Oireachtas Joint and Select Committees
Tuesday, 2 October 2018
Joint Oireachtas Committee on Agriculture, Food and the Marine
Priorities for Budget 2019: Minister for Agriculture, Food and the Marine
I ask those in the Public Gallery to ensure their mobile phones are completely turned off. We are here today to discuss pre-budgetary priorities. I welcome the Minister for Agriculture, Food and the Marine and I thank him for coming before the committee to discuss his priorities in advance of the budget next week. I also welcome the officials from the Department.
Members are reminded of the long-standing parliamentary practice 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.
I invite the Minister to make his opening statement.
I am pleased to accept this invitation to discuss the 2019 budget priorities. I have met many representatives of farming bodies and organisations, as has the Minister for Finance, Deputy Donohoe, to listen to the issues at the heart of the farming community. As the 2019 Estimates process is not finalised, members can appreciate that I am not in a position to discuss the finer details of my Department's proposals. I will focus on expenditure so far in 2018, and in the coming months as well as the challenges for 2019.
It is important to note the ongoing vital contribution the agrifood sector makes to the economy, particularly the rural economy, as well as the important role the international trading environment plays in sustaining this contribution.
It is important to note the ongoing vital contribution that the agrifood sector makes to the Irish economy, particularly the rural economy, as well as the important role the international trading environment plays in sustaining this contribution. It is clear the biggest challenge comes in the form of Brexit. The sector employs 173,000 people, including those involved with primary production and processing and in the food and beverages sector, which has a total of almost 8% of total employment in 2017. One of the unique strengths of the agrifood sector is our shared vision for the sustainable development of the sector in Food Wise 2025, and having direct input from all stakeholders in the agrifood supply chain, along with the Department and State agencies in strategy formation and implementation, is crucial.
In terms of responding to the significant challenges we face as a sector, from Brexit to climate change to geopolitical developments outside our control, doubling down on the key Food Wise themes of market development competitiveness, innovation, human capital and environmental sustainability is more important than ever. Brexit poses enormous challenges for the agrifood and fisheries sectors by virtue of their exposure to the UK market. The United Kingdom is Ireland’s largest export market for agrifood products at €5.2 billion in 2017, while Ireland is the UK’s largest export market at €4.1 billion of products in 2017. The most immediate impact of Brexit has been the difficulties caused by the significant drop in the value of sterling against the euro. Possible long-term impacts relate to the potential need to apply import controls in respect of animals, plants and products of animal and plant origin imported from the UK, the certification of Irish agrifood exports to the UK and the possibility of a hard Brexit resulting in tariffs on trade. The challenge has been to take effective steps to mitigate the immediate impacts and to intensify market diversification efforts in order to reduce our exposure to the UK market. These challenges are being addressed through budgetary measures covering building competitiveness and resilience on and off farm, and through market diversification and development.
Brexit preparation is complicated by uncertainty surrounding the current negotiations and the potential final trading relationship between the EU and the UK. Nevertheless, my Department’s Brexit planning, guided by recent Government decisions, is well advanced. Officials have been working with other Departments and agencies to ensure they are prepared to fulfil their legal obligations as efficiently as possible when the UK exits the EU. I am pleased that significant progress has been made in the development of a long-term investment loan scheme for Irish SMEs, including farmers. This scheme has been developed by my Department in co-operation with the Departments of Business, Enterprise and Innovation and Finance, the European Investment Fund and the Strategic Banking Corporation of Ireland. By its nature, the detail of this scheme has taken time to develop and negotiate between all the parties involved.
This scheme will be of particular benefit to the Irish agrifood sector, including farmers, the seafood sector and agrifood businesses. It will enable them to invest in their businesses and innovate for future growth. This is a key Brexit response for which I made financial provision in budget 2018. This will bring longer term unsecured investment finance to the Irish market in the region of eight to ten years, with interest rates typically less than 5%. This type of long-term unsecured investment finance is not currently available for many farmers and food businesses or the seafood sector. This has been identified as a critical need. The loan scheme will be of particular benefit to young and new entrant farmers, as well as smaller scale farmers who typically have less bargaining power with their banking institutions.
In terms of efforts towards market diversification, Food Wise 2025 outlines the huge potential for growth in agrifood exports to new and emerging markets, particularly in Asia and Africa. My Department will continue to seek out and identify new markets and I am ready to respond to other opportunities that may arise. In keeping with Food Wise 2025 priorities, I led a successful trade mission to the US and Canada in February, while in May I led a trade mission to China. For the remainder of 2018, I will lead a trade mission to Indonesia and Malaysia at the end of October. The Minister of State, Deputy Doyle, will travel to China in November. These and other missions planned for 2019 will serve to enhance and improve existing levels of market access in these destinations. It will also promote Ireland’s reputation as a producer of high quality, safe and sustainably produced meat and dairy products. The destinations are in keeping with the market prioritisation exercise completed by Bord Bia in December 2017 at my request. Bord Bia's resources have been increased significantly over recent years, together with an increased focus by my Department’s market access team on opening new markets, particularly for meat exports. In terms of product diversification, I am pleased to note that the funding provided for the prepared consumer food centre at Ashtown is making good progress.
This is to address the situation where, traditionally, investment in research and development within the sector has been low throughout the industry given that 76% of prepared consumer food companies in Ireland are small. The €5 million is being used for the purchase of specialist processing and packaging equipment, which companies can pilot with a view to scaling up their production and-or their operations.
Overall in 2018, the Exchequer contribution to the Vote of my Department amounts to €1.557 billion. Our expenditure to date is €977 million, which is €113 million ahead of the same time last year.
We are now entering year four of our seven-year rural development payment, RDP, scheme and many of our schemes are reaching peak payment rates. Earlier this year, I presented a review of our RDP expenditure to this committee. As I stated then, projections are that the RDP will not just be fully spent but will require €105 million of transitional funding from the next programme, additional to the €4 billion provided for if implementation continues at current levels.
Delivering on the RDP is challenging and I am delighted that Ireland is performing well. Ireland leads in implementation and has the second highest rate of drawdown of EU funds among member states. The allocated budget for 2018 for the RDP is €625 million and I expect this to be fully spent. This includes the increased allocation of €25 million to the areas of natural constraint, ANC, scheme announced in budget 2018. A sum of €186 million was issued for 2018 ANC payments in September, an increase of €23 million compared with this time last year, and the vast majority of the additional allocation is distributed. Some 19,000 farmers continue to participate in the sheep welfare scheme in year 2. Advance payments are due to commence in November 2018. It is estimated that expenditure in 2018 will total €18 million. I will make full provision in the Estimates for our commitments to participants under the RDP schemes in 2019.
This year has proved to be exceptionally difficult year in terms of weather, with storms early this year turning to drought conditions with consequent implications for fodder availability. In supporting farmers through this time, I implemented a number of measures. I allocated funding to support the importation of up to 85,000 tonnes of fodder and €2.75 million towards incentivising the production of fodder on up to 25,000 ha of arable lands that would normally lie fallow over the winter period. These measures, coupled with additional flexibilities for later application of fertiliser granted under the nitrates regulations and additional flexibilities under the green low-carbon agri-environment, GLAS, scheme, are maximising fodder availability. While many farms remain in deficit, these measures have resulted in improving the fodder situation throughout the country.
The seafood industry faces ongoing challenges, including the significant Brexit challenge. In 2018, by providing world-class landing facilities for our industry such as the Department's investment for a major quay extension in Castletownbere, County Cork, which will double landing facilities on Dinish Island, we are protecting our coastal communities. Together with a range of investments in products and markets funded under the European Maritime and Fisheries Fund, EMFF, seafood development programme, we are creating the opportunity for the seafood industry to continue to expand and prosper. I recognise that such support has never been more important given the particular challenges faced by the sector.
The Common Agricultural Policy, CAP, post-2020 reform presents a different set of challenges. It comes against the backdrop of Brexit and other newer European Union priorities such as security and migration, and the global challenge of climate change. The European Commission's proposals involve new ambition, in terms of the environment and climate change, an increased emphasis on knowledge transfer, technology adoption and competitiveness, and new incentives for young farmers, all while maintaining vital supports for farm income. The budgetary allocation for the 2021 to 2027 period will be a critical determinant of how those challenges can be met.
I have been working hard with my European colleagues to secure agreement on the restoration of the CAP budget to current levels in the next period. This effort has paid dividends as up to 20 member states have joined this alliance and we will continue to work together to build consensus on this point. As we go into another reform, I will continue work with my colleagues in Europe to ensure the best deal is secured for farmers, the agricultural sector and the rural economy as a whole.
