food being exported from the island. I would be open to joint trade missions, for example, but I do not want to undermine the fantastic work done by organisations such as Bord Bia to build a reputation around Irish food produced under our system, which involves controls, checks, inspections and all the rest. The industry is worried about that in the context of a broader ambition to create an island-of-Ireland approach towards food production.

4:45 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I wish to clarify the point I was making. We are on one landmass but we have two different standards. There are farmers who own land on both sides of the Border and who move the cattle over and back. Given all of that, the nature of animal health and welfare and that diseases can travel easily on land, it seems to me a totally unsatisfactory situation if any part of the island, under whatever jurisdiction, does not adhere to the highest standards. Even if we have all the protection that the Minister has referred to, including different marketing and so on, we are at far greater risk than we would be if they had exactly the same regimes that we have.

Given that we now have a Northern minister and that devolution seems to be the catchphrase from London, rather than adhering to the British standards, which by all accounts are not the high standards we are going for, I am suggesting that those in the North come up with a common all-Ireland top-level standard for everything produced on this island. This is not for political reasons but for practical reasons and because it is the most bio-secure thing we can do. I imagine that when the Minister speaks to his colleague in the North, she will be totally with him on this matter.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The only issue is that many of these schemes are voluntary, but they have effectively become non-voluntary. Let us consider the beef quality assurance scheme, setting aside what the Irish Cattle and Sheep Farmers' Association has been saying recently. There is an increasing take-up of the quality assurance scheme because farmers get better prices for their beef. Several factories will not now take beef that is not quality-assured. Therefore, it is effectively becoming mandatory. It is part of the premiumisation of Irish beef.

Farmers in the North can buy into that if they want, but there is a far lower take-up. I get what Deputy Ó Cuív is saying. I have been very open to the rolling out of Bord Bia programmes in the North. In fact, quality assurance schemes are available to Northern farmers in many cases. Anyway, we have some work to do yet to create an all-island standard. There are some in the North who would be far happier remaining with British standards. It is an ongoing discussion and we will have it again on Friday week, I suspect, at the next North-South Ministerial Council meeting.

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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I have a brief question on a different area completely. Last spring twelvemonth we had difficulties with the fodder prices and so on. There were almost 1,100 calls to the Department on the issue. How does that compare to the past year? How does it compare to previous years? Traditionally, farmers would have been reluctant to ring the Department when such a situation arose. How have the figures compared?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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We will hear a quick question from Deputy Heydon, and I have another point I wish to raise myself.

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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My question is on tuberculosis testing. The projected outturn or target is 8.4 million tests, while 8.5 million tests were carried out last year. How do we get rid of TB and, by extension, TB testing? We have made good progress in recent years, but surely the more progress we make the harder it is to get rid of the last of it. Is it realistic to suggest that we can eradicate TB when we consider the problems we have in the wild outside of our control stock?

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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My question relates to TB testing as well. I have the figures on BSE testing in front of me. I note the Department is not testing healthy slaughtered animals from 4 March. In other words, animals that are brought to knackeries have to be tested. Does this apply only to animals over four years of age? Are they the only animals being tested or are all animals at knackeries over a certain age being tested? Given age and demographics, will we eventually be in situation whereby we will not need to test any animals at knackeries for BSE? Any animal born after a certain date is BSE-free because we stopped feeding meat and bonemeal and so on. Will that be a saving in the budget?

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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My apologies, Chairman, for arriving late. My question relates to the outturn at the end of August. Given the average for the year, the Department appears to be €11 million behind budget under programme B. The figure for wages seems to be €5 million above what has been budgeted based on the average over the year.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Which section is €5 million above?

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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The section relating to overall expenditure under programme B, with an outturn at the end of August of €128 million. If we project that number out over 12 months it will be approximately €11 million below budget. Also, the figure for wages is running at €7 million, or €5 million above budget. Does the Minister have any information on this?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The current expenditure outturn for 2014 is currently €128 million. The estimate was €203 million. The expenditure does not always happen in an even manner throughout the year.

