Brendan Smith (Cavan-Monaghan, Fianna Fail)

The organic production sector in Ireland is still very small by European standards, although in recent years the market for organic food has shown strong growth. Bord Bia estimated the value of the market to be approximately €38 million at retail level in 2003, and it seems an annual growth rate of approximately 10% should be achievable in the short term.

I am hopeful the production sector can develop because the circumstances have never been more favourable. Decoupling has created a new set of circumstances in which our farmers have the freedom to farm in response to market demands. In this more market-oriented scenario, there is real scope for organic production to expand. The new rural development regulation reflects the emphasis which the European Union places on organic farming. In addition, the EU organic section plan adopted during the Irish Presidency of the European Union clearly puts organics on the agenda and identifies it as a tool that can be used and adapted to contribute to the solution of many pressing issues.

Every country has its own advantages, and I firmly believe there are significant opportunities for Ireland in producing and processing organic food. Irish agriculture is predominantly grass-based, with high levels of production in the dairy, beef and lamb sectors. The profile of our organic sector is very similar. However, we are still heavily reliant on imports of organic fruit, cereals and vegetables and I hope some conventional producers will consider the opportunities that exist for import substitution.

My Department already provides substantial incentives to encourage farmers to take up organic farming. Through the rural environment protection scheme, almost €4 million was paid directly to organic farmers in 2004. Since the scheme began in 1994, it has delivered some €31 million to the sector. Under the current scheme, an organic farmer with 55 hectares is eligible for an annual payment under REPS 3 of €18,505 per year for the first two years, and €13,555 each year for the rest of his or her time in the scheme. As a further incentive to encourage conventional farmers to venture into organic production, the scheme now allows them to convert part of the farm instead of the entire holding, as was previously the case. REPS 3 will be followed by REPS 4 in 2007, and I recently launched a consultative process regarding the new scheme. I urge all organic stakeholders to make submissions on how they feel the rural environment protection scheme can best support the organic sector.

Additional information not given on the floor of the House.

My Department also operates the scheme of grant aid for the development of the organic sector, which supports investment both on-farm and off-farm. For on-farm investments, grant aid can be given for 40% of the cost up to a maximum grant of over €50,000. For off-farm investments, the maximum grant is over €500,000.

Today's consumers like to know where the food they buy is produced and their preference in general is for local food. They also demand quality, convenience and value. Therefore, locally produced organic food should have an extra appeal to consumers. With the growth in direct selling, via farm-gate sales, box schemes and farmers' markets, outlets exist for organic producers and processors to market their products locally.

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