As mentioned earlier, I am conscious that this has been a difficult year for the beef sector in the context of weather and the associated range of challenges. My Department is continuing to examine appropriate measures to support all agrifood sectors, including the suckler sector. This is a particular focus in terms of our policy negotiation objectives in the next CAP reform and we will be informed by stakeholder consultation on the needs of the sector.
I would like to make an important point. As a community, we in Ireland must embrace the challenge of addressing climate change and other environmental imperatives.
Agriculture will have to make its contribution, and it is clear that any new CAP must be configured to help us to do that.
I thank the Minister and his officials for attending this meeting, the purpose of which is to discuss key issues in advance of the budget. I will start with one of the Minister's final points, which is the need for additional supports for the beef sector and, in particular, the suckler cow sector. We have discussed this issue on many occasions in the Dáil and I have pointed out that it must be prioritised. The Minister will know from the National Ploughing Championships that it is being prioritised by farming organisations as well. Indeed, the Irish Farmers Association, IFA, has produced a report and research on the suckler cow sector and the benefit of any additional support that would go to it.
It is not sufficient for the Minister to say that it is simply a matter for the next CAP. The beef sector is under massive pressure at present and many farmers are considering their future in the suckler sector. They are looking to the Minister and the Government for an indication, at a minimum, of movement towards the introduction of a payment of €200 per suckler cow and progress on that in this budget. We must get to the stage where that is in place. We can discuss the format and how it is introduced, but the Minister has an opportunity in the budget to do something to indicate to the beef and suckler cow sector that he understands its very precarious situation. That requires movement from the Minister on additional funding for the suckler cow sector. I hope we will see something in that regard next week. The Minister's stance so far has been that he would not consider it. The furthest he has gone, and that is only belatedly, is to say it is something he would consider as part of the next CAP. That simply does not wash and is insufficient. Farmers need to see something happening in this budget.
Another key issue for priority - the Minister addressed it earlier - is the imminent fodder crisis, particularly the need for short-term support in the form of a low-interest loan scheme to assist farmers with the pressure many are under after the drought in the summer in respect of merchant debt and short-term credit. Again, the farming organisations have been clear in seeking assistance from the Government in that regard, specifically seeking a loan scheme under the auspices of the Strategic Banking Corporation of Ireland, SBCI, to assist farmers with the credit pressure they are under. That must be addressed in the budget. Unfortunately, the Minister's lack of delivery regarding the Brexit loan scheme is simply unacceptable. It is almost a year since the funding was allocated for that, but the scheme is still not in place. As winter approaches, it will be important to have an allocation for a hardship scheme for farmers who might find themselves in a difficult position. We hope that will not come to pass but it is important that provision is made for it.
Another key issue, and I seek feedback from the Minister on this as it is not the first budget in which it has been presented to him, is the farm management deposit scheme. Given the volatility of the sector, it is an additional income volatility tool to provide additional assistance and capacity to farmers to be able to manage their income, plan ahead and be in a position to buffer against pressures such as those we have seen this year.
In addition, I wish to raise the issue of harness racing, which the committee has discussed on a few occasions. Perhaps the Minister will comment on it. The committee has been in correspondence with the Minister regarding seed capital to support that. Will an allocation be made in the budget?
It is important to refer to the current price of beef with the Minister today and the difficulties being experienced by farmers in that regard. The beef forum is coming up this week. The forum last met in February but it has failed the beef sector so far. The price of beef in the UK has been increasing in recent weeks while pressure is being exerted by the factories on the beef price here. In the context of the upcoming budget and with the beef forum due to meet this week, the Minister must address the unacceptable situation whereby prices are being squeezed. In particular, I urge the Minister to ensure that at the beef forum this week he makes it crystal clear to the factories that a fair price must be given to farmers, especially given the additional pressures they have experienced because of the weather this year, with many having to sell additional stock. That must not be used by the factories to cut margins further and leave farmers in an even more difficult situation.
I know we are discussing the budget today but if a hard Brexit comes to pass next March, that will be an earthquake-like shock to the agriculture sector. It is absolutely critical that the Minister makes provision in this year's budget for that possibility so that the Department is in a position to assist the sector and to mitigate against the challenges that a hard Brexit presents. I hope the Minister will give us some clarification today and an update on the supports that will be made available and the provisions that will be made in this year's budget in the context of Brexit.
I thank the Minister and his officials for their attendance today. I attended a meeting last night in Ballinasloe on the issue of the suckler herd and I estimate there were between 400 and 500 farmers present. They were all feeling huge pressure because of the impact of the beef sector on the suckler cow sector. They are in a real crisis.
As I pointed out last night, it is four years since farmers protested outside supermarkets and meat factories around the country because of the pressure they were under. While the beef forum was set up in response, it has not worked. It has been a failure because farmers are still in the same position. Farmers are demanding that the Government ensures that they get fair play with regard to price. A package also needs to be put in place to support the suckler cow sector if it is to have a future. The Government must show that it is prepared to invest in the sector and that it understands the plight of suckler farmers who are mainly along the western seaboard and in the Border region. A full 80% of the stock in that part of the world are suckler cows and farmers really need to get a lift. I look forward to the Minister's comments in that regard. I know that there has been talk of farmers being given €200 per suckler cow and while it may fall somewhere short of that, we need to see some provision being made in the budget.
I will refer now to Brexit and its potential impact. We spoke earlier about the impact Brexit will have on small food producers. In the context of Food Wise 2025, I believe there is too much emphasis on volume and not enough on value. Mr. Joe Burke from Bord Bia made a presentation last night and pointed out that the price we are getting for our beef is pretty much average on a global scale. That is an issue that we must face. We need to consider value, find ways to get a higher price and ensure that the higher price is returned to the farmer.
In the context of the budget, the issue of young farmers has been talked about for quite some time in terms of what we can do to deliver for that small sector of farmers who want to get into the industry but feel that they are locked out because they cannot get any entitlements or a break. Will there be something for them in the budget?
Last year, additional moneys were provided for ANCs, which was welcome. Will additional money, which is needed, be provided this year? The Minister is smiling but the farming sector is under the most pressure. This land is the least productive but, at the same time, it produces a major benefit for the farmers who work it. Many of them feel they are being squeezed out.
According to the Minister's opening contribution, approximately 19,000 farmers participate in the sheep welfare scheme. There is pressure to go down the route of using the new digital tags. Is there a possibility of increasing the payment to cover this? There should be an increase of €5 per ewe, which would at least give the sector additional help in this regard.
We were told an attempt would be made to provide access to more cheap loans. The problem goes beyond loans at this stage for many farmers. They feel that even if they secured a loan, they would not have the capacity to pay it back. This is why the ANC, sheep welfare and suckler cow schemes are vital in putting money into the hands of farmers who need it.
The State aid rules on support from the Government could be a significant problem for us, particularly with regard to Brexit. If there is a hard Brexit, many food companies that export mainly to Britain will be left in a serious position. Their only hope of survival without shedding jobs, which is something we do not want them to do, is for the State to assist them but if it does so, it will be in breach of State aid rules. Have negotiations taken place with the European Commission to ensure we can get a by-ball in this regard? We need one if we are going to try to sustain the industry.
The Minister mentioned the seafood industry. The committee will write to the Minister about the delays faced in aquaculture with regard to getting salmon farm licences. It is strangling the sector. It is not really an issue of investment but of the Department stepping up to the mark and recognising it is an industry that has potential and delivering for it.
I thank the Minister and his officials for their presentation. The farming and agrifood sectors are looking to next week's budget to see the Government's commitment to the industry. This year has been difficult and farmers are under extreme financial pressure. We had one of the longest winters, a non-existent spring and then the problem of an extremely dry summer. The income level of many enterprises is zero and significant merchant debt has built up over the winter and summer. Cows were fed this summer in the same way as they were fed in January and February. Farmers have large bills and are facing into a winter with inadequate fodder. The cost of fodder has spiralled, as has the cost of concentrate feed. We are in the first days of October but grass growth has stopped quickly or slowed down significantly. This is sending shivers down farmers' spines. Feeding will have to commence at full winter rate quickly.
It is disappointing to be debating the 2019 budget when commitments given in the 2018 budget have still not been delivered. I refer specifically to the low-interest Brexit loans. To still be waiting for them 12 months later is disappointing in the extreme. It is essential that low-cost loans are announced in the budget.
In 2016, when the Minister announced the introduction of low-interest loans I said that not enough money had been allocated to this and that the money allocated would not be adequate to cater to the demand.
