Oireachtas Joint and Select Committees
Tuesday, 2 February 2021
Joint Oireachtas Committee on Agriculture, Food and the Marine
The Impact of Brexit on the Agriculture Industry: Minister for Agriculture, Food and the Marine
I remind members that in the context of the Covid-19 restrictions, only the Chairman and staff are present in the committee room and all other members must join remotely from elsewhere within the parliamentary precincts. The secretariat can issue invitations to join the meeting on Microsoft Teams. Members may not participate in the meeting from outside the parliamentary precincts. I ask members to mute their microphones when they are not making contributions and use the "raise hand" function to indicate they wish to speak. Speaking slots will be prioritised for members of the committee.
The purpose of today's meeting is to discuss the challenges facing the agrifood sector as a result of Brexit. I welcome the Minister for Agriculture, Food and the Marine, Deputy Charlie McConalogue, Mr. Paul Savage, assistant secretary with responsibility for Brexit, Ms Hazel Sheridan, senior superintending veterinary inspector and head of port operations, and Mr. Rob Doyle, deputy chief veterinary officer and director of imports controls division. All are joining remotely from a witness room in Kildare House.
Before we begin, I have an important notice on parliamentary privilege. Witnesses are protected by absolute privilege in respect of the evidence they will give to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to do so they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings be given and they are asked to respect the parliamentary practice to the effect that where possible they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Those participating in the committee meeting from a location outside the parliamentary precincts are asked to note that the constitutional protection afforded to those participating within the parliamentary precincts does not extend to them. No clear guidance can be given on whether, or the extent to which, participation is covered by the absolute privilege of a statutory nature.
I ask the Minister to make his opening statement. In the past 24 hours, members have seen media reports illustrating the way Brexit and trade can be impacted. There was a serious development in Northern Ireland overnight. There are various issues. The committee has received submissions from various stakeholders in the beef and dairy divisions. The questions of committee members will be mostly based on the questions posed by those stakeholders and the problems they are encountering in the first month of trading in the Brexit scenario. The Minister appeared before the committee in recent weeks on the issue of fisheries and the problems that sector is experiencing as a result of Brexit. We will concentrate today on the agrifood sector. The committee appreciates the Minister taking the time to address it.
I thank the Chairman and members for the opportunity to address the committee on the impact of Brexit on the agriculture industry. I am joined by officials from my Department: Mr. Paul Savage, assistant secretary; Mr. Rob Doyle, director of veterinary services; and Ms Hazel Sheridan, head of import controls operations division.
The decision of the United Kingdom to leave the European Union and, with that, the customs union and Single Market brings about fundamental changes in the relationship between EU member states and the UK. These changes will be felt in particular by member states such as Ireland that have traditionally had a close trading relationship with Great Britain. As of 1 January 2021, and even with a deal that avoided the imposition of tariffs on trade, the seamless arrangements that characterised our trading relationship with the UK are, unfortunately, a thing of the past. This has particular implications for the Irish agrifood sector, given the highly integrated nature of supply chains between ourselves and our closest neighbour. Trade with Great Britain in animals, plants and products of animal and plant origin is now subject to customs formalities and sanitary and phytosanitary, SPS, checks. The focus now for Ireland will be to work to ensure that our obligations are discharged in a way that facilitates trade in both directions to the maximum possible extent while also maintaining the integrity of the Single Market.
The EU-UK Trade and Cooperation Agreement, together with the withdrawal agreement, including the protocol on Ireland and Northern Ireland, means that Ireland’s key objectives in the Brexit process have been achieved, particularly the protection of the Good Friday Agreement and the gains of the peace process, which includes the avoidance a hard border on the island of Ireland, as well as the best possible outcome for trade and the economy, notably tariff-free trade with the UK and the protection of Ireland’s place in the Single Market.
For the agriculture sector, the avoidance of tariffs and quotas was especially important. Members should remember that, in the absence of an agreement, Ireland would have faced a combined impact of between €1.37 billion and €1.55 billion on our agrifood exports to the UK and between €715 million and €970 million on our agrifood imports. The beef sector, in particular, would have faced a punitive tariff rate equivalent to 72% on our beef exports of €1 billion per year. By agreeing the trade and co-operation agreement, we have avoided this very difficult no-deal scenario. However, the agreement, unfortunately, will have a significant impact on the fishing industry. This was a very difficult compromise and the Government will work to ensure that the fisheries sector and the coastal communities that depend on it are supported through the period ahead.
My Department has ensured that financial and other support measures have been put in place over successive budgets to support farmers and the agrifood sector to deal with Brexit. These supports have included direct aid, capital funding for the food industry and the provision of low-cost loans such as the Brexit loan scheme and the future growth loan scheme. Supports have also been provided to Bord Bia and Teagasc to assist food companies to prepare for Brexit, including through market diversification and innovation. Businesses should continue to avail of the broad range of supports in place, including financial, upskilling and advisory supports such as the Bord Bia customs readiness grant.
While the UK will remain an important market for our agrifood sector, market diversification remains extremely important and we will continue to work with industry and our growing network of agricultural attachés abroad to achieve that. In this regard, the new €100 million investment scheme agreed with the Department of Enterprise, Trade and Employment will be crucial to assist our meat and dairy processing sectors to diversify into new markets and products.
In addition to domestic supports, the European Commission recently shared the proposed initial allocations to member states from the Brexit adjustment reserve, which is valued at a total of €5.4 billion in current prices. The initial allocation proposed for Ireland is more than €1 billion in current prices, almost a quarter of the initial 2021 allocation of €4.2 billion. Ireland's proposed allocation reflects the extensive engagement that the Government has undertaken to present the unique, adverse and disproportionate impact of Brexit on Ireland. There is still some work to do to ensure that the proposed allocation is maintained through the forthcoming negotiation process in the European Council and, subsequently, with the European Parliament. The Government will be very focused in this endeavour and will ultimately seek to use the final allocation to support in the most effective way possible those sectors that have been most affected by Brexit.
I will turn now to some of the more immediate and practical impacts we have been dealing with, and will be dealing with over the coming months. The Government has put substantial time and financial, human and IT resources into preparing for Brexit. However, we have been very clear all along that, even with an EU-UK deal in place, the seamless trading environment we had become accustomed to would not continue. As I mentioned earlier, operators must engage with a range of customs procedures and regulatory checks and controls on their trade with the UK that did not previously apply. These will cause delays and increase costs for businesses and, unfortunately, they are permanent.
My Department, in conjunction with the other key Departments and agencies involved, including the Revenue Commissioners, the Department of Health and the HSE, began planning for the imposition of import controls on consignments coming from Great Britain as soon as the result of the UK referendum was known. This was because, regardless of what trade deal was done, controls would come into force for consignments coming from Great Britain at the end of the transition period, in the same way as these controls apply to all other countries trading with the European Union. In the case of live animals, animal products, plant and plant products, including food, two types of controls are required, namely, customs controls and sanitary and phytosanitary, or SPS, controls.
SPS controls consist of documentary, identity and physical controls that must be carried out at specialised facilities called border control posts. There are currently four approved border control posts in Ireland, at Dublin Port, Rosslare Europort, Dublin Airport and Shannon Airport. In terms of volume in the years leading up to 2021, 90% of the SPS goods coming into Ireland from Great Britain came through Dublin Port. The frequency of SPS controls is laid down in EU legislation. With some exceptions, all consignments of animals, plants and plant and animal products, including food, coming from Great Britain must now be accompanied by a health certificate, signed by an official veterinarian in the case of animals and animal products, and signed by an official plant health inspector in the case of plants and plant products. On arrival at the port, certain commodities must undergo identity checks. Some commodities will also have to undergo physical checks. The rates are related to the risk posed by the product. These can vary from as low as 1% to as high as 100%, depending on the exact nature of the consignment. These checks will take time.