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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That is what I wanted to ask. Is it likely that things will take off in the next four months to close that gap?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Yes, I think so. My understanding is that we are likely to spend our full Estimate this year. That has not always been the case and obviously the process is managed. My understanding is that this is the case. We have made savings in terms of food safety, animal health and so on. Let us consider TB, for example. I am unsure whether it was Deputy Heydon or Deputy Deering who said that we are not making progress on TB. In 2009 there were 23,500 cases of TB. Last year, there were 15,500 cases, fully 9,000 fewer animals. There has been phenomenal progress on TB.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I will interrupt here. I come from one of the black spot areas, as the Minister is probably aware, where there has been a spike and we have many problems. Clare is possibly another such area. The national average has gone down to approximately four per 1,000, but the average is eight per 1,000 in County Wicklow. Will black spot areas have targeted resources that have been saved from other places to try to identify and isolate cases and bring the figures down to the national average?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That is the case at the moment. We target resources, including for culling badgers. Herds are frozen, effectively, once there is an outbreak. We are trying to isolate problems, deal with them, slaughter the animals, compensate the farmers and deal with the wildlife issue, including badgers, and I know there is a potential issue with wild deer in the Chairman's area. We must take on these issues, as difficult as they may be. Let us consider the average figures nationally. We have gone from spending approximately €60 million per year on this problem four or five years ago to spending €34 million per year now. It is major progress.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I am not saying it is not.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I take your point, Chairman. If there are specific problem areas we will have to try to develop solutions for those problem areas.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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Let us consider the €83 million for animal welfare. I realise the figure is not broken down specifically. How much of that figure is going on BSE testing?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The figure for BSE testing is rather small.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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It was identified in the original Vote last year in the budget.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The figure is €1.25 million.

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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That figure is down from what, approximately?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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We are still carrying out many testing programmes on carcasses to ensure that we are monitoring and on top of that, but it is down. The actual test is not a big expense; compensation is the main expense. Sorry; I am referring to TB. BSE testing represents small money.

Deputy Deering asked me about the fodder crisis. Let us recall when the fodder crisis arose. It had been predicted because we had an extraordinary weather pattern involving a very bad winter, no summer and then straight back into another very wet winter. There was virtually no break for farmers for almost 18 months. Land was totally sodden. Then we had a late spring.

We had virtually no grass growth in much of the country and even where there was growth, the ground was too wet to put animals out on it. An extraordinary number of weather patterns, one after the other, added hugely to the problem. We learned significant lessons from this. We are now in a very healthy position and have been all year in terms of fodder. We had a great summer last year and again this year, the inverse of what happened previously. We had a mild and relatively dry winter and probably the best grass growth ever this year. Some farmers are taking four cuts of silage.

We are entering winter this year in a healthy state from a stock point of view. Teagasc now conducts a national audit of fodder availability at intervals to ensure we are properly prepared. We will not always have summers like that we have just had and need to prepare for the kind of nightmare scenario and weather patterns we had two years ago and ensure we have enough fodder in stock next time. We do not want to have to import grass from France and the United Kingdom. From our perspective, that is a bit like Eskimos importing snow. We should never find ourselves in that position again. Farmers, dairy farmers in particular, have learned lessons from what happened.

4:55 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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We will move on to programme C - rural economy, environmental and structural changes. It is now 6 p.m. so we have half an hour for this and the next item.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I refer to the whole ball of wax in regard to direct payments - the single payment, area of natural constraint, ANC, and everything else. If we look at all of the grants, there was a 10% drop between 2011 and 2013 and last year there was a drop of €1.769 billion. The total will be down again this year and next. Part of the reason for this is that the single payment has decreased globally, but we are also going to be in a valley period in terms of money coming under the rural development programme, because the REPS payments have virtually stopped and AEOS is coming to an end.

As the Minister rightly said in the Dáil today, the GLAS payments will not come on stream in a significant way until 2015. Has the Minister the figures in regard to how much direct payments will have dropped between 2011 and 2015 - payments which keep many farmers going? What is he going to do to try to level off this payment? It has come down, but I accept it will rise. However, it will never go back to where it was. Live horse, get grass - the farmer must survive, but there will be huge pressure on farmers. Can the Minister quantify how much the total in direct payments will drop from 2011 to 2015 before they begin to rise again?

