Brendan Smith (Cavan-Monaghan, Fianna Fail)

This debate is particularly timely and it is an opportunity for the House to focus on the undoubted potential of the Irish agri-food sector to contribute significantly to the recovery of the economy. I express my sympathy to all those who have been badly affected by the flooding in recent days. I am aware, from my Department's assessment, of the impact of the flooding on the agricultural community. The Government discussed the impact of the flooding at its meeting yesterday and has agreed to the allocation of €2 million for a targeted fodder aid scheme, which will complement a wider humanitarian aid scheme to assist those communities most badly affected.

This has been a particularly difficult year, with low commodity prices, currency difficulties, particularly with sterling, and weakened demand at home and abroad. The global economic turmoil continues to have its effects on all sectors. Throughout the year, I have continued to work actively at EU level on the most effective use of market support measures, notably for the benefit of the dairy sector. In view of the importance of export markets for Irish food products, the importance of such market support measures cannot be underestimated. I have also consistently raised the imbalance in the food chain with the increasing power of the multiples. The potential of the Irish agri-food sector has long been recognised by government but it is all the more important in current economic circumstances that it is kept in sharp focus. The Forfás report, Sharing our Future 2025, points to the importance of the agri-food sector realising its further growth potential and maintaining its place as an important part of the national economy and of strategic relevance in food security.

The agri-food sector is operating in a dynamic environment and, to harness the sector's potential, we cannot afford to standstill. A new direction is needed for the agri-food sector and new thinking is required on what needs to be done, as more of the same will not be enough. It is for this reason that the Department and five State agencies — Bord Bia, Teagasc, Enterprise Ireland, BIM and the Marine Institute — have completed significant work on a new strategy for the development of the agri-food and fishing sector for the period up to 2020. The Department has long been of the opinion that the agri-food sector should consistently take a medium-term view, to be renewed periodically, and the development of medium-term strategies has been a feature of our work for a considerable time, as evidenced by previous Agri Vision 2010 and Agri Vision 2015 strategies. Those who have made recent comments, with which I wholeheartedly agree, about the need for a new medium-term strategy seem to have been unaware of the advanced nature of the work on the Agri Vision 2020 strategy. The work that has been done to date has involved the preparation of a series of papers on the main sectors. These papers are almost complete. They will give an informed basis to a web-based public consultation process and request for submissions, which I hope to initiate very shortly. The Joint Committee on Agriculture, Fisheries and Food will have an important input into this work.

I take this opportunity to repeat my invitation to all those with a stake in the Irish agri-food sector to participate actively in the 2020 process, to stimulate debate and help chart the course for the future. I know there are no easy answers, but I am convinced that, unless the 2020 strategy gives concrete direction to the industry as a whole, it will be a lost opportunity to maximise the potential of the sector.

I am anxious that the Agri Vision 2020 strategy will maintain the impetus gained from the very successful Agri Vision 2015 report and action plan. The new strategy will take full account of new global and market realities, where agriculture and food are central to the major global challenges of food security and climate change. The plan will focus on the critical issue of competitiveness, the challenges from the global economic downturn, currency fluctuations, climate change and how best to maximise the opportunities arising from a growing international food and energy crops market. We also will be investing considerably in research and development over the next few years, as it applies to the agri-food sector.

The Government is acutely aware of the competitiveness issues affecting our economy and the particular effect, especially when combined with the currency difficulties, on the food industry. The broad thrust of the Government's approach is to take every possible step to help improve our competitive base. This is not an easy process but is one being afforded the highest priority and persistence.

The establishment of NAMA is a critical step in the Government's efforts to achieve a properly functioning banking system. We all appreciate the importance of getting credit working through the system, particularly, for example, given the ongoing credit difficulties being experienced in the farming sector. I am acutely conscious of those difficulties and I have maintained close contact with the Irish Banking Federation and the major banks, which gives me the opportunity to impress upon them in very clear terms the short-term liquidity difficulties experienced by farmers and the wider industry and, in particular, the need to extend normal working capital facilities to farmers. My most recent meeting with the Irish Banking Federation and the chief agricultural advisers of all the banks was earlier this evening.

Following my request, the European Commission agreed, in May 2009, to an advance payment of 70% of single farm payments from 16 October to assist farmers experiencing difficulties in the dairy market and other sectors. As a result, more than €850 million has been paid to 120,000 farmers since last month. These payments have been a full six weeks earlier than provided for under the rules of the scheme and the level of advance payment, at 70%, is unprecedented. Following the issue of the 70% advance payments, my Department will begin issuing the 30% balancing payments from next Tuesday, 1 December 2009, when 98% of the remaining balance will be paid out. Assuming all applications are cleared for payment, a further €380 million will be paid to Irish farmers, bringing to €1.24 billion the total amount paid between October and December. It is worth putting on record that we have the most efficient system in the European Union for the disbursement of money under the single payment scheme.