There is a huge amount of pent-up frustration among farmers on the issue of credit. The document we have been presented with mentions an interest rate of 5%. That is not a low-cost loan. Bank of Ireland appeared before the committee a couple of weeks ago. It has a loan scheme which offers significantly lower rates than that. The problem with the banks is that many of the farmers who are most in need of credit will not get access to the loans. It happened last time around, when farmers who were under the most financial pressure did not get access to the low-cost loans. Farmers who converted loans they had into low-cost loans were probably benefitted most. Low-cost loans must be a part of next week's budget. Teagasc or another Government agency should have a role to play to ensure that those farmers most in need of low-cost loans get adequate access to it. That is absolutely essential.
Our beef sector is now at a critical crossroads. Men are now making decisions about their futures, and are waiting until after the budget next week to decide whether or not to exit the industry. Factories have exploited the situation this summer by cutting prices without justifying such a move to farmers. That decision had implications all the way down the pricing structure, down to the price of the calf. The beef forum has to be used to bring transparency to the industry and to show us exactly what a side of beef is worth. The price of steers is very disappointing at the moment, given the price of culled cows a couple of months ago. With the price of beef rising in the UK, and our factories dropping prices week by week, it is completely unjustified. The lack of live exports is playing a huge part in the ability of factories to exploit the situation. Funding for Bord Bia to increase live exports is absolutely essential. The closure of the Turkish market at the moment is also a factor. Bord Bia needs extra resources.
The Minister spoke about market diversification. I do not disagree with that sentiment, but in reality, over a 12-month period, how practical is it? Brexit is coming at us very quickly. We can examine how Ireland has been heavily dependent on the UK market over the years, and Bord Bia has always focused on reducing that dependency. However, the dependency has only reduced by a few percentage points over the years. We have other products, notably cheddar cheese, which are only exported to the UK, so while we should try to pursue diversification it will not solve all of our issues.
Next week we have to see an announcement of low-cost loans, a movement towards a €200 payment for suckler cows, and some movement on the sheep sector, particularly hill ewes. These measures are required to restore profitability to the sector. Areas of natural constraint payments have to be further increased in order to bring them back to previous levels. Those payments were cut by Fianna Fáil nine or ten years ago; that does not need to be said. We are where we are, and there is a different economic situation now. Those payments have to be restored.
On the taxation front, the thresholds for inheritance and the transfer of family farms need to be increased. Agricultural relief has to be maintained at its current level, and the taxation incentives in place, whether stock relief or stamp duty exemptions for young farmers, are all absolutely essential. I cannot stress enough how important next week's budget is. Farmers are looking to the budget to see if there is a serious commitment to the sector. Men are making decisions about their futures.
I have met individuals in the past couple of months who have never thought of ceasing the farming enterprises in which they are involved. However, they are thinking about doing so now. They wonder if there is any commitment to their sector, and they might move away from it.
A small number of farmers are involved in the pig sector, but it is under huge pressure. Farmers working in it will need low-cost loans to survive. They are caught in a perfect storm; there has been a severe drop in pig prices while the price of inputs have increased dramatically. The sector does not get much media attention, but it is under huge pressure. It is an important industry for the country.
Rural Ireland will look anxiously at next week's budget. It wants to see a commitment to different sectors, and a commitment to keep profitable farming in place, whether dairy, beef, grain or pig. All sectors are under huge financial pressure. Next week's budget is hugely important.
There are, but there is a degree of commonality as well. I will try to deal with each of the topics.
The issue of access to credit was raised by all three speakers. Ensuring access to credit is not a core activity of the Department of Agriculture, Food and the Marine. It must be acknowledged, however, that our initial foray into this area was due to the fact that the banking system was not functioning as it should in terms of providing access to working capital for the farming community. There have been many studies, including, if I recall correctly, the Central Bank quarter 2 report from 2016, in which the cost of credit across the eurozone was reviewed. Those studies found that Ireland was in the relegation zone in terms of the league table relating to the cost of credit. We made our initial foray into the provision of working capital and €150 million was made available at a rate of 2.95%. That product was a success and 4,249 farmers benefited from it. As Deputy Cahill pointed out, however, many did not. In the context of the 136,000 farmers operating in this country, 4,249 it is a relatively small number of beneficiaries, but the benefit of it was far greater than just in the context of those who drew down loans. It generated competition in the marketplace for other products as the financial institutions responded. There is evidence that there are now similar products for working capital. The market has responded. The pillar banks that delivered the €150 million loan scheme have taken initiatives. One of the products is a three-year loan of €30,000 at a rate that is virtually identical to that which applied in the context of the €150 million loan scheme.
The question now is whether it is beneficial to invest another tranche of taxpayers' money into developing a product that is already in the market place thanks to the financial institutions, or whether there is another area of activity in which there is a need for greater competition. I acknowledge that in the context of last year's budget there was a demand for both. In the context of the €25 million we secured in last year's budget for this purpose, we take the view that, because of the competition that has been stimulated in the area of working capital, in order to build resilience in the industry and for primary producers, the appropriate response is to focus on the area of access to affordable capital for investment purposes rather than for working capital.
I accept that there is concern in this regard. Some people would like to see movement in both areas. There are those who dispute the fact that there is sufficient competitions. However, all of the indications are that, whether it is via the pillar banks, merchant credit delivered through co-ops or the activities of particular credit unions, there is a great deal more competition in that area.
Relatively speaking, the bigger return for investment in that space now relates to supporting affordable finance for capital investment. We got €25 million and we are working with a number of strategic partners to deliver a product in the area of capital investment. I have outlined the detail of that.
On unsecured borrowing, it is important that we compare like with like. We are talking about unsecured borrowing over a period of eight to ten years. In that context, the relevant products are not available at competitive rates. What we envisage is to have a product that would be available at less than 5%. Such a product is not in the marketplace at present. For example, unsecured borrowing is not available for young farmers or new food businesses at present. In the context of unsecured borrowing, €500,000 is the cap and the minimum loan amount is €50,000. Those are the parameters that would apply to the new product we would develop. People ask why this product is not in the marketplace already. We delivered earlier this year - also through SBCI - a €300 million working capital fund for the SME sector. Of this, 40% was ring-fenced for the agrifood business. It was not until we got that product into the marketplace that we were ready to engage with SBCI and a number of other partners, including the European Investment Fund, in terms of delivery. There was an announcement last year to the effect that the money we obtained would be paid over in order to secure the availability of the fund. However, the product was never going to be available for draw down until the start of the year. The detail of what is involved is available now and we will work on the remaining steps that need to be taken in order to deliver it to the market.
In terms of the sequence of events, first the €150 million was made available and then the €300 million fund was launched in March. At that point, we began our engagement with SBCI, the European Investment Fund and the Departments of Finance and Business, Enterprise and Innovation. There are so many parts to the fund that we do not control all the levers relating to it. If we did, we probably would have a product in the marketplace already. As already stated, we are dealing with a number of partners. We will get that product out to market. It will be different and it is not a repetition of the previous one because competition has been leveraged by virtue of the previous initiative we took in that space.
The other matters to which everyone referred are the beef and suckler cow sectors. I acknowledge that a challenging scenario exists and that it has been tied in to the beef forum, beef prices, etc. The beef forum is a useful creation to enable engagement between all of the stakeholders on the range of issues and I personally will raise with the processors the obligation to recognise that this is a symbiotic relationship between beef farmers and the processing sector. It is not a forum where prices can be fixed. That is clearly understood and acknowledged by all of the farm organisations. I want a situation whereby primary producers get a fair return for their product. The forum is an opportunity to engage on a range of issues.
One of the initiatives we have put forward in respect of the beef sector is on the agenda for discussion tomorrow. We provided funding for it via the RDP. There were calls in recent weeks for the beef forum to be convened and we have acceded to these. One of the items on the agenda for tomorrow's meeting is how we might progress matters in respect of the producer organisation for which we have provided funding. It is not a panacea for all of the ills, as I have said, but it works in other commodity areas. It works in other jurisdictions in terms of the beef sector and there is potential for it to have greater clout in terms of engagement with the processing sector than would be the case with farmers acting individually. That is something I will explore with the forum when it meets tomorrow.
Deputy Cahill referred to live exports in the context of the beef sector. The numbers are running significantly higher. The figures for 2017 were up 30% on those for 2016. Likewise, the figures for 2018 are up 30% on those for 2017.
Significantly, in respect of the beef sector, in the spring and early summer of 2018 primarily, 147,000 calves were exported. Deputy Cahill raised, in particular, the Turkish market in the context of live exports. The devaluation of the currency in Turkey as a consequence of geopolitical events outside of our control means market is in some difficulty for us now. We are always looking for new market opportunities, whether it is in EU countries such as Spain for weanlings, some of which find a migratory route from Spain into north Africa, or for sales directly to north Africa, particularly to Libya. I met recently an Egyptian delegation here. We are active in exploring all those opportunities. I am committed to live exports as an important outlet for competition in the marketplace and will remain active in that space. I have met all the live exporters at a round-table meeting in the Department to emphasise the importance of the sector to the beef industry and that their continued participation and activity in that space is important.
