Tim Lombard (Fine Gael)
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I remind members, witnesses and anybody in the Public Gallery to turn off their mobile telephones. All persons present are asked to take personal responsibility for themselves and others in regard to the risk of contracting Covid-19.

Today's meeting will consist of two sessions. The first is to discuss the development of the sheep sector and the second will be a discussion on the timber sector. Before we begin, I draw to the attention of witnesses that if they give evidence to the committee within the parliamentary precincts, they are protected by absolute privilege in respect of that evidence. This means witnesses are fully protected in respect of any defamation action arising out of the committee meeting. Witnesses are expected not to abuse this privilege and may be directed by the Chair to cease giving evidence. They should follow any such direction. Witnesses are further reminded of the long-standing parliamentary practice to the effect that, within reason, they should not comment on a third party outside the House in such a way as to make him or her identifiable. Witnesses giving evidence from outside the parliamentary precincts are asked to note that they do not benefit from the same level of immunity from legal proceedings as do witnesses giving evidence within the parliamentary precincts. They should consider taking legal advice on the matter. The privilege against defamation does not apply to publications by witnesses outside the proceedings of the committee or any matters raised on foot of proceedings.

I welcome the witnesses from the Irish Farmers Association, IFA: Mr. Tim Cullinan, president; Mr. Kevin Comiskey, chair of the sheep committee; and Mr. Tomás Bourke, senior policy adviser. I also welcome Mr. Brendan Crosse and Mr. Michael Crosse, directors of Sheep Milk Ireland Limited. I invite Mr. Cullinan to make his opening statement.

Mr. Tim Cullinan:

I thank the committee members for inviting the IFA to address them today. Sheep production is the second-largest farm sector in the country based on farmer numbers. There are more than 36,000 active sheep farmers in Ireland, accounting for 2.7 million breeding ewes. The sheep population in this country is 4 million, with an average flock size of 111 sheep. The average number of ewes per farm is 75. Ireland is the fourth-largest sheep meat exporter worldwide and the second-largest exporter of sheep meat in the EU. Almost 3 million sheep were processed in 2022. The sheep industry is an important economic component of our local economy and generates wider economic activity and employment in rural communities throughout the country. The sector is strongly export-oriented. In 2022, exports to more than 35 countries were valued at €476 million, an increase of 17% on the previous year, with more than 75,000 tonnes of sheep meat processed, representing a 10% increase.

Sheep farming is carried out on some of the most difficult land in the country, thereby generating economic and socioeconomic activity in those areas, while also adding enormously to the biodiversity and environmental objectives of the entire country. Sheep farmers produce a public good through the use of extensive grass-based systems, including protection of the environment and biodiversity and preservation of the landscape and unique features. Sheep farming is the lowest producing farm system in terms of greenhouse gas emissions. Wool produced on sheep farms is a renewable product with multiple added-value uses, which is not reflected in the price provided to farmers for this unique product.

The sheep sector is a low-income vulnerable sector that is dependent on direct payments for more than 100% of family farm income. This challenging income situation is a major deterrent to new entrants to the sector. In 2022, gross margins on sheep farms decreased by 14%, with net margins dropping 81% to just €7 per ewe.

This included the sheep welfare scheme, SWS, payment. A return of €7 per ewe in the sector is unsustainable. Direct supports for sheep farmers must be increased to €30 per ewe to encourage generational renewal and ensure the economic viability of existing sheep farmers. For 2023, Teagasc forecasts a 1% increase in total sheep production costs. Feed concentrates are projected to increase by 10%, with no weakening of fertiliser prices, which have increased by 195% on 2021 levels. Other direct costs on sheep farms are forecasted to increase by 4% in 2023. Lamb prices are currently 70 cent per kg or €16 per lamb on average below 2022 levels. Inflationary pressures are projected to continue into 2023, impacting on demand for lamb.

Direct payments support the continuation of the family farm structure, preserving farming and economic activity across Ireland through various direct payment methods. Direct payments contribute over 100% to overall family farm incomes, and a targeted €30 per ewe payment is essential to support the sector. Store lamb finishers are an integral part of our production system in terms of maintaining a year-round supply of lamb and providing a vital outlet for our hill sheep farmers. Store lamb finishers must also be supported for finishing lambs.

The impact of Brexit on Irish sheep farmers has the potential to be devastating. The UK and French markets are key markets for Irish sheep meat. Bilateral trade deals agreed by the UK with countries such as New Zealand and Australia have the potential to undermine the UK market for Irish sheep meat and have the potential to displace domestic produce in the UK, which in turn undermines the French market for our sheep meat. Sheep farmers must be supported from this threat through the Brexit adjustment reserve.

Mr. Kevin Comiskey:

I thank the committee for the invitation to explain about the sheep sector and the crisis we are in at the moment. It is compounded by the collapse in the wool trade. Shearing is a key management practice on sheep farms for the benefit, health and welfare of the flock. It costs about €8 to present a 3 kg fleece rolled and packed on a farm in good condition for the merchants. That costs farmers around €21 million annually. Following a feasibility study that was carried out, the Wool Council has been established and one meeting of the group has taken place so far. There are multiple uses for this product and it meets all the environmental credentials, which must be a driving force to maximise its use. To achieve this and reduce the processing costs, it is important wool is presented in optimum condition from farms. I emphasised that at the first meeting of the council. There was full agreement in the room that to get a reward for farmers, that is where the payment should be made. Shearing costs must be directly supported to incentivise farmers carrying out this measure and to ensure wool is presented in good condition.

When I was first elected as chairman, I had been on the sheep committee for six years. The issue of dog control was a big thing and was always on the agenda. I knew it was a big issue, and it has become an even bigger issue since then. I have witnessed some horrific cases and I have visited horrific scenes. It is all down to irresponsible dog ownership. The lack of Government action is allowing this to happen, while sheep farmers are having their flocks savaged by dogs almost daily. The members will all have heard about these attacks on sheep farms. They have a wide impact not just on the farm and the flock. They also have a mental impact on the families. I have visited farms and have sat round tables with young children in such circumstances, and it is a horrific thing.

The IFA has set out our demands in this area very clearly. We must have a single national database for all dogs correlating licensing and microchipping and identifying the person responsible for the dog. At a minimum, there must be alignment of the existing licensing and microchipping records to one central access point. There must be full enforcement of microchipping and licensing obligations of dog owners for all dogs, stronger powers of enforcement for dog wardens and the Garda, and clarity around these powers. That is where I think the main focus will be. The regulation will fall at the first fence if we do not get enforcement. Enforcement will be a key issue in this. Stronger sanctions must be put in place to reflect the horrific damage these dogs do on farms.

Following a request from the Minister, Deputy McConalogue, a meeting of the Food Vision beef and sheep group was convened. The Minister was aware of the meetings we had in Athlone and throughout the country highlighting the crisis in the sector and asked for the group to be convened. We met on 17 February to discuss the market situation in the sheep sector, with presentations from the Department of Agriculture, Food and the Marine, An Bord Bia and Teagasc on current supports and activities to inform stakeholder discussions on what more can be done to support the sector in the current circumstances. As our president has pointed out, support is vitally needed, and that €30 per ewe payment is part of that vital support. The crisis in the sector was outlined in detail at the meeting. Sheep farmers' margins have been effectively wiped out, dropping 81% to just €7 per ewe in 2022. Based on the presentations from both Teagasc and An Bord Bia, there is limited opportunity for any significant increase in 2023. We are three months into the year and we are well behind on the price in 2023, so we could be looking at a price of less than €7 per ewe this year. This crisis can only be alleviated by immediate direct supports for sheep farmers from Government, and we are lobbying strongly for that support.

One of the terms of reference of the Food Vision beef and sheep group is to deliver on the objectives of Food Vision 2030, and within that there are a number of issues that must be resolved, addressed and delivered on for the sheep sector. These include more market price transparency of prices paid weekly; the provision of an export benchmark price tracker for lamb; addressing the issue of imported live lambs and sheep meat in carcass form and its impact on prices Irish farmers receive; and the labelling of sheep meat and the controls in place. At all the meetings we have held recently in Athlone, Tuam, Tinahely and throughout the country, these issues were raised as major concerns by farmers on the ground. It is critical that returns from the marketplace are maximised. Sheep meat factories can and must do more to reflect the full value of the sheep meat we produce and the exacting standards it is produced to. An Bord Bia has a key role to play in this area and must be more proactive in delivering higher value volume markets for Irish sheep meat. Indeed, we have seen that the US market is available. We have to get the factories up and running and get the lamb out if the market is available and accessible. The factories have a big role to play in that respect as well. However, markets alone are not enough to provide economic viability and sustainability on our farms. Sheep farmers must be provided with immediate direct supports for the ewes on their farms.

Sheep farming is the second-largest farm sector in the country, carried out on more than 36,000 farms. The sector generated an export value of €476 million in 2022, an increase of 17% for the country, while at the same time margins on sheep farms were slashed by 81% to just €7 per ewe or just over €500 a year for the average sheep flock, with prospects for this year of similar margins. That is around one week's wages for 12 months' work. It is not sustainable on any farm.

The Minister asked for the Food Vision beef and sheep group to convene as a matter of urgency to discuss the crisis in the sheep sector. We were asked at the meeting to make our submissions on what is needed for sheep farmers. The meeting was held three weeks ago, and I and members of the committee hand-delivered the submission to Agriculture House two weeks ago. The Minister and his Government colleagues have had the time to consider the submissions. We now need to hear what supports are forthcoming to get confidence in the system. There is absolutely no confidence in the sector at the moment and we need a response from the Minister and Government.

Direct targeted support of €30 per ewe to support the economic viability of the sector must be provided immediately. Store lamb finishers are a vital outlet for hill sheep farmers, especially in County Leitrim where I come from and right across the western seaboard. Hill lambs come from the west along the hills and mainly go east. These finishers play a key role in production supply systems. Direct supports are critical to maintain this outlet for hill sheep farmers. Farmers must be directly supported to offset the cost of shearing and incentivised to present wool in optimum condition to facilitate further processing.

This is a brief outline of where we are. The sheep sector is in crisis. We need a clear indication from the Government to put confidence back in the sector. Saying that it is monitoring the situation is not enough.

Tim Lombard (Fine Gael)
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I thank Mr. Comiskey. I call Mr. Cross.

Mr. Brendan Crosse:

I thank the committee for inviting Sheep Milk Ireland to attend and providing us with the opportunity to present on how developing a sheep milk industry can make a significant improvement to the viability and resilience of the entire sheep sector.

Sheep production is the second largest farm sector in the country on the basis of farmer numbers and the fact that there are 2.7 million breeding ewes. It plays an important economic, environmental and societal role across Ireland, but particularly in the most rural regions. Sheep farming is the lowest farm system in terms of greenhouse gas emissions.

Despite all of this, the sector is challenged by its economic viability, which is particularly highlighted during the current crisis. This has resulted in poor incomes for farmers and low levels of new entrants. The value of sheep wool has crashed and sheep meat is already a premium meat globally. These are major hurdles for the industry. Having spent countless generations focusing on sheep meat and wool, Ireland must seriously consider the potential of the third product from sheep, which is milk.

Ireland has proven to be a profitable, efficient and sustainable producer of milk. It has a world-class supply chain from its production systems and processing capabilities to its global distribution and marketing. Billions of euro have been invested across all levels of the industry to achieve this. It continues to deliver for farming families around Ireland. However, it is increasingly seen that the dairy cow industry is approaching peak production and reaching its natural limits in Ireland.

Sheep milk production is a major industry across the world and represents 1.5% of global milk production, or 10.5 billion litres. It is a larger industry than the organic dairy industry. Sheep milk is a fascinating product. It has 50% more protein and fat than cow and goat's milk, it is 70% higher in calcium, and it has a unique composition that results in it being suitable for many people, including those who have an intolerance to bovine dairy products. Some 45% of the world's sheep milk is produced around the Mediterranean basin in countries such as Spain, France, Italy, Greece and Turkey. The main outlet for the milk is cheese products such as feta, halloumi, Roquefort, Pecorino and Manchego. There is a growing demand for premium alternative dairy products across the world. The main export markets for sheep milk cheeses are the US, the UK and Germany. These are markets where Ireland is already particularly strong.

Sheep milk production, like all dairy production, faces fundamental production challenges in these Mediterranean regions. These are caused by increased cases of drought, dependence on imported feed, which has seen significant inflation, and traditional production systems, such as hand milking sheep up in the mountains. This has led to reduced production and the consolidation of the sector into high-input indoor systems with a high cost base, leading to increased milk prices. Despite these price rises, demand for the products continues to grow. Currently, Pecorino Romano trades on the Italian Stock Exchange in Milan for €14 per kilogram. This compares with cheddar, which trades at €4.60 per kilogram.

New Zealand recognised the opportunity for sheep milk production. In recent years, it has invested in and co-ordinated the expansion of the industry. Significant research coming from New Zealand shows the economic and environmental opportunities that the industry has in grass-based production systems. Having started from a similar sized base as Ireland, New Zealand sees it as its next billion dollar exporting industry. New Zealand's findings, in a similar production system to Ireland's, show that the income potential for sheep milk production is comparable with dairy cows but with significantly less up-front capital investment, making it feasible for farmers on smaller landholdings.

The environmental benefits are considerable. Sheep milk production, across multiple different production systems, is averaging 40% to 50% less greenhouse gas emissions on a per hectare basis when compared to a Waikato grass-based dairy cow system. New Zealand authorities have also allowed a sheep dairy farm to operate on land that was previously restricted from dairy because it has scientifically proven that the nitrates leaching, and resulting impact on water quality, from sheep milk production is considerably less than it is from bovine dairy. New Zealand has moved past the feasibility stage and is in a period of scaling up and expansion. Major players such as Landcorp, Danone and Blue River are processing sheep milk and focusing on delivering nutritional products, predominately to Asian markets.

Our business was set up to grow the sheep milk industry in Ireland. It is backed by Irish people who understand the fundamentals of this project and the opportunity it represents for rural Ireland. We have set out to enable the growth of the sheep milk industry, which we believe is just waiting to be co-ordinated. We use words such as "enable" and "co-ordinate" because all the major elements of this industry are already in place. Since its establishment in 2017, the business has undertaken significant work to understand, develop and adapt global sheep dairy practices to an Irish context. This work includes: overseas visits to all major European sheep milk-producing countries along with market development visits; importing various dairy sheep breeds; trialling farm production methods, particularly focusing on lamb rearing and dairy sheep nutrition; product development, including the export of milk powder products; and the development of a large dairy flock that represents 80% of the dairy sheep genetics in Ireland today.

Taking lessons from our work, the business is investing in the development of a demonstration farm, which will showcase an efficient farm with top-class rotary parlour and feeding systems. When the demonstration farm is operational, we would like to extend an invitation to committee members to visit it. We will also be having an open day for interested farmers. All work to date has been completed with private funding, with minimal supports from Government agencies. This work has been carried out against the backdrop of significant challenges for any business, not least a start-up, like Covid-19 and the war in Ukraine.

A sheep milk industry in Ireland can develop by working with the family farm model and leveraging off our world-class dairy industry. It can be an efficient farm model, where the lambs are naturally reared by the ewes for 30 days and the milk is collected for the following six months. The shorter milking season will suit farmers on poorer land. The increased output from the farm, compared to dry stock, will allow some farms to reduce livestock numbers, producing more with less.