The border control posts at Dublin and Rosslare have been operating well within capacity during the first month of the new trading arrangements. Trade volumes started very low and are still not at the levels experienced in the years leading up to 1 January. In general, many business operators are making very good efforts to comply with the SPS requirements. That said, the requirements are not simple. In some cases, the supply chains are very complex and the rules were not necessarily designed for the type of trade that crosses the Great Britain-Ireland border. Issues remain in terms of business operators providing advance notification. Advance notification is critical to ensuring trucks are not delayed on arrival at Dublin and Rosslare ports.
Issues also remain concerning the accurate completion of health certificates and consistency between SPS and customs documentation. This is the single biggest change in agrifood trade flows between Great Britain and Ireland witnessed since the Single Market was created in 1993 and, as such, presents a significant challenge for all stakeholders adjusting to this new reality. The Department of Agriculture, Food and the Marine is working closely with business operators to help businesses adapt. Following on from extensive engagement undertaken through a range of forums and communications channels leading up to December 2020, the Department is continuing to assist operators in practical matters, such as the submission of documents and the resolution of technical difficulties.
From 1 January, exports of animals and certain goods to Great Britain have also required export health certification. Brexit has equally resulted in some changes in requirements concerning live animal exports to Great Britain, including a 40-day residency period for cattle, sheep and pigs on the holding of origin. Animals also cannot have passed through a market and must be consigned directly from the holding of origin or through an assembly centre. In addition, two sets of documents are now required for the transport of live animals to or through Great Britain, which is another unfortunate consequence of Brexit. Operators now require transporter authorisation, driver certificates and vehicle approvals for both jurisdictions.
The UK has adopted a phased approach to the introduction of import controls, with further phases commencing on 1 April and 1 July. Officials in my Department continue to engage with the UK authorities on their exact requirements. Significant challenges may lie ahead, but work is ongoing to ensure the Department can meet upcoming UK import requirements from 1 April, and this may require an additional 4,000 to 6,000 export certificates to be issued each week. Officials in my Department will be communicating with the industry on the detailed requirements soon. The industry too will have to play its part in ensuring that trade can be facilitated.
I refer briefly to two topics mentioned in the committee’s correspondence about today’s meeting, namely, live exports and mixed milk. On live exports, there was a drop in the number of calves exported in 2020, mainly related to Covid-19 issues and the fall in demand from the food service sector in Europe. The Department is engaging with all stakeholders regarding the 2021 calf export season, and officials have, for example, met with live exporters and Dutch importers last week. Officials also met with NGOs which expressed concerns about this trade. I have met with the ferry operators on several occasions as well to impress on them the importance of this trade to the agrifood sector.
On mixed milk, the agrifood sector in Ireland relies on inputs from or processing in Northern Ireland, particularly milk for dairy products. Under the Northern Ireland protocol, Northern Ireland remains in the UK customs territory. This means that goods from Northern Ireland will not be considered as inputs of EU origin for the purposes of preferential tariff arrangements under European Union free trade agreements with third countries. The implications of this situation are that certain current Irish agrifood exports to third countries may unfortunately incur tariffs even where a free trade agreement is in place between the EU and that third country if they do not meet the product-specific rules of origin for that product. This is especially problematic for the agrifood sector and is of particular concern to the dairy and drinks sectors which are so closely integrated North-South. There is no issue, however, in respect of the trade in such goods within and between the EU and the UK.
I hope this overview gives the members of the committee a good sense of the potential impact of Brexit on the agriculture industry. I and my Department will continue to work to minimise this impact on the sector, and we will continue to engage closely with all stakeholders in this regard over the coming period. I look forward now to taking questions and to hearing the contributions and comments of the members of committee. I and my officials will respond to them.
I take this opportunity as well to commend the tremendous work undertaken in respect of Brexit by all those in the Department. Brexit happened at a challenging time, and none of us predicted that the negotiations would continue up until Christmas Eve before a trade deal was completed. While this agreement was massively welcome and brought much relief, it also caused serious challenges in respect of being able to prepare fully for the changes which took place on 1 January. I commend the work and the time and effort put in by officials over the Christmas period and into the new year to adjust to the new situation and ensure that we were prepared in every way we could be.
I acknowledge that. I and my team will now endeavour to answer any questions members may have.
I concur with the Minister's comments on Department staff and officials. We all dreaded what 1 January would bring. Thankfully, while we are here discussing problems, it has not caused huge market turbulence yet. We have to recognise that fact. We are trying to overcome difficulties that a Brexit deal was bound to impose on us.
I will raise a number of matters before I open up the floor to other members. Mixed milk is particularly problematic. For one or more of our processors, it is a major issue. A huge amount of some of our processors' milk originates in Northern Ireland. Over 60% of one of our major processors' milk comes from Northern Ireland. The Minister talked about trade agreements and said processors could incur tariffs under EU trade agreements with third countries. We had turbulence in the marketplace and aids to private storage, APS, were needed, as was our intervention. How would that work for Northern Ireland milk? In reality, it is impossible for some of these processors to segregate their product. Is there a solution to this? Northern Ireland milk has traditionally come to the Republic to be processed and the investment has been made in the South. It is a very significant investment indeed. While I understand the problem that is there today, what are the market supports, and have we a possible solution to this scenario? Segregating our milk for these processors is not an option.
It certainly has been a matter of concern for our dairy industry. Obviously, we are an all-island dairy market and producer. It is entirely integrated. That is one of our strengths and, likewise, that feeds through to our dairy processors, who have a lot of mixed milk coming into their operations. It is something they were concerned about and something that I, as Minister, and the Department raised as part of the Brexit negotiations. The terms and conditions of many of the third-country free trade agreements that were in place and that predated Brexit had already been set. The fact that Northern Ireland remains part of the UK customs territory is central to defining the origin of that milk in some of those free trade agreements. I am very committed to trying to resolve this in time but it will involve having to look to the renegotiation in due course of those third-country agreements in order for the issue to be fully resolved. Thankfully, since the start of the year, things seem to have been operating reasonably well so far. This is not an issue for many of our main markets outside of the European Union. Within the EU and the UK it is not an issue either because milk can be traded freely, but it certainly is an issue for some third-country traders. I will ask Mr. Savage, the assistant secretary, to comment further on this issue. He has put a lot of time and effort into the technical detail of this.
Mr. Paul Savage:
Rules of origin, as the Minister said, are clearly an issue that has arisen in the context of mixed milk and product from the North and the South of Ireland qualifying under EU free trade agreements. There was an issue with changing that situation in the short term in the context of the requirement that the Commission would essentially have to renegotiate all existing free trade agreements, which, of course, is a very difficult task and not one the Commission considered in the context of trying to conclude the negotiations with the UK in the lead up to the end of the year. To try to renegotiate all those agreements would be a very difficult thing for the Commission to do in any event.
It carries the risk of other issues being raised in potential attempts to renegotiate those agreements. There is a danger of opening up a hornet's nest of other issues being brought onto the agenda, including by third countries. There is an understandable reticence on the part of the Commission to engage in detail on that. However, we have an engagement with the Commission on this. There is also the possibility that, in finalising free trade negotiations in future, the rules of origin and preferential access issues could be resolved or addressed to our satisfaction. That would be in the case of negotiations that are ongoing now or may be undertaken in future. This is something towards which we need to look.
It is probably worth saying that the Minister for Foreign Affairs, Deputy Coveney, has been engaging with the Vice President of the European Commission, Mr. Maroš Šefcovic, on a number of issues relating to the implementation of the agreement. Rules of origin is one of those issues on which discussions have been taking place and engagement will continue for the foreseeable future.
Access of products that might contain Northern milk to European common market organisation, CMO, supports was mentioned. There is an issue for us in that regard, as the Commission has indicated that there would be a question over the eligibility of such products, which come from outside the customs territory of the EU, for those market support measures. We have engaged with the Commission on this point and sought to try to secure access for the products. The Commission says that it is not possible because of the associated rules of origin issue, but we are continuing to engage on it.
