Dáil debates
Tuesday, 18 October 2016
Topical Issue Debate
Brexit Issues
6:45 pm
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Who is taking this matter?
Seán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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The Minister of State at the Department of Agriculture, Food and the Marine, Deputy Doyle.
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Go raibh maith agat. I do not exaggerate when I say that the Irish mushroom industry is in peril. Of the 60 growers in operation at the time of the Brexit referendum in Britain and Northern Ireland, at least six have since ceased production. With 80% of Irish mushrooms destined for the British market, the decline in the value of sterling vis-à-visthe euro of almost 20% since the referendum is having a devastating effect on producers and processors in Ireland, not least in my constituency of Cavan-Monaghan, where there is a significant concentration of producers and one of the industry's leading players, Monaghan Mushrooms.
With some 3,500 people employed by growers throughout the country - representing a critical mass of employees across rural Ireland - the prospect of the closure of further mushroom producers' businesses because of the impossible situation in which they find themselves, not least as a result of fixed forward contracts set in sterling and the ever-hungry eyes of producers in eastern Europe eager to carve out an even greater share of the British market ,would spell economic calamity for these producers and their employees, families, communities and local economies, and for Ireland's export earnings.
The export value of Ireland's mushroom sector is of the order of €180 million per annum. This is a major issue and we are facing a very serious crisis. In the absence of key measures in the 2017 budget, I ask the Minister of State and the Minister for Agriculture, Food and the Marine, Deputy Creed, to spell out what they and the Government are willing to do to help the mushroom industry to survive this crisis. Having no increase in diesel excise duty - welcome though it was - will not cut it. What rescue measures is the Minister proposing? It is now that such measures are needed. Dilly-dallying will lead to further collapses and job loses and an ever greater cost on the Exchequer than any measure or measures might impose.
I appeal to the Minister of State, Deputy Doyle, to outline the consideration that has been given to possible schemes within EU state-aid rules. Some clever footwork is required. What is the potential of reintroducing the previous employment subsidy scheme? What is the position of this country, as an EU member state, sharing a border with a jurisdiction that is exiting the EU? Will our gallant allies in Europe step up to the plate to assist our vulnerable agrifood sector in surviving the turmoil that the British exiteers have inflicted on our economy, employment levels and opportunities? Will the Minister assure the Irish mushroom industry, which is the most vulnerable sector of the Irish food export business, that - in its hour of need - he and this Government will not be found wanting?
Andrew Doyle (Wicklow, Fine Gael)
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I thank Deputy Ó Caoláin for raising this very important issue. It is particularly relevant to the area from which he comes. Let me reassure him that the Minister for Agriculture, Food and the Marine, Deputy Creed, and I are acutely aware of the challenges the mushroom sector is experiencing in the aftermath of the UK referendum decision to exit the European Union and in light of recent significant currency fluctuations. I am focused on working closely with the industry - I can provide details on that later - to address these difficulties in the months and year ahead.
We are monitoring the situation regarding sterling volatility closely and have set up a dedicated unit to consider the impact of Brexit within the Department. In addition, Bord Bia is working closely with the sector on market intelligence, UK consumer research and quality assurance. They recently held a currency and negotiation workshop specifically targeted at the sector, which I understand was very well received by the mushroom industry. In the coming weeks, the Minister, Deputy Creed, and the CEO of Bord Bia will be meeting executives from all the UK multiple retailers to further highlight the difficulties producers are facing. The Minister has also arranged a meeting with his UK counterpart to discuss the impact the UK decision is already having on the agriculture and food sector in Ireland.
I am also keenly aware of the ongoing impact that the devaluation of sterling is having directly on the profit margins of mushroom producers and growers. The mushroom sector, like many other exporting sectors is particularly at risk because of the high dependency on the UK market. This week we arranged for the payment of just under €1.57 million to one of the mushroom producer organisations under the EU producer organisation scheme.
Bord Bia, in response to the difficulties being experienced by exporters, recently launched its marketing intensification programme. This programme aims to provide targeted marketing supports to companies with high dependency on UK markets. Grant supports will be prioritised to assist companies in strengthening their position in that market and in their efforts at market diversification. The marketing intensification programme is aimed at Irish food and drink producers that operate with a turnover of between €1 million and €30 million and that export at least 20% of their turnover to the UK. The total fund is €500,000, however, eligibility does not confer an automatic entitlement to aid. The selection process is competitive with between 20 and 30 companies expected to be supported. Eligible activities are those undertaken between the date of receipt of the application by Bord Bia and 30 April 2017. The closing date for receipt of applications for the marketing intensification programme is Friday, 28 October 2016.