In further recognition of the income difficulties experienced by farmers, I have secured the agreement of the Minister for Finance, Deputy Brian Lenihan, to request the Dáil to approve a Supplementary Estimate for my Department. This will allow me to bring forward some €85 million in payments under the farm waste management scheme and the rural environment protection scheme, REPS, which would otherwise have fallen to be paid in the new year. If the Supplementary Estimate is approved, my Department's expenditure on REPS this year will reach a record level of €369 million, paid to a record number of 62,000 participants. In addition, spending on the farm waste management scheme for 2009 will be €286 million and by the end of January, Exchequer spending on the scheme will be approximately €1 billion, totally funded by our Exchequer. I expect we will have the opportunity to debate this Supplementary Estimate in the next week or so and I hope all parties will support the proposal.

The price farmers get for product represents the most important way farmers can enhance their incomes. Unfortunately, we have experienced a significant weakness in prices achieved for dairy, beef and cereals this year. We are all aware of the particular difficulties the dairy sector has experienced and, thankfully, there have been some signs of price recovery in recent weeks. Obviously, we all hope this necessary price improvement will continue.

The past year has clearly demonstrated the value of market management mechanisms which prevented a bad situation from becoming worse. In the course of last year's CAP health check negotiations, I was to the forefront in arguing for the retention of these measures and, as a result of the pressure which I and subsequently a number of my colleagues brought to bear on the Commission, many of these measures were activated to help stabilise a very difficult position. Equally, in recent months, an increasing number of member states, of which Ireland was a central player, pressed the Commission to address the difficulties in the dairy sector. The outcome was positive, with agreement on the need to maintain the effective use of market measures, including intervention and private storage aid, as well as the introduction of what will now be a €300 million dairy fund, as a means of providing direct support to dairy farmers. I have impressed on the Commissioner, and she accepts the point, that there has to be a very controlled release of butter and skimmed milk powder from intervention stocks to avoid any negative shock to prices.

One of the key outcomes negotiated in the health check was the agreement to abolish milk quotas in 2015. This is unquestionably in Ireland's interest and I am particularly pleased the decision was recently reaffirmed by the ED Agriculture Council. In relation to quota abolition, we are on a road of no return. The industry must now focus on dealing with the challenges and opportunities the abolition of the milk quota will bring. One immediate benefit of the abolition of quotas was my ability to allocate 14 million litres to 70 new entrants to dairying under a new entrants' scheme. These are young farmers who have a genuine future in the industry and the scheme was an outstanding success, both in terms of the quantity and quality of applicants. In terms of the further 1% of additional quota that will be available next year, I intend to consider how the scope of the scheme may be expanded to new and recent entrants. There will be an even greater focus on providing quota for new entrants.

There is no doubt the industry is weathering a very difficult period, exacerbated by very dramatic price volatility. I am hopeful that we have now turned a corner. That is very important because the outlook for prices in the medium term is positive, due to significant world demand for dairy products based on an increasing world population and economic growth in developing countries. For an industry that exports 85% of its produce, valued last year at €2.3 billion, the anticipated growth in world demand should bring real benefits.

The beef industry is even more dependent on exports with more than 90% of production exported. As important as export earnings are to the economy, this level of export-dependence makes the sector susceptible to fluctuations and trends in international and EU markets. The global economic downturn has seen consumers curtail spending and a consequential decline in beef consumption throughout Europe this year. This fall has been especially noticeable at the high value end of the market, a segment of the market specifically targeted in recent years by Irish producers and processors.

Nonetheless, as in the dairy sector, the medium-term prospects are encouraging. Rising population levels, improved standards of living that are forecast, growing urbanisation and changing dietary patterns, particularly in Asia, are all contributing to increasing food demand. Furthermore, the EU Commission has estimated that EU beef and veal production is expected to decline by almost 5% by 2015. This will lead to a supply gap within the EU of 600,000 tonnes by 2015, providing market opportunities for efficient market producers. I believe Irish producers are well placed to benefit from these opportunities. Apart from the sectoral challenges and opportunities, one of the most significant issues that will impact on the future of the agri-food industry is the shape of the future Common Agricultural Policy, CAP. While funding arrangements for the Common Agricultural Policy are fixed until 2013 under the current EU financial perspectives, all aspects of the EU budget are currently being reviewed. This will be followed by negotiations to determine the composition of the next financial perspectives of the EU from 2014 to 2020, including the funding available for agriculture and rural development.

