Mary Coughlan (Donegal South West, Fianna Fail)

Tá lúcháir orm a bheith anseo idTithe an Oireachtais le cur os comhair na Seanadóirí cad atá ceadaithe anois. Tá súil agam go mbeidh díospóireacht bhreá againn.

I thank the Cathaoirleach for the invitation to address this House on the agricultural chapter of the social partnership agreement, which I am happy to say the farming pillar recently endorsed.

We often hear talk of the demise of farming or that agrifood is felt to be waning as an industry. I fail to see how that sector, of which farming is such a vital component, delivering 9% of gross domestic product, GDP, and employing, directly and indirectly, almost 9% of the labour force, could be seen in such a light. The lesson to be learnt from Irish economic expansion and growth in the last decade is that the health of the economy is not measured by the strength of one industry or segment. It is that mix and balance, with no over-reliance on one area or product, that has allowed our country to continue to grow and develop and to succeed even in more difficult economic circumstances. Farming and food have a vital role to play in that regard, not only economically but also in a social context. Agriculture will always have a special place in the life of this country.

An important factor in the growth of the economy and in our development as a society has been the existence of the partnership process. Together, the various pillars of society have, since 1987, worked by consensus to form a series of focused and strategic agreements contributing to lower taxes, the slashing of the unemployment rate, a sharp reduction in inflation and interest rates, and the achievement of sectoral harmony. The farming pillar has been there from the beginning and has contributed positively. The partnership process and the economic stability it has fostered have in turn served farming well.

I acknowledge the contribution of the farm organisations to farming and to the wider nation. These organisations give the farming community a voice and a presence in national life, and have shown themselves to be both resilient and resourceful in protecting the interests of farmers, the agriculture sector and rural areas. They have also been able, through the partnership process, to look beyond their own interests in taking a wider view of the economy and society.

The partnership process is designed as a framework where the well-being of the country can be reviewed and where common goals can be agreed. The stability of the overall economy is as important to farming as any other sector. I know that farmers have the same interest in, for example, the health services, education and infrastructure as other economic groups. The partnership process provides us with a mechanism that avoids a return to the days where each sectional group fought alone in an adversarial system under which pay increases were secured without regard for their inflationary consequences. The past 19 years have shown that a consensual system, where regard is paid to the national good, competitiveness, social inclusion and the maximum level of employment, has resulted in gains to all sectors of society.

The new social partnership agreement, Towards 2016, is the most ambitious and complex yet and has taken a considerable time to negotiate. This is not surprising. Each of the social partnership agreements has had a particular focus and has contained significant innovations. In this respect, Towards 2016 develops a framework to address key social challenges that individuals face at each stage of life. This means a greater focus on the needs of children, young adults, people of working age, older people and people with disabilities. To allow for long-term policies to be put in place, Towards 2016 has a unique ten-year framework.

The shared overall goal of Towards 2016 is to realise its objectives by enhancing the complementary relationship between social and economic prosperity and by developing a vibrant, knowledge-based economy where economic development is environmentally sustainable and internationally competitive. The major economic, infrastructural, social and environmental issues require a longer-term focus and a coherent and joined-up policy approach.

The approach to which I refer is very much in line with the commitments laid out in the agriculture chapter of Towards 2016, where the overriding objective is the sustainable development of a competitive farming and consumer focused agrifood business that contributes to a vibrant rural economy and society. A large range of actions are set out, including enhancement of the sector's research and development capacity, broadening agricultural activity in the area of alternative enterprises, the production of public goods and the promotion of structural change. All these are linked to the overarching need for the development of competitive capacity.

One of the key elements of the agreement of the agricultural element of the partnership agreement has been the Government's willingness to provide a major increase in funding for agriculture from Exchequer resources. This has not only made up for the inevitable decline in EU funding due to Ireland's enormous economic performance, but has also provided the finance for the very significant enhancement of some major schemes which support the development of the sector.

National Exchequer funding for the farm schemes under the rural development programme will be €4.7 billion for the period 2007 to 2013. To put the figure in perspective, this is an increase of 135% from the €2 billion in Exchequer funds provided for the same schemes in the current round, 2000 to 2006. The total funding for the agricultural measures is €6.8 billion, including €2.1 billion from the EU and modulation.