The current suppliers of sheep milk products face fundamental supply challenges. There is an immediate demand for circa 5,000 metric tonnes of Irish sheep cheese globally, which would equate to approximately 110,000 sheep. This does not include the opportunities on which New Zealand's sheep milk industry is focusing. We have identified a market opportunity with one of Ireland's dairy co-ops and will begin exporting a product in the second half of 2023. We will be importing sheep milk to help us meet export demand and allow for efficient manufacturing. We are recruiting four farmers for 2024 and we have farmers across Ireland contacting us weekly looking to start.

How quickly the Irish sheep milk industry can scale depends on the level of support from the Government. Over the past two years, I have completed a Nuffield scholarship on a project entitled "Creating alternative primary agri-food industries: the feasibility of establishing a sheep milk industry in Ireland." What I found was that growing primary industries was expensive and challenging, they required significant co-ordination between supply and demand, and their supporting infrastructure and research were importance. Being export driven means that we must compete on a global stage from the outset. Ireland has not developed many new primary industries beyond our traditional sectors. The reasons for this must be reviewed.

There is a significant opportunity for the Irish sheep sector to begin sheep milk production at scale. This will improve the viability and resilience of the entire sector. New Zealand has a target of $750 million in exports by 2035. There is no reason Ireland cannot have similar ambitions, particularly with its environmental credentials. The support of the Government is essential for maximum impact. Support for primary agriculture industries is not under the remit of Enterprise Ireland.

We ask that this committee consider the following: a visit to our demonstration farm when it is operational; a request that the Food Vision sheep group, with its stakeholders such as Teagasc and Bord Bia, conduct a brief feasibility study on the potential for sheep milk in Ireland, which we would be happy to support; and a review of the support structures in New Zealand for primary industries, such as the Primary Growth Partnership and Sustainable Food and Fibre Futures, which act as an Enterprise Ireland for innovation at primary level, and the FoodWaikato facility, which is an open access processing facility for dairy and non-dairy products. On the completion of these, we would like to follow up with the committee and its stakeholders to discuss supports to fast-track the development of the industry.

The first 1 million litres are the most the challenging, and the start-up period is when support is most required. After that, the industry will create its own momentum to grow and provide much-needed diversification for farm families.

Jackie Cahill (Tipperary, Fianna Fail)
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I thank Mr. Crosse very much. In reference to his last line, the first 1 million of anything is always the hardest. In fairness, it is great to see young men coming with a fresh initiative. Fair play to them. The Senators are under pressure to get back to the Seanad, so I will let Senator Boyhan in first.

Victor Boyhan (Independent)
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I thank the Cathaoirleach and the other members of the committee. I will be brief. I congratulate Mr. Brendan Crosse and Mr. Michael Crosse. It is great to see enterprise, and particularly agri-enterprise. They might touch on the availability of grants and supports, if any, received from local enterprise offices. The business is probably too small for Enterprise Ireland. What have they tapped into in terms of supports? Clearly, they have an energy. It is great to see. There is a demand for alternatives to cow's milk. They have identified that, and at a premium. The issue is sheep milk production at a scale that is viable. They are talking about importing it, which will come as a surprise to some. That is the reality, however. They might touch on that.

I will wind up with two or three questions for the IFA and then go. I thank the IFA for a comprehensive and detailed submission. I want to focus on the wool market. From Mr. Cullinan's comments, I gather that there has been only one meeting of the wool council. He might give us some feedback on the wool market and the discussions that have taken place. It is clearly flat; we do not need to be convinced of that. The wool council was hailed as a great initiative by the Minister of State at the Department of Agriculture, Food and the Marine, Senator Hackett. I would be interested to hear about Mr. Cullinan's engagement in that regard.

Bord Bia will be appearing before the committee two weeks from now. There were strong messages in both the organisations' statements. Bord Bia was mentioned. The witnesses might tell us, in a few sentences, what they would like us to raise with Bord Bia. We will start with Sheep Milk Ireland.

Mr. Brendan Crosse:

I thank the Senator. In terms of grants and supports we have received from Government agencies, we received innovation vouchers for milk powder production trials in Moorepark and we received equity funding from Enterprise Ireland. Follow-on funding was challenging, however, because, as I said, much of our work to date has been on developing production systems, investing in genetics and things like that. These do not fall under Enterprise Ireland's remit. They relate to the Department of Agriculture, Food and the Marine. We have been kind of challenged by that throughout our discussions with Enterprise Ireland. In fairness, the matters in question do not come under its remit. That is all we have received to date in that regard.

In terms of importing milk to help us with production, the large dairy industry that exists in Ireland processes 1 million or sometimes 2 million litres per day. To get into those plants, we need to be delivering at least a tanker of milk to justify a couple of hours of production. Unfortunately, the smaller guys are probably handling 500,000 litres over a year. Therefore, for us to produce an ingredient product we know we can scale, we need to be efficient in manufacturing. To do that, we need to put volume together at the start and, hopefully, by the expansion and entrance of new farmers into Ireland, we can displace that imported milk quite quickly.

Victor Boyhan (Independent)
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Does Mr. Crosse have any asks of Bord Bia in terms of his sector?

Mr. Brendan Crosse:

What I would like is for Bord Bia to conduct market research. Instead of Sheep Milk Ireland telling the committee that there is an opportunity for sheep milk, maybe our marketing agency, which probably has access to reports, could conduct market research and present it to the committee. Then, it would be coming from a Government agency instead of a private company.

Victor Boyhan (Independent)
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I thank Mr. Crosse very much. Would the IFA like to respond?

Mr. Tim Cullinan:

I thank Senator Boyhan. First, I compliment the two lads on the new initiative. This is something new in Ireland. I always like to see new initiatives. Obviously, as the Chairman said, getting off the ground is always a challenge. Funding for this project is essential.

The Senator mentioned the wool market. In fairness, and my colleague will speak about this in a moment, it is something we have been looking at in recent times. We are all looking at new initiatives. It is an excellent product, particularly in the context of insulation and where we stand with climate change and the refurbishing of houses. The problem we have is the price that is available for wool at the moment. It will not even cover the cost of shearing. Part of our submission is that we need a direct intervention to cover the cost of shearing. That would help to alleviate some of the problems we are experiencing in the sheep sector currently.

Moving on to Bord Bia, there are a few matters. We might refer to the beef situation back in 2019. What evolved from that was a beef price tracker. What is absolutely essential is that we would also have a lamb price tracker and be able to track the main markets to which we are exporting. That would be very important. It is absolutely essential that we seek out higher value markets for sheep meat. As we all know, sheep meat is a high-value product. In recessionary times, obviously, that is a challenge. That is where Bord Bia needs to put its attention to at the moment. It should seek out those higher value markets to ensure that we can get a better return from the marketplace. If the Chairman does not mind, I will hand over to my colleague because he has been dealing with the wool aspect of sheep.

Mr. Kevin Comiskey:

I thank the Senator for his questions. I attended the first meeting of the wool council, which was only an initial meeting to get set up. As I pointed out earlier, the payment at farm gate level is essential for the farmer to get something in reward. I visited Bradford in England and saw how the wool was managed over there. It is segregated and cleaned and then goes down to the washing plant for cleansing. Indeed, they did express an interest that they would come and set up collection points here. It is getting it to that stage, however.

Even the wool merchants at the first meeting agreed that in order to get it in there, 20% of the wool being presented to them is of little or no use. That is a significant costs to them to get rid of that as well. The main reason for that is because it is of no value to farmers and anything that is of no value is just thrown on the ground. That is why we recommended that there should be an €8 payment for it. That was the only thing. The wool feasibility study was set up and €100,000 was spent on it. It told us nothing different that we did not know. There are markets out there. We sent out a press release after I returned from the trip to Bradford. I received many telephone calls and contacts. I got a telephone call from America regarding hiring their markets out for carpets and such. There are potential markets out there but getting it to that stage is where we have to go.

I will mention a few brief things on Bord Bia. Labelling is a big issue we came across at meetings right across the country, especially on carcase lamb coming in and the follow-up and checks and balances on that. The Food Safety Authority of Ireland, FSAI, Bord Bia and, indeed, the Department all have a role to play in that. The other issue, which the Chairman touched on about doing more for the markets, is that Bord Bia should in my opinion be targeting the younger market. It seems to be the older generation types, if I could use that phrase, who are buying the lamb. It should target the younger generation maybe with mince and burgers and different types of products people could get. It could have shows or cookery demonstrations and things like that to target that younger audience. That would be beneficial as well.

Jackie Cahill (Tipperary, Fianna Fail)
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Mr. Cullinan referred to markets in the UK. We all welcome the progress on the protocol. The UK is a huge importer of lamb. How are we going to keep track of whether there is significant importation coming into the Republic from the North? How will that work in the context of the protocol and free access? I have been contacted by people in the sheep industry who have been constantly complaining about UK lamb coming into the South. In the context of the protocol, however, and do not get me wrong, we welcome the protocol, does it have huge inherent dangers for the sheep trade?

Mr. Tom?s Bourke:

The Chairman is right. As we set out, significant questions are being raised by farmers, rightly so, as to the role and purpose of the large volumes of both live sheep that are imported for processing from Northern Ireland and the carcase lamb that is imported here for further processing.

There is a concern about the up-to-date transparency on the volumes and frequency but when we look at it historically, they are pretty solid volumes. When one combines live lamb and carcass lamb as it currently stands, it probably counts for about 20% of our production in this country, of 75,000 tonnes, which is significant. An argument is being put forward by processors that it is to do with efficiencies and maintaining a processing plant. We have raised concerns and have made a submission to the Competition and Consumer Protection Commission about the Dawn Meats venture in Kildare and the potential impact that would have in taking out a large, stand-alone sheep processing factory.

One area that we feel the Food Vision group needs to focus on early is having an independent assessment of what role that plays as it currently stands. The Chair has hit the nail on the head with regard to the real concern for the sheep market trade. It is not really about the UK or Northern Irish production. If we look at the overall balance of supply and demand from an EU perspective, demand is slightly above supply figures within the EU, which one would imagine to be an optimum position for sheep production. What undermines the trade is no different than what we see with the South American beef or New Zealand lamb that comes into the EU. While the UK and Northern Irish production is all effectively within the same market, per se, albeit going through some of our processors, the big concern and issue is the volume of New Zealand lamb that is allowed to come in without tariff.

The UK is now going to accept additional volumes, both from New Zealand and even more so from Australia, which has the capacity to significantly increase the volumes it puts into that EU market. That will have a displacement effect from our perspective because obviously we export to the UK but primarily into the EU market. There are concerns that there will be displacement of UK produce into those key markets for our lamb. That is where the real worry is, also where the impact of Brexit effectively is, from the sheep sector's point of view. This bilateral trade deal that is now being done increases the volumes of New Zealand and Australian lamb that can come into the UK market. The existing tariff-free quota for New Zealand lamb coming into the EU was split 50:50 between the UK and the EU. That is being further added to by this additional bilateral trade deal. That effectively gives access to the EU market, which is our market for sheep meat. That is a huge concern for the sector in the medium and long term.

It is important that we get some price transparency. As a major exporting country, we are resting in third place, behind France and Spain, but significantly above the UK, Northern Ireland, New Zealand and Australia, which are all potential competitors to us. When they are below us, they effectively undermine our capacity to get a sustainable price from the marketplace.

Michael Collins (Cork South West, Independent)
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I welcome the witnesses. I have been looking at how the IFA has worked so far. The IFA's national sheep committee brought the campaign for stronger support of the sheep sector to the Department on the afternoon of 21 February. The IFA sheep chairman, Kevin Cumiskey, submitted a letter to the Minister, Deputy Charlie McConalogue, highlighting the deepening income crisis for sheep farmers and setting out the urgent need for immediate direct supports. This was requested by the chair of the Food Vision group last Friday. Following a request from the Minister, the chair of the Food Vision beef and sheep group convened a meeting of the group, focused on the sheep sector, last Friday. The purpose of the meeting was to discuss the market situation in the sheep sector, with presentations from the Department, Bord Bia and Teagasc on current supports and activities to inform stakeholders' discussions on what more can be done to support the sector in the current crisis.

As outlined in the meeting, the sector is currently in crisis, with sheep farmers' margins effectively being wiped out. They dropped 81% to just €7 per ewe in 2022. Based on the presentations from both Teagasc and Bord Bia, there are limited opportunities for any significant increase in 2023. This crisis can only be alleviated by immediate direct supports for the sheep farmers from the Government. In fairness, it provided a package for the pig sector last year, which is badly needed for the sheep sector. Direct, targeted supports of €30 a ewe to support economic viability of the sector must be provided. Store lamb finishers are a vital outlet for sheep farmers and play a key role in our production supply systems. Direct supports are critical to maintain this outlet for hill sheep farmers. Farmers must be directly supported to offset the cost of shearing and incentivised to present wool in optimum conditions to facilitate further processing.

We need action now. Without it, the second largest farm sector in Ireland, which operates on 36,000 farms, many of them in my constituency in west Cork, on some of the most difficult land types in the country could be at risk. The committee's decision to visit the Department follows on from last week's protest in Roscommon town where hundreds of sheep farmers rallied to highlight the worsening crisis in the sector. The IFA made a case to the Minister that a support of €30 a ewe was needed for the sector. Instead, the Minister went with €12, which is way too low, given the impact of inflation on the sector. Have the witnesses left it too late? Many are critical of the IFA and have said it has moved too late on this. Why did the IFA wait until there was a crisis in the sheep sector? Why were these measures not brought forward when the Minister announced a support of €12 a ewe? The IFA waited until the trade had hit rock bottom.

I have a couple more questions, which I will pull together because I want to give others a chance. Kevin Cumiskey said the process agreed was so great that they were effectively destroying their own supply. The further price pressure in recent days is not acceptable. As we approach the key religious festivals in March and April, demand for lamb will improve. Factories must immediately reflect the improving market conditions and the price they pay.

Why do the witnesses think the processors are allowed to dictate the price from week to week in the mart trade? What relation does this have to the importing of lamb into Irish markets that is going through the factory gates for processing? What quantity of lamb and sheep are being imported and going through factories in Ireland at present? What stamp of origin is on them as they leave the factories or head for retail in Ireland or are exported back out of the country? In other words, is this meat stamped with Bord Bia approval?

Mr. Tim Cullinan:

There is quite a bit there. The Deputy is right. More recently, in Athlone and Roscommon, and when our chairman was on Kildare Street in Dublin, we highlighted how serious the situation is at the moment. If we roll back on this, the Minister decided he was going to have a roadshow with the proposals on the CAP in 2021 and 2022. We were clear from the outset that we needed a proper support package in the CAP, both for the livestock sector and the sheep sector. Our position was steadfast from the start; we needed €30 a ewe to ensure the viability of that sector. This is an ongoing campaign. We reheated the campaign when the pressure came onto the sector in more recent times. Our campaign was clear from the start. To back that up, we have seen the figures from Teagasc clearly demonstrating that last year, including the sheep welfare payment, the margin per ewe in sheep production was €7, which we all know is totally unsustainable. The other issue was store lambs. We all know the impact of the Russian invasion of Ukraine on impact costs, particularly for store lamb farmers. The cost of feed or meal increased massively. That sector was losing serious money when finishing lambs last winter. That was why we escalated the campaign, but the campaign had been continuously ongoing.

