Tom Hayes (Tipperary South, Fine Gael)
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I thank the Leas-Cheann Comhairle for allowing me to raise this important matter. I do so because I believe the Minister does not understand the dire circumstances facing the cereal, beef and dairy sectors. Having been involved in agriculture for many years, I have never seen farmers in such desperation. Cereal farmers have experienced two bad years, with low prices and yields and high costs. Many of them have been driven to desperate measures by these factors and the pressure being applied by banks. Dairy farmers have never had it so bad. Earlier this year, I experienced the anger and frustration of many young dairy farmers at a protest about low milk prices outside the Tipperary co-operative.

I do not recall such low prices across the farming sector and I am very concerned about prices in the beef sector. As a result of the large number of cattle being slaughtered, some farmers have been unable to get their animals into abattoirs. A monopoly in the beef sector is driving down prices and there is a large gap between the prices paid to farmers and sale prices. Action is urgently required to address the problem. The Minister must make a special case for dairy producers in Brussels to ensure a package is put together to secure their survival.

Young farmers have invested substantial sums in the farming sector which is now on the verge of collapse. Some farmers are ready to take their lives because of the dire financial circumstances in which they find themselves. In the past three weeks, farmers have found out that their returns this year will be poor. While world prices will rise in a few years, many of our farmers will have left the industry by then. Farming has a vital role to play in economic recovery and I urge the Minister to do something on their behalf to allow them to regain control of their lives and businesses.

Trevor Sargent (Dublin North, Green Party)
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I thank Deputy Tom Hayes for raising this important issue. As a representative of a farming community, I assure the Deputy that my visits to farms and farmers around the country have left me in no doubt about the level of hardship and despair in the sector. The problem has not been helped by the weather in the past couple of years.

There is no doubt farmers are facing difficulties at this time. A number of factors have acted in concert to affect income for the farming sector. These factors include a period of prolonged inclement weather, the general economic downturn, the banking crisis and poor prices by historical standards for most commodities. The normal rules that would apply to a sector such as cereals where a low volume harvest should result in higher prices do not apply this year. It is rare for such difficulties to come together but that has been the case this year. This was balanced to a lesser extent by a drop in input prices and the continuing income support being provided by my Department.

The issue of poor prices does not just apply to farmers. A number of significant challenges are common to all sub-sectors across the food industry, including high costs, weak sterling, a slowdown in consumer spending and retail price pressures. To address these concerns the Government is taking a number of steps, including promoting greater utilisation of existing enterprise supports.

Through its support agencies, such as Enterprise Ireland, Bord Bia and Teagasc, the Government has developed or is developing a variety of enterprise supports, including the enterprise stabilisation fund and Leadership4Growth programme. In addition, resources will continue to be prioritised both for applied research through Enterprise Ireland and fundamental research through the Department's food institutional research measure and research stimulus fund. These measures are designed to increase the demand for farm products and help boost prices at farm gate level.

In 2008, direct payments to farmers accounted for approximately €2 billion, largely comprising the single farm payment - €1.3 billion - rural environment protection scheme - €312 million - and area based compensatory allowances - €256 million. When other capital grants and investment schemes are included the total payments by the Department of Agriculture, Fisheries and Food to farmers amounted to more than €2.6 billion in 2008. Despite the current difficult budgetary position, a similar level of payments will act as an income platform for farmers in 2009.

From the farmer's perspective, direct payments constituted slightly more than 30% of total gross output in 2008. This shows that almost one third of total revenue on farms is derived from direct payments. At a time when market returns are at low levels, these payments are very important.

As Deputies are aware, the international dairy industry is facing serious challenges. Markets for dairy products are extremely weak across the world, primarily due to a collapse in demand caused by the global economic downturn. In the past couple of years, we have witnessed extremes of volatility in dairy product prices on an unprecedented scale.

The Common Agricultural Policy contains support measures to help us manage the market. During the health check negotiations last year, my colleague, the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, fought hard to keep the important measures in place. Since the start of the current crisis, the Minister has pressed the Commission to use available market instruments. He will also attend an important meeting of Agriculture Ministers in Austria in Monday and I will deputise for him in his absence.

