Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I thank the Ceann Comhairle for the opportunity to raise this issue and the Minister of State for attending.

This issue is in the context of the recent missive from Brussels of 25 April, in which the Commissioner for Agriculture and Rural Development, Mariann Fischer Boel, stated:

Some countries have suffered a serious drop in consumption and prices in the poultry sector which could not be adequately compensated with the existing tools. Thanks to today's agreement, member states who so wish will be able to design measures best suited to their own particular situation.

The last line of the statement from the Commissioner concludes:

Once member states submit their proposed measures, the Commission will have to approve them through the management committee procedure.

I hope the Minister of State will be able to advise us this afternoon exactly what measures the Department of Agriculture and Food intends presenting for EU Commission support. It is important we recognise there is not a single approach which will satisfy the complexities of the poultry sector. In other words, one size will not fit all. It is important we reflect on the range of needs within the poultry sector, which clearly is currently suffering a significant downturn in terms of the market and the issue of consumer choice. This is reactive to the ongoing publicity and tension involved in the threat of avian flu coming to Ireland. Avian flu is not in Ireland. It is important that we use today's opportunity to say so. The points I want to make must be against the understanding that Irish chicken is of excellent quality and very good to eat. I urge people to have confidence in Irish poultry meat as an option for their personal and family consumption.

We have to consider the range of different needs. The bigger processors clearly have certain requirements and would perhaps benefit from consideration of a rescue package or subsidy linked to cold storage. We are looking at situations where there could be anything up to or exceeding 100,000 chickens in cold storage and little prospect presenting over the 18-month span for safe human consumption. We must therefore look at the whole area of supports for producers and processors, but not intervention. I emphasise that, but we could consider export to Third World countries, where there would be a ready market, albeit at reduced prices. We should regard that economically, as part of our commitment to overseas aid, at the same time ensuring we protect the interests of a critical sector of our agriculture economy.

Recently we have seen a deterioration in demand and prices are reducing as a consequence. Regrettably, if key measures are not taken, we will find there will be a need to dispose of vast quantities of poultry meat that have built up in cold storage over the period. At the same time we have a large amount of cheap imports of poultry of questionable quality and almost no traceability coming into the country.

With regard to smaller processors in the poultry sector, cold storage support simply will not address those processors' needs. They need cash flow to survive. I am referring here to companies which are dependent on wings and legs exports to the African market. With the closure of the Benin market, where avian flu has occurred and the opening up of potential in Gabon but with serious price reductions——

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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I ask the Deputy to give way to the Minister of State, in fairness to other Members.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I urge the Minister of State and her Department to put forward the most appropriate measures, with the greatest speed possible.

Mary Wallace (Meath, Fianna Fail)
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In the last six months the European poultry industry has been experiencing market difficulties as a result of the reduction in demand for poultry meat. This resulted from consumer concerns arising from the publicity surrounding avian influenza. The problem has been felt acutely in Mediterranean countries while more northerly countries have encountered far fewer problems. The current situation in Ireland is that demand has improved in recent weeks and is now approximately 10% down on normal levels. The Minister for Agriculture and Food, Deputy Coughlan, and the Minister of State, Deputy Smith, have kept in very close contact with the sector and recently visited a major processor in the north east.

Apart from demand on the home market, some operators are suffering losses on sales of cuts such as legs and wings that were traditionally exported. Those markets are no longer available as there has been a similar reduction in demand for poultry products in non-EU as well as in EU countries. Those operators who achieved sales had to do so at greatly reduced prices.

Heretofore there was no effective legal basis on which any financial support could be advanced to the poultry industry. As the current difficulties are being experienced in varying levels throughout the EU, the Minister for Agriculture and Food, Deputy Coughlan, along with several of her colleagues in other member states, asked the EU Commission to put forward proposals for a suitable legal framework whereby assistance could be provided, with a view to alleviating the difficulties for the sector.

On 26 April last the Council of Agriculture Ministers adopted a new regulation under which exceptional support measures may be considered for the poultry industry in the event of serious market disturbances directly attributed to a loss of consumer confidence due to public health or animal health risks. Any measures approved under this framework would be co-funded on a 50-50 basis by the EU and the individual member states concerned.

Member states are required to forward their plans and costings for proposed measures for consideration by the Commission. A poultry management committee meeting will take place in Brussels on 17 May next. At this meeting, the Commission will provide clarification on how it intends to proceed with these proposals, including the types of measures it will accept for co-funding. The Commission will have regard to overall budgetary considerations, as funding will have to come from elsewhere within the CAP budget. The Commission will also be anxious to avoid interfering with the relative competitiveness and income of operators in the various member states as countries may vary greatly in the level of support, if any, they will provide to their industries.

The Commission has already indicated its strong preference for measures that will solve the problem at source, that is, a reduction in the number of breeding poultry to bring the level of poultry meat production into line with actual demand.

The Minister for Agriculture and Food will shortly be proposing a package of support measures to the EU Commission for approval and co-funding. Due to the European State aid rules this route, involving Commission approval and co-funding, is the only legal mechanism for providing such support to the sector.

The Department will be requesting support for measures that operators may decide to take to reduce their throughputs. This will cover the destruction of hatching eggs and reduction of the breeding bird population. I envisage that this scheme will come into operation soon after approval and will apply long enough for corrective action to be taken and fully implemented by the industry.

The Minister will also be seeking short-term support for poultry farmers and processors for reduced throughputs. Aid for private storage is another mechanism that would be useful to the industry as there are already unusually high quantities of poultry meat stockpiled here. She hopes the Commission will approve a storage scheme that will assist processors over the next few months.

As some operators have already taken steps to adjust outputs to the new reality, the Department is anxious that an element of retroactivity be provided in approved measures.

The rates of export refunds have already been increased to extraordinarily high levels but these are having little effect because third countries have reduced their demand for poultry for the same reasons as are at play here in the European Union.

We will have to wait until 17 May before we know the exact timescale and procedure for approval of measures that the Commission is working to but the Department fully appreciates that whatever measures are going to be available should be commenced at the earliest possible date.

The poultry industry is a valued part of the agricultural economy and I am anxious that it remain viable and prospers. The sector must position itself to produce product for which there is a real demand and remain competitive. Undoubtedly there are severe competitive pressures on this industry at the best of times. The Department is strongly of the view that special short-term support is warranted in the context of the current avian influenza difficulties.

I assure the House and the poultry industry that the best interests of the sector on this issue will be promoted and defended to the EU Commission, at official and political level, to achieve the best possible outcome with regard to the introduction of the most useful special support measures to meet the particular needs of the Irish poultry sector at this critical time.

I thank Deputy Ó Caoláin for raising the issue.