As we said, approximately 20% of lamb exports is lamb that was imported. My understanding from speaking to people involved in the sector, both farmers and industry, is that they need the extra lambs coming in to produce efficiencies. The way that lamb is labelled going out is questionable.

My colleague Mr. Comiskey, the chairman of the IFA sheep committee, has been dealing more in that area. I will hand over to Mr. Comiskey to deal with that part of it.

Mr. Kevin Comiskey:

I reiterate what the president said. I certainly did not leave it late, nor did the sheep committee leave it late. It is exactly 12 months since I highlighted that there was going to be a crisis in the sector. I saw it coming down the road. At the end of March 2022 I had pointed out that coming into the back end of 2022 and early into 2023 we would be running into a crisis. Unfortunately, we have seen no action on that. This is why we went ahead and had the meeting in Athlone and in various other places such as Tuam and Tinahely, and presented the document to the Minister, as the Deputy has pointed out correctly.

Indeed, I find it very disappointing when I see the Government, Ministers and the Department officials coming out and making statements and thumping their craw about what they are giving to farmers. At the Food Vision beef and sheep group meeting they pointed out to us that farmers were getting €250 million in areas of natural constraint, ANC, payments. In 2007 those ANC payments were €257 million. Taking inflation into account those payments now should be €380 million in 2023. It really twists my gut to hear Ministers and officials coming out and saying that the agri climate rural environment scheme, ACRES, will be a support to sheep farmers. It certainly will be support and sheep farmers will avail of it, but every other farmer will also avail of it including dairy, beef, tillage and every other sector as well. ACRES is an environmental payment for environmental actions that will help the Department, the Minister and the Government to achieve the targets they have set. It is not a direct payment to sheep farmers. This must be pointed out clearly to the Minister. This is why he came at us with €12 and is trying to cover up with this ACRES scheme. I am not accepting that. I want to make this very clear here today.

With regard to the carcass lamb coming in, I am on the record on this. When I was vice-chairman of the group I monitored the lamb coming in. I pointed out earlier that this is where the labelling issues are. Bord Bia, the Department and the Food Safety Authority of Ireland, FSAI, has a major role to play there. Mr. Bourke has the figures.

Jackie Cahill (Tipperary, Fianna Fail)
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Deputies must attend another vote. I will ask Senator Lombard to take the Chair and the Senators here will continue the discussion.

Mr. Tom?s Bourke:

I will answer the Deputy's question on the figures. Consistently, the levels of live imports from Northern Ireland have ranged between 300,000 and 400,000 live lambs for direct slaughter, with carcass imports ranging from 6,000 to 8,000 tonnes per year. As the committee will see, when those two figures are put together it is 20% of the overall production.

Mr. Comiskey has dealt with the labelling issue. This has been a clear call out to the competent authorities in relation to their obligations on the processes around labelling.

With regard to the current prices, it is important to keep the order of events in context. In 2020 the average lamb price for the entire year was €4.97 per kg. In 2021 it was €6.67 and in 2022 it was €6.80. In effect, we had got prices to a place where there was a reasonable return for sheep farmers had we not, as the president said, had the crisis in Ukraine. This exploded the actual input costs on our farms. Unfortunately, as alluded to already, lamb is an expensive protein. Seemingly, the market has not been able to return any higher price while on the other hand we have incurred additional costs of production, which has effectively eroded our margins. It is important to put it into context that we are almost €2 per kg above where we were only three years ago, but the imbalance has been created and the margins have been eroded, not by the price per se, but by the actual impact of cost of production on the farm.

The Deputy will have noted from numerous communications from the IFA throughout the last number of years as we are approaching every budget annually, and prior to the discussions on the last CAP, that the IFA policy position prior to any of this has been a call out for a direct support payment of €30 per ewe, and that call remains.

Paul Daly (Fianna Fail)
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I welcome our guests. I have a couple of questions for each group and then a couple of questions that might be common to both groups. I will start with the group from Sheep Milk Ireland. As others have, I welcome the group's initiative. I see great potential in it. A couple of my questions might not sound that way but they are just for information purposes. I am aware that the group has conducted research on this and has put a lot of work into it. The group makes a lot of comparisons with New Zealand. In economy of scale, how viable would this be based on the Irish average sized sheep farm in comparison with New Zealand? There is probably a lot of investment required if a farmer is to start making loans on that when we compare the size of Ireland's economy and the average size of our flock. What work has the group done in that regard? Does the group believe there would be enough of a margin in it - if it were to get up and running - to justify the investment that probably would be necessary for milking machines and so on?

I would also like the witnesses to comment on genetics and genomics. Again, I am not being negative and I just want to ask the questions in order to get the information. The witnesses have talked a lot about this. Let us presume that one is breeding a ewe that is to be a good milk producer. Is there a possibility that we might end up with a Friesian calf scenario with regard to the store lamb? Again, I am not being negative but I would like to know the answer. If the purpose of the enterprise is milk related how could that have a long-term effect on the sheep meat production side of things?

Perhaps both groups could answer my next question. Apart from getting over all of those hurdles, is there buy-in out there? Is there much interest? Among the membership of the Irish Farmers Association are there many farmers or sheep farmers who would look at this and potentially go down this road and make the necessary investment? I would like to know what kind of feedback the IFA is getting from farmers on the ground.

My next question is more IFA related. We have been here before, I have met all of the representatives individually, and we have discussed this previously. We know where we are and we know what is needed. It is not for the want of lobbying, irrespective of what political party or none the witnesses might be aligned to. We are all batting for the farmers at every opportunity within the Department and with the Minister.

As Mr. Comiskey rightly said, some of the things that are getting rolled out about the payments that are available are touted as being covers for environmental measures and they are not intended, and never were intended, to support the sheep sector. One of the aspects that gets rolled out is the organic side. From talking with people who have gone organic on the sheep side, there is no market and there is no margin. Why is that? Is that the processors or is it Bord Bia? Is it that the markets are not there or are the processors not giving the organic lamb due respect? Organic is in every sector and every type of food with an organic label is popular on the shelves. When one hears the difference between what an organic sheep farmer is being offered per kilo compared to what the standard farmer is being offered, the margin is not there. I believe it should be. I would like to hear the witnesses' opinion as to why they believe the margin is not there. At whose door does that blame lie? Is it Bord Bia, is it the processors, or is it a combination of both?

I agree with the witnesses and I support their call for a contribution from that Brexit adjustment fund. Given their statements here and previous deliberations we have had, and after Brexit has levelled it out, it explains totally how the sheep sector has sustained the biggest hit aside from the mushroom sector. I will not rehash all of the reasons, but it includes the whole New Zealand aspect and the division of tariff-free importation from New Zealand. The Irish farmers got the blunt end of the stick there.

The chairman also touched on the issue of Northern Ireland lamb. I read recently that the quantity of Northern Ireland lamb that came south in the last year is up 30% from 2021, whether that be carcass or on the hoof. Where do the representatives see that ending?

Do they foresee ramifications in terms of us being polluted with Northern Ireland lamb and, following on from the Windsor Framework, New Zealand lamb coming in by back door to Northern Ireland? There is the possibility of Northern Ireland restaurants serving New Zealand lamb and Northern Ireland farmers sending their lamb down South, which would really be detrimental to our market. Is there any way of slowing that down, if not halting it? I see the potential for a serious crisis. We are all farmers in the room and in fairness, if there is an opportunity we do not tend to miss it. If farmers from the North can get more for their lamb in the South, even if it is a bad price, and restaurants in the North can get New Zealand lamb more cheaply, I am afraid that is what is going to happen. I can see the situation in Northern Ireland compounding this issue in the future.

Mr. Michael Crosse:

I thank the Senator for his questions. In terms of New Zealand, the biggest commonality we have is that we are both heavily grass based. Milking sheep works very well on a smaller scale. The smaller land block - the 60- to 80-acre farm - can be very viable in Ireland. The cost of getting into a milking sheep set-up on a farm is heavily dependent on what has already been done. Most of these farmers may have been part time and are likely to have good infrastructure already thanks to various grant schemes over the years. If they are already doing grassland management well, the natural progression would be a change of breed to a milking sheep and then focus on proper milking facilities. That would lend itself to a very smooth transition into sheep milking. Farmers who are already doing a good job with dry stock but cannot really push it any further to make more income can very easily transition. It is different with dairy cows, for example, where cubicles are needed. On a smaller farm, there would be a high level of infrastructure costs for things like cubicles, slurry storage for dairy cows whereas the transition to sheep is gentler with a much lower capital expenditure requirement.

The Senator asked about the breed of ewe. We started off with a dairy breed that was very high yielding - the sheep equivalent of a Holstein - called the East Friesian. This ewe is a very high milker but the ram lamb is poor quality in terms of meat production. It is more difficult and more expensive to finish. We quickly recognised that having that ram lamb as a by-product would be a long-term sustainability issue so we moved to more dual-purpose type breeds. Now our breed of sheep would be the equivalent of a British Friesian. The French breed called Lacaune is the predominant one that we use and the lambs are hitting all of the specifications in the factories. The ram lamb meat is now contributing profitably to the system.

In order to ensure that the lamb is a core part of the system, the ewe rears its lamb for the first 30 days. That gives the lamb the best start and is very labour efficient in comparison with artificial lamb rearing which is very labour intensive and expensive. The ewe rears its lamb in the winter time, usually some time around the end of January, for a month. Then the lamb is finished on concentrates and the ewe goes out to harvest grass and produce milk for the rest of the year. In the conventional sheep system in Ireland, the ewe rears its lamb for 12 weeks and is idle for the rest of the year. Under our system, the ewe is rearing its lamb for 30 days and is then producing milk from grass and generating an income for the farmer on a monthly basis for the entire grazing season. The system is resilient in that regard. Our grass has a huge impact on the quality of the milk in comparison with other sheep-milk producing countries.

On buy-in, we had kept it low key with regard to recruiting farmers because we were trying to be certain about our market and that we had a route to market. In Ireland there are small cheese makers producing sheep's cheese but their ability to scale was limited. It was difficult for them to take on more farmers, so we did not really engage with too many other farmers. Now, however, the pathway is much clearer and the profitability potential in sheep milk farming has made people be more proactive in terms of looking at different ways to make an income from their farm. On a weekly basis, we are getting an awful lot of phone calls and contact from other farmers, which is great.

Paul Daly (Fianna Fail)
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I have a brief question for Sheep Milk Ireland. As a new group, has it been difficult to get access to the Department? I know that it can be difficult for new groups because there are protocols in place. Have our guests had much contact with the Department? How easy or difficult has it been to gain access?

Mr. Brendan Crosse:

Anytime we have had engagement with people in the Department, they have been very helpful. Of course, ours is a small-scale group so we are not a priority. The main challenge, in terms of the Department and its structures, is that there is no funding stream or mechanism in place to support people who are trying to develop new land uses in Ireland or new, innovative primary sectors.

Paul Daly (Fianna Fail)
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I was just thinking that the targeted agriculture modernisation scheme, TAMS, would be ideal for someone who was thinking of going down that road, for equipment and so forth.

Mr. Brendan Crosse:

Yes, of course. TAMS is there for infrastructure and things like that. In New Zealand, however, they have a programme called Sustainable Food and Fibre Futures, SFFF, which is for companies that are trying to take on aspirational or transformational projects for primary level products. Under that programme, the department works with industry and co-funds projects. In our case, as a start-up business, it would be great if we could do a genetics programme, develop milk recording systems, import different breeds and do more work on product development. All of these things are akin to what Enterprise Ireland does for food technology and agricultural technology companies and across the SME sector but the Department of Agriculture, Food and the Marine does not have an equivalent section. I have seen the impact of the SFFF programme in New Zealand and all of the different land uses that have been developed. They have 700,000 farmed deer, a goat milk industry, an A2 milk sector, a manuka honey industry and a wine industry. In 1985 there was no wine industry in New Zealand but now it generates NZ$1.5 billion. The same is true of the kiwi fruit; 30 years ago there was no kiwi fruit industry in New Zealand but now Zespri is a global company. In contrast, new primary industries in Ireland do not really have a support mechanism within the Department of Agriculture, Food and the Marine.

Mr. Tim Cullinan:

I thank Senator Daly for his questions. To follow on from what the previous speakers have said, this is obviously a very specialised area within sheep production, which in itself is a very low-income sector and very challenging. We have to look at land types in different areas of the country. The market is obviously very important for this sector as well. There is a lot more work to be done on the ground in those areas before we would be able to recommend that farmers get involved in the sector. That said, as I said earlier, we should always be looking forward and if there is potential in this sector, then supports should be developed around that.

The Senator made a very valid point about ACRES, which was included in the programme for Government. It was agreed at that time there would be a €1.5 billion environmental scheme which was not about supporting sheep production but about supporting environmental measures. Obviously, there is a cost for every farmer to get involved in that scheme in terms of the measures that he or she has to implement.

They are two separate things. As Mr. Comiskey already pointed out, that is about environmental measures. We are about supporting a sector that requires extra funding to ensure it can continue into the future. The Senator raised a question around organic markets. Given where we are at the moment with food inflation running at 16.5%, all you have to do is look across to Germany, where the organic market has collapsed. We need to be very careful about what we advocate at the moment because there are a lot of challenges. If we push more organic sheepmeat into the current market, it is going to create more difficulties. I agree with the remarks around the Brexit adjustment reserve, BAR. We speak about market diversification and the concerns around Brexit, which are becoming more real, as the Senator highlighted. We have sent multiple submissions to our Government around the Brexit adjustment reserve and the sheep sector as well. Time is running out. The BAR funding must be spent by the end of 2023. Our Government needs to make a decision about what it is going to do in that area. The last thing we want is this funding going back to the EU. That would be an absolute disaster. The Senator mentioned the Windsor Framework, the challenges around it and the concerns with more imports coming in. Our understanding is that sheepmeat coming to the Republic of Ireland is coming from Northern Ireland, but he is right, there will be more challenges with red lanes and green lanes. We would all welcome a solution around the protocol and if the Windsor Framework is going to replace the protocol, overall, for trading between us and Northern Ireland, it is an important dimension of trade for our sector. I believe Mr. Bourke wishes to make a few comments.

Mr. Tom?s Bourke:

I thank the Senator. To kick on from where Mr. Cullinan finished, as we alluded to earlier, anything that facilitates freer trade between us and Northern Ireland is important. We have seen the impact of the live export trade for the slaughter of fit or forward store cattle on the mart trade over the last year or so, when it has been particularly buoyant. We highlighted earlier the concern on the sheep side about what role or impact those live imports are having and whether they are just maintaining efficiencies in our processing or are they being used as a tool to weaken price. The Food Vision group must investigate that in detail. We need an independent report on that to clarify the issue once and for all. At a higher level, we take the EU and UK as one collective sheepmeat production unit and sheepmeat consumption unit. It is largely imbalanced from the perspective of supply and demand. Imports from New Zealand are the issue, which has now been compounded because there was a tariff-free quota coming into the EU of approximately 280,000 tonnes, split between the two. While that did not increase the volumes coming in, what has now effectively increased the volumes is the additional discussions at EU level regarding additional tonnage potentially to New Zealand and, critically, to Australia, which has the capacity to significantly ratchet up. A significant amount of New Zealand's trade goes to China at the moment and it is probably maxed out or close to it. It also now has additional access to the UK trade. That will most likely displace UK lamb, which will be looking for a home. In reality, what determines our price for lamb are the French price and the EU price, because we are so heavily dependent on exports there. Those coming from outside of Europe are going to have the biggest impact on us. That type of volatility in the sector for a low-income, small-scale farm enterprise cannot be absorbed. That is why we must move back towards direct supports for food production and farming.

