Thursday, 27 October 2016
Ceisteanna - Questions - Priority Questions
1. To ask the Minister for Agriculture, Food and the Marine the immediate contingency steps he is taking to safeguard the interests of the Irish agrifood sector and CAP payments following the decision by UK voters to leave the European Union; and if he will make a statement on the matter. [32461/16]
The United Kingdom's decision to leave the European Union presents significant challenges for the Irish agrifood sector. My Department, together with its agencies and stakeholders, has been carefully considering the potential impacts of a UK exit, looking at the areas in which the greatest risks may arise and on which we will need to focus when negotiations begin. The main areas in which impacts are foreseen are currency fluctuations, tariffs and trade, the EU budget, regulations and standards, and customs controls and certification. The United Kingdom's exit vote raises complex issues for the fisheries sector. Significant challenges are also foreseen from a North-South perspective.
My Department is engaged in detailed contingency planning and has published a summary of the key actions we are taking by way of an immediate response to the United Kingdom's decision, as well as feeding into the central contingency framework being co-ordinated by the Department of the Taoiseach. We are also continuing to deepen our analysis of the likely impacts.
A number of steps have been taken to ensure a sensible and coherent approach will be adopted. They include the establishment of a dedicated Brexit unit, the convening of a consultative committee of stakeholders and the establishment of a contact group under the auspices of the Food Wise 2025 high level implementation committee. The Department is also participating fully in the new sectoral work groups established by the Department of the Taoiseach under the auspices of the interdepartmental group on Brexit which, in turn, feeds into the new Cabinet sub-committee on Brexit. The Department has also chaired the first meeting of a special agrifood subgroup which took place on 19 October.
The most immediate impact for agrifood exporters has arisen from changes to the euro-sterling exchange rate and a number of actions are being taken to mitigate it. Bord Bia and Enterprise Ireland have been providing practical guidance for small and medium-sized enterprises, SMEs. Recently, Bord Bia announced a number of measures covering areas such as managing volatility impacts, providing a consumer and market insight, deepening customer engagement and extending market reach, which are aimed at helping companies to maintain their competitiveness. Similar support is being provided by Enterprise Ireland.
Budget 2017 financially underpins the Department's Brexit mitigation efforts through strategic investment in key areas of my Department, its agencies and the agrifood sector. They include access to an innovative low-interest agriculture cash flow fund of €150 million, agriculture taxation measures designed to address income fluctuations, increased funding for Bord Bia and Bord Iascaigh Mhara, BIM, investment in research and development and innovation, and increased expenditure on the rural development programme and the seafood development programme.
I continue to support efforts to diversify market outlets in order to reduce our dependence on the UK market, including through participation in trade missions such as the one recently to South-East Asia and the planned mission to north Africa and the Gulf region.
As regards CAP payments, there are potential implications for the EU budget. It is expected that the UK exit will result in the loss of the United Kingdom's contribution to the EU budget of between 5% and 10%, or approximately €10 billion. This will likely have implications for future spending decisions in what is already a tight budgetary framework. CAP funding accounts for some 37% of the EU budget and we can expect additional pressure for further contraction in CAP funding in the years ahead. I am aware of the potential issues in this regard and assure the Deputy that my departmental officials and I will be focusing on this aspect during the exit negotiations.
The importance of the UK market to the agrifood sector has been well rehearsed. Some €4.5 billion in agrifood exports, including more than 50% of our beef and one third of our dairy exports, go to the United Kingdom. Of concern is a recent report that indicated that almost 80% of employment in the food and beverages sector was based outside Dublin. As well as the need for as strong a response to Brexit as possible, this serves to emphasise the importance of the UK market to job creation in the regions where it is more difficult to create employment and which have suffered, in particular. The Minister indicated that a consultative committee on Brexit had been established in his Department. However, it has only met twice. Given the importance of the issue, that there have only been two meetings is inexplicable. Why has it not met more?
The Minister indicated in his response today that the €150 million loan and the tax changes in the budget were related to the Brexit response but that fund was primarily driven at European level because of the pressures already being experienced in relation to a livestock crisis. As such, it is not directly related to Brexit.