In the negotiation on the new financial perspectives there will be competing pressures for funds including pressure for less money overall for CAP, as a share of the EU budget and in absolute terms. In this regard, the recently leaked Commission draft paper is of concern to us in that it advocates major policy changes and lower funds for CAP. We have serious concerns at some of the options mooted in the leaked document from the Commission on the budget review. There is speculation that it will be subject to significant re-writing, and we will press for that. We have a particular concern at the notion of co-financing of direct payments. In current circumstances, this obviously would be unaffordable for Ireland and for many other member states. More fundamentally, it would arguably represent re-nationalisation of the only real common policy of the EU.

Decision making on the Financial Perspectives will, for the first time, come within the co-decision process where the European Parliament as well as the Council of Ministers has to agree to the results. This is obviously a more open and democratic process. However, it leads to some uncertainty about the outcome, as it is new.

Our overarching view is that we need a strong and adequately resourced CAP after 2013. This is a point I have pressed strongly in discussions to date and for which there is good support in the Agriculture Council. In view of the new co-decision making process, I want to work with our MEPs to ensure the best outcome for Ireland and for the Irish agri-food sector. That engagement has begun with all MEPs.

Food security and climate change are key challenges to be addressed in the coming years. By 2030, the planet will need to produce 50% more food, with less land, water and energy as inputs. Food companies are faced with the challenge of meeting the needs of an ever increasing population while at the same time, limiting the impact of their activities on the environment.

Speaking recently on the occasion of the World Food Day 2009, my colleague, the Minister of State with responsibility for food and horticulture, Deputy Sargent, made the following point:

We need to consider where our food comes from and our joint responsibility to achieve food security. Even in a developed country like Ireland, it is incumbent on us to consider our own food security and, furthermore, how our natural advantages and expertise in food production can be leveraged to assist in meeting long-term increased global demand.

As I said at the outset, this is an important and timely debate. There are clear challenges facing the Irish agri-food sector but importantly as well, great opportunities for the growth and development of the sector. It is a sector of enormous economic and social benefit to the country, particularly in our rural and coastal communities.

We need to have a serious analysis of the sector based on the facts and realities and not based on rhetoric and soundbites. No more than any other sector in the economy, the agriculture sector has not been immune from the difficult choices the Government has had to make. No analysis of the sector and its prospects can conveniently ignore the fiscal realities. Despite the difficulties in the public finances, the Government is investing a record level of €369 million in funding for REPS in 2009. Within a matter of weeks, total spending on the farm waste management scheme will have reached €1 billion, by an enormous distance the highest ever on-farm investment in the history of the State.

The new on-farm facilities provided over the past number of years have been extremely important in recent years when we have had extremes of rainfall and very difficult conditions. Most farmers have been able to put their cattle in appropriate housing accommodation. It is very important investment for the farming community.

When the future of the Irish pork industry was threatened last December, the Government acted swiftly to secure the industry by restoring public confidence and by providing a financial facility worth up to €200 million. These are the actions of a Government committed to securing an industry's future and viability, in this case a production and processing industry worth €1.1 billion annually and employing 6,500 people and 500 farm families.

The Irish agri-food industry is worth in excess of €8 billion annually in exports to more than 170 countries. It has proven to be robust and resilient. It has faced and overcome challenges in the past and I have no doubt that it will emerge from this current challenging environment well-placed and conditioned to take advantage of the undoubted opportunities.

The 2020 Agri Vision strategy presents an opportunity for everybody with a stake in this most important of sectors to contribute constructively to the development of an updated vision for the next decade. The sector will have to be flexible, creative and innovative and one of the most efficient in Europe, which is it at present.

I am optimistic and positive about the industry's future, notwithstanding the serious difficulties faced this year. I am confident about its potential to contribute to the recovery of the economy. The Government recognises that potential and I want to work with the industry and all those involved, from the primary producer right through the chain, to ensure that the sector reaches its potential and maximises the contribution it can make to the growth and development of the economy nationally and, equally important, to the many local communities and economies throughout the country.

One of the main issues confronting agriculture over the next few years will be the review of the Common Agricultural Policy and the need for the European Union to ensure adequate budgetary facilities are provided to have a well-resourced Common Agricultural Policy for the benefit of consumers. Over the past year in particular, the power of the multiples has been of serious concern to everybody involved in the food chain. We have seen the deficiencies in the food chain with the primary producer and, in many instances, the processor not getting adequate return for their product.

I refer to unfounded commentary outside and inside this House in regard to Exchequer funding for the Department. The initial budget in 2008 for the Department was €1.89 million. By the end of that year, the Department had allocated well excess of €2 billion under the various schemes. This year, with the approval of this House, we will spend in excess of €2 billion, a sure sign and evidence of my commitment and that of the Government to supporting the agriculture sector through what is a very difficult period.

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