I welcome the Minister and the representatives from the Department. My first question is on mixed milk and will follow on from something that has been put on the agenda, including by the last line of the Department's document on market tools. How would that issue affect all Irish products? If Irish milk products need to go into private storage or intervention, how will the percentage of southern product in mixed milk products be ascertained? How will the conundrum be solved? This issue needs to be built into the new Common Agricultural Policy, CAP. There must be some way of getting recognition for Northern Ireland milk. By virtue of the facts already stated, this sector is probably the one that will need the most EU support and initially be affected most by Brexit. It is vital that we have access to the market tools.
The Minister's presentation addressed a number of other issues. Regarding the new SPS export health certificates, EHCs, and custom control requirements when importing from and exporting to the UK, has the Department done any speculative work on how those systems will function when at full capacity? While I do not know whether it is possible to say that there is anything positive in Covid, it has given time for teething issues to be highlighted and has limited the quantities of imports and exports in January and now into February. This reduced market has given our hauliers, exporters and importers a chance to come to terms with the new rules and regulations. If and when we return to full capacity or as close to what used to be the normal trade flow, how will we handle the situation? Have those tests been conducted and are contingency plans in place?
While I welcome the Brexit adjustment reserve, I will add the caveat that it needs to be spent wisely. Where we can overcome problems diplomatically, we do not need to throw that money at them in the hope of finding a solution. I will cite the example of the beef exceptional aid measure, BEAM, scheme. While I welcome the Minister's application for an extension of the reference area for the nitrates reduction under the scheme, I would not like to see any of the Brexit adjustment reserve being used with conditions placed on it in the same way they were placed on the scheme to reduced nitrates or have any other effect than what it says on the tin, that is, an adjusted reserve and a replacement of lost earnings due to Brexit.
That is vitally important. Will the Minister elaborate on or indicate how he think the events of the weekend can affect this and what he thinks will be the outcome of the Article 16 fiasco? It seems to have had a knock-on effect on the dock workers in the North. Will there be an immediate resolution to this problem? Agriculture and agrifood exports and imports to and from the UK will be hit most by this. The Minister's presentation may have been penned before much of what happened in the past 24 hours and I would like to hear more on the matter.
I thank Senator Daly. I take on board his concerns and the point he made about the issue relating to Northern Irish milk. As Minister, I am aware of it and we hope to continue to address it. Mr. Savage outlined the challenges and issues relating to market supports, etc. As agreements to trade internationally with third countries fall due for renegotiation, it will be important that we try to address the issue. It is a challenge as matters stand.
On the contingency for capacity, I will deal with that first and then ask Ms Sheridan, head of our import controls and operations division, to come in and provide an update and full overview on how things are going, on throughput and on the contingency planning we have done. We have very much been planning for this. The Senator is right that it has been greatly facilitated so far by the fact that throughput is down significantly in comparison with previous years. I will ask Ms Sheridan to address that point shortly.
On the Brexit adjustment reserve, the markets and prices have thankfully remained fairly solid so far. There is no doubt that Brexit is presenting additional challenges in the context of exports to Britain. We will monitor the situation closely. The Government has been clear from the outset regarding how it worked with the agrifood sector to prepare in advance and also that we would stand ready to work with it as Brexit evolved afterwards. I am monitoring the situation closely . The purpose of the Brexit adjustment reserve is to support those sectors that are most impacted. Thankfully, we achieved 25% of the total allocation. That is a reflection of the fact that people at European level understand that we are particularly exposed. There is ongoing engagement with Europe about how that money can be spent. I will be engaging with the Departments of Public Expenditure and Reform and Finance on the latter. It is important that the money is used effectively. My specific focus, priority and commitment is that farm incomes will be central in how we look at the year ahead and at the impact of Brexit.
Thankfully, the issue relating to Article 16 was resolved. This should not have happened in the first instance. It has been recognised at European level that what happened was both a mistake and misguided. In many ways, we were blindsided by it in the context of how it evolved in the context of the dispute relating to the AstraZeneca vaccine. I do not foresee this mistake being repeated. On foot of the Taoiseach's engagement with the President of the European Commission, Ursula von der Leyen, and Prime Minister Johnson, and that of the Minister for Foreign Affairs, Deputy Coveney's, engagement with Vice-President Šefovi and Minister Michael Gove, the matter has been resolved.
It certainly was not helpful. We all know how challenging and sensitive the Brexit situation is from an all-island point of view and a Northern Ireland point of view. The North-South protocol is a really important mechanism by which Northern Ireland, while remaining constitutionally part of the UK and part of the UK customs regime, has access to the Single Market as well. There are opportunities for Northern Ireland around that and it is really important that it has access to both.
That does not come without its challenges but it is really important that we work together to try to ensure that it operates as smoothly as possible and that the importance of it is respected. While the incident at the end of last week was not helpful, it was resolved quickly. It is important there is really strong recognition among ourselves, Europe and the British Government of the importance of the North-South protocol from a Northern Irish point of view.
On the point about contingencies, current capacity and planning for scaling that up, I will ask Hazel Sheridan to come in on that.
Ms Hazel Sheridan:
I thank the Minister and Senator Daly. In answer to the question about preparations for operation at full capacity, infrastructure, staffing and IT systems have been put in place at both Dublin Port, Rosslare Europort and at Dublin Airport. They have all been constructed based on analysis of 2019 and 2020 data flows. What has been put in place is capable of dealing with trade if it had remained the same as it did in 2019 and 2020.
At the same time it seems unlikely that that will be the case. This is the biggest change, as the Minister said, that the industry has had to undergo since 1993 and it is likely that it will result in changes to supply chains and to trade flows. However, the infrastructure, staff and IT systems are in place. As the Minister said, at the moment we are operating well within our capacity and, as the Senator referenced, that has been helpful in getting people up to speed with the requirements.
There was no way of testing what this was going to look like in reality because there was no way of asking businesses to complete customs formalities and SPS formalities ahead of 1 January. There was no way to test the capacity of the UK to issue heath certification or to test the capacity of people to understand what was needed on the certificates and all of those issues.
Unfortunately, there is no substitute for doing the business itself and that is the phase we are in. Certainly there is a lot of complexity in that and there is much learning for businesses, for the Department of Agriculture and the Marine and for other agencies, as to how we can improve things and how we can do things better. We continue to work with businesses in seeking to do that and we are seeking to address any issues raised as quickly as possible.
We are working well within capacity and have lots of spare capacity at the moment. We are ready to go whenever that increase in business happens. It is very difficult to say what the business will look like. We are in very new territory and it will take quite a significant period of time before we can assess the full impact of the UK now being outside the Single Market.
I thank the Minister and his staff for coming in and for the comprehensive overview. I have a few points and a few questions. The Minister mentioned the agricultural attachés. He might at some future date update the committee with a briefing note on the work of these attachés, particularly post-Brexit. It is not something I want done today but the Minister might update the committee on that because they are doing important work.
The Minister referred in his opening statement to the unfortunate and significant negative impact of the agreement on fisheries. We all accept that now and the reality is that we need to be aware of the supports that are going to be put in place, the ongoing supports that are there and what the Minister intends to do. I ask the Minister to keep the committee abreast of that because it is going to have a really crucial impact on coastal communities and it is of very serious concern.
We had a submission from the Irish Livestock Stakeholders Association. Every member of the committee would have gotten it. I was particularly interested in the issues it raised on the export of livestock, the challenges that go with that and possible impediments coming down the track. We know that livestock is being ferried through Rosslare. We know that is an 18 hour journey and it has an impact on animal welfare. I want to acknowledge the Minister's Working Together for Animal Welfare document circulated in the last day or two. It makes really interesting reading. Clearly, we have an issue in terms of working in partnership with all the stakeholders, science and experience-led public policy. The Minister identified that as part of his five point strategy on this. However, we have to get the message out that we believe in a consistency of approach in terms of evaluation and assessment of animal welfare. We also believe in a vibrant export and agricultural food trade. That is the challenge and that is the balance to be struck. The Minister dealt with it very comprehensively in his Department's new Working Together for Animal Welfare strategy which I commend to all the members.
I go back to two things. This Irish Livestock Stakeholders Association recommends a number of points. I want to take up two of them. One is the opening of a super lairage in County Wexford. It proposes the development of a super lairage in Rosslare Europort. A large lairage will reduce the journey times for exports and aid and improve animal welfare.