In regard to piers, I notice under C7, fisheries - as I would have predicted because I know how slow these things are - that only €2.4 million of the €17.95 million put into the Revised Estimate has been spent. I know the Department will receive a pile of bills from the councils in November or December. However, knowing what is happening in my county, I would reckon that between planning permission, the National Parks and Wildlife Service and whatever else, many of the works that have been approved will not be done and dusted by the end of the year, depending on the amount of work. Can the Minister guarantee he will be able to carry forward those capital moneys into next year? This is vital because in the case of substantial works, if works are approved in March and one must go through all the statutory obligations and consultation, particularly in highly sensitive environmental areas where there are significant problems as a result, it will prove impossible to get the various planning requirements in place and work tendered and completed by the end of the year. Can the Minister guarantee he will be able to guarantee a roll-over of the moneys in question to next year? Normally one can carry over unspent capital and it is vital we are assured of that.

My next question relates to genomics. Based on the figures given by the Minister, I estimate a little under the Minister's budget of €23 million, some €22 million, indicates that give or take half the farmers joined the scheme this year. If the other half does not join the new scheme in time next year, will this have a detrimental impact on them or will it undermine the whole project? Significant money is being spent on trying to get the genomics project right and to improve the suckler cow herd. Has any study been done on the effect of a significant increase in the number of dairy animals that will comprise the dairy herd? Only a proportion of these will be needed as heifers for replacements. Given that selection of the sex of calves will be more prevalent, we will have huge numbers of dairy cross beef breeds, which will change the metrics of the genomic scheme. Therefore, we could have these animals coming in from the side, whose primary purpose as dams is to produce milk but which will have to be disposed of into the beef herd because of the huge surplus. Has the impact of this on the suckler cow farmer been examined? How does this fit in regard to genomics and trying to get the best beef breeds when we will have a greater proportion of dairy breeds going for beef?

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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I have just two questions. In regard to the target to achieve 200 agriculture licence determinations this year, how many have been made and what progress is being made on the appropriate assessments in regard to Natura 2000 bays?

In regard to the increase in tonnage of foreign catch to be processed in Ireland in the whitefish sector, has any assessment been made of the impact on prices for Irish vessels of encouraging foreign vessels to land whitefish here? I have heard anecdotal evidence that this has caused a reduction in prices for Irish vessels, because they do not have a quota that can guarantee supply to processors. Has any information been gathered on the impact of this?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Will the Deputy put that question again please?

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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What is the policy in regard to foreign vessels landing whitefish here for processing. I have heard some anecdotal stories that this is impacting on the prices Irish vessels can get for whitefish because they do not have a quota that can guarantee supply to processors. Has any assessment been made of whether there is any basis to this or whether there has been a significant impact in regard to prices Irish vessels can get when competing with vessels that have far bigger quotas and can guarantee supply?

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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I have a brief question in regard to the targeted agricultural modernisation scheme, TAMS. There appears to be a significant backlog of applications in the system, going back months or even to last year. What is the reason for this? I presume the funding is there. Is there a problem with the application process or have the criteria changed? Can the process be streamlined?

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Are there any other questions?

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I have a technical question. Last week I asked a question about the increase in employment in the area of agriculture, fishing and forestry, but I received a reply giving me a figure for the increase in employment in the agri-industry, food and fisheries. The area of agriculture, fishing and forestry is a separate CSO heading, but the reply included the figure for the agri-industry.

According to the CSO figures, the numbers employed in agriculture, forestry and fishing have increased hugely over the last few years. As the saying goes, I may be a gullible man but I do not believe that one. The CSO keeps telling us that it is only partly so because of the way data collection has changed. Can we accept that there is no increase and, if anything, there is a decrease in direct employment in agriculture? I am not talking about the agri-industry but about agriculture, forestry and fisheries. There are no more people engaged in those primary industries than there were two years ago.

5:05 pm

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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First of all, I would not accept that. I think there are more people working in those sectors now than there were before. I do not have an exact number on that.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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More farmers, fishermen and forestry workers?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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If one looks at the seafood and fish processing sector, there are more jobs now than there were before.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I did not say that.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I heard what the Deputy said. As regards forestry and agriculture, if one asks the CSO for clarification of its figures, it is not talking about the food industry but about primary sectors. There is a slight increase in the numbers this year, whereas last year there was a significant increase, although the same methodology was used. I am not suggesting that there is a massive flocking to the land, but the numbers of young people studying agriculture-related courses and those attending agricultural colleges have increased dramatically compared to three or four years ago. Presumably those young people are going somewhere when they leave agricultural colleges. On more than one occasion I have had to increase the staff availability for Teagasc to deal with the number of young people seeking to study farming and agriculture. I think it is credible that there are increased numbers, but to know whether they are as significant as was suggested last year in the CSO report, one would have to ask the CSO.