On Bord Bia funding, one should look at the trajectory and the staff complement. It has gone in the right direction. It faces challenges not only in the area of beef but in also in other commodity areas because of Brexit. There has been a significant increase in its funding and in its staff recruitment. Not all of the judgment should be based on the numbers of additional staff, although I understand in the region of 30 additional staff have been recruited. Contract staff are also being used to deliver assistance to companies on the ground. There is a great deal of activity in that area.
I am acutely aware of the issues relating to suckler cow enterprises. We need to be measured. I accept there is a challenge in the sector. I am committed to ensuring that it remains a key producer of high quality beef because of the associated benefits associated with export earnings, etc., and the primary objective to ensure that we get a fair return for the primary producer but it is important that we do not overstate the extent to which there is a flight from suckler cows as well. The issue needs to be addressed in different fora both in the context of domestic and CAP policy, but there was always an expectation that following the abolition of dairy quotas, there would be a rebalancing. That has not happened to the extent that many experts predicted. The reduction in the herd is 7% since the dairy quotas were abolished. It is most pronounced in the areas where there was direct migration to dairy enterprises. The largest reductions were in Carlow, Kilkenny, Waterford and Cork, with some people moving entirely to a dairy holding by eliminating a beef enterprise. The reduction is not as great as has been suggested. We need to do everything we can through the policy instruments available, including CAP, under which the greatest level of supports is provided, to ensure those in the sector can see a future for themselves.
We have, for example, delivered on ANC payments. Many beef farmers have been beneficiaries of this. We put an additional €25 million into ANC payments this year and we focused it on those who operate on the most marginal land. Some of the members referred to the prevalence of this enterprise on the western seaboard, in particular, and much of that land was the beneficiary of the focused approach we took in the Department in respect of the additional money.
On the issue of food wise 2025 strategy, Deputy Martin Kenny stated that there was an overemphasis on volume rather than value. There is no volume target in the strategy. The ambition is to increase the value of our exports to €19 billion by 2025. There is no volume target for any specific commodity. In essence, the strategy identifies the impediments or roadblocks for all commodities.
It is the function of all stakeholders to clear those impediments and roadblocks to enable the industry, whether it is the dairy, pork, sheepmeat, beef or tillage sectors, to respond to the opportunities that will be presented. No volume target is set in respect of beef or dairy but there is a value target. As we seek to develop products that go higher up the value added chain, value rather than volume will drive returns. We are addressing the roadblocks and allowing the industry to respond. People have said we should rein in our ambition because of Brexit or climate change but, on the contrary, it has never been more important to have a blueprint containing our stated ambition. These obstacles stop us from achieving that ambition. The figure of €19 billion, or 23,000 jobs, may be achieved but we should focus on the impediments and on human capital, sustainability and the other pillars of Food Wise 2025.
Electronic identification, EID, was mentioned, which is something I have not had the opportunity to discuss at the committee previously. No one would defend the existing system as being fit for purpose but whether we feel obliged to defend it, when the Food Safety Authority of Ireland said our current traceability system was not fit for purpose, it was a game changer. Having received the report, doing nothing was not an option. We decided to address it and the best available technology is clearly electronic identification. We have responded substantially to the concerns of the industry in respect of the timeline and the cost to farmers. I have always acknowledged that there is a cost but there is also a cost associated with doing nothing. It was never an option to fail to respond to the food safety report, which stated that the fact that we did not have traceability could become an issue of public health. If we could not recall products, it could have consequences in the marketplace and for our reputation and, therefore, we moved on it. No party to the process, whether marts or farmers, is entirely happy about it but there is an obligation on all stakeholders to respond and we have come up with a reasonable response. We have moved on the support we are paying to farmers, with a maximum of up to €100, and we have made financial assistance available to marts as central points for recording data. We have made a reasonable effort on an issue on which we had no choice but to proceed. EID is now being introduced in the sheep sector and that matches what neighbouring jurisdictions have done. It is the best available technology and it is inevitable that it will become the identification process for the bovine sector as well. It will be more affordable in the context of the value of a bovine carcass as opposed to a sheep carcass.
Deputy Kenny asked about state aid rules. There is ongoing engagement at EU level about enabling the State to engage directly with enterprises that are directly impacted. I spoke about generational renewal recently. The taxation issues referred to by Deputy Cahill, such as stamp duty and stock reliefs, are all important but the best signal we can send to young people is one that will enable them to see an opportunity to generate an income and make a career out of the industry of their choice, akin to their peers in any other sector.
That is what motivates me in the negotiations on CAP reform.
I would be concerned if the signal we were sending by reducing the budget, albeit in a framework of identified supports for generational renewal, was that Europe is cutting its budget for the agricultural sector and its support for farm families producing high-quality products and delivering on things such as water quality and biodiversity, which are deemed to be for the public good. It would be dangerous to send out such a signal in light of the fact that global demand will increase by 70% by 2050 as a result of growing populations. We will need additional food to meet the needs of those populations. The age profile is reaching a critical point. How can we produce the necessary food if no one takes up the challenge in the future? There is a high risk of land that is used for productive agricultural purposes being abandoned and there are risks of increased urbanisation, desertification, etc.
The incentives are important in the context of the issues raised by Deputy Cahill but the most important signal we can send to young people is that the CAP values what they do and funds it accordingly. We have been very active in trying to get other member states to dig deeper in terms of financial contributions. We have to signal that we are prepared to pay more but Europe can only spend money which it is given by member states. There has to be a unanimous decision on the part of all member states to increase the budget. The Commission cannot borrow money to spend. Other member states see other challenges such as, for example, in the areas of migration and security. I acknowledge that there are big challenges in that regard. Those in the Mediterranean region see people landing on their shores on a daily basis so migration and security are really important issues for them. However, those challenges need new money and are not a reason to raid the CAP budget. We are trying to encourage other member states to acknowledge that. Following the Swedish election results, a Eurosceptic party now has the balance of power. What are the prospects of Sweden contributing more to the CAP when the criticism from such member states is that the response of the Commission did not go far enough?
Deputy McConalogue also asked about fodder. The response of the stakeholder group to the fodder crisis was quite phenomenal and we owe a debt of gratitude to every one of them, as well as to the farm organisations. The recommendations and the initiatives we have taken all grew from that group but the best thing that came out of the process was the advice given to individual farmers by Teagasc, private consultants or the co-operatives. The figure in the audit of July was 28% but in early October it had fallen to 11%. There has been a lot of endeavour and people have been baling silage at a ferocious rate over the past week or ten days. It is probably tapering off now but a lot of progress is being made. Quite a volume of May silage is yet to be harvested and other stuff is coming in under the tillage initiative. If we can keep cattle out until the start of November and can hope for a normal spring, we will have the bones of a solution alongside the fodder initiatives, GLAS flexibilities and the extension of the dates for slurry spreading. The stakeholders have made an enormous contribution to that.
I am aware of the point made by Deputy McConalogue about the farm management deposit scheme.
He also mentioned the low-interest loans. There is a cash-flow problem for farmers as well, which is partly why there was a request to the commission to bring forward the payments. It is money that would come to farmers anyway but they asked it to be brought forward at a time when cash-flow is pinched. It is an assistance, and those early payments enable €260 million of additional money to be put in the rural economy. We in the Department are likely to need a supplementary Estimate to enable us to fund that higher level of payment, whether it is the areas of natural constraint, ANC, scheme or the 85% imbalance under green low-carbon agri-environment scheme, GLAS, organics, which are the two main schemes driving the reason for the supplementary.
In the broader context, the agri-taxation committee that sat and was reviewed over the past number of months has delivered an enormous amount. There are some outstanding issues such as the farm management deposits scheme that would be of great benefit to the farming community but I suspect there is unlikely to be any great take-up of it in the year ahead because of the challenges therein. Not many people would require to shelter income because of cost and, therefore, it would primarily be of benefit to the dairy sector. It will not be an issue for the beef people whom we talked about earlier, who make up the greatest number of farmers in the livestock sector. I suspect that even on the tillage side there may not be any great demand for it. As a hedge to volatility, however, it is an outstanding issue that remains important.
