Martin Ferris (Kerry North, Sinn Fein)

In common with tens of thousands of other people, large numbers of farmers are suffering the consequences of the flooding which occurred during the past week and which will continue, depending on weather conditions, to pose a severe threat in parts of the country in the coming days. The problems that have arisen range from loss of animal feed, a need to move animals and damage to machinery and buildings. The impact on farm operation and the costs involved mean that many of those farmers affected will have been pushed over the brink of survival and may well be forced to cease operations. It is important, therefore, that — as in the case of the damage done to homes and businesses — the State should intervene, where possible, to ameliorate the effects of the damage that has been done and to assist those most affected in recovering.

The Minister referred to the grant scheme that was put in place in the past 18 months in respect of waste management, etc. In many instances, the slurry tanks that were installed, for environmental and other reasons, under this scheme have been submerged as a result of the floods caused by the recent unprecedented rainfall. As a result of a regulation that prevents the spreading of slurry until January, we find ourselves in the ridiculous situation whereby — despite the fact that good weather may arrive in the interim — these tanks must remain full. The Minister should allow common sense to prevail and permit farmers to empty their slurry tanks if the weather improves.

Apart from the floods, 2009 has not been a particularly good year for the farming sector or the related rural economy, which has suffered from the impact of the overall economic downturn. As in other sectors, the effects of the recession have been further exacerbated by the negative response of the Government. This was evident in the cuts introduced in last year's budget. People in the farming community are concerned that the forthcoming budget will contain more negative proposals that will further restrict the sector's ability to survive and recover. The projected loss in income for farmers to date this year is approximately 28%, while last year the actual loss was 13%. Therefore, as Deputy Creed stated, there has been an overall reduction of 41% in farm incomes. The current average income is in the region of €13,000 for part-time farmers and €16,000 for full-time farmers. This means they earn approximately on quarter of what public sector employees are paid, which shows their determination and commitment to trying to survive on minimal incomes.

Farmers, like those who own small businesses, have been also affected by the restrictive lending practices of the banks. These practices contrast starkly with the banks' liberal dispensing of huge amounts of credit to property and other speculators whose activities — allied to whatever global impact there has been — contributed greatly to the economic downturn in this country. In comparison to those involved in the property sector, farmers have always found it difficult to access credit. Many of them are currently unable to persuade the banks to lend them money. It is ironic that in order to procure loans, farmers are obliged to offer the deeds of the property as collateral. This is in stark contrast to the position with regard to speculators and developers, who in recent years could obtain credit whenever they desired. The latter proved detrimental to the health of the economy and we are all being obliged to pay as a result.

Lending institutions are also exerting pressure on farmers to make repayments on existing loans. This constitutes a massive pressure on many farmers and is greatly restricting their ability to remain in operation. In a significant number of cases, they are being forced to consider the option of leaving farming altogether.

The large processors have been also less than helpful in the current situation. During this year they have again systematically attempted to cut the prices paid to farmers for milk and other products. In some instances the products involved are being used as loss leaders in a competitive war between the major retailers. The historical evidence, however, points to a long-term reduction in the proportion of the price charged to consumers that is eventually passed on to farmers. As I stated on previous occasions, and as was highlighted by a number of submissions to the report of the Joint Committee on Agriculture, Fisheries and Food on farming in the west, this has implications for the way in which a small number of large operators have come to monopolise the processing of farm produce. It also illustrates the loss of power of farmers as what were once farmer-owned co-operatives have been transformed into orthodox businesses which are no longer amenable to the type of democratic decision-making that was previously in place. Farm co-operatives have become public limited companies whose motivation is profit whatever the consequences and this is detrimental to the good intentions of those who established those co-operatives.