As regards overall spending on CAP, there was some reduction in the Pillar 1 spend and some adjustment in the transition. However, we are still talking about €1.2 billion or more. It is still a very significant spend on Irish agriculture. The whole point of what we are trying to do in agriculture at the moment is to help farmers make more money from the marketplace, rather than talking indefinitely into the future about solely making a living from the amount of money that comes from Europe. The money we get from Europe should be about supporting incomes for farmers. It is also about helping farmers who do not have the capacity to increase their income from the marketplace because of the challenges and disadvantages they have and the types of farm they have. Primarily, we should be spending money to allow farmers to produce better, safer and more premium products that they can get better prices for. That is what we are trying to do with the Food Harvest 2020 programme.

The average spend on the rural development programme, RDP, over the lifetime of this CAP will be €565 million. That was agreed with the Minister for Public Expenditure and Reform, Deputy Howlin. We are only spending €405 million on the rural development programme this year. So Deputy Ó Cuív is right; it will take a while to ramp this up.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Next year?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Farmers can look forward to an increased RDP spend every year for the next six years if we are going to get to an average spend of €565 million. However, we cannot go straight from €405 million to €565 million overnight, given budgetary constraints and the expenditure profile. It does show the success of negotiations around getting Exchequer co-funding for a rural development programme which is essentially the same in value terms as the last rural development programme. Given the budgetary pressures we now have, I think that is a pretty good achievement.

We are currently spending €23 million on the beef genomics scheme, but we will be spending €53 million when it is fully up and running. The figure will be €43 million next year plus €10 million, which is €53 million for the suckler beef sector. It is true to say that we are focusing on the genomics scheme for suckler beef, but the dairy industry has been focused on genomics for years - it just has not been paid for it. Those in the industry get their money from better breeding and better-performing animals in terms of DNA assessments and genomic research in dairy. The Deputy is right that in future, as we see an increased dairy herd size, we will get more beef animals coming from the dairy herd. As we see more developments on sexed semen, we will see dairy farmers being able to essentially set aside perhaps 15% of their breeding for replacements. They will then be breeding the rest of their herd to beef animals or bulls in order to get a much better beef animal coming out of the dairy herd. That is a good thing because it will raise standards. I still think the best beef in the country will come from the suckler herd and I certainly hope it will get the highest price abroad.

We need to look after the suckler herd. The last thing we want is to see beef become a by-product of a growing dairy industry. That is why I have been putting a lot of money into the beef sector, particularly the suckler beef sector, when there has not been a lot of money around. We will see that happening into the future also.

Deputy Pringle raised the question of foreign fishing vessels. Prices for whitefish have not been great this year and there are a number of reasons for that. Part of it was that early on in the year there was very little fishing going on. In fact, in January and February we only caught half our normal quota. In an effort to try to get some cashflow back into the industry we agreed to increase quotas significantly in March and April. Other countries did the same and there were market problems in terms of oversupply for a lot of whitefish in those months. I am aware that there are price pressures on the whitefish sector but I am not convinced that that is because of foreign vessels landing in Ireland. If we cannot catch fish with Irish trawlers the next best thing is to have foreign trawlers landing into Irish ports, where we can process, package, add value and grade fish. We can thus employ people in rural coastal communities to do that. There are good examples of that in the pelagic sector, including with blue whiting in Killybegs. There are also some good examples concerning whitefish in places such as Ballycotton and Castletownbere.

I have not received feedback that foreign landings are undercutting prices in the whitefish sector at the moment. We must remember that most of this product gets exported anyway and is sold in the same markets it would be sold into if it were being processed in La Rochelle, Brest or Vigo. However, since the Deputy has asked the question, I will make a few inquiries into it. Not everybody likes the idea that foreign boats are landing more into Ireland. Personally, I think it is a good thing for the sector. It is a way of increasing the volume of fish through our port infrastructure.

I was also asked about aquaculture. The number of licences we have got through so far this year is pretty low. I do not have an exact figure, but nearly all the licences we got across the line last year - and there were more than 200 of them - were effectively in the last quarter of the year. Twenty-five licence determinations are expected for Donegal Bay, with 60 for Dungarvan Harbour, another 60 for Clew Bay, 11 for Valentia and the Portmagee channel, 35 for Galway Bay and 70 in Kenmare Bay. We are trying to do everything we can to progress aquaculture licences when and where appropriate, and to have a transparent and robust system to do that. The Deputy knows only too well that if one does not do this properly one will be in the courts, and it will be a much longer process.