As the Senator rightly said, all of the current payments available to farmers are environmental payments. There are no criteria really that oblige you to maintain any animals or any level of food production. Taking the sheep sector alone, it represents €476 million in export value to the national economy from 36,000 farms based on an average flock size of 75 ewes, in some of the most difficult farming terrain in the country. We must get back to what the Common Agricultural Policy was originally put in place for. There has been a perfect storm from a farmer's perspective. Direct supports for food production have been removed, while production standards on our farms have increased due to demands and regulation from an EU perspective. Then, there is the issue that our customer base has become accustomed to a cheap food policy. Now, it does not square. The Ukraine war has brought this forward, probably by a number of years. It was heading in that inevitable direction. You simply cannot produce food to the exacting standards we do in this country for the price the consumer is prepared to pay for it. Now, there is the issue of the cost-of-living crisis, which every household is going through across Europe. From a lamb perspective - the issue with organics was highlighted - it is at the higher end of food out there. People are being extremely prudent in their spending because they have no choice. From a lamb perspective, we are an expensive protein. There is no getting away from that. Our prices increased from 2020 on and seem to have hit a point. Analysis of the marketplace shows not only a trade down in the volume of purchases, but in the type of purchases of lamb meat. The cheaper lamb cuts, similar to beef, are now being purchased in lower volumes. When that happens, the spend on both lamb and beef has actually increased because of the price point. As the Senator said, we must get serious if we are serious about protecting food security and sovereignty from an EU perspective and if we are serious about protecting the jobs and income generated by farming and agriculture in Ireland. We must start targeting the supports there towards the level of production and activity on farms. Unfortunately, the original support payment, the Common Agricultural Policy, has now transitioned to an environmental payment. We need a food production payment now, which we are calling for at €30 per ewe. I thank the Senator.

Mr. Kevin Comiskey:

I thank the Chair and Senator Paul Daly. He is always willing to meet us. We met in his county and in mine. I thank him for that. He touched on organics. It is a bit of a chicken and egg situation, to have the supplier, do you not have the supply. If you have the shelf space, you need to have the supply for the shelf space. Someone asked who was to blame for that. Bord Bia and processors both have a role to play. Bord Bia's role is to get the markets and the shelf space and that of the processors then is pay the extra premium to the supplier. Regarding milking and whether there is a position on that and whether other farmers would take up milking sheep like Mr. Brendan Crosse and Mr. Michael Crosse, who I compliment for their initiative in milk in the sheep industry, there is, more than definitely. However, who is going to do it? It is going to be lads like Brendan and Michael. The generation you see around the sheep marts at the minute is certainly not going to do it. How do you get young farmers like these lads into the sector? It is through building confidence and support, which is what we are all about here today, encouraging young farmers. I have a young son and he is very interested in it but cannot see a viable income in it at the moment. If it was supported, possibly there would be. As Mr. Bourke pointed out, there is a lot of talk about food security, which is very important. Financial security is equally important for the primary producer. If you do not have financial security for the primary producer, you are heading nowhere.

On the €30 payment, as I said earlier about the dog campaign, I was on the committee for six years before I became chairman. We initiated that at the time and got going. We looked for a €30 payment and secured from rural development funding the old sheep welfare scheme of €10 per head. We have constantly asked, since 2016, for that to be built on and brought up to €30. If you took inflation into account, it would go even further. The IFA has been very strong on the supports needed in that area. I thank the Chairman.

Eugene Murphy (Fianna Fail)
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Tá fáilte roimh go léir an tráthnóna seo. A lot of what I want to ask has been asked so I am not going to repeat the questions and Senator Paul Daly's questions clarified quite a lot. I have always been supportive of farmers, as the witnesses will know, and I have been very supportive of farmers in Roscommon, and I spoke to quite a few farmers at the day out there. I am not on this committee but I am from a farming background and I help out on our own farm in Roscommon.

There is no doubt there is a huge crisis in the sheep industry, which has been so much part and parcel of our heritage for so long. It is very important that we try to get all the supports possible, and I believe there will be an increase in the sheep welfare payment. This has been going on for too long. The witnesses make a very good case in terms of, if not moving away from environmental grants, then acknowledging that food production grants are very important.

We live in a world that needs food, which has been forgotten in many of the environmental debates. It is important to say that, in recent years, farmers are sometimes nearly treated as criminals in the environmental debate. When you are raised on a farm, you feel the finger is always being pointed. As long as I have known the farming community, I know the vast majority of farmers always cared for the environment and always cared about nature because we were brought up with it. I always say we are the best environmentalists of the whole lot. However, that is not well recognised in today's world, particularly in Ireland, and that attitude needs to change.

There is no question that Brexit has had a bigger effect on the lamb market than other areas, which is one of the reasons we should try to get more money out of the Brexit fund for the farming community. I want to turn to Michael and Brendan Crosse. I missed the first part of the presentation. If it is okay with the Chair and the other members, I would ask for a very brief synopsis of where Sheep Milk Ireland is coming from, just to give me some idea of it.

Mr. Brendan Crosse:

We set up this business, Sheep Milk Ireland, in 2017. We started with the view that most sheep industries across Europe and the world have sheep milk industries attached to them, and Ireland and the UK stand out in not having one, yet we have a world-class dairy industry and world-class sheep milk production here. We felt that by establishing a large dairy genetic flock, we could help to bring the two industries together to create a new industry in Ireland. We have scaled up from a low base in the last five or six years and we have conducted trials on our farms. We have produced milk powder product which we have exported to China and Taiwan. We are now developing a cheese product to export through one of the dairy co-ops.

What has happened that has really increased the fundamentals of our project is that 45% of world sheep milk is produced around the Mediterranean basin, in France, Italy, Greece and Turkey, where products such as pecorino, manchego and feta cheese are household names of cheese products. However, increased cases of drought and cost inflation in their inputs, given they are all consolidated into indoor systems, has led to fundamental challenges of sheep milk production in those regions, and it has created a huge opportunity for Ireland to move into this sector. There is a precedent for this in that New Zealand has developed a sheep milk industry in the last ten years. It is similar to Ireland in that it had an older age profile among its farmers but it has started to attract new entrants because there is a huge opportunity for people to get in and make a good living out of this. We are very optimistic about the opportunity here and delighted to get the opportunity to present to the committee today.

Eugene Murphy (Fianna Fail)
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That should be supported and like others, including the IFA, I want to support it. Although I do not want the witnesses to form an opinion that I am against it, I have a question as to the difficulty of selling the lamb, which Senator Daly asked about. Can this be marketed in such a way that it can be sold?

Mr. Michael Crosse:

The lamb plays a very important part in the role of milking sheep. In Ireland, we have a natural winter period and, in December and January, the sheep are indoors in a lot of cases. While the sheep are indoors, they rear their lambs for 30 days and, during this period, the lamb starts to eat concentrates and is naturally and simply weaned from the mother. The lamb contributes, provided we are lambing early in the season-----

Tim Lombard (Fine Gael)
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Excuse me, I understand Mr. Cullinan has to leave so I would ask him to come in at this stage.

Mr. Tim Cullinan:

I would just like to respond to Senator Murphy as I need to leave the meeting shortly. I apologise to the other witnesses. Senator Murphy is right. For the sheep sector in particular, the western seaboard from west Cork right up to Donegal is very important; in fact, it is essential in those counties, including in the Senator’s county of Roscommon, and that is why we were in Roscommon on that day. I understand, more than anyone, the impact on those counties.

The Senator made a very valid point around food security and human nutrition, which is very important. We need to find a balance. The Senator also made the point on farmers and the environment. There are no better people than farmers to look after the environment, in particular the sheep sector, which is a very low emissions sector. From that point of view, it is critical to get the funding to ensure we can keep this sector going. I will leave it at that as I am under pressure and have to attend another meeting.

Eugene Murphy (Fianna Fail)
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Thank you for answering that.

Tim Lombard (Fine Gael)
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I will ask Mr. Crosse to finish the point. I am sorry to have interrupted.

Mr. Michael Crosse:

It is very important to have lamb as a sustainable part of the system. The ewe rears the lamb in a natural way. The ram lamb is going to the factory at 100 days of age and, most importantly, is contributing to the profitability of the system.

Eugene Murphy (Fianna Fail)
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I have one question for Mr. Burke or Mr. Comiskey. We see that the spring lamb period is the time that farmers expect a bit of extra money. Do the witnesses see that being affected this year by the crisis? If that was to happen, it would be quite serious.

Mr. Tom?s Bourke:

Spring lamb production, in particular early lamb production, is an expensive investment, whether direct or indirect, and it requires a huge labour investment, so a reward is required. Clearly, the religious festivals are kicking off from this month and buying has started for that, and we can see a strengthening price on the ground at the moment, which is certainly welcome. However, it is a long way shy of where it needs to be because, as the president outlined, we are 60 cent or 70 cent a kilo behind last year. Last year, we did not break even without the direct supports and our costs have not reduced in any way since then. There is a real concern that even though there is an expected strengthening in price based on the An Bord Bia analysis of the marketplace and the improved demand over the coming weeks and months, it still will not be enough.

These farmers who have made this huge investment of time and money need to get a clear direction of travel from the Government as to what level of support there is for them, for the work they do and for the value they bring to the broader rural economy. Decisions are going to be made for next year in the next couple of weeks and months. We understand the scheme may not be fully developed or worked out, but if there is a direction of travel or a strong indication that the crisis is recognised and going to be addressed, it needs to come sooner rather than later. The Senator is right. It is the farmers who have been on their knees lambing in the last 24 hours who need a direction of travel, and they need it sooner rather than later. Expecting a farmer to put in that level of work to produce food to the standard at which it is being produced for a return of €7 per ewe, all of which comes from the direct suckler welfare scheme payment - it will be the sheep improvement scheme this year - is not sustainable based on last year's costings.

Mr. Kevin Comiskey:

I will add to that. It will also be affected by the carryover of hoggets. Farmers were not able to buy the nuts, as I pointed out in March 2022. I am talking about hill lambs, which will affect the price of lamb, given the changeover will not take place because we got no supports on that.

As Mr. Bourke has rightly pointed out, we need them immediately.

Eugene Murphy (Fianna Fail)
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I thank all the witnesses very much. I wish the Crosse brothers the best of luck with their project.

Tim Lombard (Fine Gael)
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It is technically the perfect storm. The price of fertiliser is high, and meal and protein prices are high. Like the rest of us, the witnesses are probably paying north of €400 a tonne now for the ration. It is the perfect storm but then when we meet the consumers, they think our product on the shelf is dear. There is an issue with how the consumer views the lamb we consume and where it is in the pecking order. The analysis of where the industry is based is on medium-sized flocks ranging from roughly 100 down. Has any thought been given to how we put a process in place, when it comes to the power of the factories and their ability to set the price compared with the power of an individual farmer to bargain for that price, to provide that farmers would have stronger bargaining power when dealing with the factories? We need to address how we engage with the processors which have, in many ways, a kind of monopoly, although I do not like to use that word, in the marketplace. From an IFA point of view, what work have we done to make sure farmers can be protected as a group selling products? What does the State need to do to make sure groups come together and are financed so that we can have a better industry?

Mr. Tom?s Bourke:

The Acting Chair has asked very good questions. There are two income sources for sheep farmers. One is the direct supports, which have been eroded, and the other is the marketplace. As Mr. Comiskey outlined in his opening address, it is critical that the return from the marketplace is maximised. We must also be realists in that regard when, as an exporting country, we look at the price point of our product in terms of where the price of lamb is in all other countries. When we compare the price with other EU countries, with the exception in real terms of France and Spain, and we look at the UK, which has similar production systems, it does look to be challenging. There is clearly a significant lack of transparency around the pricing of sheep meat. As Mr. Cullinan alluded to, on the beef side we have an export benchmark tracker that has been created by Bord Bia. It takes the price of cattle in the export markets and, based on the volume we put in there, it compiles a compounded price. That allows us to directly compare our price with this hypothetical market, which takes in all other countries. There is an urgent need for a comparable system to be put in place on the sheep side in the first instance because that would certainly help with market transparency.

The second issue, as we alluded to previously, is the real function and role of the imports into processing plants. We have continually been told that they are an important aspect of maintaining efficiency and ensuring that we maintain the broader foothold of processors in this country, or are they a mechanism to keep prices down? One could argue it both ways. That needs to be independently validated and verified. As Mr. Comiskey has alluded to, this is work the Food Vision 2030 group needs to kick off because it should be noted that this group is the first industry group for sheep. We have had such groups in dairy and beef and we have had discussions in collective groups on tillage and other areas but this is the first time a sheep group has been established to deal with issues that need to be addressed.

If we look at the sheep sector in the context of producer groups, it is probably the one that is most represented in producer groups throughout the country. In fairness, the people who have organised, managed and run those groups over the years provided a great service to the sector. They have ensured that a significant number of farmers have remained in sheep meat production because of the convenience aspect and the facilitation of interaction with the factory that is taken out of the hands of the smaller suppliers who can sell their lambs on a weekly basis to the group, safe in the knowledge that they are getting the agreed price. All of that is based on a quoted price from the factory. There is, again, an absence of transparency around what is paid for lamb on a weekly basis. One can click on the Department of Agriculture, Food and the Marine's website or open any of the national agriculture media each week and see the exact price paid by every single meat factory for every grade of animal within every category. It is a position that a lot of member states in the EU are very envious of, given that it is a degree of transparency that does not exist elsewhere in the beef sector. There are other inadequacies but this is one of the areas where we are well ahead. No such system exists on the sheep side and we need to bring a lot more transparency there.

What we need to ensure within the new Common Agricultural Policy is that there is early-stage support for producer organisations. One of the issues we have raised strongly and discussed with the Department is the importance of the existing sheep producer groups being fully recognised and supported, with significant funding provided for those groups. It is important that these groups, and the people who have run them for the past 15 or 20 years and longer and have provided great service on a voluntary basis to the sheep sector and the farmer members of the groups, qualify for supports. There are significant supports there and we are assured that they will qualify. It is important that the terms and conditions are finalised and made available and that all of the existing groups are supported. In effect, what the Acting Chair is alluding to is empowering groups of farmers to maximise the price they will get. The support they need in addition to that is transparency on pricing so they are not at the mercy of a quoted price on a weekly basis, which effectively undermines a portion of the bonus the groups have negotiated for their members.

