Jim Glennon (Dublin North, Fianna Fail)

I thank the Minister for Agriculture and Food, Deputy Coughlan, for sharing time. My sharing time with her was the source of some amusement to the Opposition benches. If those Members were more aware of the situation on the ground in north County Dublin, they would still have a Deputy there. Instead, they now have to listen to me for ten minutes on the issue.

I commend the amendment to the motion to the House. Horticulture, particularly potato growing, is important to the economy of north County Dublin. For years, the area has been known as the top market gardening area in the country. Statistics show that it produces half of the national output in the horticultural sector. Nationally, the sector is a dynamic one and has grown to be a significant entity in the agricultural industry. Farm gate production is valued at approximately €270 million, with retail sales of €650 million. The sector is also labour intensive with approximately 10,000 people employed in the production and distribution chain. A significant number of foreign nationals work in the horticultural sector, being a vital component to it. Without these immigrant workers, the entire sector would be in much difficulty.

The Department of Agriculture and Food contributes directly to the sector by providing plant health services, enforcement of quality standards and grant assistance. Bord Bia plays a key role in promotion, marketing and ensuring high standards through the operation of its quality assurance programme. A significant contribution towards the development of the sector is made through the grant aid schemes for capital investment on farms under the national development plan. Since 2001 more than €8 million has been paid to 400 horticultural producers to upgrade or develop new facilities. This grant aid has been a major catalyst for investment and growth in a sector which is making a significant contribution to the rural and national economy. The Minister recently announced a further €3.6 million grant package for 2005, which will fund projects to the value of more than €10 million. All areas of horticulture are eligible for the scheme covering mushrooms, protected crops, nursery crops, field vegetables, soft fruit, apples and bee-keeping. I commend the Minister of State at the Department of Agriculture and Food with special responsibility for food and horticulture, Deputy Brendan Smith on this initiative. Horticultural producers benefit from EU aid under the producer organisation scheme. Last year, €5.6 million was paid to 15 recognised producer organisations, an increase of €2 million, 55%, on the 2003 figure. The development of producer organisations under EU regulations contributes to the development of the sector, enabling producers to benefit from their combined strength in production and marketing.

Traditionally the horticultural industry has been the subject of free market forces. The introduction of the single European market has brought about additional competitive pressures and challenges for Irish horticulture. The increasing importance of the retail multiple market has resulted in the concentration of buying power in the hands of five retail multiples. Between them, they control 75% of the fresh produce retail market, creating an adverse effect on the price returned to the producer. Significant changes have taken place in the supply chain, particularly in the changeover to centralised distribution and purchasing. This has resulted in both opportunities and threats to growers. I know the Minister for Agriculture and Food and the Minister of State are conscious of the concentration of so much buying power in such a small circle.

Social and demographic changes have impacted on the industry over the past decade with an increased demand for convenience food and prepared consumer foods. Important trends in horticulture are the specialisation and rationalisation of production units and an increase in catering outlets and demand for semi-prepared produce. Growers have adapted to the exacting demands of quality assurance from the supermarket chains. However, they face considerable challenges in the future. Not least among these are energy and labour costs, increased competition from an enlarged EU and low profitability resulting in low re-investment. Multiple retailers are now competing with each other on price, meaning reduced returns to growers.

The impact of these trends and market forces has had an important bearing on the mushroom sector. This sector, which has been one of the most dynamic sectors of Irish agriculture over the past 20 years, is coming under considerable pressure due to severe competition from cheaper Dutch and Polish supplies on the UK market. With costs of production increasing, producers are caught in a price cost squeeze with profit margins being significantly eroded. In these circumstances, further rationalisation is inevitable. There are now fewer than 200 growers, but they have a much larger scale of production and, accordingly, mushroom output has remained relatively stable over recent years, with exports to the UK market valued at approximately €90 million.

To chart out a future policy direction for this important sector, the former Minister of State, Deputy Treacy, established the mushroom task force at the end of 2003 to examine the issues facing the industry and to devise an action plan for its future viability. The task force submitted its report in May 2004. It contained 35 recommendations under seven broad headings and set out a timetable for their implementation. A review group comprised of all interested parties is currently monitoring the implementation of these recommendations and major progress is being achieved on all fronts. I believe that with the full implementation of the recommendations in the report, the future of the sector will be secured.

Horticulture makes a significant contribution to the rural and national economy, particularly in my area of north County Dublin. It is evident that this is recognised by the Minister for Agriculture and Food and the two Ministers of State in the level of support provided to the sector. I wish them well as they continue their efforts and I have pleasure in commending the amendment to the House.

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