Returning to the issue of the budget, all rural representatives are aware of the impact which the cuts in areas such as disadvantaged payments and the early retirement and installation schemes as well as other cuts in the budget available to Teagasc have had on the sector. In many cases it has meant the difference between a farmer being able to survive or not. The cuts in the retirement and installation schemes have had a massively negative impact on the transfer of land and farms from elderly farmers to a new generation. That is having a major impact along the west coast where the average age of farmers involved in the process is in excess of 45 years and in many cases is well over 60 years. The early retirement scheme was beneficial; it offered security to those giving up their land to a new generation while they awaited their old age pension. The installation aid was a start-up grant for young farmers which was necessary for someone taking over a holding. Cutting that has been a disaster.

To return to the report, one of the clear demands made throughout the sector was that those cuts should be reversed. It is vital that no further similar measures are included in next month's package. Their impact extends beyond the farming community and into the rural economy as whole, taking as it does vital income out of circulation and weakening the ability of farms to contribute to the overall economy, as they do in so many ways. That direct economic impact has been added to by the implementation of cuts in public provision to rural communities, with other cuts yet to be made. It will also be added to by the impact of the type of cuts recommended by the McCarthy report if the Government decides to implement them.

It is ironic that the report of the economic forum of Irish farm and food industry leaders on the agri-food sector should appear at a time when it is unlikely to be matched with the type of commitment on the part of the Department which it urgently requires. As the report states, there is huge potential to harness the food sector as a vital element in economic recovery. Central to that is the issue of food security which, it has been argued, in the Irish context would be threatened if the EU was to return to advocating the type of measures proposed by former Commissioner Mandelson in the context of the WTO trade negotiations.

This country still retains significant advantages in food production and these can be built on to further enhance the Irish processing and general food sector with all the benefits that would bring to farm viability and income as well as job creation. It is one of the few major areas where we can make decisions and implement strategies that are not dependent to a huge extent, as is the case in some manufacturing areas, on what happens outside of Ireland and decisions taken by multi-nationals.

Key areas identified by the report are access to credit; research; the relationship between the farmer and the processors, to which I have already referred; and the power of large retailers in determining price and standards. The report also addresses other areas such as State supports and targets higher value production for the domestic and overseas markets.

In 2008, the agri-food sector accounted for 10% of total merchandise exports in Ireland at approximately €8.6 billion in produce. Similarly, the sector accounted for approximately 9% of total exports on average. Given that the worldwide population is increasing at a rapid pace, consumption is rising and food demand is greater than ever, agri-food exports are a large potential source of revenue for the country. Ireland is seen as a green food island and greater efforts should be made to capitalise on this and expand our agri-food exports.

At present the agri-food sector directly employs approximately 50,000 people as well as providing the primary outlet for the produce of 128,000 family farms. These jobs are dispersed throughout all regions of Ireland, especially in rural areas. The sector accounts for half of Irish goods and services purchased by the manufacturing industry and just more than half of exports by indigenous manufacturing industries. The importance of protecting that and the potential from any expansion hardly needs to be pointed out.

Deputy Arthur Morgan is completing a report for the Joint Committee on Enterprise, Trade and Employment on expanding employment in the agri-food sector, which covers much of the same ground as the report to which I referred. The submissions provide much evidence of optimism about the future of the sector to stimulate the economy but suggest that practical initiatives are required to create the basis for a prosperous indigenous economy. However, they also highlight market failures in the provision of services to SMEs in the availability of capital and support for start-up companies, where indigenous SMEs increasingly compete against companies that can produce goods from a much lower cost base.

Among the key challenges to the growth of scale and employment in the industry are access to credit, regulation and Government policy, retail pressure and disparities in labelling requirements. Similar findings were made in the industry forum report. Among its recommendations are the need to research problems; more rigorous labelling so that, for example, a term such as "Irish food" can only be used after specific criteria are satisfied; and the encouragement of greater co-operation among producers and other related and supporting groups to take advantage of opportunities through enhanced knowledge and contacts, easier access to markets, reduced costs, increased bargaining power and greater competitive advantage.

The farming sector faces a number of serious problems at the present time, the most immediate being the impact of the floods, but also the long-term impact of the cuts. However, as the reports to which I referred indicate, there are grounds for optimism in the future if the correct strategy and support is put in place.

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