Mr. Kevin Comiskey:

It is exactly as Mr. Bourke pointed out and as I mentioned in my opening address. I concur with the points the Acting Chair made on transparency. He referred to the price of meal being north of €400. It is €480. That is the crippling point. Between meal and fertiliser and the other things the farmer has to put his hand on to buy at farm-gate level, even if it is only the handle of a rake or a drop of diesel in the jeep, no matter what it is, these costs have a significant impact on the cost and the return. That is why we keep referring to the direct supports, and how vital they are.

Tim Lombard (Fine Gael)
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I compliment the witnesses on their response and their project on the milking of sheep. It reminds me of where the dairy industry was in the 1950s and 1960s. How it really got off the ground was down to how the co-operative movement gathered around it and became a real driving force. The co-operatives made sure a coherent system was put in place to ensure the dairy industry got going. At the time, co-operatives were set up in nearly every second parish and eventually they all joined up and moved forward. Do the witnesses think the co-operative movement will play a vital role in their industry going forward? Do they believe they need to set up their own co-operative movement for sheep farmers or do they expect to work with a dairy co-operative society and to engage with it on its technology, marketing and infrastructure? Where do they see this industry develop, going forward?

Mr. Brendan Crosse:

The co-operative movement has really delivered for the dairy sector and there is no doubt it could play a role in the sheep milk industry. We are working with a dairy co-operative, using its processing capabilities, export and food safety expertise and all the investment and intellectual property, IP, that is there. We are engaging with it to build this industry.

It is part of our thinking but, at this stage, we are just building our supply chain and delivering products to market. All of that structure needs to be in place and all of that work needs to be done.

Tim Lombard (Fine Gael)
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The witnesses have a very interesting forum here today and obviously people will be listening in. Will they give people an idea of the practical issues facing their industry? How much milk does an average sheep produce per year? How much protein and butterfat is there in sheep milk? What is the value per gallon or per litre? Could we get an indication of what the value of this animal to the industry is?

Mr. Michael Crosse:

The output from a ewe producing one and a half lambs is similar to that from a conventional ewe. The key point of difference is that, after rearing the lamb for 30 days, the ewe goes on and contributes milk for the rest of the season from grass. As to the yields, the breed we use is the Lacaune, which can do 300 l after rearing the lamb. At a value of €1.30 or €1.40 a litre, that ewe is producing output of over €500, including the lamb. That is three or four times the output of a conventional ewe. We originally started milking sheep to make a living. We were renting all our land and, to make any kind of living out of sheep, you need an awful lot of them. Even then, the profitability is not great. We looked at milking sheep because there is potential to make more money from fewer sheep because of the output. That is the big selling point. A guy with 1,000 sheep on a 200-acre farm is not actually making a whole lot of money out of those sheep. The figures show that he could milk 400 sheep on that 200-acre farm, making more money while also being more resilient to outside market forces relating to costs and being more environmentally friendly. That is the-----

Jackie Cahill (Tipperary, Fianna Fail)
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Do you have to leave the lamb on for 30 days?

Mr. Michael Crosse:

One of the big things we have done is----

Tim Lombard (Fine Gael)
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The Cathaoirleach has no hope.

Mr. Michael Crosse:

We have artificially reared some lambs over the years. It is a difficult system because, even with 200 sheep, you would have nearly 400 lambs. They come quite intensively at a busy time of the year. We found that we spent most of the time looking after the lambs and so were suffering on the ewe side because we did not have enough time. The conclusion is-----

Jackie Cahill (Tipperary, Fianna Fail)
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Would automatic feeders help with the calves?

Mr. Michael Crosse:

They are all there but the reality is that natural is best. We are building a new industry and we have the opportunity to look at where the weaknesses are in other industries. Not only is it future-proofed, but it is the best system to let the ewe rear the lamb. It gives the lamb the best start and is the most labour efficient model. The lamb is then put on the market and the ewe is milked.

Tim Lombard (Fine Gael)
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Before Mr. Brendan Crosse comes in, you often hear the figure of 305 days for dairy cows. How many days are sheep milked? Are sheep milked twice a day or once a day?

Mr. Michael Crosse:

With sheep, you have to start early in the season. The milking season starts in January or February. No matter whether you started lambing in February or May, when the days start to shorten at the end of September, the milk yield will start to reduce regardless of when the sheep lambed in the summer. The milking season is approximately six or seven months. The length of lactation dictates milk yield and profitability with sheep, just as with cows. The key thing in Ireland as opposed to some of the other major producers is that, when you are milking sheep in Ireland, even though a sheep might only produce 1 l or 0.75 l a day in autumn, the solids are high and the costs of production are really low. They are getting all of that from grass whereas, in an intensive system such as those in Italy or Spain where sheep are indoors all of the time, the animals are always kept on a high-energy diet of feed that has to be bought in and the lower yield makes that unprofitable very quickly. In Ireland, the costs are carried early in the season through high production, high yields and lamb sales and then, in the second half of the season, the sheep are very easy to manage and you can extract a monthly income at a very low cost. That is a key part of the resilience of sheep.

Tim Lombard (Fine Gael)
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Are they milked once a day or twice?

Mr. Michael Crosse:

It is twice a day for the majority of the season. Once you hit July, the benefit of milking twice a day lessens as the season progresses. The milking season is shorter.

Jackie Cahill (Tipperary, Fianna Fail)
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Is Senator Lombard going to convert?

Tim Lombard (Fine Gael)
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No, I am not.

Mr. Brendan Crosse:

On that, if you get on a two-hour plane journey down to the south of France, Spain or Italy, you will see 1 million sheep being milked in France and 2 million in Spain. In Greece, more sheep milk is produced than cow milk. It is a massive industry globally and particularly around the Mediterranean basin. Nowhere in that area has the grass potential of Ireland. They are also now facing challenges in production. There is nowhere north of Toulouse apart from Ireland and the UK that has the sheep density required to grasp the opportunity to produce a premium dairy product for the market. There is an established market for the product. That is the thing as well. The sheep milk industry is probably older than the cow milk industry. Sheep were one of the first animals to be domesticated. Similar to the meat, sheep milk is linked into many festivals. There is a real opportunity to go into proven markets. There is no work to be done in marketing here. We are seeking to import milk into these markets as a premium product because it is from Ireland and grass-based. There is serious demand for sheep cheese products alone and Ireland can take serious advantage of that.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I thank all of the speakers for coming in. I apologise for all of the breaks in proceedings but at least voting is finished now. It is great to have the Crosses here and to see such innovation. It is certainly very exciting. With regard to land, good grass and so on were mentioned. I imagine that, in the Mediterranean region, sheep are generally farmed on marginal land. In that respect, there is a great opportunity for what we would call marginal farmers. What kind of numbers are farmers looking at if they are to have an effective and commercially viable operation?

Mr. Michael Crosse:

With regard to marginal land, in fairness, our land in Cashel is of very good quality. We really tried to push grazing in our early years and to get grassland management up to a very high standard. However, the sheep ultimately need a little bit of kindness, particularly at night-time and especially early in the season. These sheep are producing three or four times as much output as a conventional sheep. Early in the lactation period, they need and respond to a little bit of kindness. Housing at night is a big part of that, particularly early in the season when the conditions are not right. However, sheep can go on any kind of land most days of the year because they are light on the ground so they are suitable for areas all over the country. The most suitable farmers for this industry are people who are already doing dry stock, most likely sheep and cattle, to a high standard and who manage grassland well. They probably also have good-quality facilities already and are grant-aided. Such people can transition to sheep farming very easily because the housing is already suitable. You can start off with fewer milking sheep and make a living pretty quickly because a large capital outlay is not required.

The one failing of the sheep dairy industry in Ireland has been investment in milking facilities. Historically, in Ireland and across a lot of the world, milking sheep took hours and hours. That just will not work. Sheep milking needs to hit the same efficiency as cow milking. One person should be able to milk 400 ewes in one hour and come back refreshed in the afternoon to do it again. If we cannot do that, the industry will not stack up. The ability to be competitive in the world market is about labour efficiency, cost efficiency and having a really resilient system so that, if the price is poor at some time, the business will be strong and in a position to ride it out. The benefit to the dairy industry of resilience in the cost of production can be seen today. This year, when inflation was going through the roof, the cow dairy industry felt it to a lesser degree than many other industries and got all the benefits of the higher price.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Mr. Crosse mentioned 400 ewes.

Mr. Michael Crosse:

That is correct.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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That is what you are talking about, is it?

Mr. Michael Crosse:

Farming 400 ewes on 70 or 80 acres is very sustainable.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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The witnesses said Enterprise Ireland has brought it as far as it can. I would imagine it is very attractive for Enterprise Ireland because, ultimately, it is export-driven because that is where the market is. It is not aiming at a domestic market as such. Has Sheep Milk Ireland tried to get Enteprise Ireland to meet with Department officials to agree a pathway forward or make it easier for the sector?

Mr. Brendan Crosse:

We have not asked it to meet the Department with regard to the project. We feel we have probably gone off and made an awful lot of investments by ourselves and are now moving to the next stage and Enterprise Ireland will play a role in our business again. There is still a hell of a lot of work to do in building a primary industry that is not under Enterprise Ireland's remit. That is just a fact.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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There is probably merit in bringing it to the table. Enterprise Ireland is very good. We have seen it with just transition. Where there are impediments like that, it will work with ancillary agencies to advance the cause.

Mr. Brendan Crosse:

When it is assessing the project, our objective is to leverage off the dairy industry. We are not looking to reinvent the wheel. If you look at building the sheep milk industry, it will not be able to recognise the jobs at farming level. We are looking to outsource our contract manufacturer with the dairy industry. Okay, we can call a few extra jobs on shifts but-----

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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The industry is very much non-competing. If somebody has a solar operation, it fits perfectly with that.

Mr. Brendan Crosse:

That is 100% true. There is definitely a compelling case for solar milk. I was on a large solar farm about two weeks ago and received an email last night from a man with land going into solar and is looking at sheep milk. One of the advantages is that it can run across an extensive system on the land. There is not much competition from other farming systems. The landowners are giving back grazing rights in many of these cases because the income potential of the solar loan is enough. If sheep and dairy links up, it could be a significant contributor to that land.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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The only other challenge is that they must be very parochial and provincial at the start. They must get a processor so whoever they get as their supplier must be in that immediate area.

Mr. Brendan Crosse:

The Little Milk Company, which produces organic milk, does two collections per week. It has a truck running through the country. It is very high-value milk. We are looking to set up a collection point and clusters but Ireland is a small country. Two and a half hours can get you to a lot of places.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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When does Sheep Milk Ireland see itself in production?

Mr. Michael Crosse:

We have been milking for the past seven years.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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On the scale that it is talking about.

Mr. Michael Crosse:

We plan to recruit four farmers this year and build on that every year. There is no reason we would not have 100 suppliers milking in the next five to seven years. They are certainly there and are contacting us. The Deputy spoke about collecting milk. We would like to pick them based on efficiency of all those things. We see the potential for sheep milk lying very much in the midlands across to Westmeath where there is already a lot of sheep and there are not many cow dairy set ups. There is significant potential in those areas. Within an hour, a lot of milk will be collected.

Mr. Brendan Crosse:

Farmers are aware of what is happening in New Zealand. It is the largest farming sector by farmer numbers, including the beef sector. There are large dry stock farmers there. A total of 2.7 million breeding ewes in the Republic of Ireland with another one million in Northern Ireland so there is a huge potential farming base. There are 100,000 beef and sheep farmers in this country. We can get them on board.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I am conscious that other people need to come in. So we are looking a 400-ewe model. What would be my typical start-up costs if I wanted to go into that and I am a dry stock farmer at the moment running sheep?

Mr. Michael Crosse:

With a couple of hundred sheep - we will take it that there is potential to replace what such a farmer has with the milking sheep. Regarding the suitability of housing, most farmers will have enough housing for the sheep. Grassland management should already be good. It is all pretty applicable. The key part is the milking infrastructure. Sheep milking parlours are approved for TAMS, which is a significant help. Efficient milking is the key part that makes the system work. A sum of €120,000 would cater for a 400-ewe flock. Regarding a grant, there would be a €70,000 or €80,000 of a cash outlay for a milking parlour, which over ten years is the best a sheep farmer milking sheep will ever make because the labour saving over that time is phenomenal compared to a poor set up with milking sheep.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Is it fair to say there is really no volatility in the witnesses' prices unlike probably dairy?

Mr. Brendan Crosse:

The great thing is that sheep milk is a massive market. There will be always a level of price swings up and down. However, it is in premium markets and is typically a cheese board cheese or in speciality dishes. Based on that, it is insulated. When people buy cheese, whiskey or wine, there is a level of "premiumisation", particularly when you go into higher categories. Sheep milk is in this category.

Mr. Michael Crosse:

The cow industry in Ireland had a fantastic year - a one-in-a-100-year of making really good returns this year. A lot of Europe cannot say the same because it has a higher base cost to its production and was more exposed to the volatility of cost whereas the Irish cow dairy sector was not. Ultimately, the fundamentals of that follow through for sheep. That is the real strength and environmental benefit.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
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When Deputy Martin Browne first suggested that the committee talk about sheep milk, some of us might have been a bit sceptical but the presentation from Sheep Milk Ireland was really interesting. As a member of a committee that is keen on exploring avenues for farmers to diversify, I think this sector might need further work. Is a particular type of land very suitable or unsuitable? We know a lot of sheep farmers with whom we deal operate on very peripheral land. Does that have an impact on the sheep milk sector in the same way as it may do on bovine? Has Teagasc carried out any research into this sector's potential for growth? Has Sheep Milk Ireland engaged with Bord Bia?

Mr. Michael Crosse:

They are high-performing animals and need high intake to produce a high output. There is higher rainfall in the west and winters can be a bit more extreme so the sheep need to be in at night time. Like the dairy cow, on-off grazing can work really well. Regarding land type, they will not milk on top of a hill. If they do, it will have to be in a shed. The severity of the weather and the poor-quality feed would not be ideal. The midland region has good quality land. While that land might not be good enough for a herd of cows to walk across, it still grows very good grass for six months of the year. All those types of land are perfectly suitable for milking sheep.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
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What about Teagasc and Bord Bia?

Mr. Michael Crosse:

Teagasc has not done anything with milking sheep. It has an adviser on goats, Cian Condon, whom we have spoken to and communicated with over the years. There has not been research on farm systems and we feel the time has come for that to be discussed. A milking sheep farm system should be researched in Teagasc.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
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I would like to touch briefly on the challenges facing the sheep sector. Given we are dealing with a sector that was probably already operating on a marginal basis to start with in terms of numbers, we are in a very concerning time. It was said in the witnesses' opening statements that the impact sheep farming has on a lot of rural communities is disproportionate to the income of the farmers themselves. That is because they are in some cases the lowest income farmers but they have the biggest impact because they operate on such a local basis. We have seen this across a number of sectors when we enter into periods of existential crisis. We need to put in place a system that addresses those periods of extreme price volatility. I have a few questions in that regard. The sheep welfare scheme was mentioned. It has increased from €10 to €12 but when you consider the timeframe we are talking about, in real terms farmers are getting less support. The question is whether the €2 increase this year will even offset the losses or the input cost increases that farmers have seen in the same period.