What is the Department of Agriculture and the Marine's role in all of this in terms of support? How can we deal with that? Clearly, there are huge opportunities in Rosslare Europort and I am conscious of the work Deputy Verona Murphy is doing in this regard. It is an important area. I would be interested in that.
This group also talked about the export of calves moving from 14 to 21 days, with stronger, higher quality and healthier calves leaving Ireland. That is what we all we want. This is an area and a challenge. It is one I would like the Minister to deal with because it is important in terms of livestock. He addressed all this in his statement.
The Minister might tell us how he is progressing and what his plans are for the establishment of the first chair in animal welfare and veterinary ethics at UCD school of veterinary medicine. This is one of the priorities the Minister has set out in his strategy.
What is important is that the message is clear. We rely on the export of live cattle for the economic viability of agriculture in this country. We need to bring everyone on board with us to develop that. We see challenges, of course. Europe and other member states were talking about curtailing this area. The Irish Livestock Stakeholders Association which represent the industry needs to be listened to. I ask the Minister's Department to look at its submission because it makes some valuable points.
I do not have time to tease out many of the other submissions. However, there are issues there and I ask the Minister to address them.
I refer to the agricultural attachés and their work post-Brexit. They play a really important role, particularly in being able to work and maintain existing markets abroad and work with our export companies to try to develop new markets. They also work very closely with Bord Bia on ensuring the Irish team abroad collaborate and have a clear strategy to try to develop and maintain the markets we have. I will get the Senator a note on the numbers we have. We have been expanding the footprint and will continue to prioritise that in the time ahead. I will get Senator Boyhan exact details and an update on progress in that regard.
The Senator also touched on fisheries, on which the committee and I engaged in depth two weeks ago. While it was very welcome that we avoided a no-deal scenario, Brexit has undoubtedly had an impact on our fisheries sector and the wider economy. It is important that we support the sector and coastal communities in the time ahead. As the Senator pointed out, the Government is committed to investing in them in the time ahead. I am in the process of putting in place a task force to advise on how we can best support the sector immediately and in the years ahead. The work of the task force will very much inform how we go about investing and supporting the sector. I will certainly keep members up to date on progress.
The Senator also referred to the importance of live exports. I concur with him. In parallel, the importance of animal welfare standards was emphasised, not just in respect of live exports but also in respect of the agrifood sector more widely. I concur in this regard also. The Senator referred to the recent publication of Working Together for Animal Welfare - Ireland's Animal Welfare Strategy, which I launched last week. As the Senator and other members know, animal welfare is central to the ethos of our farmers across the country, who take great care of animals. It is essential that the Government and Department make sure there are no exceptions and that there is robust oversight and regulation. All animals must be treated according to the highest welfare standards. That is essential. No more than in any other walk of life, one has to ensure there are no exceptions and that, where there are, there is enforcement. We all agree that Irish farming and agriculture very much value the welfare of animals. It is central to what farmers do but, equally, the Department and I, as Minister, are committed to ensuring there is oversight and that there are no exceptions to the norm. I am committed to robust enforcement if anybody does not maintain animal welfare standards to the level we expect. The strategy I launched last week very much speaks to that.
The live animal trade is an important aspect of our livestock sector, particularly the beef sector. I have engaged closely with the sector over recent months in preparation for the spring period, in particular, which is a really important period for live exports. My officials and I will continue to engage strongly on this to prepare and to make sure the trade is facilitated in every way possible.
Reference was made to the prospect of lairage at Rosslare or elsewhere in County Wexford. The provision of lairage and handing facilities is a matter for the trade itself. It is really important that live exporters work together and collaborate. I encourage them to continue to collaborate on ideas for developing facilitates.
On the progressing of the first chair in animal welfare and veterinary ethics at UCD, my Department has been engaging with the university. It is a really good and important initiative. I will revert to the committee with an update on the timeline for that.
I thank the Minister and his officials for being here. I have been raising Brexit issues, including fishing, all along. Obviously, I have been talking to the west Cork Irish Farmers Association chairman, Mr. Donal O'Donovan, and to Mr. Dermot Kelleher of the Irish Cattle and Sheep Farmers Association. I met representatives of Individual Farmers of Ireland last night and they are seeking a meeting with the Minister. He might take that up with them in the near future.
The Brexit fund of €5 billion, of which Ireland is to get €1 billion, must be activated to compensate for any losses, including those associated with sterling volatility. Agriculture and food production are very exposed, and we must ensure as much funding as possible for farmers.
Chilled and processed meat such as sausages, burgers and mince from the UK, which is now regarded as a third country, cannot access external markets. Ireland is a food exporting country. Cheddar cheese from Carbery should be actively entering these markets. This needs to happen immediately and the Government should be doing everything it can to make sure it does.
How will the Minister ensure the least well-off farmers, in particular sheep and beef farmers who are going through a difficult period, will access the €105 million Brexit fund? Does he have any ideas in this regard or can he disclose how that will happen?
A separate €100 million was granted to food processors. Will conditions be attached to this fund to ensure, for instance, that low income farmers also benefit from it? Will a process be put in place ensure it is not handed out automatically and we do not find out afterwards that it did not get to where it was needed most? In my discussions with agriculture groups, they have made the valid point that when the rural environment protection scheme, REPS, started around 1994, anyone on €3,000 or €4,000 was eligible and, therefore, anyone on €18,500 should, by right, be eligible for any new REPS-type deal. That is not happening. Unfortunately, many farmers are still on such low incomes and get very little to survive on their farms. The €105 million investment is important. I ask the Minister to tell us what his plans are in that regard.
Ireland will receive a quarter of the Brexit adjustment reserve fund, which will amount to just over €1 billion. I will be monitoring progress and the impacts of Brexit. The academic assessments in advance of Brexit made estimates of what its cost implications and impacts on the agrifood sector would be. Various projections and assessments were made in advance. This is not a test run - we did not have a chance to have a trial run - but a real-life emerging situation and I am closely monitoring what the impact will be.
I want to ensure that the first priority in the year ahead will be to try to protect farm incomes. In doing that, I will be monitoring how Brexit evolves. Thankfully, prices and the markets for various meat sectors have held up well. We all hope that will continue but I will closely monitor the situation.
Working with the Minister for Public Expenditure and Reform, Deputy Michael McGrath, I achieved an 11% increase in the overall agrifood budget in the most recent budget in October 2020. This will ensure we can underpin farm incomes in the time ahead by ensuring many of the schemes we had in place can continue. It will also provide some fresh and additional funding, particularly in the environmental space, for new schemes to support farm incomes and deliver public goods in the process.
As the Deputy will be aware, last week I engaged in a public consultation to get farmer feedback on a new pilot environmental scheme. I am interested in hearing the views of members on that. The significant increase in the budget of 11% was an important platform from which to try to protect farm incomes in the year ahead. I will closely monitor the sector to assess how best we can support it over the course of the year, particularly in accessing the Brexit adjustment reserve.
The Deputy also mentioned the €100 million capital investment scheme for food processing and the dairy and meat processing sectors. There are conditions attached to that. The scheme is about adding value to food processing and ensuring we diversify product. It is about trying to ensure we increase the value of our products and that farmers see a return from it. The maximum grant aid available under that €100 million capital investment fund will be 30%, so most of the investments will be less than that.
The objective is to encourage the processing sector to invest in the sector in a way that adds value and that develops and diversifies products and markets. All of that is necessary because we need a healthy and robust processing sector that maximises the value of the food that is produced on farms, that ensures incomes are as high as possible and that we get maximum value on the international markets for the food we export. I believe that addresses all the Deputy's questions.
I thank the Minister and his officials for their attendance. I have a couple of questions and ask him to note them.
At present, factories or operators that make meal bins export them but they are having serious problems acquiring the materials from the UK. The farming community buys an awful lot of machinery from auctioneers such as Cambridge Machinery Sales but as many as one in three tractors for import must be stored in yards in England because of problems importing them. Although officials in the Departments concerned and customs officials have stated there is no problem, truck drivers have experienced deep frustration when they tried to bring in this gear. Has the Minister met the Minister for Transport, Deputy Eamon Ryan, to discuss the problems?