On Brexit, I remain convinced we can get a deal. Any deal we get will not be as good as the current arrangements because if one is outside the Single Market or the customs union it cannot be as good as what is currently available. In that sense it is an exercise in damage limitation. I remain convinced we can get a deal and once the Tory party conference is out of the way I think we will enter a more realistic engagement rather than megaphone diplomacy, of which there is an element at the moment.
On harness racing, we have looked at it and given some funding earlier this year. Some €64,000 was given in funding this year as a training initiative or pilot project to tackle what is a big problem on the roads, as Deputy Cahill will be aware in his own neck of the woods and elsewhere. There is a problem in the northside of Cork city also. We have worked with the association to try to enable it to organise itself better in order that it may become an instrument for further funding in this area, and we have made some progress with it.
We had the aquaculture licence review, to which we responded with vigour. We will clear 300 licences in 2018 and the ambition is to clear 300 more in 2019, which will clear the backlog of licence applications.
All right. On the other issues, I have met with the pig sector in the IFA as well as individual operators.
I acknowledge it is a difficult challenge which has been complicated at EU level most recently by an extension of African swine fever into Belgium. The biggest imperative for the industry now is to maintain our own biosecurity in this area, and there is a high level of engagement to create an awareness of that. As an island nation, we have certain natural advantages with biosecurity but there is no room for complacency. From the engagement I have had I appreciate that credit and the labour force are big issues for the sector, as are prices. Bord Bia has a promotion in China and other parts of Asia this year, which is an important matter. There has also been an issue with the ceiling of grant aid for investment in pig units. We are looking at whatever flexibilities might be there under the rural development plan, RDP, which are not evident as we speak, to see if we could grant more aid for investment in farming. It must be borne in mind, however, that it is to facilitate improved welfare circumstances on farms, thereby eliminating the use of antibiotics and so on. It does not facilitate greater production volumes but it makes it more welfare friendly and hopefully more efficient also. There is no easy fix here. We have engaged with the Strategic Banking Corporation of Ireland, SBCI, also on the overall issue of merchant credit and how SBCI might get involved in that space, generally speaking, but it is at an early stage.
On the hardship scheme, there are obviously the State's means-tested welfare schemes but in the context of the overall response by the Department to the fodder issue, which I think is what Deputy McConalogue was referring to, we have responded clearly to all the issues that have been raised at the stakeholder forum. The forum continues to meet and will be important in continuing to assess where we are and what interventions are needed.
On the fodder issue, before I return to Deputy, there is one issue that may not have been addressed yet. For the first time in a long time, we see fodder coming from west to east. There is a substantial cost involved in that also. Would the Department or the forum look at the idea of subsidising the cost of that?
Deputy Cahill will be aware that in the throes of late spring fodder was moved from his neighbouring county to Tipperary in April and May. It is not unprecedented, therefore, but it is unusual. We will consider looking at all of that. The overwhelming objective and emphasis have been to close the gap and get the tillage initiative up and running. We remain open to engaging on that issue but it is not something we have considered in detail at this stage.
The Minister glossed over the suckler cow issue and the necessity or possibility of doing something about payment in the upcoming budget. I ask him to flesh out a bit further where the Department is with regard to achieving something and working towards the €200 payment per suckler cow or at least getting the process started. As the Minister will be aware, the sector is under massive pressure and farmers are looking in this budget for a signal that the Government understands where they are, understands the income pressure they are under, and will move to deliver something for them. I emphasise the importance of the Minister taking that on board and pushing it with the Minister for Finance to try to achieve an allocation in this budget in order that something can be done and there can be some type of margin delivered to the suckler farmers. It is simply not sustainable that they will continue in business but not get paid for their work.
I welcome the opportunity to engage with the Minister in advance of the budget.
I want to ask for increased support in the budget for the development of the sports horse industry. It has great potential to generate business in rural areas where we are looking for ideas to retain communities. There is already significant interest in sports horses. I believe some plans have been presented to the Minister and funds will be needed to assist in those. I hope we will see something that would be meaningful for local economies in rural Ireland develop from that.
In order to ensure genetic diversity in Irish rare breeds in accordance with our EU obligations, there are complaints from the Irish Rare Breeds Society that the support it has received from the Department is minimal, not meaningful and not impactful. What is the Minister looking for in this budget for them? What is his view on supporting them further?
My biggest concern here today is the suckler cow. I know the Minister wants to support the beef sector and the suckler farmers. I acknowledge the measures that are there, the beef data and genomics scheme, the establishment of the beef producer organisations, all the new markets the Minister has worked towards opening, alongside Bord Bia and all the other measures that help. The truth is, notwithstanding all the efforts, morale is very low among suckler cow farmers. In the west and north-west, where I am located, we have not had the worst of the weather this summer, in fact we probably had the best of the weather, a combination of sun and rain and we do not have the fodder problem. Over the past few years, however, we have been battling an extended winter every year. We have had fodder shortages and the fodder crisis last year. There are pressures on slurry storage and spreading, poor factory prices and poor prices at the mart. We also have cash flow problems. Brexit, Mercosur, and climate action measures will be laid upon farmers, including the threat hanging over them of a carbon tax.. There is evidence to be concerned about the sustainability of the suckler cow herd's future and, unless there is intervention right now, there will be problems in the future. The farming organisations have been ventilating the situation of these farmers. From what I can see, and to judge from the figures produced by the farmers I have met and their personal situations, they are making little or no money or are losing money and if they did not get other farm payments they would be in a desperate situation. This is backed up by the Department's Food Wise 2015 beef group which is recommending further supports for sucklers and I would support this also.
When I talk about farmers setting out their income an example is the farmer showing me that it costs him €900 a year to keep his suckler cow yet when he sells the calf he gets €850. I do not know why or how anybody would or could sustain that. Reality will bite. The reality is that farming is a vocation and while the older and more mature farmer may stick with the vocation to the end, the younger generation may not. I know the Minister says we need to encourage younger farmers, whether in respect of land mobility or otherwise but in another case, a suckler cow farmer who has 80 head of cattle contacted me; his son is 30 years old and is very interested in and loves farming. He bought an old house for €60,000 which he needs to do up. He went to the bank where he was more or less laughed at. The bank told him he would not get a cent based on any of his accounts. He has a trade and was told to go back to his trade because that would be the only way he could ever hope to get a mortgage or to build any future for himself. There is no future in that suckler cow farm the way he sees it now. Unless farmers have other work there is no great incentive for them.
The day will come when younger people walk away from this because they have had more education opportunities and have better options. That does not suit us or our country. It is no secret that the average age of farmers, especially suckler cow farmers, is quite high. If the young farmers do not take up the baton the suckler cow numbers will plummet. I am not being alarmist, all the facts are stacking up towards this. I know the Minister wants to support the beef sector but I believe that if this happens and the suckler cow herd plummets, where I live in the west and north-west will be unrecognisable. In the west 81% of cows are suckler cows. I think in Mayo they account for 84%, in Roscommon and Leitrim, 93%. That is from a report conducted by the Irish Farmers Association, IFA, and the National University of Ireland Cork, NUIC. The suckler cow is the basic production machine for a vast industry, not only are we getting traceable quality and affordable food but if the numbers drop from the percentages that I have quoted we can forget about the meat factories, the marts, the merchants in my area, the vets, and all the spin-off industries from the suckler cow. I welcome payments on the areas of natural constraint, ANC, and the increase, which is very important but dairy people get that same payment. What is needed at this juncture is a targeted payment in this budget. We have to be realistic about the Common Agricultural Policy and look forward. I know the Minister has talked about the constraints and the challenges and that he is fighting with the Commissioner, Phil Hogan and the whole of Government but we need a targeted payment in the budget recognising the pressures the suckler cow farmer is under, which are well documented, but also the significance and importance of the suckler cow. It is absolutely critical where I am from. I am in no doubt about it. We can talk about towns and villages and all the rest, but the fabric of rural Ireland is the suckler cow and it is critical that there is action to support the farmers. At the very least a signal should be given in this budget that there is hope and that they fit into the bigger scheme. This is a critical, pivotal time for the suckler cow farmer. Notwithstanding any campaigns that farm organisations run, again and again people tell me their stories of sons and daughters and their own circumstances and they are fed up. They are not people fighting with me about Government. We need to act because there is an awful lot at stake here.
I acknowledge the Minister's opening statement and the numerous questions he has answered. This is a very large brief, which has a lot going for it. Fodder was mentioned and I need to touch on some issues regarding that. We had snow, storms and drought in my part of the world, and there has been a significant uptake in the amount of fodder made in the past few weeks, even last weekend. The knock-on effect, however, for me and others involved in the industry is the financial implications of the fodder crisis, whether in June, July and August, when large quantities of meal, round bales and whatever else, was being fed.