The Government has been reluctant to introduce a wool package of any meaningful nature. We have argued in the past for capital investment in supporting farmers even from an animal welfare perspective. Do the witnesses have any views on what such a package should look like? I would be very interested in hearing those. I have some questions around wool. I am told the wool council has been established. I do not think the Department issued a statement to that effect, which is surprising. Have the witnesses had interaction with the wool council yet? Do they think it has the capacity to deal with some of the challenges being faced? For the first two years after I entered this House, every time we put a question to the Minister in respect of wool we were told we had to wait until the wool feasibility study was published. The recommendations include determining the feasibility of a scouring plant and wool testing facility and incentivising the use of natural fibre products. It was certainly my expectation, and I believe that of farmers, that the wool feasibility study would answer those questions as opposed to simply posing them for further deliberation. Am I correct in thinking that? We are in a period of extreme pressures. What immediate measures are needed? What type of support package, if it was up to this committee, would the witnesses say is needed now in order to get farmers through this immediate crisis they are facing?

I am sorry; I have one more question.

Jackie Cahill (Tipperary, Fianna Fail)
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I am glad I was not hanging for those three minutes.

Matt Carthy (Cavan-Monaghan, Sinn Fein)
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In respect of one of the potential avenues for that support, I would be very critical that the Government has not been utilising the Brexit adjustment reserve quickly enough to support sectors. If the witnesses could give us examples of how the sheep sector has been impacted by Brexit, that might be helpful. I thank the Cathaoirleach for his indulgence, as always.

Mr. Tom?s Bourke:

I will field a few of those questions and then Mr. Comiskey will pick up on others, particularly on the issue of wool because he sits on the wool council, which has had just one meeting. As the Deputy said, we have seen this type of scenario in a number of other sectors with market volatility and the challenges it poses. It is something we mentioned earlier in the context of where the supports are now for food production within the EU from our perspective within this country. We effectively do not have any. We have raised the standards. We have increased the costs on farmers while at the same time taking away the direct supports to produce food and we have transitioned those into environmental payments. The sheep sector in its own right had €476 million of export value to the national economy last year, which is a significant increase on the previous year. At the same time, farmers' income is down 81%. That shows the dysfunction of the market and the inability of the market to return what is needed to farmers for producing food of the standard of the sheep meat produced in this country. There is only one mechanism to address that. We are starting to hear more and more soundings about food security and food sovereignty since the Ukrainian crisis. Unfortunately, that was too late for the direction of travel of the current CAP, where the moneys that were previously directed towards productive farmers based on their level of production have now been moved towards an area-based system.

The Deputy asked the correct question as regards where we have to get back to. The sheep sector in particular is a low-income vulnerable sector on a small scale, with the average flock being 75 ewes. It does not have the capacity to absorb the volatility of a world market or the influence of world events on market prices. The solution to this is directly supporting production on those farms and supporting it at a meaningful level. We have seen the figures from the economics of sheep farms from last year. The entirety of the €7 return per ewe came from the sheep welfare scheme, which was a payment of €10. If we are to be serious about providing a bit of sustainability and confidence in the sector to consider future options, even along the lines of what Mr. Michael Crosse and Mr. Brendan Crosse have discussed, there has to be some long-term security and sustainability provided from an economic perspective. That can only be provided by direct payments, which is why we have called out the need for the €30 payment. The €2 increase to €12 is certainly not going to address the dynamic, based on Teagasc and Bord Bia predictions for this year as regards costs and potential markets. The markets are significantly behind last year at this point in time, with costs expected to run similar to last year's levels. We are currently €16 per lamb off where we need to be and that is in a year where we only made €7 per ewe. The additional €2 will not provide any solace or address the seriousness of the crisis we are in.

Mr. Comiskey will pick up on the point about the wool council. We visited British Wool in Bradford and looked at the structures in place there. Clearly, there is an issue around the volume of wool we have and justifying a washing plant in this country but we have to look a bit further and look at the type of wool we produce in the main. From what we have been told by the industry, it is a coarse enough wool and in that regard it does not command a premium price on the other end. There are some exceptions but that is the case with the flock we have in general here. However, there are multiple uses for wool. We hear about insulation, the potential for fertiliser pellets and all of that. There are multiple uses where value can be added to this product. The difficulty is that the vast majority will not return at the farm gate and would not cover the cost of shearing. If we are serious about our bioeconomy and utilising this hugely valuable resource that is created on farms and produced every year, we need to reward farmers. We should do that in the first instance from a welfare perspective with regard to shearing and the costs associated with it. Second, in order to reduce the cost of adding value to that product further and doing processing, we need to create an incentive for farmers to present the wool in better condition, to reduce the cost as we go into second and third level processing and make the product more utilisable. We were very disappointed with the wool feasibility study. As the Deputy outlined, our understanding was that the purpose of that study was to identify these areas rather than flag the questions. I will let Mr. Comiskey deal with the matter of the wool council.

Mr. Kevin Comiskey:

I will be very brief because Mr. Bourke has covered it relatively well. Deputy Carthy asked what €2 would do and the answer is absolutely nothing. As I have said on numerous occasions, the only use it has is to get a trolley in the local supermarket. That is the only benefit it has. If the committee could do something today, it should be to write a cheque for €30 per ewe for every farmer in the country. It would be very beneficial for me when I am heading west. Farmers would be very happy with that.

On the question of feasibility, I sit on the Irish Wool Council. It has had one meeting so far which was an initial meeting to get set up. It was the only good thing I saw from the Irish Wool Council because the rest of it did not tell us anything we did not know. I said at the meeting that, as Mr. Bourke pointed out, we need to be rewarded at farmgate level. We had it costed at €8 per ewe. Everybody with an interest in wool who was in the room that day, including the merchants, agreed unanimously. As I said earlier, 20% of the wool the merchants get is of no use. There is a significant cost to get rid of that.

When we were in Bradford at the washing plant, which is a very intense operation, I asked how long it would take to clip the entire volume of wool we have in this country tonnage-wise. They said they would wash all of the wool we have in this country in six weeks. Therefore, I do not think a washing plant in this country would be viable. They expressed an interest in setting up collection points here. We need to get a reward at farmgate level in order to produce it on further and gain the benefits Mr. Bourke has outlined.

Martin Browne (Tipperary, Sinn Fein)
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I welcome both sets of witnesses. When the representatives of Sheep Milk Ireland gave their opening statement, they invited the committee to visit when they are finished working on their system. It would be worthwhile to visit and take a good look at the farm when it is operational. Deputy Carthy and I contacted the Minister about any research they may have done. They have not done any research but they are open to engagement. Sheep Milk Ireland's opening statement mentions that New Zealand has realised the potential of the sheep milk sector, having started from a similar base as in Ireland. What has been the main assistance to the development of the sheep milk sector in New Zealand? What processing infrastructure is missing in Ireland to support the growth of the sector here? Is it because there is a complete lack of research on the sector by the Department and by Teagasc?

Mr. Brendan Crosse:

There are two main differences between the support for innovation at primary level in Ireland and in New Zealand. First, the New Zealand sustainable food and fibre futures programme incentivises private investment that recognises an opportunity and is willing to invest in industry and start-ups. The nature of this type of investment is that it has a huge impact across the country but there is potentially a slower return on it compared to investment in technology, marketing companies and things like that. It takes a specific type of capital. From the Department's point of view, it could incentivise that by matching funding and working across the supply chain. A great deal of the research in Ireland is very much siloed. Food for Health Ireland focuses on the uniqueness of dairy milk, Teagasc looks at farm systems and Bord Bia does marketing research. There is no broader research question asking how we can establish, invest in and build a sheep milk industry in Ireland and have a funding pool that can tap into the various capabilities that already exist here.

The second difference relates to the processing infrastructure. New Zealand recognises that as an export country, if it is to build new industries it needs to be competitive on a global stage from the outset. It has established an open access processing facility, FoodWaikato, which has enabled the growth of a cost-competitive infrastructure. It is owned and funded by the New Zealand Government and has enabled the growth of many different dairy industries, including sheep milk, goat milk, A2 milk and organic milk, all of which have been processed there. They have graduated from the open access facility and built their own dryers on that site. The sheep milk industry has now commissioned its own dryer next door to the open access facility. Ireland has a sheep milk industry that is ready to take off. We have an organic cow industry that is being incentivised at market and at primary production, but no one is incentivising the manufacturing of products that enable them to get to market cost-competitively. That is the reality. We did the Food Works programme with Bord Bia. It highlighted to us the challenges of building brands. What Ireland does well is it produces ingredients and raw products such as milk, milk powder, cheese, lamb, and beef but we are not building brands because that is very expensive. We feel - the organic dairy industry probably feels the same - that producing premium bulk products is what we can do in Ireland. We will be cost-competitive at primary level, but we cannot go out and say we will be inefficient at processing for the next five to ten years because we will not survive. We need to be able to deliver that product and that requires support at a processing level.

Martin Browne (Tipperary, Sinn Fein)
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Is the lack of research here due to the fact the sector is so small and is seen as niche? I know from talking to Sheep Milk Ireland the first time it came to meet me that there seems to be massive potential here for this. It is unbelievable that neither Teagasc nor the Department has done any research into it, as New Zealand has done, to expand it or to see where the sector could go. It seems that time is being wasted. At a time when the Department and Europe are asking for cuts in herds, this seems to be a way to do something different on farms with a bigger outcome at the end of it. Is the reason none of them have done research that they see it as a niche sector at the moment?

Mr. Brendan Crosse:

Teagasc and Bord Bia respond to industry. It probably takes someone from the industry or a start-up to highlight the opportunity to them by creating the noise for them to engage with it and to realise there is a demand for the deliverables from that research. In New Zealand, they have a two-tier approach with heavy investment into maintaining, growing and developing the status quo but also a more aspirational approach in their research to develop other primary industries. There are probably lessons to be learned from that.

Mr. Michael Crosse:

In fairness, all the research work around sheep that is done in Ireland shows that the best farmers who are doing the best practice are struggling to make a living from sheep farming. The benefits of the practices they preach and work on, and the benefits of all that research, will be heightened if they have milking sheep. They will really see the benefits in such circumstances. If they have a profitable high-output system with milking sheep, they will reap the rewards even further from all the work that has been done in areas like genomics and grassland management. As Mr. Brendan Crosse said, it takes someone to push through these innovations. The real deficit is in getting innovative ideas off the ground. Then the larger bodies like Teagasc will be very happy to engage and to do the research in the future.

Martin Browne (Tipperary, Sinn Fein)
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The possibility of grazing on land that is not suitable for dairy was raised earlier. When I spoke to Mr. Michael Crosse the other day, he spoke about how to improve the bedding under the sheep when they go out on the land. Can he expand on that? Will he let the committee know how much better that is than slurry being spread on the land?

Mr. Michael Crosse:

Sheep probably do best on a straw bed and the straw bed is obviously dung. The sheds have very little dirty water. The milking system is relatively low as well but the majority of the farmyard waste is manure and dry matter and it is much healthier for the soil in promoting earthworm activity and the likes. When we talk about dairy, we think about dirty water and water pollution.

Sheep do not have that impact. They do not break the soil and do not produce a huge volume of slurry that can be difficult to handle at times in Ireland, with our high rainfall. Those are two small points on what is beneficial about sheep.

Mr. Brendan Crosse:

Sheep are traditionally known as the golden hoof due to their ability to regenerate land. Sheep are lighter on the land. They spray their faeces across the land much more than cows, which tend to put it in one spot. As I said, sheep dairy farms have been allowed to set up on land around Lake Taup in New Zealand that was previously banned for bovine dairy. Sensors were put into the ground that showed the nitrates leaching was considerably less on sheep dairy farms there, as was the resulting impact on water quality. New Zealand has allowed those farms move into those sectors.

Martin Browne (Tipperary, Sinn Fein)
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The New Zealand experience found sheep milk production has 40% to 50% less greenhouse gas emissions per hectare. Will the representatives quickly expand on that?

Mr. Brendan Crosse:

It is New Zealand's research. Even in Ireland, however, sheep are low-emitting animals. They are very efficient. To compare a sheep produced for meat with a dairy sheep, the sheep is producing the milk anyway. All we are asking of the sheep, instead of producing milk for 80 days to rear its lamb, is to take the lamb off a little earlier and continue milking for a further 120 days. The milking season is generally approximately 200 days. The sheep is on the ground idle. When it is producing milk, it involves higher processing but, as New Zealand proves, it does not lead to drastic growth in its emitting profile, which makes it very attractive in Ireland. As we stated, the opportunity will then be not only those sheep producing a little more but producing three times more output. We could pull back on ewe numbers and have a much more sustainable system.

Martin Browne (Tipperary, Sinn Fein)
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I thank Brendan and Michael. I have two quick questions for the IFA representatives. Their opening statement referenced the need for Bord Bia to be more proactive in delivering higher value markets for Irish sheep. Will its representatives tell the committee how Bord Bia is falling short at present in promoting that?

Mr. Kevin Comiskey:

Bord Bia has the markets, but one typical example is the American market, which is ready at present. It is accredited and ready to roll except the process is not ready to supply that market. The American market is a critical one but there are also the South African and other markets that could also be achieved, with more promotions and input into them.

Martin Browne (Tipperary, Sinn Fein)
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The IFA representatives also spoke about the need for stronger powers in respect of dog control. Committee members have spoken on several occasions about the lack of wardens in counties. In County Tipperary, where I live, we were told we had 1.5 wardens, which is crazy for a county of that size. Has the IFA had any involvement with the Garda or councils regarding dog control? What seems be happening, and we spoke about this earlier, is that it is falling between two different Departments. What are the representatives' thoughts on how dog control is being done at present and how it could improve?

Mr. Kevin Comiskey:

We have been very clear for a number of years on what we want done. We are engaging. The Deputy is right; it falls between three Departments. When I saw the working group being set up, I was not sure whether it was a positive. We met with that group, however, and it has issued its report to the Ministers: the Minister for Rural and Community Development, Deputy Humphreys, the Minister for Agriculture, Food and the Marine, Deputy McConalogue, and the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien. We have engaged with them all on microchipping, the single national database, and the appropriate sanctions to be put in place to reflect the horrendous damage. It is a major issue in the countryside and where I am from. It is an issue throughout the country, as is hill walking and people out with dogs on mountains. People go for walks there and let the dogs go. That is a major issue and all these things have to be taken under control. That is where enforcement, as the IFA has always said, will be key. There have to be dog wardens. There is only something in the region of 60 in the entire country. There has to be a vast increase in the number of dog wardens. It is to be hoped the Departments will take all our points on board and act on them.

Jackie Cahill (Tipperary, Fianna Fail)
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We have gone over time. I thank the witnesses for their presentations. The Crosses are in the embryo stage of establishing an industry. We will do all we can to help highlight it. They have asked us to contact a number of agencies on their behalf and I will take that on board. The committee will do that. We will definitely listen to what the IFA said regarding the ongoing battle on the sheep crisis, including its lack of profitability. I thank its representatives very much.

We will suspend the meeting to allow the other witnesses in.