The processing of applications for dairy equipment received in the final tranches under the first targeted agricultural modernisation scheme, which closed on 31 December 2013, is continuing. All applications are now being examined under the dairy equipment scheme and farmers are being notified of any errors. In the case of the sheep fencing/mobile handling equipment scheme, fewer than 400 applications remain on hand.

These applications should be processed by the end of October. The final date for completion of work is the end of August 2015. A new TAM scheme will open in January.

TAMS is not as straightforward as one might think. People apply, get a basic approval, and then sometimes nothing happens. Then they demand an inspection before they can commence work, at a time that suits them, which does not always result in an inspection when they want it, and so on. We also have many approvals that have not resulted in drawdown. Perhaps people are waiting to see what happens with dairy prices before they go ahead and spend money. Next year we will budget for a significant TAMS spend, particularly in dairy, but also in other sectors.

5:15 pm

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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The application process seems to be very bureaucratic. This is what I am hearing back. The Minister said himself that many approvals have not resulted in drawdowns. Not just in the dairy sector, but also in the sheep fencing/mobile handling equipment scheme, for example; from what I hear back, this is particularly bad. There seems to be an awful lot of red tape between the results and the drawdown not happening.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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We are required to do certain things before we spend money that is co-financed from Europe. If farmers start work before getting approval, we cannot give them any money. There is an initial approval process and then there is an inspection and a whole series of form-filling, and quotations are needed from multiple contractors to ensure that farmers are getting value for money and so on. It is a bit tedious, but many farmers have worked the TAMS system well and it has worked well for them. We will look at it again next year to see if we can improve the pace of turnaround, but sometimes people get approval and they sit on the approval without doing anything for quite some time. Then, when they decide they do want to move forward, they contact the Department and want an inspection straight away so that they can get on with the work. We will review it and see how we can do things more efficiently for farmers before we open up new TAM schemes in January and February, but for many farmers the system has worked reasonably well.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Very briefly, Deputy Ó Cuív.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister mentioned aquaculture licence approval in Galway Bay. I asked a written parliamentary question, which I thought was reasonable, and got a very vague answer.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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On what?

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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I asked about the timeframe in which we can expect a decision on the application by Bord Iascaigh Mhara in Galway Bay. I am not asking the Minister to pre-empt a decision; I am just asking what the timeframe is.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I cannot give the Deputy a timeframe because until I get a timeframe for recommendations on my desk, I cannot make decisions and I am reliant on others to do that. That project has complications. It is a very big application. It is a new departure in some ways for salmon farming in terms of scale, and so it is coming under much scrutiny. I have said to the Deputy and to others in the Dáil that I would not grant approval for a project of that scale unless I was absolutely satisfied of-----