The fodder crisis has moved on to become a financial crisis in many ways and we must now manage that through the institutions. I do not think the Department of Agriculture, Food and the Marine has a direct responsibility to manage the funding but the pillar banks need to come on board and be more amenable to that.
I have heard alarming reports, even as recently as this morning and I will share the information with the Minister after the meeting, about pillar banks being slow to deal with the farming community. The merchant credit that built up in June, July and August needs to be moved off the books and maybe moved away via a two or three year loan so that farmers can move through this phase and on to the next phase. I hope that the Minister will engage with the pillar banks to ensure that there is no blockage, and work is done to ensure that the banks engage with the agricultural community thus allowing funding to flow.
During the summer a very interesting TB forum took place and the Minister announced that the new chairman is Mr. Michael Cronin. The incidence of TB has dramatically declined in the past few years. In the past the figure was 8% but it reduced to 3.5% in 2017. The TB forum is something that we need to acknowledge and it is very worthy. I ask the Minister to clarify how the forum will work so that Ireland is TB free by 2030. How does he think the badger vaccination programme or the start of same is working? What about the announcements published in newspapers today on the outlook for TB and herd restrictions? One of the issues that I picked up on the ground today is that people are confused, seek clarity and want to know where we will go with the proposals. I realise that the proposals might be quite restrictive. I ask the Minister to inform us more about these issues.
The Minister spoke, quite rightly, about Brexit as did many members here. I do not have a great knowledge of the fishing industry but I met a group of individuals who work in the fishing industry last night. They are deeply concerned about the impact Brexit will have on their industry, on their access to the UK territorial waters and the knock-on effects in terms of the so-called EU fleet arriving into Irish waters without having access to the UK territorial waters. I ask the Minister to comment on the issue. To me, it is one of the issues that has not been spoken about enough. The people who work in the industry feel very left out of the equation. They believe the conversation is more about cheddar cheese instead of mackerel. I ask him to make a statement on the matter.
Finally, I wish to mention Food Wise 2025, which is an important policy that the Government pushed out several years. What is the Minister's view of that policy in terms of the new Oireachtas Joint Committee on Climate Action? I refer to the all-party Oireachtas committee of 22 members who will consider issues of climate change such as ensuring there is a mitigation policy. Is he concerned about the Food Wise policy in terms of these proposals? I realise that we are going through a process at present and that his report will not be published until 15 January. Does the Minister feel threatened by the proposals? Does he believe they will have a large impact on the beef industry, in particular? Some of the unfortunate evidence heard by the committee of late has given the impression that we would be better off moving out of the beef industry and claiming the payments regarding climate. That is a very significant statement that we have seen come out of that committee in the past few weeks. I ask the Minister to comment on these issues because they create great concerns about the industry.
As the Chairman and members will know, I am not a member of the committee but I was anxious to attend this debate today. I appreciate the opportunity to make a short contribution.
I thank the Minister for his attendance and entering into this dialogue with us. It is important that we discuss these issues pre-budget. I know that Deputies McConalogue and Cahill have covered most of the issues. Therefore, when I refer to the suckler cow scheme or things like that I do not expect the Minister to go back over things because he has already answered. I wish to put it on record that the suckler cow scheme is very important to my part of the country - to the west, midlands and north west. The scheme is as important to my area as the dairy business is to the south of the country but in reality the scheme cannot continue, which other speakers have said here.
I am alarmed by the fact that farmers with good arable land are saying that the work is not profitable, that they cannot break even in many situations and their only option is forestry. I want to put it on the record that I am not anti-forestry. I believe that we need forestry, it is important for reducing carbon count and the sector creates quite a lot of jobs. As the Minister well knows, the reality is that if a farmer walked into his or her local bank tomorrow morning and said he or she wanted to develop their farm and forestry vis-à-vis a suckler herd then he or she will get better terms from the bank for forestry. It is a pity that good arable land, which farmers have worked as agricultural land for years, will be lost to forestry and that has happened repeatedly in my county and constituency of Galway-Roscommon. Since I became a Deputy I have received a lot of representations on the matter. We need to support the suckler cow business in some shape or form. As members will know, my party has, for a number of years, given a commitment to securing a payment of €200 per suckler cow. People have constantly raised the matter with me but I will leave it there because the Minister has dealt with it.
Obviously the Minister is not going to give us clues about what the budget will include. Recently farmers, the IFA and others have told us in briefings about the benefits of renewable energy. We should get far more serious with the farming industry in terms of renewable energy. Farmers are prepared to produce renewable energy and huge opportunities await them. Surely the Government should go out of its way to assist farmers to become more involved in the production of renewable energy.
Deputy Cahill mentioned the pig sector. Fewer than 300 pig farmers remain in this country and there are only eight or ten of them in my constituency. The industry has been really rough for quite a number of years. I certainly would not like to see a situation develop where there are zero pig farmers in this country. These people work very hard and they need protection and support.
I wish to mention drainage schemes. Prior to my going into media I was a qualified horticulturist and I was involved in soil testing for a number of years. It is very noticeable that the quality of the soil has deteriorated in recent years. Due to rain patterns a lot of the nutrients have been washed out of our soil. Therefore, it is vital for the future of farming, particularly in the many areas of heavy soil, to reintroduce a drainage scheme. There has not been a proper drainage scheme for many years and farmers badly need it for their farms. I ask the Minister to reintroduce the scheme and provide a budget for same because it is vitally important.
Finally, will money be provided to farmers for diversification such as agri-tourism or whatever?
I thank the Chairman. I am glad of the opportunity to speak.
I wish to mention the fair deal scheme for farmers who get sick. We welcome the cap of three years. We hope that money will be provided in the budget to finance the scheme. I am very concerned that the value of the farm, including the dwelling house, will be assessed when determining the percentage to be paid by a farmer. It will be very onerous and tough for a young farmer if his father is in a nursing home, hospital or whatever. Let us say a farm is valued at €500,000, which would not be a very big farm, and 7.5% means a cost of €37,500 a year. That percentage, even with the three year cap, means a total of over €100,000 must be paid, which will place an awful financial handicap on any young farmer trying to start out in the business.
It is more than a fifth of the value of the farm. It is going to be very tough and one could not call that a fair deal at all. It is a very lousy deal for a youngster trying to start out, where maybe his father is taken out of the farm all of a sudden with a stroke or a heart attack. It is a very unfair situation. To every other person it is the family home. There should be some other way of assessing the farm and the family home. The family home is included in the farm as well. It is very severe and an attack on a young fellow starting out and I do not know how people will cope with that.
I want to support the suckler cow. Where I come from that is all we have back there and the farther westwards one goes the more sucklers there are, where in north Kerry it is more milk-based farming. In our side of the country, it is the suckler cow and people are struggling. In the marts of Cahirciveen, Milltown, Castleisland, Waterville and Macroom, the farmers are taking an awful roasting.
Sure, I was not forgetting them in Kenmare, either. Suckler cow farmers are taking a lot of heat and a trouncing at present, with the cost of feed, meals and fertilizer. How can the fertilizer companies account for increasing the cost every year regardless of whether the farmers have a good or bad year? Is there no way to control this? We hear this morning of the cost of diesel fuel increasing. The talk is that the Government is increasing the cost of fuel. If it does that it is going to affect the farming community in a very adverse way. I ask the Minister, when he is around that Cabinet table, to do something to ensure that diesel does not go up in price any further, regardless of whether it is the Minister, Deputy Ross or the Green Party or whoever is calling for this because of climate change or whatever.
I do not agree with it. It is very unfair to be increasing the cost of VAT and carbon tax when we consider that fuel coming in to the country is so dear at the present time. I asked on the Order of Business that it be reduced rather than increased and I am not good today when I hear that the Stock Market is increasing it rather than reducing it. There is room for manoeuvre when the cost has already gone up. The Government tax take has increased as the cost of the barrel of oil comes in and I believe there is therefore room to manoeuvre and to reduce the cost somewhat to help people with home heating oil, and all fuels.
As to areas of natural constraint, ANC, all farmers payments were reduced in 2008. We got €500 back last year but we need the rest of it and more with the way the thing is going.
Hen harrier designation may not affect farmers and other Deputies here, but it certainly affects part of Kerry and north-west Cork. Farmers are not being compensated as regards the hen harrier designation for not being able to work their land the way they would like to. They cannot plant their land and it is useless and worthless. I said at some forum here that we hear about houses and people being robbed at night, and of break-ins but this is daylight robbery.
Those who own the designated lands and have struggled to buy it, or who have had the land handed down to them are not being compensated. Many of these farms are now worthless because of the Department's hen harrier designation.