Jackie Cahill (Tipperary, Fianna Fail)
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Before we start, I will read a note on privilege. Witnesses giving evidence within the parliamentary precincts are protected by absolute privilege in respect of the evidence they give to a committee. This means that witnesses have full defence in any defamation action arising from anything said at a committee meeting. However, witnesses are expected not to abuse this privilege and may be directed to cease giving evidence on an issue at the Chair's direction. Witnesses should follow the direction of the Chair in this regard and are reminded of the long-standing parliamentary practice to the effect that as is reasonable, no adverse commentary should be made against an identifiable third person or entity. Witnesses who are giving evidence from a location outside the parliamentary precincts are asked to note that they may not benefit from the same level of immunity from legal proceedings as a witness giving evidence from within the parliamentary precincts, and may consider it appropriate to take legal advice on this matter. Privilege against defamation does not apply to the publication by witnesses, outside the proceedings held by the committee, of any matter arising from the proceedings.

This evening, the committee will hear from Mr. James Geoghegan, Mr. Richard O'Connor and Mr. Tommy Williamson. We will also hear from Mr. Padraig McConn, who is joining us remotely. My understanding is that he is in Finland at the moment. We have been issued with Mr. Geoghegan's opening statement. In the interests of brevity, will he give us a synopsis of its contents? Of all of us here, the Deputy who fully understands the issues, Deputy Fitzmaurice, is laid low with a serious chest infection this evening. I have never heard him as short of guff so he is not feeling great in himself. He has a number of questions he wants to put on the record and I will do that for him as we go through the meeting. I ask Mr. Geoghegan to give us a synopsis of those areas where he sees the issues. It is fair to say to him that as committee Chairman, I am getting lobbied by other stakeholders who say they feel this situation is under control and that they have an alternative product. I put that to him as he begins. Some other stakeholders are saying they have invested and have an alternative product.

Mr. James Geoghegan:

Good evening to all the members of the Joint Committee on Agriculture, Food and the Marine. I run a company that imports and distributes creosote fencing materials. The European importing ban is coming in at the end of March and basically after that, we have no replacement product lined up for the Irish market. From talking to other importers, everybody is in the same boat. There is new treatment coming on line but it is not there yet in the quantities required to fulfil the market demands. As we stand at the moment, co-ops and contractors are running out of material. With the demand on fencing this year due to the new agri-climate rural environment scheme, ACRES, scheme and the new targeted agricultural modernisation scheme, TAMS, grants that are coming out, there will be a huge demand on timber and the stock is not going to be there to satisfy the market. Farmers are going to be in big trouble. They are simply not going to have enough product to do all they need to do. There are 46,000 farmers taking part in the ACRES scheme and the minute they begin, the first thing every farmer will have to do is to use quite a lot of fencing to fence off the environmental areas and all the drains and rivers. That is going to create an extra pull on fencing compared to other years. It will take a lot of fencing to do that. Then with the ban on creosote for the equine sector, there is absolutely no replacement for a timber fence to replace creosote fencing to fence horses. There is a new TAMS grant out now for horse fencing. Basically horses will just eat the timber and the tanalised type treatments. We need to get creosote held in production, definitely for the horse fencing and for cattle and sheep fencing, until we have enough product to satisfy the market. From what we are seeing, with the volume of creosote that is being imported, the importers, some of whom are here tonight, do not have the raw material available. The new type plants that are needed to for the new type of treatment are not up and running yet. I was actually talking to one of my suppliers this morning and they are going in to look for planning permission to build their plant. They are talking about two years before they are up and running. They are based in the UK and have not received a license yet for this new chemical that is coming on the market. Richard O'Connor will explain to the committee about the new chemical, its properties and how it works.

Jackie Cahill (Tipperary, Fianna Fail)
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I will ask the questions Deputy Fitzmaurice has put forward as they might cover some of the issues. Then we can take it from there. As I mentioned, we are getting conflicting reports as to the preparedness of the industry for the ban on creosote. These five questions are from Deputy Fitzmaurice and are directed at Mr. Geoghegan. What material will he supply his customers with in April? What effect will the ban have on fencing contractors? What is the labour cost for a fencing contractor to erect stakes on a per stake basis for a farmer? What is the lifespan difference in creosote-treated timber and locally produced tanalised timber that the local sawmills sell? Are there plastic or steel alternatives on the market, and if so, how do they compare with timber?

Deputy Fitzmaurice has a number of questions for Mr. O'Connor as well. I will go through them all together. First, what effect will the ban have on his business and can he supply his customers this year with an alternative product? Second, will PDM have problems to hold staff numbers? Third, when will PDM use Tanasote, a new chemical that is to replace creosote? Fourth, how many countries are now licensed to use Tanasote to treat timber?

The Deputy has a question for the other two witnesses. What percentage of their business is creosote timber and what replacements have they got organised? How many retail shops does Mr. Padraig McConn supply? Will there be a shortage of fencing materials this year?

There is a fairly comprehensive list of questions there from Deputy Fitzmaurice. The panel can take them in order. It is a fairly comprehensive outline of the issues with them. Whoever wants to go first may proceed.

Mr. James Geoghegan:

On my own situation, I was told last year that the company which supplied me, which is Scanpole, would have a product up and running by now, and now it does not. As of April this year, I will not have stakes to sell in my business. I have tried a few other suppliers and the volume is not there on the European market. At the minute, we literally do not know what to do. I have had phone calls from another importer last week asking me had I spare stakes to give him and where was I going to get stakes. I asked where was he trying and he said he was googling "stakes in Europe" and could not find any to buy. He is another big importer in Kilkenny.

As it stands, we do not know what we will do. We supply a lot of stakes. My phone is hopping all day every day now. Actually, a merchant in Waterford rang me today looking for stakes. He asked would I give him two bales of stakes for his own farm. He said that his phone is hot with lads calling. He said that he is out of stakes but he has a job on his own farm and needs two or three bales, and would I fix him up. I said I will. I am dealing with the man for years. I will give him stakes, but it is loaves and fishes at this stage. It is very serious.

Mr. Tommy Williamson:

There is such a variety of stakes, in size and everything. In my yard, I have an abundance of certain sized stakes but I do not have small stakes that are the biggest seller. From day to day, they come in. Now the people producing them ask do I need them. One wonders will they be creosoted on time and will they come in on time.

The thing about it, to start with, is that any importer of stakes or people selling stakes received no notification from the Government whatsoever. We knew nothing about it only what came out in the Irish Farmers' Journal. That is when we knew first that there would be a ban on creosote stakes.

Usually, when we would order stakes, we would be a year ahead. We would be giving orders for what we are to supply this summer for next year and to ban the stakes in such a short period of time in the middle of a fencing season is just not on.

Mr. Richard O'Connor:

There are just a couple of things I would say. To be fair to the authorities here, the Department of Agriculture, Food and the Marine has engaged with stakeholders with respect to the risk on creosote because it is a derogated product and has been for many years. It has always been the case in the sector that we would have known in time that creosote would have to be banned.

The issue we have is that, under the biocidal products regulation, BPRs, across Europe, it is a very considerable level of investment that chemical companies need to go through to get a product approved as an alternative to creosote. In Ireland, one product, which the Cathaoirleach referred to earlier on, called Tanasote was approved at the back end of 2021 and a product called Agri Protect was approved by the Department in late January of this year, literally, eight or nine weeks ago. Therefore, there are two chemical alternatives now available under the regulations.

The issue that all creosote treating businesses have across Europe is the technologies that we have been using are relatively old. Creosote is a well established product. It goes back over 100 years. Our business, PDM, is established since 1968 and we have been treating and pressure-treating timber for both the telecommunications and utility, ESB, electricity sector as well as doing fencing treatment.

Jackie Cahill (Tipperary, Fianna Fail)
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Is it correct that the ESB has a derogation?

Mr. Richard O'Connor:

That is one of the difficulties with the transition. Creosote has been allowed in four key use classes up to this point: telecommunications and electricity poles; railway sleepers; marine timber, historically, for marine ports; and fencing for equine, agricultural stakes and fruit stakes that would typically be used across Europe in vineyards etc. The ban that is taking place affects fencing only and there is an extension for another seven years until October 2029 with respect to sleepers and poles. From my perspective, we will face this issue again for the utility sector in Ireland because it will not have an alternative to creosote for pole infrastructure at that point in time. That is a significant issue in its own right for that period.

Returning to fencing, with the approvals of the two new oils, there has not been sufficient time to go through the regulatory process for treaters. Treaters, such as ourselves, if you consider what we need to do in Ireland, need to work with the local authority that we are affiliated with to make sure that the pressure treatment that we do fits within the environmental constraints of our industrial emissions licence, which means engaging with the Environmental Protection Agency, EPA, directly to ensure that we are treating to the correct parameters of the licence. Because the oils are relatively new and the biocides within the oils are relatively new, we have to go through a significant process to understand, in terms of treating the oil and what residue might come out of the product at a local level, how we deal with that within the physical environment where we are treating. We have a wastewater treatment system in PDM at the minute that deals with any by-product or run-off from creosote on the site. We have to get to an emissions standard with respect to that water, which we do, and we are compliant in that regard. However, we have to go through the same process now with the new oils. Because they are only available and approved relatively recently, we are only beginning to get an understanding of what it will take to treat those chemicals to the industrial emissions standards required by the EPA. It is the same issue right across Europe for those treaters which are choosing to stay in creosote or to move beyond creosote into the new oil. All of them have to go through the same process. That does not happen in six months. That is a much longer process.

On top of that, with best available techniques now required under European legislation, we, in upgrading our facilities, must apply best available techniques. The technologies used to treat today are very different to the technologies that exist in most creosote producers, including PDM, which have been treating for the past 45 or 50 years. The technologies are different and they require significant capital investment.

From our perspective, having a 180-day period from the end of October 2022 up to the end of April 2023 to consider the transition that we need to make is far short of the time required to go through that process. On top of that, post pandemic, in upgrading new facilities, the lead time on the infrastructure needed to build a new plant is significant. From planning and commissioning to endgame is a minimum of 18 months to get a new plant in place if we were to start the process tomorrow.

Jackie Cahill (Tipperary, Fianna Fail)
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When was the sector first told that there would be a ban on creosote stakes?

Mr. Richard O'Connor:

Officially, in October 2022, by the Department of Agriculture, Food and the Marine.

Jackie Cahill (Tipperary, Fianna Fail)
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Although officially in October 2022, would the sector have known it before that?

Mr. Richard O'Connor:

Creosote has been on a derogation for 20 years and it clearly has been a risk for all of that period of time.

Jackie Cahill (Tipperary, Fianna Fail)
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I met a fencing contractor in my county in early summer and he raised the issue of creosote stakes.

He said that there would be a ban this spring.

Mr. Richard O'Connor:

Correct.

Paul Daly (Fianna Fail)
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I would like clarification on a couple of points. Mr. O'Connor stated that there was a derogation on creosote. The treatment of timber with creosote will have changed a great deal since the derogation's introduction. As youngsters, we were sent out to paint with creosote. When you buy a creosote stake now, it has been pressurised and industrially applied. Would this not have helped to get a further derogation in respect of fencing?

If the ESB told me tomorrow morning that it had to put a pole in my field, it could put a creosote pole in the ground closer to a water course than I could put down fencing posts for the next seven years. Is that what Mr. O'Connor is saying? This would make for an added complication. I do not know about telegraph poles, but if someone who is supplying ESB or whatever is building a new plant for fencing posts, he or she is going to have to keep a creosote plant active for seven years as well. I did not do my homework well enough, as I did not realise that the derogation would continue for another seven years for the pole industry.

There is Tanasote, but what did Mr. O'Connor say the second potential new product was?

Mr. Richard O'Connor:

Agri Protect.

Paul Daly (Fianna Fail)
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What research has been done on them as they relate to the equine industry? I have horses. All a horse wants to do is eat the fence unless it is treated with creosoted. How will that work with these two new products? Has their safety around horses been tested?

Mr. Richard O'Connor:

The data we have so far are predominantly on the Tanasote product. There have been studies on it in the UK for the past four or five years. There is no evidence that cribbing is an issue for the copper oil treatment that is Tanasote. We are not concerned that cribbing will be an issue with the new product.

Bear in mind, the product has only been in existence for four to five years, so when we speak about service life, we are extrapolating what service life we believe we will get based on the degradation we are seeing in year 2, year 3 and year 4. The company behind Tanasote is an international business called Arxada, which says that, properly treated, someone should be able to get a service life of up to 40 years. Compare that with creosote. As I understand the current situation, and unless it has been damaged by storms, the ESB will take a pole product out of its service after 50 years, such is the efficacy of the treatment it is reliant on. The figure would be broadly similar on the telecoms side – Eir, National Broadband Ireland and the other players. Over the years, I have seen plenty of poles that were treated 50, 60 or 70 years ago that are still standing the test of time. Our strapline to customers is that they will have to apply creosote to a fence once in their working lifetimes as farmers or stud owners. That is 30 to 40 years, which is typically what one would expect to get with a properly treated fence.

Based on the data I have seen, I am confident that the new copper oil products will have a reasonable service life. Maybe it will not be as good as creosote, but it will certainly be significantly better than the water-based treatments currently available in the market. In my experience, those water-based treatments typically fail after five or six years of service in the damp Irish climate. We have grown our timber business in creosote significantly on the back of the failure of the copper water treatments.

Paul Daly (Fianna Fail)
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In layman's terms, what would the witnesses request of us that we were in a position to deliver?

Mr. James Geoghegan:

The small print in the forthcoming ban states that there is to be no ban until there is a sufficient quantity of alternative quality product on the market. Currently, there is not a hope of that happening for the next two years. As Mr. O'Connor stated, it might be two years before PDM has a plant built. It is not even sure if it is going ahead with a plant yet, given the cost of the new treatment, which is a matter we have not touched on yet. From what I am hearing, a stake that costs approximately €10 now could increase to €15. Is a farmer going to pay €15 for one stake? Companies are not going into the new treatment in full force because they are not sure they will be able to sell the product, it will be so expensive. This is a significant issue. Can farmers afford to pay €15 for a stake compared with €9 or €10 now? This is a major investment for companies; I have heard figures of between €1.5 million and €5 million to build a plant. Companies want to be sure they have markets for an expensive product before they proceed. This is slowing down the product in coming to the market.

Jackie Cahill (Tipperary, Fianna Fail)
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With TAMS and all the other various schemes, there will surely be a market for stakes.

Mr. James Geoghegan:

There is a large market, which is why we are here. The first thing a farmer with 4,000 ha to 6,000 ha has to do is buy 300 or 400 stakes. Every drain, river, bog and wildlife area has to be fenced off this year.

Jackie Cahill (Tipperary, Fianna Fail)
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That will take care of the first year or two's payment.

Mr. James Geoghegan:

Yes, and that is on top of the average replacement cost on farms every year. It will be a huge bang this year.

Jackie Cahill (Tipperary, Fianna Fail)
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That farmer would want 300 or 400 stakes every year.

Mr. James Geoghegan:

Yes. We know from the volume coming into the country, how much we are selling and the phone calls we are getting today that contractors will not have stakes to erect in a few weeks' time.

Mr. Richard O'Connor:

Obviously, creosote qualifies for TAMS. I know that, if I rang the National Standards Authority of Ireland, NSAI, tomorrow and asked whether it would have an equivalent of TAMS in place for copper oil fencing from the beginning of May, such a scheme would not exist because the work is not done. For example, the work with the chemical companies that are supplying the product only began last Monday.