Ireland has got €1 billion and factories will receive €100 million of that. Where does the Minister envisage the remainder will be spent to benefit small family farms?
Some State agencies have contracts to supply milk to the HSE, for example. Is there a danger that Brexit will put pressure on milk contracts? We have heard about the seed potatoes issues. Has the issue been sorted?
As the Chairperson outlined, there is talk today that officials in Northern Ireland will be pulled away and for safety reasons, the EU is rightly pulling some of its officials away dealing with imports of animals and food. Will that situation create a big problem? Last night, I heard RTÉ's Tommie Gorman say that a lot of this situation stems from the Article 16 problem concerning Ursula von der Leyen and company last week. Will the Minister get a complete explanation of what went on and how the cat was thrown among the pigeons in that regard?
The Minister went on media and said that he wrote to the European Commission asking for the deadline for the reduction in the beef exceptional aid measure, BEAM, scheme to be extended. Has he got any news about the scheme?
The Minister said that he wanted feedback and today I read about the new schemes that he has proposed. I would always say to those who criticise his Department that it is fairly efficient at giving out money. I read somewhere that schemes will be based on progress and whether something grows. If we go down the road of consultants doing locally led schemes, then there will be less money in the pockets of farmers. In fairness to the Department, if there is a scheme that stipulates one does X, Y and Z then one gets one's money and, in my opinion, the Department administers schemes more efficiently in respect of the overhead costs.
I thank Deputy Fitzmaurice. On the importation of farm machinery, there is ongoing and close engagement between my Department officials and officials in the Department of Transport and the Revenue Commissioners on the importation of all products, and I know about the challenges concerning farm machinery.
There have been many adjustment challenges, particularly as people adjust to the paperwork that is now involved and to ensuring they have prepared for what is required to meet the thresholds and the paperwork obligations. It is something on which we will continue to try to support importers and exporters closely. In order to do that, it is essential that all Departments are working closely together and that certainly is the position. It does not mean there are not challenges; unfortunately there are. That is a reflection of how Brexit was a really bad idea in the first instance and was only going to lead to challenges from a trade point of view. However, we are determined to ensure trade flows as smoothly as possible and with everyone working together, in many ways it has gone as well as it could thus far. As others have already pointed out, scale is down. It will be scaling up but we will continue to work closely together to support everyone, across all sectors, in meeting the additional challenges.
On the €1 billion Brexit adjustment fund, my objective in everything I do is ultimately to support farm incomes, to ensure they are as sustainable as possible and to maximise them. That is why the €179 million in additional funding in the most recent budget was aimed at supporting farmers directly, because that is my number one commitment. In that context, it is important to have a robust processing sector as well and that it is invested in. It is important for such investment to be about adding value to what farmers produce at farm level and ultimately be about trying to ensure it underpins farm incomes in the best way possible. That is my objective in terms of how we assess and monitor farm incomes in the year ahead.
The Deputy mentioned milk production. The challenge there with mixed milk is from the perspective of a third country or non-EU market. There are some challenges in that regard and the sector is trying to manage them as best it can. As time moves on, we certainly will seek to ensure the third country issues can be addressed as trade deals come up for renegotiation.
On seed potatoes, there was an issue with seed and ware potatoes. Ware potatoes can now be imported into the country. There remains a situation with seed potatoes where the SPS certifications are not provided for. As a lot of the seed potatoes used domestically are imported from Scotland, that is a particular challenge. The British Government is currently engaged with the European Commission on an application to cover seed potatoes for import and it remains to be seen what will transpire. Undoubtedly there is an opportunity for us to try to reboot the seed potato industry domestically. In the north west and in my own county in particular, there was always a strong tradition of seed potato production. It is one that has fallen away in recent years but I am looking at the opportunities there to see how we can try to develop that further. The engagement between the British Government and the EU Commission continues on the importation of seed potatoes.
With reference to EU checks in Northern Ireland, safety comes first and I think we all recognise that. Full documentary checks continue in respect of imports. It is important we recognise what the North-South protocol achieved. Northern Ireland remains constitutionally part of the UK and part of the UK customs union but the protocol provides the opportunity for Northern Ireland to be fully part of the Single Market as well. That leaves Northern Ireland in a unique position whereby it has access to both markets. The North-South protocol and those checks are important for facilitating trade in both directions. We will therefore work with our Northern Irish counterparts on supporting that and it is important that everybody takes a measured approach in the time ahead.
The Article 16 debate at EU level in the past week was not helpful. As I said earlier, the European Commission has recognised that it was misguided and it was recognised as a mistake. It is not something we will see in the future.
On the extension I have sought to the BEAM scheme from the Commission, the Deputy will be aware that a significant number of farmers are behind in meeting the 5% nitrogen reduction criteria, which was required of them by 1 July this year. My objective is to always do everything I can to support farm incomes and to ensure that farmers are supported from a departmental and a policy point of view. This was a welcome scheme, which was co-funded between the EU and the Exchequer. More than half of the farmers are on course to meet their obligations to reduce their nitrogen use by 5%. Some of them have taken significant action to achieve that. Many other farmer did not join the scheme in the first instance because the 5% would have put them off and they decided to not avail of it. Those who are on course to meet the 5% reduction by 1 July will be unaffected by the request I have made to the Commission. If the extension is granted, it will allow for a new reference year from 1 January to 31 December this year so that farmers can reset and achieve the 5% reduction over the course of 2021. I am hoping for an early answer from the Commission, but we have not yet received confirmation on that being granted. I will be asking my Department to work with the representative organisations to engage with farmers, emphasising the importance of them engaging with their agricultural advisers on how best to take the action now to minimise the challenge of meeting that 5% reduction over the year ahead. If that reduction is not met, it means that the money already paid out to individual farmers will be repayable and this is not a situation I want. This is why I have sought this second opportunity for farmers to reset to try to ensure the money stays in their pockets.
I thank the Minister for taking the time out to be with us this afternoon.
Some of my questions follow on from other questions that have been asked. On the situation at the ports in the Six Counties over the past 24 hours where staff were withdrawn by the Department of Agriculture, Environment and Rural Affairs in the North, and now staff have also been withdrawn by the European Commission, will the Minister clarify what are the implications of this? What will it mean if staff cannot go back for a prolonged period? Of course I join in extending our support to the workers and condemn any intimidation or harassment of the workers. In that context, has the Minister spoken with his counterpart in the North? I am aware there has been a change in the past 24 hours but has there been any direct correspondence or engagement on the issue with the Minister there, the Department or the European Commission?
The Minister's statement refers to financial and other support measures that have been put in place, and specifically direct aid. We are now in the new, post-Brexit scenario. What direct aid does he propose to provide for farmers? Reference was made to the €100 million investment scheme that was agreed with the Department of Enterprise, Trade and Employment but many farmers rolled their eyes at the thought of processors being able to avail of a grant when there are no new supports in place, and when it appears there are no criteria for the processors' engagements with the farming community. Perhaps the Minister will outline for us whether it is his intention to provide direct supports to our primary producers in the short to medium term.
Regarding the BEAM scheme and the Minister's application for a referral, the question is whether we have left it too late. The Minister, when an Opposition spokesperson, would have raised this issue before the summer last year because he would have heard, as we all did, from farmers who were finding it increasingly difficult to meet the reduction criteria without losing more than what they were set to gain from the scheme. Why was there a delay? What other measures can be put in place to support farmers who may not now be in a position, even with revised criteria, to meet the terms and conditions of that scheme?
With respect to the Brexit adjustment reserve fund, I am a little concerned by the remarks that we have heard here today. I welcome the Government’s progress in ensuring that the draft scheme suggests that we will be in line for approximately €1 billion but the reason our arguments were so strong related to agriculture. The potential impact of Brexit on Irish farmers and the agrifood sector was set out in lights in terms of the challenges that Brexit would present to Ireland. If we get to a scenario where a Brexit adjustment fund does not reflect that reality, it will be an absolute failure. What we need to ensure, in the first instance, is that this reality is recognised and that other Departments do not pull a fast one over the Department of Agriculture, Food and the Marine, in other words, that we and Irish farmers secure a very high proportion of that fund. I wonder if the Minister can put a percentage on the proportion of that €1 billion he sees coming to agriculture, in particular, to our primary producers.