There are plenty of places in Kerry suitable for forestry. We have a rule, however, that there has to be 80% green ground in any plot that someone would want to plant. We are not far away from the Minister, and if one goes around any part of our side of the country, one will see that people are lucky to have the 20% of green ground and 80% of all other kinds of ground. It is not arable land and it would be suitable for forestry. There were grants to plant all of that kind of ground in the past and that is where everything has gone wrong. The rules changed and this is impeding the planting of forests.
There is another problem, which is not of the Minister's making. Many farmers now want to take that forestry out of their lands. They are looking for planning permission from the forestry service, or from the county councils, and there is what are called "serial objectors" putting in objections to farmers building roadways and entrances into the places where the forestry was planted. This will militate against farmers in the future. They will know that if they plant that ground, they might not ever be able to take the timber out of it, or sell what they grow. It is going to adversely affect farmers in the future planting forests because they will be afraid that they will not be able to get anything out of it.
Some legislation needs to be brought forward to deal with these serial objectors and to stop this because it is criminal what they are doing to poor people who planted their land, hoped to retire and have a bit of money to help them in their old age. This is a problem in many farms around where I live.
Another matter the Minister is aware of is targeted agricultural modernisation schemes, TAMS, grants for farmers where they unwittingly dealt with leasing companies and are being refused the grant. Something will have to be done for those who have applied and who had dealt unwittingly with leasing companies. One person I know of paid a lot of money out of his own pocket and went to the leasing company then for the rest to purchase a vacuum pack. He is owed €10,300 and cannot get it. He is being robbed of his TAMS grant. I am asking the Minister to do something for the people who are caught, and to make it clear from here on, that anyone who deals with a leasing company will not get their TAMS grant because this is hurting many people. The Minister knows these people and so do I. Something will have to be done at Government level to ensure that these poor people get their grant and to put some impediment in place so that these companies are not allowed to give money where the farmer is trying to access a TAMS grant. I am pleading with the Minister as this is important to the people affected. There may not be a great number of them but there are enough to require that something be done for them. They are asking us, who are elected by the people. I am asking the Minister and his Government to do something about this issue, where people are unwittingly being caught by the leasing companies in the way they access their funding from them rather than from the bank.
At the last meeting I attended here we discussed the fodder crisis and I asked how the take up on the Targeted Agricultural Modernisation Schemes, TAMS, investment programme was going. I was told there were no problems yet recently the Department released figures showing that a substantial number of applicants were in fear of not meeting the deadline on completing the work. Would the Department consider extending time to those farmers? Otherwise they may not get the work done in time to qualify for this round of TAMS.
I lend my support to the request that the Minister look after the suckler premium. I know we are talking about a big demand for the €200 but at least it could get started because the beef industry is in a bit of a crisis at the moment.
An issue raised in a few circles in my area concerns some kind of nitrates derogation. We had a very dry summer and many farmers took the gamble of putting out fertiliser but there was no take up. They went again and then the Department gave them extra time for the spreading of fertiliser. Some farmers may have gone over the limits in spreading nitrogen. Will the Minister be flexible when they apply for a derogation to allow for that because the first round was not taken up and they took advantage of the good weather in September to put down a few extra bags?
Many farmers cannot afford to take out any more loans. While I will not go down the road of the meal voucher the best judge of a farmer and his inputs and constraints in the past six or 12 months are the merchants and the co-operatives. The Minister should consider putting a loan facility through their good selves because they are the ones who have the bills to be paid. The last time the Minister did the farm loan I do not think the right farmers got the loan. I think the Minister would be in agreement on that. The bank manager took the first customer who came in and was at the top of the list, and those with a good cash flow. It is leaving some farmers at a disadvantage. Maybe the Minister could make some kind of loan system available through the co-ops and the merchants such that they would carry the book and pay the farmer and he would eventually pay it back to the co-ops. They are the people who will be caught at the end of the day and in that way the farmer who is badly in need and who will be short of fodder will be helped.
Would the Chairman like to come with me to a meeting with the Minister for Finance later?
I thank all the contributors for their questions. The beef and suckler cow sector is one of the main issues raised. That is understandable but it was not until Senator Mulherin and Deputy Murphy raised the issue that the climate change context was raised as well. Very often the Department is accused, rightly or wrongly, of not having joined-up thinking. It is imperative that anything we do, whether budgetary or at CAP level is consistent with the obligations we face under challenging targets for reduction in greenhouse gases by 2030. That is something I am acutely conscious of in the context of the sector.
An effectively coupled payment of €200 per cow is the demand, and although I have heard it described as a targeted payment on every cow, it is not the direction we should go in the context of our climate change obligations.
We need to make sure that, whatever we do, we are consistent with the direction of travel we have been going in the context, for example, of the beef data and genomics programme, BDGP, which aims to drive efficiencies in the herd and improve its genetic merit and I am conscious of that. I am in the middle of the overall budget figures. I cannot go any further than that but I am aware of the issues for the sector, as I am for the broader farming community. Anything done at any level has to be done within that framework, otherwise we would, rightly, be open to the charge that we were not being consistent and a coupled payment is not the direction we should consider travelling.
Senator Lombard asked if I see the climate change agenda as a threat to agriculture. It could well be but I also think we are starting from a position of strength in the debate. There is no one issue that will resolve all this.
Deputy Murphy asked about renewable energy, whether anaerobic digestion or solar panels. We have to be open to all of those initiatives, whether milk recording or BDGP, the use of sexed semen, protected urea or anaerobic digestors. The range of issues, from sequestration to new technologies to monetising the value of waste, will have to be invoked to enable us to meet the targets. It could be said that, with the exception of BDGP and the green low carbon agri-environment scheme, GLAS, the last CAP did not drive that agenda sufficiently. Certainly the next one will. What is on the table now is putting far more conditionality on payments in the future. The smart farm programme is a collaboration between the Irish Farmers Association, IFA, and the Environmental Protection Agency, EPA, and it shows that where farmers embrace these on-farm initiatives they deliver a good story in terms of sustainability but they also deliver from a financial perspective. They make the farmers more profitable. We need to work harder at demystifying all this talk about sustainability and talk about the practical things. For example, one of the biggest challenges we face almost immediately is ammonia emissions. Simple things like moving to the trailing shoe or the splash plate deliver very significant improvements, as does protected urea as opposed to calcium ammonium nitrate, CAN. I appreciate there is a price differential there but it has been suggested to me, and this is worth exploring, that if the volume of CAN or protected urea rose significantly then the differential might drop and there is a significant dividend from that. They are things we can do in bite-size approaches to the sustainability agenda. It will not necessarily be the new quota on the dairy side. I acknowledge what has been done by the dairy industry to anticipate the challenges but we will all have to do more.
The Department will have to lead. That is right because it would be financially punitive not to do so. The market is also saying we need to do this. That is increasingly the request in the markets we want to be in, where there are consumers with higher spending power who are asking about the sustainability credentials in the broader definition of sustainability, such as environmental and welfare issues, and anti-microbial resistance, which are all part of this.
Consumers in those markets with higher spending power are asking about sustainability credentials under the broader definition of "sustainability", including environmental sustainability, welfare issues, antimicrobial resistance and so on. All that is part of this agenda. As with farming more generally, we can find a solution within that framework that enables us to meet those targets, challenging as they are, while also protecting the family farm structure. Much of it goes back to the question of an adequate CAP budget.
Senator Lombard raised the matter of the TB forum. The challenge for that forum is to come up with evidence-based policy recommendations that will enable us to achieve the objective of eliminating TB by 2030. It is a substantial challenge and represents a substantial budgetary line in my Department on an annual basis. While the overall incidence of TB is going down, the size of individual herds is increasing significantly and, therefore, the cost of a herd outbreak is greater than it would have been in the past. The Department appreciates the efforts of farmers in this area over the years. We are on the cusp of achieving the complete elimination of TB but it requires a final push from everybody. The forum is the right thing at the right time and I have no doubt that its current members and Chairman will do a good job.
The Senator also referred to the fishing industry. In essence, what the fishing industry - unlike farming - faces in the event of a calamitous Brexit is having its field taken away. In essence, that is what is involved because we catch 60% of our most valuable stock, mackerel, in what is deemed to be UK territorial waters as well as 40% of our second most valuable stock. A full third of the total value of the Irish industry is in UK waters. In a way, that debunks the argument that the industry was short-changed in terms of EU membership. The Irish fishing industry benefitted from the fact that it could fish in other waters and make a profit. We are clued into this issue in the context of our Brexit negotiations and will work side by side with the fishing industry, both the catching and the processing arms, on it. Our position is exactly the same as that of the industry and we are working with all of the equally affected member states that have an exposure to catching stocks in UK territorial waters. We have fed our analysis into the Barnier task force and our position is shared by all of the programme officers. As I said earlier, I hope there will be a profitable outcome on it.