We have not, unfortunately, had the immediate response required from Government to aid the sectors, particularly the mushroom sector, that are under intense pressure. In regard to the mushroom sector and the other sectors that are particularly exposed, what are the immediate supports the Minister is planning to put in place to ensure they are not put out of business?
I thank the Deputy for his question. It is true that on the agrifood side the impact will be most adversely reflected in the rural economies. The Deputy's reference to the study which refers to 80% of employment being outside of the greater Dublin region is relevant in this regard. This is the reason for all the serious initiatives we have taken.
The stakeholders forum has met on two occasions. The list of representative groups with which I have met bilaterally to discuss their concerns is quite lengthy. Brexit is a standing item on the agenda of the high level implementation group, HLIG, on Food Wise 2025. It is an issue that consumes every waking moment. Every policy is Brexit-proofed in terms of how we can assist a sector. The €150 million loan fund was not driven by Europe. We got €11 million from Europe for the livestock sector. We thought it was strategically far more important to put €14 million of Exchequer funding alongside that €11 million and thereby leverage a loan fund of €150 million rather than spread the €11 million across 100,000 family farms. The €150 million fund is not an EU-led scheme.
On the mushroom sector, we have specific initiatives in place. We already make significant funding available to producer organisations. There is a €5 million capital investment scheme available in my Department for the mushroom sector in particular. That sector also has access to the €150 million loan fund. My colleague, the Minister of State, Deputy Andrew Doyle, has met with some of the substantial players in the mushroom sector. That engagement continues. In what is a fluid situation, appropriate policy instruments are being developed not only in my Department but across the whole of Government.
As proposals are being discussed and developed, jobs are being lost in the mushroom industry. The Minister will be aware that 700 jobs have been already lost in this sector. What we need are responses now and not discussions on what might happen in the future. There is an immediate crisis in this sector. The mushroom sector is at the cliff face of that crisis. It is not good enough for the Minister to talk about things that may happen in the future. This sector needs to be rescued now. Supports must be put in place to ensure that more companies do not go out of business.
On this sector in general, why did the Minister, Deputy Creed, and other Ministers not ensure that a fund was put in place to specifically support those companies that are most exposed to the fall in sterling, most of which are in the agrifood sector? The Minister indicated that he has been meeting with the partners on Food Wise 2025. Food Wise 2025, which is the strategic plan for the agrifood sector, was developed prior to the referendum on Brexit. It is important that Food Wise 2025 is reviewed in light of the implications of Brexit on this sector. It must be Brexit-proofed and updated so that it is a plan that ensures the sector can move forward taking into account the new challenges posed by Brexit.
On the latter point, Food Wise 2025 is an industry-document that my Department facilitated in terms of development. We have previously had challenging issues in this sector, including BSE, foot and mouth disease and the pork dioxin crisis, all of which, at the time, were enormous challenges to this sector. Brexit is not sufficient to derail the ambition, which is a long-term ambition for this sector. While we must react and take account of the challenges we face this is not a time to wilt in the context of the ambition for the industry over the longer term. Most of the industry commentators would accept that.
On the specific issues which the Deputy raised in regard to the agrifood sector and the need for Government to do more to bail out the sector in the context of Brexit, there are limitations on what the State can do under EU state aid rules. It is for this reason the access to low interest loan finance is a tailored initiative. An Bord Bia, Enterprise Ireland and BIM have all been in contact with their individual client companies and are bringing them through in so far as they can without breaching state aid rules. They are assisting them in terms of new market development and deeper engagement with their client base in the UK given the current difficulties they are experiencing in that regard. They are also helping them to navigate the waters in terms of renegotiating contracts. It is inevitable that there will be food inflation in the UK arising from Brexit and a weaker sterling. Over a period of time this will deliver some comfort to the Irish food industries exporting into that market. What we need is assistance in the interim to help them to navigate the current difficulties. That is what my Department is focused on. It is also what the whole of Government approach is focused on.