Most of the available supports have been activated since the beginning of the year, including decisions in June to twice increase export refunds for butter, skimmed milk powder and whole milk powder. These measures have helped to stabilise the position. However, despite some signs of an improvement, prices remain low. We will continue to maintain close contact with the European Commission and Council to ensure support measures operate at levels that will make a real impact in the market. One important commitment the Minister secured this week from Commissioner Fischer Boel is that intervention stocks will not be released onto the market until it can take them without being weakened.

In addition to these urgent measures, the Minister announced today the establishment of a dairy consultative group. This announcement follows from last Monday's special meeting of EU Agriculture Ministers in Brussels at which there was a full discussion on the need for measures to manage the dairy market in the period up to quota abolition and beyond. The consultative group will assist the Department in the deliberations that will take place in the coming months in the high level group.

The beef sector is extremely important to the national and rural economy. Exports are significant, with 90% of output exported annually, making Ireland the largest beef exporting nation in the northern hemisphere and fourth largest beef exporter in the world. Beef now accounts for almost one fifth of total food and drink exports. I accept the Deputy's point that beef farmers are not seeing a sufficient amount of the return on these figures.

Prices are a function of the returns available in the marketplace. Given the sluggish market at present, the decline in prices during 2009, while extremely unwelcome, is not entirely unexpected. Year on year prices are down around 12%, which is presenting difficulties for producers and processors alike. However, it is important to remember that while returns have fallen, prices still remain ahead of those achieved in 2007 and these price falls are being witnessed across many European marketplaces.

The development of non-price strategies is fundamental to meeting evolving market challenges and demands. To this end and in line with the Agri Vision 2015 action plan, a number of policy initiatives have been developed and enhanced. These include Bord Bia Irish beef promotion strategies, the Bord Bia quality assurance scheme, the beef and sheepmeat capital investment scheme, breed improvement programmes and the establishment of the 2020 strategy group. In addition, Bord Bia is implementing a major autumn beef promotion aimed at 40 million European consumers in ten major markets. This promotion is being run in conjunction with key continental retail outlets and their Irish suppliers.

At this time of increased competitive pressure, it is vital that we continue to implement effective marketing and promotional strategies aimed at consolidating and strengthening our position in the all-important European market. Our traditional selling points remain our greatest strengths and it is upon these that we will continue to concentrate in the challenging times ahead.

I am conscious of the particular difficulties that grain growers have encountered with regard to this year's harvest. The wet weather made harvesting conditions extremely difficult and impacted on grain quality. It also impacted on the horticultural sector with some cereal farmers unable to access fields. Thankfully, we had a couple of weeks of fine weather late last month which enabled the harvest to be brought in. There have also been difficult negotiations between the farmers and grain merchants on the issue of price. While this is a commercial matter between the parties, I hope they can arrive at a mutually satisfactory solution soon.

Ireland is not self-sufficient in grain production and prices here will be very much influenced by prevailing supply and demand conditions on European Union and world markets. In so far as it can, however, this Government will continue to support the cereals sector with the aim of improving the efficiency, quality and viability of grain production. In this regard, Teagasc is providing expert advice to the growers concerned while my Department operates a range of services such as seed certification, seed testing and recommending lists of varieties.

The opportunities farmers need to grasp are on a number of fronts. Some have managed, through the organic options, to make their cereal farming more profitable than it was and there is a demand which needs to be recognised in that area.

The measures I have mentioned show the Government has a commitment to farming, and I hope the Deputy will agree. I appreciate he is representing a lot of pain out there and I identify with that. The Government recognises the importance of the agrifood sector in terms of output, employment and exports, and while there are short-term difficulties to be overcome, there is - the Deputy acknowledged this and I hope farmers will strive to make it through this difficult period - a favourable outlook for the sector in the medium to long term as we can see the global demand for food, fuel and fibre products from farming is growing as the world's population grows, which is something, it is to be hoped, farmers will benefit from.