On mixed milk, when it came to arguing for the need for a backstop and for an Irish protocol, one of the issues that was easy to articulate to European negotiators and others within the political institutions was the issue of milk production because it clearly operates on an all-island basis and requires co-operation and interaction, North and South. The figures speak for themselves. We have a scenario where that sector, despite all of that, could be the one that is impacted as a result of the outworkings of Brexit. The problems have been well-articulated; the solutions less so. People need assurances in the first instance that the Government has informed its European counterparts that there will be no support for any new trade deal that fails to resolve this issue at that stage but also that we will go back to the Commission and say that existing trade deals need to be amended to reflect the fact that we have a milk product among the best in the world that can be sold across Europe and in Britain without tariffs or conditions, and the same should be the case for any third country that the EU has a trade deal with. I am not convinced that argument is being made forcefully enough at this time and it should be.
I welcome the comments that have been made in respect of the issues relating to trade, logistics and the potential for disruption. I hear that the templates and the proposals put in place are reflective of a 2019 level of demand. Could we get some assurances that they will also facilitate surges? January has been a particularly quiet month in trade and that has allowed us to put in place the transitional arrangements in a way that has not resulted in large delays. The fear is that this will result in some form of a backlog at some stage in the future. Can we have assurances that this will be addressed?
A number of contributors at our earlier hearings referred to the need for credit export insurance.
I would welcome the Minister's views on whether we will be in a position to put such a measure in place for our exporters, considering that many of our counterparts across the EU have such an insurance in place.
On the Northern Irish ports, this is an emerging situation. As I said, the first priority here is the safety of staff. The type of threats we have seen are to be condemned by all. There are still full documentary checks in place and we will work very closely with our Northern Irish and EU counterparts in the time ahead. It is important that we all work together to calm the situation and recognise that the objective of the North-South protocol is to ensure access for Northern Ireland to the EU Single Market and the UK market and that it remains part of the customs union.
On direct aid for farmers, as I said, in the most recent budget I delivered an increase of €179 million in direct support to farmers and in fresh funding for farm schemes. My number one objective is farm incomes.
Deputy Carthy pointed out the investment in the processing sector in the time ahead, which will amount to €100 million over the next five years or €20 million per annum until 2025. That will be about ensuring value is added to product and encouraging private investment in the processing sector.
The most crucial issue at all times, from my point of view, is supporting and investing in farm incomes. That is why I achieved an increase of €179 million or 11% in the budget. If people express concerns to the Deputy, he should remind them of that important support provided in the recent budget and of its importance to farm incomes.
The €1 billion provided under the Brexit adjustment reserve will be important in supporting the overall economy, particularly the agrifood sector, in adjusting to Brexit and its impact. I am monitoring that very closely and I stand ready to support the agrifood sector from the reserve as the situation evolves.
Well over half of farmers are on course to meet the current reference year with regard to the BEAM scheme. However, we are now more than halfway through the reference year and it is clear that many farmers are not in a position to meet it. I am hopeful that the new reference year will be approved at European level. This will make the 12 months of 2021 a reference year and give farmers an opportunity to adjust to meet the 5% threshold. The terms and conditions are the same now as they were when everybody signed up to the scheme. While the terms and conditions have not changed, I hope that, with the approval of the European Commission, the reference year will change. This will give farmers who are having difficulty meeting the threshold a second chance to do so in 2021.
We will do all we can in the time ahead in regard to mixed milk and the trade deal. We will work with the European Union to have third country trade deals readjusted to make best use of the opportunities available. We would like to address that issue to ensure this works and does not become an issue or is removed as an issue over time.
The benchmark taken for throughput at our ports was 2019. Significant resources have been provided to meet the increased administration required with regard to importing and exporting. This will depend on how volumes evolve. In many cases, they are less than half of what they were previously.
There is no doubt they will increase again and if additional resources are required, they will be put in place to adjust to that.
Regarding export insurance, there has been engagement over the past year between the Departments of Agriculture, Food and the Marine and Enterprise, Trade and Employment. The Deputy is right. It is an area where there is currently no system in place but we continue to assess it in terms of what the opportunities and potential would be for such a scheme.
I welcome the Minister. The issue of live exports was raised earlier and I want to come back to it. There are issues regarding calf exports, lairages and so on that we are going to have to discuss, probably in the next few weeks.
What is the Minister's opinion on live exports, particularly to the UK? I am referring to in-calf heifers and breeding animals. These are top-quality beef and dairy animals that are going to the UK market only. They are trying to build up their herd to same genetic standard that we have at the moment. There has been great trade in these animals over the past few years and the new regulations are becoming a major impediment. The Minister might elaborate on what can be done regarding that impediment because in the next six to eight weeks, the majority of this trade, particularly in in-calf Friesian heifers, will take place. He might elaborate on how we can deal with that issue, particularly in the short term.
Another issue I am coming across is delays in imports through ports, particularly parts for agricultural machinery, milking plants and so on. There have been significant delays. The usual turnaround time for a part for a Case tractor or Manitou machinery could be anything from one to three days; now it is seven to ten days at a minimum. That is what the importers are telling us, which is a major issue for the industry. This has not been streamline and a protocol has not been put in place. What needs to be done to make sure that this can be streamlined so parts can be brought into Ireland? The irony is that many of these parts are being transported from Europe to the UK and then to Ireland. This trade issue is having a significant impact on getting those parts on to the island.
The last issue is slightly different. It is about CAP. The Minister might elaborate on the status of the talks. The Brexit deal has been completed. Rightly or wrongly, we are where we are with it. There is going to be a rebalancing in the talks regarding CAP payments over the next two years. The Minister might give an update on the negotiations and the timelines pertaining to that.
I will ask Mr. Doyle to come in on the export of live animals to the UK market. I will ask Ms Sheridan to come in on the Senator's second point about parts for machinery and the challenges in that regard.
The Senator's third point related to the CAP and where it is at. A general approach was agreed both by the EU Council of Ministers and by the European Parliament on what the next seven-year CAP programme should look like. It is currently in a trilogue process between the European Parliament, the Council of Ministers and the European Commission, to finalise the programme for the next seven years. Hopefully, that process will conclude soon.
We will have to submit our national CAP strategic plan to the Commission by 1 January next year. This year is going to be important in developing our strategic plan. I will engage in great depth with farming organisations and farming representatives over the next number of months on the design and nature of our plan. There will then be public consultation on it in the second half of the year before we submit it at European level.
Once our national strategic CAP plan is approved, including the nature and type of scheme in Pillar 2 and the nature of our eco scheme, which will be a requirement under Pillar 1, 2022 will be about developing and preparing for those schemes, getting information out to farmers and working with them to prepare for the schemes to be in place from January 2023 when the new CAP will go live. It will be a five-year programme, given that 1 January 2023 will be approximately two years later than this month, which was when the programme was due to kick off. There will now be a two-year transition period, and I have announced that many of the outgoing schemes will be continued throughout that time to ensure there is no impact on farm incomes as we await the start of the new CAP.
I might ask Mr. Doyle to speak on the live export of animals, including to Britain.
Mr. Rob Doyle:
I thank Senator Lombard for his question. Brexit has had the unfortunate consequence of bringing about new measures in respect of trade with the UK. For example, there are additional residency requirements for animals, in that they must now be on the holding of origin in Ireland for 40 days prior to export, which is an increased length of time.
A second issue that is causing considerable challenges relates to drivers' vehicle approvals and transporter authorisations. Brexit has meant that drivers' qualifications are no longer recognised between Ireland and the UK. We have negotiated a solution for that with the UK, which will recognise Irish drivers' qualifications under the common travel area. The information is on our website, including an email address to which a driver can apply with evidence of his or her qualification. Regarding transporter approvals, the transporter must apply for approval in the UK. There are links to that information on the website as well.