As part of budget 2017, we have also secured an additional €700,000 in funding for capital investment in the commercial horticulture sector. This will increase the budget for this scheme to €5 million in 2017. In addition, the horticulture sector will have access to the €150 million low interest cashflow support loan fund announced in the Budget Statement last Tuesday, providing access to highly flexible loans for up to six years for amounts up to €150,000 at an interest rate of 2.95%, with an option of an interest-only payments for thee years. Through Bord Bia, we are also investing in a market development programme that will assist companies dealing with currency and trading difficulties.
Let me draw the Deputy's attention to the ongoing support being provided to the industry through national and EU schemes operated by my Department. Under the National Development Plan 2007 to 2013, the Department implemented the scheme of investment aid for development of the commercial horticulture sector. During this period, the Department paid just over €4 million in grants to mushroom growers, which supported €10.1 million in investment. To ensure ongoing support for the sector, the Department extended, under EU sanction, the scheme of investment aid for the development of the commercial horticulture sector to run until the end of December 2019. In 2014 and 2015, a total of €1,635 million grant aid was paid to mushroom growers. The further grant aid paid supported €4.1 million in investment by these growers. Under the 2016 scheme of investment aid for the development of the commercial horticulture sector, the Department issued approvals in the amount of €1.33 million to growers in the mushroom sector, supporting €3.3 million in investment. I will provide a commitment to ensure that payments under this scheme are paid as early as possible, so as to try to alleviate any financial pressure that growers are facing.
The EU producer organisation scheme is a vital support for mushroom growers with 65% of Irish growers in a producer organisation at present. This scheme provides an important mechanism for growers to achieve greater bargaining power in the marketplace by becoming part of a larger supply base, which is very important in the current environment.
Between 2005 and 2016, a total of €41.3 million was paid to the mushroom producer organisations as part of that EU producer organisation, PO, scheme.
6:55 pm
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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The Minister of State indicated that the Department has set up a dedicated unit to consider the impact of Brexit. That is important but the situation we are talking about is not post the moving of Article 50 by the British Prime Minister, the reality of the crisis facing the mushroom industry is immediate. The producers cannot wait until after March 2017. We can already measure the deleterious impact on the mushroom sector, as I have shown in the facts I shared with the Minister of State earlier.
The Minister of State also indicated that the Minister has arranged a meeting with his British counterpart to discuss the impact of the British decision on the agriculture and food sector. When will that meeting take place? We need to see a demonstration of the realisation of urgency.
While I have noted the measures in budget 2017, it is important to realise that the moneys paid in grants to mushroom growers over the period of the National Development Plan 2007 to 2013 were aids to investments undertaken by the growers. They made significant investments and are heavily indebted as a consequence. The grant supports were all very fine and good at the time but we are living in very different circumstances. This is a grave situation and it is imperative that we do not just offer some of the historic facts about supports presented. We need to hear about real and substantive measures that will help to secure the 35,000 jobs involved in the sector, many of which are concentrated in critical areas throughout the country and not least in my constituency of Cavan-Monaghan. This is very important and I ask the Minister of State to recognise and take on board the points I have raised. I appeal to him with all the strength I can command on behalf of those so affected to ensure that there are real measures to meet this crisis, to save this industry and to ensure that there is a future for people in traditional employment areas in rural Ireland.
Andrew Doyle (Wicklow, Fine Gael)
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The Minister is in London today and was scheduled to meet his counterpart but she cancelled. I think another meeting is scheduled for two weeks' time. I fully appreciate the gravity of this issue. I met the chief executive officer, CEO, of Monaghan Mushrooms, probably the primary producer in the country, last week. We worked through some suggestions and no one knows the industry better than the man in question.
Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Ronnie Wilson.
Andrew Doyle (Wicklow, Fine Gael)
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Yes, indeed. The Deputy is correct in saying that the PO scheme is for investment but the structure of the PO is such that the money involved might be accessed, along with some other measures that are incentives for lean producing with Enterprise Ireland. Officials from the Department are meeting representatives from Enterprise Ireland to see what might be available from its pot of incentives. We are talking about the impact of Brexit now on much of the agrifood sector, not post the triggering of Article 50. We are concentrating profoundly on the mushroom sector and some other sectors all of whose exports are into the sterling market which is probably 80% of what is produced. We appreciate that. We are trying to work out a resolution.
The low-interest finance has generated some interest as working capital with flexibility. This will only plug the dike for a little while. There is a choice to be made by customers in the UK, do they want this fresh product from Ireland for which there is no question about standards, quality and reliability or do they want to push it over the brink. Prices are fixed generally in January but, unfortunately, do not kick in until the end of March or early April. We can do nothing about that without their goodwill. That is the importance of going not just to the Minister but over the next few months to the CEOs of all the producers to reiterate how precarious the situation is. We are doing everything we can, I assure the Deputy. It is not something that is particularly strong in my own area but I can appreciate its value in bordering counties and in the Deputy's area.