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Will we have a decision this side of Christmas?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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Hopefully we will make some decision on it this side of Christmas, but the project has moved very slowly. To be honest, it has been very frustrating from my perspective.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Are there any observations or questions on programme D - direct payments and effective delivery of schemes and services?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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The main component here is the disadvantaged areas scheme, DAS, but it is relatively straightforward. There will not be much change; it is moving from one CAP to another. However, the assessment of land under DAS will change in the coming years. Farmers who have genuinely disadvantaged land are the ones getting the payment. We will have some flexibility on that, as obviously there will be regional stresses, and it will not be easy because nobody likes losing and everybody wants to gain. We will manage it as best we can and we will work with farming organisations in a very open way on that. That does not take effect until the end of 2016, as far as I remember, in terms of the land-based assessment, which will be measuring moisture capacity, quality of soil, depth of soil, etc.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There are three levels of payment on DAS at the moment: less severely handicapped or less favoured areas, more severely handicapped or severely disadvantaged areas, and mountain areas. When one looks at the productivity of the land in the three areas, there is not much difference between good land and less favoured areas, and the difference between that and the more disadvantaged band is relatively marginal in terms of livestock units per hectare. The big jump is that productivity in the areas designated as mountain areas, which are not all mountain tops, is about half that. Many people say that with the disadvantaged area payment, if one can only produce half the volume one should get double the payment. Is it intended to move, even in the present context, to a system under which the payment would reflect the disadvantage? In the new areas of natural constraint scheme, ANCS, under which system it is all done by district electoral division, will the payment be relative to the natural constraint? That would seem the rational thing to do. If my constraint is twice your constraint, one would think I would get the extra payment to make up for it. That is not how it works at the moment. I know there has been a reluctance to change this, because I had to correct the Minister before. At one stage there was a lower payment for mountain areas, which was quite extraordinary, and which was agreed with the Irish Farmers' Association for some amazing reason. When I came in as Minister of State I changed it and made the mountain payment higher. This is an issue on which the Minister should make his own decision, and the criteria should be objective and fair.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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If I could correct myself, Chairman, the new biophysical criteria for what we call the DAS but which will in future be called ANCs, must be in place by the end of 2018, so there is a bit of time, but there is a huge amount of work involved in assessing land plots. There are also many difficult decisions to be made. One of the things I hope people will welcome in terms of differentiating between the challenges faced by farmers is the new island payment, whereby farmers living on an island will get an additional €150 per forage hectare. The original recommendation to me was for much less than that, but I thought we needed to give a decent chunk of money to farmers who farm on islands, or else we will not see a new generation of farmers on these islands. For farmers who are not resident on islands but who have stock on them, there is a rate of €75 per forage hectare. We are trying to give considerable top-ups to farmers who are operating in difficult conditions in many cases on islands. It is really important that we keep farmers on islands. Otherwise we will see the vegetation there changing and they will become unfarmable if we do not keep them stocked. Whether it is the south west, the west coast, or the north-west coast - there are probably a couple on the east coast as well - this is a new departure for island farmers and it seems to have gone down well.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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As a sub-committee, we welcome the fact that one of our recommendations was actually taken up.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That is true.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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That creates a very interesting precedent. Some islands are very fertile and some are not so fertile. Some of those in the lake near me are well farmed, while some are in the sea. The Minister has just taken them as a group, viewing them as disadvantaged, with feed, etc., having to be brought in by barges or by boat. I welcome this, but the reality is that in many cases the mountain areas, as the Minister's own statistics would show, are also at a massive disadvantage compared with the rest of the country, but there is not much difference when one looks at livestock units per hectare.

Why does the Minister not follow that up with the same methodology in the short term for 15 to 17, inclusive, relating to mountain areas? This would mean that there would be a double payment in the mountain areas.

5:25 pm

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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We have not differentiated between individual islands. Cape Clear is probably quite different from the Aran Islands, which are different from Beara, which is different from Sherkin. If we were to assess all of those islands and vary the payment depending on-----

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister is missing the point. He has accepted one payment for islands because generally they are a very disadvantaged group. We know, based on livestock figures from his Department, that on average the output of livestock in mountain areas is half that of anywhere else in the country. Therefore one would expect that people farming designated mountain land would receive twice the DAS payment for that land for the next three years. People often have land in both disadvantaged and non-disadvantaged areas.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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That does not necessarily follow because there are lands that are not designated as disadvantaged at all, that are not overly productive either. We will first assess the level of disadvantage of land on the basis of biophysical criteria as we are required to do. Once we have this done, we can make further decisions.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The budget for the areas of natural constraint should remain intact. When the assessment of biophysical status is carried out, the broader question of how land is divided should be regarded as another argument. The assumption that disadvantaged land can be divided per hectare as a percentage of the national total is a dangerous one. It is most important in the context of today's discussions about budgets, outturns and projections that the approximately €200 million is a protected budget for the people who are farming in areas of natural constraint, so that they can be compensated for what they cannot produce at the farm gate. The objective of many of the other schemes that are in place is to improve and enhance productivity. On land that is defined as an area of natural constraint the compensation should be able to make amends for that to some degree.

I appreciate that Members have stayed back until 6.30 p.m. I thank the Minister and his officials for coming in. Perhaps this can become an annual feature of the joint committee's ongoing scrutiny of expenditure. We need to allocate ourselves a little more time in future and try not to schedule a meeting or priority questions to the Minister in the same week as the national ploughing championships. It would have been fairer on everyone if we could have started at two and gone through until six.

The joint committee adjourned at 6.30 p.m. until 2 p.m. on Tuesday, 30 September 2014.