Brendan Smith (Cavan-Monaghan, Fianna Fail)

I thank the Deputies for their good wishes on my appointment as Minister of State at the Department of Agriculture and Food and I am glad to have the opportunity to respond to this debate. The poultry and egg sector is an extremely important part of the overall agri-food industry. The sector has a farm gate value of €150 million and provides valuable employment throughout the country, supplying quality products to the domestic and export market.

Last year, 66 million chickens and 10 million birds of other species were slaughtered, maintaining a high level continuity of production in the face of increased competition from imported products. Despite increased import penetration, the poultry sector is a net exporter, out performing imports by 22,000 tonnes last year and contributing €244 million to our balance of payments. Increasingly, the industry here, in common with other sectors, must continuously face up to the pressures of severe price competition from lower cost producers from abroad. This is a fact of international trade. Its implications are felt across the chain, where costs of production are constantly scrutinised and kept under control. Part of this is due to higher costs of feed, compliance costs associated with welfare and environmental legislation, inefficiencies at slaughter level and downward pressure from the retail sector.

While the retail sector is dominated by Irish produced poultry, all other aspects of the business at catering and wholesale levels are largely supplied by imported product. There is strong competition across the EU and in third countries at this level of trade and Irish processors have performed extremely well in maintaining their strong share of the domestic retail market while these competitive pressures grow.

I understand that the dispute between Castlemahon Food Products and some of its poultry suppliers concerns the price being paid by the company to the growers of the birds. The practice in the poultry industry is that the processor supplies the day old chicks and feed to the producer and also covers the catching and loading costs. The producer provides the labour and carries such costs as electricity, capital repayments and litter disposal. A price per bird is paid to the producer and this can vary from processor to processor.

In the Castlemahon case the producers involved in the protest are claiming that the price being paid by the company is insufficient to cover their costs and are seeking an increase. A large number of Castlemahon suppliers are not party to the dispute. The protesting producers are refusing to place day old chicks so it will be some weeks yet before the shortfall will be felt at plant level.

Castlemahon is a major poultry processor, employing 300 people. It is vital to the west Limerick economy and, indeed, to the rural economy. While the issues between Castlemahon management and its producers are matters that relate to the commercial operations of the company, it is in the interests of all concerned in the sector to ensure that there is no resultant disruption in the level of poultry supplies in the country. This will simply fall into the hands of importers and risk a more permanent loss of market share.

It is vital to an industry such as this that the integrated nature of the producer-processor relationship is recognised as of fundamental importance to the future success of the industry. In this respect, it is important that margins must be available for all parts of the industry, both at production and processing levels, and that quality of product be encouraged and rewarded. I urge both sides to consider again how they might find a compromise that will continue to bring economic benefits to the poultry chain and in so doing demonstrate the industry's capacity to respond effectively to the wider competitive challenges in the market.

This is a major issue for the people of west Limerick, as is evident from the fact that the three Deputies for the constituency tabled it for debate. I have listened carefully to the points and suggestions they made and, in the morning, I will consult with senior officials in the Department to see if there is any way we can help to facilitate progress in resolving the issue. I accept that it must be resolved at the earliest date.

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