Brendan Smith (Cavan-Monaghan, Fianna Fail)

This country is facing an unprecedented economic challenge. The global and financial crisis has impacted on all areas of economic activity. Irish agriculture and the agrifood sector are not immune from the economic challenges and circumstances have changed significantly in the past year. The rapid decline in certain commodity prices could not have been foreseen and the appreciation of the euro, particularly relative to sterling, has placed additional pressures on export markets.

The Government is acutely aware of the challenges facing the industry and our commitment to the agrifood sector remains absolute. Listening to some commentaries, one would be excused for thinking we had stopped funding agriculture. In the recently published Revised Estimates, the Government provided almost €2 billion for agriculture, fisheries, food and forestry. Within the constraints of the public finances, we continue to support the agrifood, fisheries and food sector to the fullest extent possible and when combined with EU funding of €1.4 billion total public expenditure in support of the sector in 2009 will amount to over €3.3 billion.

We are all conscious of the particular difficulties being experienced by the Irish dairy sector, with dairy prices which are considerably lower than the record highs achieved in 2007. Certain people continue to perpetuate the flawed argument that EU quota increases are the cause of the current low prices for milk. The fact is, however, that milk production is below the level that existed before the quota increase took effect in 2008. Furthermore, if EU production was constrained by quotas, Ireland would not be able to benefit from future upturns in dairy markets. The only winners in such a scenario would be our global competitors, of which there are many.

Since the conclusion of the CAP health check, in respect of which I argued strongly and ultimately successfully for the retention of dairy market management measures, I have repeatedly pressed the Commission for the early introduction of supports to restore confidence and put a floor under prices. Following my consistent interventions, the private storage scheme for butter was brought forward, export refunds for dairy products were reintroduced and intervention schemes for butter, milk and skimmed milk powder were opened. The importance of these measures cannot be overstated because they play a vital role in stabilising the market. Only last month, I urged the Commissioner for Agriculture and Rural Development to intervene more aggressively in taking product permanently off the market by supporting exports, maintaining the intervention process at levels which would enable the maximum quantities to be temporarily removed from the market and giving the commercial markets breathing space to rebound. Significantly, export refunds for butter, skimmed milk powder and whole milk powder were increased last week and all quantities of butter and skimmed milk powder offered were accepted into intervention while intervention purchase prices were maintained.

It is critical that market management mechanisms are expanded to deal with the difficult dairy market situation we are experiencing. Dairy producers can be assured that I will continue, as I have done consistently for the past six months, to maintain the strongest political pressure on the EU to ensure it plays its full part in restoring the dairy sector to a sound trading position.

Beef and sheepmeat processing are important indigenous industries and vital components of the Irish agrifood sector. Their annual turnover is approximately €3 billion and their €2 billion in exports account for over 20% of Irish food and drink exports. The beef industry has changed from dependence on intervention in the early 1990s to a situation in which 98% of output is sold on European markets. This has required investment in quality, standards, market development and promotion. The Taoiseach's recent announcement of Government grant assistance of over €69 million for 15 capital investment projects under my Department's beef and sheepmeat investment fund is an important statement of support for this sector. The Government's investment will stimulate further investment by the industry of €100 million and will ensure its long-term competitiveness, as well as increasing net sales and exports by €400 million. This will ensure a net expansion in employment, with over 800 additional jobs to be provided by 2012.

As well as the dairy sector, I have for some time been conscious of the particular difficulties being experienced by the sheep sector and in recognition of those difficulties I have allocated €7 million from the single farm payment national reserve to 14,000 hill sheep farmers this year. This money was the only additional funding to which I have access this year. I have also confirmed that sheep farmers will be the substantial beneficiaries from the allocation of some €25 million in unused CAP funds next year.

In all, €75 million will be available in unspent CAP funds between 2010 and 2012. Additional modulation worth €17 million will be available from next year, alongside funding from the European economic recovery package, EERP. My Department is currently preparing a new rural development programme incorporating the additional modulated moneys and the new funding from the EERP which will be submitted to the European Commission by 15 July. I am currently considering a range of proposals which might form part of a revised RDP.

Last December, following the recall of all Irish pork and bacon products, the Government reacted swiftly and proportionately. From the outset we were determined to take such actions as were necessary to protect an integral element of the Irish agrifood sector which is worth €1.1 billion per annum and employs 6,500 people. Approximately 500 farm families are involved in pig production and exports are worth €368 million annually. Conscious of the threat to the viability of pig production and processing in Ireland, the Government put in place funding of up to €180 million for a product recall scheme to facilitate the immediate recommencement of slaughtering and a further €20 million for those farmers whose herds were slaughtered. This investment has effectively secured the future of an industry.

The farm waste management scheme introduced by this Government is the largest on-farm investment scheme in the history of the State, funding of €1.1 billion being provided to some 34,000 farmers, 90% of which will have been paid by next January. This investment has to be viewed against an initial Government commitment for on-farm investment of €350 million over the period 2007-13, of which €200 million was committed to the farm waste management scheme. This outstandingly successful scheme is clear evidence of Fianna Fail's ongoing commitment to the Irish agricultural sector. The €1.1 billion grant aid, all of which is from our Exchequer, will be paid over a few short years. While it has been necessary, given the pressures on the public finances, to phase payments to more than 17,000 applicants over three years, I have ensured that a special ex gratia payment will be made to those farmers whose payments are being phased to ensure that no farmer will suffer a financial loss as a result of the deferred payment arrangements. The level of on-farm investment made by the Government is testament to our commitment to assisting farmers who want to improve their on-farm infrastructure, capacity, efficiency and effectiveness and is in stark contrast to the support offered by previous Fine Gael-led Governments.

At the time of the supplementary budget in April, I announced that I would be carrying out a review of the rural environmental protection scheme in the context of the overall level of participation, the funding available to me and the flexibility provided by the additional funding which I negotiated in the recent CAP health check. As part of the forthcoming review, details of which I intend to announce presently, and particularly in the context of available funding I will have regard to the submissions received on the possible use of modulation funds. A number of these are concerned with REPS-like measures.

The Irish agri-food sector is Ireland's most important indigenous sector, providing hundreds of thousands of jobs throughout every county in the country at producer and processor level. The sector was never more important to the Irish economy than it is now. We are justifiably proud of our reputation as "Ireland the food island" and, notwithstanding the current economic difficulties, the Government is continuing to invest hundreds of millions at both farm and processor levels.

As a food producing country, it is essential that we have a robust food industry that provides an outlet for our producers and adds value to the primary product. While we all acknowledge the importance of identifying and building new export markets for our food and beverages, it is critical that we maintain a strong domestic market for Irish food and drink. A strong domestic presence is an essential factor in developing export markets. In that regard, we must have an Irish retail sector that maintains a strong commitment to sourcing and providing a comprehensive range of familiar Irish products and brands.

The issue of retail margins on food products has become a point of heated public debate in recent times, as reflected at last month's EU Agriculture Council meeting. I commend my colleague the Minister of State with responsibility for food and horticulture, Deputy Trevor Sargent, on the efforts he has made to highlight the difficulties facing many producers and processors in this area. While the recent concentration of retail power in the hands of a few large supermarket chains is an international phenomenon, it has fundamentally changed the balance of market negotiating power in the food chain and is a significant factor in the declining share of retail prices which is passed back to the producers.

I do not have much time but I want to take this opportunity to commend the work of the Minister of State, Deputy Trevor Sargent, and that of the Minister of State with responsibility for fisheries and forestry, Deputy Tony Killeen, at the Department on behalf of the agriculture, fisheries, food and forestry sectors.

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