Some members raised the ANC issue. We allocated an additional €25 million in funding to that scheme this year, with €13 million going to mountain-type land, €9 million to severely handicapped land and €3 million to less severely handicapped land. That means that those farming mountain-type land will see their payments increase from €109.71 to €135 on the first 10 ha. Payments have issued to some farmers and others will receive payments as they meet the stocking requirement. Payments will increase from €95 to €112 for those farming severely handicapped land. This is a significant and focused increase. Senator Muherin referred to the fact that dairy farmers receive payments under the ANC scheme but tillage farmers do not, even though there are some tillage farmers on ANC-type land. To put that observation in a broader context, the challenge with regard to CAP reform is to direct resources such that they deliver the greatest dividend. Proposals on how those scarce resources can be best targeted are awaited from all of the farming organisations.
Deputy Eugene Murphy raised the issue of drainage schemes. I would love to have a better answer for him but, in the context of climate change, the suggestions in some quarters are to re-wet lands rather than drain them.
Not this year perhaps but, in truth, that is direction of travel. The issue in the context of the delivery of public goods - a broad term in the context of CAP relating to farm families producing high quality produce while protecting water quality, biodiversity and so on - is ensuring farmers are adequately remunerated for that delivery. The Deputy asked if a drainage grant would be reintroduced but I do not see that happening because that would be seen to be moving in the opposite direction to the climate change-----
Deputy Healy-Rae raised the issue of the fair deal scheme. My colleague, the Minister of State at the Department of Health, Deputy Jim Daly, has been engaged on this issue for some time. A proposal went to Government recently and was approved and I expect that there will be substantial progress on that issue in 2019.
On the issue of hen harriers, Deputies Danny Healy-Rae, Martin Kenny and Cahill, who all raised this matter previously, will be aware that there is a €25 million locally-led scheme and payments will go to those farmers who have been approved under the scheme this month. I have always said that the cumulative effect of the hen harrier scheme and the threat response plan, which involves restricted access to afforestation as an option on that land, will deliver for those farmers. Payments under the hen harrier scheme will commence this month.
Senator Mulherin raised the issue of the sport horse industry and we all celebrate the recent successes of the Irish sport horse sector on the international stage. The industry achieves quite spectacularly and has enormous potential. The Indecon report on the sector was published some time ago. The Government was of the view that the governance issues identified in that report needed to be addressed. The plan was that once those issues were addressed, funding would follow. A new, slimmed down board was recently appointed and a new chief executive is in place and is working well. Improvements can be seen now and, in the context of the budgetary debate that is ongoing, we will remain focused on what we can do in that sector. There is potential but there are infrastructure deficits in the sector. I met some people from the sport horse industry informally last Friday in Kilkenny. They were hugely enthusiastic in terms of their ambition. Rome was not built in a day and the industry has an extensive shopping list. It has also conducted considerable research and produced several reports. I would like to see the trajectory continuing in the right direction in respect of funding and while it will never be enough, we remain supportive of the sector as it tries to achieve its ambitions.
On rare breeds, I am not aware of the details of Senator Mulherin's concerns but we did marginally increase the funding available. If she could provide more detail-----
Deputy O'Keeffe raised the issue of flexibility in the context of TAMS. He is looking for a great deal of flexibility in terms of TAMS, nitrates and loans via the co-operatives.
I am straying a bit out of my comfort zone. First, there has not been an issue. I have a lot of engagement with all the co-ops. This is the first time it has been raised with me as an option that the product could be delivered via the co-ops. They would have to be approved as financial intermediaries. I am not sure it is a runner. I dealt with the issue of access to loans in some detail earlier.
I would like to deal with TAMS. I was at a meeting last night. Some members of the joint committee were at a similar meeting. I was on a beef farm in County Laois and I had a meeting subsequently in Portlaoise last night. The issues being raised in questions here are similar to those exercising the minds of the farming community generally. TAMS approvals initially lasted for three years. It proved difficult to manage the Department's liability - to make provision against it - without knowing when the farmer would draw down or activate his application or approval. For that reason, we have restricted it to 12 months for buildings and six months for plants. This gives us a better chance and that is evidenced in our outturns for this year. The first set of three-year approvals is starting to expire now. The people in question can reapply. Tranches are open and being approved all the time. We are issuing approval letters now for the most recent tranche, which closed on 8 or 10 September. Approvals in respect of those applications are issuing now. There is a rolling tranche of TAMS applications. We have restricted it to 12 months to try to get a better handle on the Department's contingent liabilities. There is a bit of sense in that.
As I said the last time I was here, the cash flows of farmers who signed up for TAMS have been affected by the events of the past six months. All of that is feeding into the calls for a TAMS extension. The Minister cannot tell farmers to go away and apply again. They probably have to come in under new specifications.
They might well be beneficiaries because, as I understand it, the specification on the costings has been revised. There might well be an upside to reapplying. It is a question of resubmitting the old application. We can look at the case of somebody who is in the middle of an implementation under this scheme. I cannot make a commitment on the hoof. There are downsides to doing these works out of cash flow. Obviously, this year has been difficult. People whose applications are expiring and who do not intend to take up their approvals are entirely within their rights to reapply and, all other things being equal, will be approved on the basis that their previous applications were approved. It is not overly onerous to resubmit the same application. We are turning over the approvals every couple of months.
I want to be clear about the nitrates directive. We went to a considerable effort to try to renegotiate a renewal of our nitrates derogation. That was an achievement in itself, by comparison with the challenges met by other member states. It is not reasonable to expect us to waive the terms and conditions.
I am aware of the point. We have discussed this previously. The Deputy is not alone in his concerns. If there was an easy solution to this, we would have done it long ago.
The circumstances outlined by the Deputy are specifically prohibited under the terms of the scheme, which have not changed.
To my mind, the leasing companies knew what they were doing and they caught the farmers as such. There should be some way of bringing these people to task. The farmers did not know about this when they were getting the money from them, but I am full sure that they did.
Leasing is a legitimate part of business for many contractors, in particular. They are constantly on leases. I know the Deputy is talking about a specific item that is approved under TAMS. I do not want to dump on leasing companies entirely because they are a legitimate part of the contracting infrastructure.
I appreciate that a suckler scheme becomes a coupled scheme. I understand that the Minister does not want to go down that route. I wonder whether there is a way of doing that which would be more like a welfare scheme for the weanling calf. Maybe certain actions relating to husbandry, welfare and management could be put in place. Such a scheme would be about the calf rather than the cow. It would have actions built into it to get us over the concerns that have been mentioned. Is there a possibility of doing that? We have to think outside the box as we seek to come up with a solution for that sector.
That is what we need to do. We are here to discuss the budget. Will something be put in place in the budget to help young farmers who are entering the industry? That is one of the issues we need to deal with. We have a bunch of forgotten farmers. We do not want to see any more farmers being put into that category.
While I do not want to delay the meeting, I would like to raise two more issues. I understand that some money was provided to harness racers, who have been mentioned, to compile a report into the industry as it moves forward. That report has been completed and presented. The harness racers have proposed a budget request that sets out how they need to get themselves established over the next period of time. It comes to approximately €1 million per annum. Given that approximately €65 million is provided to Horse Racing Ireland and Bord na gCon, it would be appropriate to find some way of providing money to support this sector.
I was not here when Deputy Eugene Murphy spoke about drainage. Drainage is an issue where it is appropriate. We have to reflect on the appropriateness of drainage in areas of heavier land. The issue of fodder comes into this. Drainage can bring about a longer grazing season and get more land into meadow, but the problem we find in many parts of the country - certainly in the west and in areas of heavier soil - is that the land is too wet, unfortunately. If a drainage scheme were in place, it would open up possibilities where appropriate. I understand that it is not appropriate everywhere. Common sense has to be applied. There is a need for a drainage scheme in appropriate places where it would work and where it would help farmers to increase their productivity.
I am aware that there is a request on my desk to make contact with somebody from the harness racing sector. My understanding is that we have not received the strategic plan. I am subject to correction on that. I do not believe it has been received yet. We provided some funding to enable the organisation to present a strategic plan for the sector and to do some work on welfare-related matters, which regularly hit the airwaves in a negative way.
I am subject to correction when I say I do not think I have received the strategic plan yet. As I have said, I am open to all sorts of thinking outside the box. The Deputy will appreciate that the budgetary process is ongoing. I cannot say a whole lot more on that.