Seán Fleming (Laois-Offaly, Fianna Fail)
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To ask the Minister for Agriculture, Food and the Marine if in the context of Budget discussions, he has raised the issue of the cost of transport in the agricultural, food and forestry sectors with the Department of Finance; and if he will make a statement on the matter. [48262/12]

Simon Coveney (Cork South Central, Fine Gael)
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The Government is aware that the cost of transport in Ireland remains high and that fuel costs are a major factor in the input costs of farmers. Ireland has to import a large quantity of its fuel for transport and, as such, we are subject to world oil prices and the risk of adverse exchange rate fluctuations. The price of oil can increase as a consequence, for example, of tensions in Gulf states, a fire on a major oil rig or speculation in futures markets. Transport costs are also a factor for our exporters. As an island nation, we have higher transport costs for our exported goods than many of our competitors.

Transport costs are primarily a matter for the Minister for Transport, Tourism and Sport and the Minister for Finance. Nevertheless, I have had regular contact with the latter concerning such costs in regard to agriculture and the cost of agricultural inputs in general. One of the measures introduced as a result of recent budget changes is a new double-income tax deduction in respect of the increased costs arising from the change in carbon tax. The Government gave a commitment to the farming sector in 2011 that it would not suffer further costs due to increases in carbon charges, and this relief from the carbon tax increase was given in fulfilment of that commitment last year. Farmers are also allowed to claim a flat-rate addition to the costs incurred by non-VAT-registered farmers based on their imputed VAT costs. Included in this calculation, which currently provides for a rebate of 5.2% in 2012, is the cost of fuel and farm machinery, including tractors. This is a further allowance to farmers on their fuel costs. In addition, the long-standing reduced rate for farm diesel remains in place. This is of significant benefit to farmers, who are not the only users of marked gas oil.

Although the global economic recession continues to impact seriously on Ireland's finances, I assure the Deputy that we are aware of the challenge posed by high input costs for farmers. We will continue to bear these issues in mind in the framing of the upcoming budget.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I did not ask the Minister about on-farm diesel costs, which is a subject for another day. My question focussed explicitly on the agricultural industry - in other words, the cost of moving milk from the farm to the processor and on to the market. In addition, timber is a major cost issue because it is bulky and obviously it is provided to the food sector by the agricultural industry.

When the Government came into power it said it was about creating jobs. In opposition it emphasised the issue of competitiveness. We live on an island off another island, which is off the European mainland. Does the Minister accept that natural resource industries, such as forestry, food and agriculture generally, have particularly high transport costs? While we cannot do anything about world oil prices, the cost of the Government-imposed taxation on transport costs is having an effect on the competitiveness of Irish agriculture, food and forestry.

Simon Coveney (Cork South Central, Fine Gael)
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Of course it is. That is stating the obvious. If we were to reduce the cost of transport in any sector we would increase its competitiveness. However, the job of the Minister for Finance is to try to get the balance right between ensuring that we have enough income from the tax-take to meet our deficit challenge. Of course I would like it if we could dramatically reduce fuel taxes, but we do not have that luxury at the moment.

Ireland is a highly competitive country in terms of food production and exports. That is why we have seen food exports increasing over the last two years. We would like to become more competitive and we are continuing to give farming and agriculture special tax treatment on fuel costs, whether through carbon tax, green diesel or the VAT rebate. I hope we will continue to be able to do that, but whether we can extend those transport fuel cost reductions outside the immediate agricultural area is a decision for the Minister for Finance.

Michael Kitt (Galway East, Fianna Fail)
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I call on Deputy Ó Cuív and note that Deputy Wallace also wishes to contribute.

Éamon Ó Cuív (Galway West, Fianna Fail)
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As Ministers said when in opposition, it is about choices. The Government could choose to try to stimulate the food and forestry sectors where transport is an enormous part of the input costs, and particularly so in forestry. I wish to ask the Minister two simple questions. First, has he suggested a rebate scheme to the Minister for Finance for auto-diesel for hauliers? This would have a particular significance for many indigenous industries, although it would not be of great advantage to somebody selling microchips.

Second, the Minister mentioned green diesel and the fact that farmers can use marked gas-oil on their farms for agricultural purposes. He twice mentioned that this seems to be some great concession but can he confirm that no consideration was given to changing the regime for marked gas-oil being used in the agricultural industry? Since the Minister has now created a doubt, can he also confirm that farmers will be able to continue to use marked gas-oil, and that the Government does not intended to add significantly to the cost of marked gas-oil, otherwise known as green diesel?

Mick Wallace (Wexford, Independent)
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I am sure the Minister is well aware that the problems of the haulage industry are directly related to pressures on the agricultural industry.

I can tell the Minister for certain that for every lorry load of dry goods returning from Italy, a lorry load of meat went out in the first place, because most of the aforementioned dry goods usually are imported in refrigerated containers. At present-----

Michael Kitt (Galway East, Fianna Fail)
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Does the Deputy have a question?

Mick Wallace (Wexford, Independent)
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I note that 35% of the fuel used by those hauliers was purchased outside of Ireland last year because of the lack of a rebate here. The Irish Road Haulage Association has done the maths on it and were the Government to introduce a system in which a rebate was in operation, it would make money from stopping the hauliers from buying so much diesel outside the country. There is money in it for the Government in doing this. Aside from the fact that diesel obviously is being laundered, I still think we must move to a position whereby only one colour is available. It is the only way to deal with those who are cheating with it.

Simon Coveney (Cork South Central, Fine Gael)
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The Minister for Finance is examining ways in which the Government can deal with the amount of diesel that is being laundered. It is a huge issue along Border counties in particular and there have been significant seizures this year to that effect. However, actually doing away with marked diesel or green diesel as farmers call it also creates huge problems, particularly in respect of the potential for diesel to be stolen from farmyards because diesel that is not marked becomes much more valuable and usable. Consequently, there is no easy solution to this issue. I note the Government has been working with its British counterpart to find more effective ways of marking diesel in order that it cannot be laundered. Hopefully, we can make progress with some new initiatives in that area.

The only person who is casting doubt on whether farmers will be able to continue to benefit from green diesel appears to be Deputy Ó Cuív. I have not cast any doubt on it. The Government has made a commitment in its programme for Government to support farmers with regard to fuel prices and will continue to do that. As for broader concerns coming from the haulage sector, I recognise the cost of fuel is causing significant strain on that sector at present. However, the question of what is to be done in this regard is not a decision for my Department. Nevertheless, I certainly will reflect these views in the budgetary discussions in the Cabinet.