Michael Creed (Cork North West, Fine Gael)
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Programme E shows the anticipated appropriations-in-aid or receipts, estimated at €306 million in 2016. They come from a variety of sources, the most important of which is the European Agricultural Fund for Rural Development, EAFRD, under which the rural development programme, RDP, is co-funded. This year it is expected receipts amounting to €239 million will come from that source. Other receipts are related to charges for inspections and certification services. There is some €15 million from the European Union to meet the veterinary costs incurred under the eradication programmes; almost €7.5 million from the European Maritime and Fisheries Fund, EMFF, and €14 million in departmental staff pension levy contributions.

Looking ahead to the remainder of this year and 2017, I am conscious that a number of challenges will be faced. They include the Brexit vote which is to take place tomorrow in the United Kingdom, the continuing poor returns in the dairy sector, price volatility in the beef and pigmeat sectors, access to finance, programme for Government commitments in respect of a new €25 million sheep scheme and the ongoing roll-out of the RDP and the seafood development programme, SDP. Some 800,000 Irish jobs are either directly or indirectly dependent on trade in the economy. Therefore, free trade agreements are important to us. With the United Kingdom as our largest trading partner, the significant potential negative implications of a Brexit for the Irish agrifood sector are clear, as evidenced by the findings of reports conducted by the ESRI, Teagasc and others.

It is difficult to predict with certainty precisely what these impacts would be. Possible consequences are foreseen in a number of areas, such as tariff and trade arrangements, EU budget standards, customs control and our fisheries sector. My Department and I are continuing to reflect on these matters and are engaged in ongoing consultations with Government colleagues to ensure there is a coherent whole-of-government approach to the issue.

Ongoing low international dairy prices are expected to have a negative effect on dairy farm incomes in 2016 following several good years. Increased price volatility has been experienced in other sectors in recent years, particularly beef, and is currently being experienced in the pigmeat sector. I have met Commissioner Hogan several times and made proposals to him in response to the current market circumstances. These include increasing the percentage of basic payments that could be paid in advance - a suggestion made by Deputy McConalogue a moment ago - introducing a further targeted aid package similar to that which was introduced last September, and increasing the volume limit for fixed-price intervention skimmed milk powder, to which the Commissioner has agreed. Other suggestions I have made include the removal of custom tariffs and anti-dumping duties on the importation of fertiliser and an effort to resolve the veterinary issues which block trade with Russia. I assure members that I intend to remain in close contact with the Commissioner on these proposals in the coming weeks.

Food Wise 2025 and the programme for a partnership Government contain prioritised actions aimed at improving access to finance as well as taxation responses to price and income volatility. Access to finance is the lifeblood of a functioning economy and is essential in helping to develop and support small and medium enterprises, SMEs, across all sectors, not least agrifood. I know from Central Bank data that the sector continues to be a significant component - almost 24% - of all new lending.

Liquidity at farm level is of concern. Last week, I met the chief executive officers of two of the main banks and urged them to be aware of the need for flexibility in the context of increased income volatility. The support of the banks is crucial, both at an individual customer level and for the sector and the economy generally. As well as flexibility during the current market difficulties, I asked the CEOs to continue to help farmers and SMEs develop and prosper. To facilitate this, I highlighted that both the availability and the cost of credit are crucial issues and that the prepared consumer food sector has identified access to finance as a particular issue.

The programme for a partnership Government provides for an allocation of €25 million to the sheep sector in 2017. This reflects the importance the Government attaches to the sector and its contribution to the rural economy. The scheme payment is based on a proposed payment of €10 per breeding ewe. The proposed scheme will be submitted to the European Commission for approval shortly as part of an amendment to the rural development programme. Consultations are ongoing between my Department and the relevant stakeholders on the details of the scheme but have not yet concluded. I am conscious that the scheme will have to take into account the range of challenges that exist in the sheep sector. Particular account will be taken of the differences in management between lowland flocks and hill flocks. It is my intention to make this scheme available to as many active sheep farmers as possible to allow the sector to avail of the opportunities identified for it in Food Wise 2025.

A key driver for increased resources in 2017 will be the rural development programme, RDP. The programme will be the subject of an affordability review later in the year by the Department of Public Expenditure and Reform. While my Department has not yet seen the terms of reference for the review, we will emphasise the importance of the programme to the rural economy and agriculture and seek to ensure that the maximum possible funding, in line with the agreed expenditure under the RDP measures, will be made available over the course of the programme to support investment and prioritise agricultural development and family farm incomes.