Jackie Cahill (Tipperary, Fianna Fail)
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That is an important point.

Paul Daly (Fianna Fail)
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Yes. To be sure I understand Mr. O'Connor correctly, he is saying that I as a farmer will not be able to get a creosote stake after 1 May and that, under TAMS, the alternative is not recognised or accepted.

Mr. Richard O'Connor:

Unless the Department of Agriculture, Food and the Marine agrees that the alternative will qualify until such time as the work to ensure that the new oil fits the IS 436 fencing standard that exists for a creosote stake is done by the NSAI. That work is not done. As I understand the situation, it will take at least a year to 18 months for that work to complete.

Paul Daly (Fianna Fail)
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Has Mr. O'Connor been in contact with Dr. Leonard or the Department on this matter?

Mr. Richard O'Connor:

Does the Senator mean Dr. Robert Leonard?

Paul Daly (Fianna Fail)
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Yes.

Mr. Richard O'Connor:

Last August or September, we looked to initiate a meeting with the NSAI to begin the process of recognising that this was a reality. That meeting took place last Monday.

Paul Daly (Fianna Fail)
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And what Mr. O'Connor is saying was confirmed.

Mr. Richard O'Connor:

Absolutely.

Jackie Cahill (Tipperary, Fianna Fail)
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That is an important point.

Paul Daly (Fianna Fail)
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It is the kernel of this debate. It is the issue that we need to pursue as a priority. I had wished to ask another question before this matter raised its head, but it is the stumbling block. There is no point in having TAMS if no product has been certified for use.

Mr. Richard O'Connor:

The Department may decide that it will qualify it, but the data will not be there.

Paul Daly (Fianna Fail)
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It is not something that can be expedited. It depends on laboratory tests.

Jackie Cahill (Tipperary, Fianna Fail)
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That makes a case for derogation straight away if we want the schemes to continue efficiently. I did not realise that.

Paul Daly (Fianna Fail)
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Neither did I.

Mr. Richard O'Connor:

Another point I would like to make is that we need to think about this from a national perspective as well. Consider our forestry.

More than 80% of our forestry is Sitka spruce. The vast majority of the material that is treated through our business and through other treaters in Ireland is based on Sitka spruce and it is for stakes and strainers. The data the chemical companies have been using so far is only based on Scots pine. One of the things we have been trying to do over the past 18 months to two years is to understand Scots pine, Sitka spruce and Douglas fir, which is the other significant material used in Ireland, particularly for strainers which are a key part of a fence. Without a strainer properly in place, a fence will not work.

Jackie Cahill (Tipperary, Fianna Fail)
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There is not much point in having the stakes without the strainer.

Mr. Richard O'Connor:

No. The majority of strainers are Douglas fir. We started doing research on material that is treated in Europe in a plant that is capable of treating it at present. We have started to get material back in Sitka spruce and Douglas fir. We have sent Irish material to Europe to be treated and then tested it at the PDM site to see whether it will potentially meet the IS 436 standard. This information has yet to be provided to the National Standards Authority of Ireland.

Paul Daly (Fianna Fail)
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I believe this ban has been introduced in countries such as Germany and Finland.

Mr. Richard O'Connor:

It will be officially across Europe from 30 April.

Paul Daly (Fianna Fail)
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It has not been introduced anywhere else yet.

Mr. Richard O'Connor:

No.

Paul Daly (Fianna Fail)
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We were misinformed on this point by somebody else.

Mr. Richard O'Connor:

It will be across the member states from 30 April.

Paul Daly (Fianna Fail)
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I was going to ask what was happening in this regard but it is misinformation we received from a third party.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I apologise for having to leave the meeting but I was listening in and I have read the presentations. I thank the witnesses for coming before the committee. A number of producers and people in the market have taken significant steps to provide an alternative. They have invested heavily in doing this. It could be said, perhaps, that the witnesses should have taken all reasonable steps to do this also. I understand what they are saying about it perhaps not being possible. Surely these companies will be at a huge financial disadvantage if the ban is pushed out. Several of them would say they are ready and able to supply the market from April onwards.

Mr. Richard O'Connor:

I would say good luck to them commercially and see how they get on.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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They are long established commercial entities. They feel confident they will be able to do it. They would say they saw in the wind that it was coming. I know Mr. O'Connor said the ban is not yet European-wide but was it not banned in France, Germany and Denmark in 2019?

Mr. Richard O'Connor:

Fencing is predominantly a UK and Ireland market and has been for quite a few years. Creosoted fencing in Europe has been increasingly marginalised over time. That is correct.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Metal is also an option. Have the witnesses looked at metal?

Mr. Tommy Williamson:

Metal stakes do not suit everyone. They would not be a problem for dairy farmers. They will use metal stakes in between. It will be a big problem for use in strainers. They will end up using metal or concrete strainers. It will still cost them more money. For anyone with a stud farm or who is sheep farming or deer farming and who requires higher fencing, it will be a problem. There is nothing on the market other than timber for a strainer unless metal is used. This costs four times the price. It will all come back to the farmers. The farmers will have to pay more if they want a fence. If the farmers pay more, the food will have to get dearer. Everything will have to get dearer. It will not be competitive compared with other countries. We are looking for an extension on the creosote until something is sorted out. This is what we are here to look for.

Jackie Cahill (Tipperary, Fianna Fail)
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In October, the EU was asked for a derogation and it refused. Was that request made by Ireland or was it made by a number of countries?

Mr. Richard O'Connor:

As I understand it, Ireland is the only country that voted in favour of retaining creosote for fencing.

Paul Daly (Fianna Fail)
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It would probably be fair to say that many countries which voted in favour of the ban do not use it anyway.

Jackie Cahill (Tipperary, Fianna Fail)
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No.

Paul Daly (Fianna Fail)
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It would not affect them. They do not use fencing to the same extent as we do.

Jackie Cahill (Tipperary, Fianna Fail)
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I have a question for Mr. McConn, our guest who is in Finland. We asked a question at the start as to how much of a shortage of retail supply the witnesses see this year and what percentage of their business is creosote timber. Does Mr. McConn have anything further to add?

Mr. Padraig McConn:

We supply approximately 300 hardware and co-operative shops and branches. We are afraid to import because of the ban. We are supposed to be out of it by the end of April. We are afraid to have a lot of it in the yard. It is like what Mr. Williamson said. We have to order stakes eight or nine months in advance to meet the demand when spring comes in. Approximately half of my business is in creosote posts. I have the same problem as Mr. Williamson and Mr. Geoghegan. We just cannot get the product. We are afraid to buy it because of what might happen if we had a lot of product in the yard and the Department of Agriculture, Food and the Marine decided to call on us next May or June. What would happen if we had 50 loads of timber in the yard? We do not because we cannot get it, but if we could get it, what would happen then? All we are looking for is an extension on this for a year or two until the proper treatments are available and we can get the product we want for the farmer that will last the test of time. Creosote posts will last the test of time.

With the type of creosote post Mr. Williamson, Mr. Geoghegan and I bring in, people could catch them in their hands. There is no leakage from them. They are not wet because they are vacuum dried. When we import them, it takes two to three hours to vacuum them stone dry. If they come in wet, they will not be allowed across the English Channel. They must be dry. I cannot see why it is a problem to put the posts in the ground in Ireland when they are so dry. There is no dribble off them anywhere. If anyone comes to my farm to look at the posts I put down ten years ago, they would not see any weepage on the ground. That is all I have to say on the matter.

Paul Daly (Fianna Fail)
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I propose we write to the Minister and the Department with immediate effect to seek clarification on the TAMS certification and what will qualify for fencing under TAMS.

Jackie Cahill (Tipperary, Fianna Fail)
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We have a lot of new schemes on track, and if we do not have a certified product for them, it will be an absolute disaster.

Paul Daly (Fianna Fail)
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We have TAMS and ACRES.

Jackie Cahill (Tipperary, Fianna Fail)
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We will do this. The witnesses have outlined the situation. I have not spoken to the Minister, Deputy McConalogue, on this. Getting the EU to turn on this will not be simple. If we cannot operate our schemes with a certified product, it will change the landscape significantly. We will write to the Minister on this and outline the issues the witnesses have raised with us this evening. We will relay the response to the witnesses.

Mr. James Geoghegan:

The EU ban clearly states it is not to be introduced until there is an alternative the market. The Cathaoirleach has said there are alternatives, but many of them have a lifespan of only three to five years. This is a big issue.

Jackie Cahill (Tipperary, Fianna Fail)
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I want to be clear. I was explaining what stakeholders in the industry have said to me. I was not saying there were alternatives.

I stated that we received correspondence indicating that there are alternatives.

Mr. James Geoghegan:

There are alternatives. For years, farmers were using stakes, but now these are only lasting three to five years. One of the questions was on to the labour costs relating to fencing. To pay a contractor to do fencing now, the labour costs more than the stakes, at roughly €8 to €10 per stake erected. If it is necessary to do this every five years, there will be a huge cost. In addition, if a stake that is going to last for 40 years is put down, then this means only one tree being cut out of the forest. If, on the other hand, it is necessary to replace the stake every five years, then eight stakes will be needed over the same period. Each stake costs €5 or €6. There is also the cost of labour, at €64, and the wire is a cost as well. There will be a major cost to farmers if we cannot continue with the 40-year product we have on the market.

The reason the ban is coming in across Europe is because creosote is carcinogenic, which we do not disagree with, and the pollution going into the ground is an issue. When there was first talk about banning creosote, however, 15 or 20 years ago, the treatments then were totally different than they are now in the creosote business. As Mr. McConn said about the vacuum drying of timber, I store timber in my yard on a gravel surface. I have stored creosote continuously there for six years and there is not one drop of it on the ground because the timber is completely dry of creosote. We also always use gloves handling it. Regarding working the machines and driving them, there was a problem years ago when the creosote was hitting the stakes. There would be a splash and it would be getting on your skin, which is not good for people. The new creosote treatments need to be looked at differently than the old-style ones. The ban is based on those old-style treatments, which is the problem.

The European creosote companies did a lot of work to reduce the amount of creosote left in timber. They are saying that they put in the creosote, it seals all the molecules of timber and makes them waterproof and then they take the creosote back out. I know for a fact that there is no run-off from the stakes anymore, as Mr. McConn was saying. The ban is based on timber with wet creosote, with the creosote running off it, splashing onto people's skin and causing contamination.

The whole ban is based on obsolete information. That is a major issue. Earlier, I was driving creosote stakes into the ground until 3 p.m. I have no issue doing that. I am a fencing contractor. We were fencing a dairy farm today until that time and the lads worked on until it got dark. I came up here obviously. We are not afraid to use creosote timber, that is the current creosote timber. I would not be too fond, however, of using the 20- or 30-year-old system of creosote timber. Regarding saying it is carcinogenic, in respect of the current system of treatment, the creosote does not get on anybody's skin and there is no contamination to humans. It is out in the field and not doing any harm to anybody, while it is saving farmers a great deal of money. The ban, therefore, is based on false information. All the countries that voted for it are European countries that do not use creosote anyway because they have a dry climate. We are in a different situation here and we need to be treated differently than the rest of Europe due to our climate.

Jackie Cahill (Tipperary, Fianna Fail)
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Okay.

Mr. Padraig McConn:

When we do go out to Europe, all the fields are massive. They are all 20 acres or 50 acres, and even then there are no fences to be seen for miles. Ireland and England are unique in this regard. We see people here fencing fields of two acres, three acres or five acres. Especially back where I come from in the west of Ireland, you would nearly stand looking at a field of 20 acres to 40 acres. They are not there. That is why they are all fenced in small parcels-----

Paul Daly (Fianna Fail)
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I presume because the UK is outside the EU that it has not taken up the ban.

Mr. James Geoghegan:

No, there is no ban in the UK. It continues to be sold away to the farmers in that country this year.

Mr. Richard O'Connor:

No, there is no ban there for the moment, but it will come. It is likely that the UK will go in the same direction. To make two other brief points, the Health and Safety Executive, which is the competent authority in the UK, equivalent in this regard to the Department of Agriculture, Food and the Marine here, has issued a statement for Northern Ireland. It is slightly different from what is happening here. It is the same date, 30 April, but where a product exists in a sales or retail unit on that date in Northern Ireland, there will still be the opportunity to sell that product to end users after 30 April. This is a different position to that adopted here.

I did not respond earlier regarding the question of labour and the implications in this regard for businesses. I will quickly say that in our business we are following the protocols we have agreed with the Department of Agriculture, Food and the Marine in respect of getting to the end point in respect of treatment. We are following these protocols, doing it properly and communicating this. I have flagged to our local team that we will not be treating fencing once we get beyond 30 April, a date which is coming in the next couple of weeks. We are doing the same as many other players in the market will be. From fencing contractors to people working in the retailing of creosoted stakes, such as farm relief services, Glanbia and others, these organisations will be looking at their staff profile with respect to engaging with those people involved in this area to explore the possibility of finding alternative work for them. In my case, I do not have an opportunity to find alternative work for several of the employees working at our facility. On Monday of last week, we began the consultation process to flag to those individuals that their services will not be required after the derogation. There are, therefore, direct implications for employment starting immediately from 1 May 2023 and this will impact across the sector to varying degrees until we find a proper alternative to replace this product. This is also the reality.

Jackie Cahill (Tipperary, Fianna Fail)
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Okay.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Is what was referred to as happening in Northern Ireland a suitable halfway solution? I refer to existing stock in yards being allowed to be sold post the cut-off date.

Mr. Richard O'Connor:

In our case, because we are finishing earlier and have agreed a process in this regard with the Department of Agriculture, Food and the Marine to try to agree and continue to assist with stakeholder buy-in into what we are doing, we will have finished ourselves by 30 April next. It is a slightly different position for retailers. As was flagged earlier, they will want to be given the opportunity to sell every bit of material which exists within their yards. If they do not, their product will be treated as a hazardous material and they will be responsible for getting rid of it as such. This will be done at a significant cost, because it will be necessary to export that material out of the country. No facility exists here to treat or incinerate it.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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Is the approach being taken in Northern Ireland acceptable?

Mr. James Geoghegan:

It would make no difference because we have no stock now. I had a lorry come in from England last Friday. As it pulled into my yard, there were four jeeps there with trailers waiting for the stock to come off it. I have another load coming in next Friday morning, and lads are ringing today and queueing up for it. All this material is presold. Everything I have coming in over the next three weeks is presold. I could even sell ten times more. The biggest problem is that the stock is just not there.

Jackie Cahill (Tipperary, Fianna Fail)
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Our witnesses have outlined the issues clearly. I reiterate that we will contact the Minister and ask him how he is going to keep the fencing industry going during this transition period. We will relay the answers back to the witnesses. There is definitely a logjam in the system and significant issues will be experienced during the transition to the banning of creosote. The witnesses have outlined these issues very clearly. We will correspond with the Minister and the Department in this regard.

The joint committee will launch its report on solar energy and the agriculture industry in the audiovisual room tomorrow, Thursday, 9 March, at 9.30 a.m. A photo of the committee members will be taken on the plinth at 9.15 a.m. At our next meeting, we will hear from representatives of Bord Bia. On the agenda will be the future strategic direction of the organisation.