Another challenge is that an Irish-approved vehicle must now receive UK approval. We are aware of the issue, which does not affect just us. We had a meeting on it with the French this morning. It is a challenge for other member states as well as ourselves. We are engaging with the Commission on it. We are also engaging with the Department of Agriculture, Environment and Rural Affairs in Northern Ireland and the UK's Department for Environment, Food and Rural Affairs to try to find a way forward, but it is a challenging situation.
I am sorry, Chairman, but could we get a timeline for a solution? In my part of the world, cows are calving at an awful rate and there will be significant pressure on live exports of in-calf and calved heifers in the next two to three weeks. Is Mr. Doyle able to indicate a timeline for a solution?
Mr. Rob Doyle:
All I can say is that it is at the top of our agenda. We are working on it. We have approved a number of UK vehicles. That some transporters are approved in Northern Ireland presents another option, in that they are able to travel between Northern Ireland and Britain. We are working to get as many vehicles approved as we can to allow trade to continue while we negotiate with the Commission, Northern Ireland and the UK, but it is a complex and difficult situation that has been created by Brexit. We must respect the rules of the Common Market and we cannot engage in a bilateral solution with the UK. Whatever we do has to be line with Commission rules. While I agree that this situation is regrettable and it is a challenging space, we are working hard on it.
Ms Hazel Sheridan:
I thank Senator Lombard for his question. We are aware of the issues in respect of machinery parts. We and our colleagues in Revenue met the freight forwarder association last week on this and other issues. The problems are being caused by a particular reliance in Ireland on groupage. A groupage container can have a large number of different consignments requiring a large volume of documentation to be submitted. Businesses are now contending with that challenge.
It is primarily on the Revenue side of the operation. There is a Revenue solution of which business operators can avail. I am not completely au faitwith that because it is quite a complicated arrangement but the information was passed on to those involved and Revenue is encouraging businesses to engage with the process. That solution is available. It is difficult, and the Minister made that point already. We are working closely with businesses to resolve the issues that only came to light once the UK was outside the Single Market.
I thank the Minister and his officials for coming before the committee. I have engaged in consultations with the dairy industry, hauliers and Meat Industry Ireland and I will make some observations and ask a few questions on foot of those.
In the context of mixed milk, it is estimated 4 billion l of milk from the North and the South go into various dairy products. That is a massive amount. Has the Department an idea what percentage of the market will be effected by the loss of access and competitiveness now that this milk cannot be sent to Japan, Canada and Korea, for example?
Hauliers have raised issues such as the duty on produce coming into the UK and then to Ireland. Companies need clarity because many are being faced with charges that they did not expect. Then there are duty-paid terms. It is stated that UK multiples have pushed back on Irish food producers and are making them more responsible for the payment of the import tariffs. That will add extra costs for consumers. Can this matter be tackled in any way? Do we know the percentage of the trucks that were forced to turn around from UK ports due to incorrect paperwork? What aspects of the paperwork process are proving particularly problematic?
On Meat Industry Ireland, businesses are now faced with burdensome additional paperwork and export processes. The new customs SPS checks, delays and disruption in logistics mean that the direct route to continental Europe is adding a cost of €500 to €800 per truck. Some hauliers are being forced to travel back from Great Britain with their trucks empty and this is giving rise to an increase of €600 in the cost per journey. It depends on the routes, but we understand that the costs are increasing by anywhere from 25% to 40%. The consequences of this point to the need for new trade, but what can be done to cut these huge extra costs?
Further capacity is needed in the direct sailings from the Republic of Ireland to continental Europe because the new capacity, while welcome, is well below the volume of traffic that had been using the UK land bridge. Meat Industry Ireland states that the reopening of the Chinese market for Irish beef is a major priority for the beef sector here. The possibility of new markets must be explored and action must be taken to deal with competition from cheap imports. Has the Department done any work in opening up new markets? Can we get an update on talks that have taken place in this regard?
On Article 16, what is the extent of the disruption that took place at the weekend? Will it have an impact down the supply chain or at other ports? Is the Minister concerned that threats such as those witnessed in the ports at Belfast and Larne could be seen at other ports in the UK? As the checks and certification requirements become more rigorous on 1 April and 1 July, is he worried that any difficulties could further inflame tensions? Does he believe that the actions of the EU at the weekend have served to confirm in the minds of those who do not trust the EU or the intent behind the Northern Ireland protocol that their concerns have been realised? Is he concerned about the future of the supply line arrangements?
On duties and the challenges arising from them, I will ask Mr. Savage to give an update on the experience so far.
The Deputy asked about the meat industry and additional costs.
In general, we continue to monitor the real-life impact of Brexit on the cost base and the cost of doing business. We are monitoring that closely across the agrifood sector.
On reopening the Chinese market, that has been a priority and something I have been working on as Minister. I met the Chinese ambassador recently to try to move the issue forward. The Taoiseach has also recently written to Premier Li to try to make progress and seek to have it reopened. It is an important market for beef and other agrifood export lines. It is something we are focusing on and doing our best to make progress on.
On Northern Ireland ports, the safety of staff is paramount and there is an onus on all of us, North and South, to work to reduce tensions in this regard. The North-South protocol is ultimately about ensuring Northern Ireland has access to the Single Market as well as to the UK market. That requires processes to be in place to achieve that. We will monitor it closely and work to ensure issues are resolved, in particular, that there is a responsible approach and attitude and that any tensions that are emerging are dialled down. Does Mr. Savage want to come in on the point about the duties?
Mr. Paul Savage:
I thank Deputy Martin Browne for his question. The Deputy mentioned mixed milk and the percentage of markets that might be affected by that in terms of getting product into places like Japan, Canada and so on. We have been engaging with milk processors over quite a long period regarding the potential impact of rules of origin on this type of exports. As for precisely what the differentiation might be in terms of impact on individual markets, we do not have full details on that. In the context of engaging with processors, that would be considered commercially sensitive in terms of sharing that with the Department. We do not have full figures on those but the key thing from our point of view is that we have continued our efforts to engage with the European Commission on this issue and to try to find a resolution. I mentioned earlier that the Minister, Deputy Coveney, is in ongoing contact with Commission Vice President Maroš Šefovi on a number of issues arising from the withdrawal agreement and means of origin is among those. Those contacts will continue because they are of a political rather than technical nature.
The Deputy mentioned duties or charges on products coming in from Great Britain. I think he might be referring to issues around the use of distribution centres in GB for the processing of products coming from EU markets, brought to centres in GB and then separated or repackaged for onward movement to Ireland or other member states. There is an emerging issue there relating to rules of origin because, from a Commission point of view, once a product goes into those types of distribution centres, it is deemed to have gone into free circulation so there is no way we can say such products are definitively of EU origin, from the Commission's point of view. We have been engaging with stakeholders on this and have spoken with Food Drink Ireland and others around the difficulties being encountered.
Where movements are coming from the EU via GB, for instance, into Ireland, the easiest way to resolve the difficulties is to ensure they move under a customs transit procedure. That is the most straightforward way to do it in order that they remain in the customs system and within customs control. It means moving them to a customs warehouse or a customs bonded facility where any separation or mixing or matching of product might take place before onward movement. We have engaged with operators on that front and this is around adjustment of supply chains in the context of reaction to Brexit because, not just in the agrifood sector but across all sectors, there are issues arising related to rules of origin where Great Britain is used as a hub, either for transport of product or as a step in the process of moving product from one location to another.
Again, operators and the operational supply chains will have to adjust over time but one solution in this area is to ensure that goods are moved under customs transit arrangements.
I have a few Covid-related questions. The first concerns the situation in meat plants. We have seen a number of reports on newly emerged clusters in recent days and weeks. We know, from previous experience, the challenges that can present when clusters emerge in meat plants as we try to exit from restrictions . My first question is whether rolling testing arrangements in meat plants are continuing and if so, to what extent. How is the Minister's Department engaging with the Department of Health to try to minimise the instances of outbreaks within meat plants?
Second, what the hell is going on with mink farms? We know that in November, the CMO issued very clear advice to the Department that all minks should be culled because of the great public health risk that they present. The Department accepted that recommendation. Yet, here we are in February and it appears that nothing has happened. There is a veil of secrecy. I know that freedom of information, FOI, requests as to what is going on behind the scenes have been refused. The citation has been "commercial sensitivity". In what was clear public health guidance provided to the Department, I ask the Minister to give a clear reason that has yet to be acted upon.
Before the Minister answers, I also have a Covid-related question. I know that unfortunately, supplies of the vaccine are extremely scarce. Our milk processing facilities operate at capacity - some would say even beyond capacity - from the last week of April to the second week of June. A cluster in a milk processing facility would have serious repercussions for capacity through the month of May in particular. Is there any possibility that workers in milk processing facilities can be upgraded in respect of when they are due to get the vaccine? I know that many sector groups are looking for reclassification and to get themselves up the list. However, milk processing facilities are at maximum capacity for about six weeks and a cluster in one of those plants would have serious repercussions during peak season.
First, on the Covid situation in meat plants, there continues to be intensive and ongoing engagement between my own Department and the meat factories on this issue. The plants also continue to work closely with the HSE and the Health and Safety Authority, HSA, in respect of the protocols that are in place. As with wider society in recent weeks, there have been particular challenges for all in respect of infection rates and the increased challenge of trying to ensure that the significant infection rates do not impact upon employees. The serial testing is continuing. It has been important in respect of trying to address risk and in identifying where there might be positive cases. It will continue in the time ahead. I recently met representatives of the industry to discuss the issue and emphasised the importance of continuing to take all precautions possible. I acknowledge that the industry has been making tremendous efforts in that regard. The last number of weeks have been really challenging for all businesses that have had to continue to operate, including meat factories, given the high infection rates that have been prevalent.
We also know from last year about the particular challenges regarding meat factories, such as the high number of people who work in them and the importance of the precautions in place, as well as the importance of continuing serial testing to reduce the risk, assist with infection control and keep staff safe.
In regard to mink farms, the Chief Medical Officer indicated his concern and his request that mink be culled, given the emergence of the Danish strain of Covid before Christmas. As Minister, I established that it would require new primary legislation for that to be carried out. I met mink farmers at that stage to relay the request I had received from the Chief Medical Officer and our intention to pursue it. In the interim, there was ongoing testing of both mink and staff at the farms to protect against the risk of the strain spreading. More recently, the Chief Medical Officer indicated that he is no longer concerned by the risk mink pose and that he is no longer seeking the culling of mink from the point of view of the risk of Covid. Nonetheless, there is a clear commitment in the programme for Government to phasing out mink farming in Ireland, so I am proceeding on the basis that we are seeking to close mink farming in the country. There is ongoing engagement between my Department and mink farmers and I will soon come forward with primary legislation that will facilitate proceeding with a cull and bringing an end to mink farming in the country.
On milk processing and the vaccination programme, I recently met representatives of Dairy Industry Ireland and the CEOs of the dairy companies and co-operatives to discuss a number of issues. I am aware of the importance of peak supply and of the workers who work in the industry. As members will be aware, an expert committee has been put in place. It is managing and overseeing the roll-out of the vaccination process to ensure that those who are at highest risk are vaccinated first, and all the pertinent information on essential workers has been fed in to it. It has put in place a strategy and process for rolling out the vaccines as quickly as we receive them in a way that addresses those who are most at risk from a health point of view and prioritises healthcare staff. Essential workers in the food industry will also form part of the prioritisation categories in the place that is regarded as most appropriate in the roll-out, from the committee’s point of view. It is a matter for it to decide on and it has the relevant information it needs on the various professions and the necessity of the work that various workers carry out. First and foremost, the priority is protecting people's health and especially that of healthcare professionals.
To return to what Deputy Carthy asked about, as the Chairman knows there are a number of meat processing plants in our county. I will take the Minister at his word that testing is ongoing, but why is there so much secrecy? Workers in these plants have contacted us with concern about their working conditions and members of the public in the area ask us questions continually. It seems we have gone back to the very start, whereby everything is kept hush-hush. If all this testing is ongoing and everything is clear and above board, why is more information not coming out?
I wish to come in on that issue. We are all familiar with the situation in Bandon, where 67 people were diagnosed last week. The big issue is the lack of information that was given to the community. Obviously the plant has issues, as it is only working at a certain level of capacity at the moment. For the town of Bandon and the surrounding area to have so many people, unfortunately, tied down with Covid, and I have not taken into consideration close contacts, it had a big bearing in what happened there in the past ten days. That kind of information is key. Other Deputies have mentioned the need to convey information to communities, which is very important. Leaving it up to the meat plants to decide to inform communities about what is happening is not good enough. The community of Bandon only heard that nearly 70 workers at a local plant were diagnosed as having Covid last week through a leak to the media. We need to work on protocols because they are not there at the moment and it is literally left to how one particular plant or organisation wants to deal with the matter. Without a shadow of a doubt some places are better than others but some just close up shop and say they have nothing to report as Covid is not an issue. We need to have some direction in order that information is given to communities in the event of an outbreak .
The same protocols apply to meat factories as apply to any other business or location where outbreaks occur. In terms of communication, there are protocols for staff to self-isolate and take precautions. The difference with meat factories is that we have ongoing serial testing as an additional aid to oversee infection rates and to work with the factories to ensure they are minimised. I take on board the feedback from the Deputies and Senators. We have, working in conjunction with the industry, emphasised the importance of protocols. They have gone to very significant lengths to put in place protocols to ensure their staff are kept safe and it is paramount that this continues in the time ahead.
I thank the Minister for his response regarding mink farms but new information has been provided in it. None of his previous responses to parliamentary questions indicated that the reason for a delay might be down to the need for primary legislation.
As for his remarks about the change of mind by the CMO, was that conveyed via a communiqué from the National Public Health Emergency Team, NPHET, to the Minister for Health in the same way as the original communiqué was issued? If done using another mechanism, can we find out what that was, how the message was conveyed and if it can be released to the committee?
There is a serious problem looming for the Department of Agriculture, Food and the Marine and maybe another Department. Farmers pay a levy when they buy plastic bale wrap. Such plastic is stacked up everywhere because it is not being sent to the UK at the moment. As this appears to be a total mess at present, we must do something in this country to address the problem such as using it to make pallets. The Department must examine the matter because there is a looming problem with the amount of used plastic that has accumulated on farms.
First, Deputy Carthy mentioned mink farming. Following the initial advice of the CMO, the Department proceeded on the basis that we would proceed with a cull.
The run-up to Christmas is pelting season, when approximately 80% of the mink in the country are pelted. We engaged with the farmers to indicate that there would be no breeding afterwards, we would bring forward primary legislation in this regard and, in the meantime, we would closely monitor risk from a testing point of view. In recent days, the CMO made clear the risk from a variant is no longer a priority from his point of view and that there was no need for a cull from a health point of view. Regardless, we intend to proceed with the programme for Government commitment to bring mink farming to an end.
With regard to the comments of Deputy Fitzmaurice and the Chairman on the plastic levy, I am certainly examining it and I will take on board their suggestions and feedback and consider them.
I thank the Minister and officials for a very earnest exchange of views. There are many areas of concern but getting a solution for mixed milk is critical. We must also make sure live exports can continue in the Brexit scenario. There are also the additional costs being imposed on our exports. I know there are other issues but these are the three main ones we would like the Minister and the officials to take from the committee today.
I reiterate the comment made at the start of the meeting that great work has been done in ensuring we are able to continue to trade. I will not say it is in a seamless fashion but it is as seamless as it can be following the divorce that has happened between us and the UK. Great credit is due to everyone that we have not had market turbulence and that we continue to trade. There are bound to be teething problems and the meeting has highlighted many of them to the Minister and the officials.
I propose we hold a private virtual meeting at 1.30 p.m. next Monday. Is that agreed? Agreed.