The new draft rural development programme reflects the commitments contained in the partnership agreement and will cover both agricultural and non-agricultural measures. In line with the EU rural development framework, the measures in the programme will address competitiveness and sustainability.

The main features and expected outcomes are that the numbers in the rural environment protection scheme are expected to increase from 54,500 to 64,000 and the average payment to each eligible participant will increase from €6,170 in 2006 to €7,220 in 2007, a rise of 17%. The average compensatory allowance payment will increase from €2,297 — excluding modulation — to €2,481 and 102,000 applicants will benefit from this 8% increase. The average forestry premium will rise from €332 per hectare to €382, an increase of 15%. A total of €250 million is being allocated for a new measure to encourage quality breeding and high welfare standards in the suckler herd. This will help to ensure high quality input for the beef industry and enhance marketability on the increasingly discerning European market. There will be enhanced support for the structural reform measures, namely, early retirement and installation aid. In the case of early retirement, the maximum pension will rise to €15,000 per annum while the installation aid will also be at this level, an increase of 55%. These measures will assist improvement in the age structure and size of farms, which will assist considerably in restructuring the agricultural sector to allow our youngest, most ambitious and productive farmers to increase their levels of efficiency and output. The changes to the early retirement scheme will benefit both current and future participants. As regards the last point, more than 2,800 participants in the current scheme will receive an average increase of 12% or €1,485 per annum. Under the new scheme, the expected average payment will be €13,500 as against €12,733 now.

On-farm investment support will cover energy crops, general farm modernisation and specific areas such as dairy hygiene and horticulture. Such support will assist investments aimed at market orientation and competitiveness.

Public consultation and a strategic environmental assessment are in progress on the proposed programme. The aim is to have it with the European Commission before the end of the year.

The question that is often asked is how this funding will link with the goals and aims of agricultural policy. I recall not so long ago, at the launch of the agri-vision action plan, that people asked from where the money to implement the plan would come. The short and simple answer is that interlinking of the action plan with the commitments in the partnership agreement and the massive funding provided for the rural development plan means that the Government will deliver on the actions set out in the agri-vision plan.

The commitments on the agrifood sector set out in the partnership agreement are part of the Government's positive vision for the future of the sector. The vision underlines the fact that delivering safe, high quality, nutritious food, produced in a sustainable manner, to well-informed consumers in high-value markets is the optimum road for the future of the Irish food industry and, therefore, for our farmers.

The agri-vision plan states that we must focus on three key points, namely, competitiveness, innovation and consumer-focused marketing. I emphasise competitiveness because the agrifood sector exports the majority of that which it produces. Competitiveness is not optional for such an export-oriented sector. It is the primary objective on which this plan is based.

Closely related to that is the importance of innovation. The modern food industry is a highly sophisticated knowledge-based sector in which technological progress and product innovation is unremitting. Crucially, meeting the consumer's expectations on product, presentation and price is critical to continuing success.

Our vision for success, as articulated in the agri-vision action plan, is, therefore, focused on the objective of ensuring that the Irish agrifood sector compares with the best in the EU and in the world in terms of knowledge base, competitiveness, innovation and marketing. It is very important that this same vision should be clearly reflected in the partnership agreement, underlining the commitment of all sections of the industry to this forward looking agenda.

A major purpose of this approach is to respond to the changed agenda for agriculture brought about by an altered EU policy environment. The need for market responsiveness is now top of the agenda, with an increased emphasis on competitiveness and innovation. However, the plan and the partnership agreement also set out the specific policies needed to move further away from the simple production-led system of the past to one which has an increasingly competitive, market-driven approach and which respects the need for sustainability. I will now outline some examples of the type of policies and schemes that will help encourage the drive for greater levels of competitiveness.

A new animal welfare, recording and breeding scheme for suckler herds is included in the recently published draft rural development programme, which will be submitted for EU approval later this year. The objective of this scheme is to encourage and underpin the adoption of high standards of animal welfare and to improve the quality of breeding cattle in our beef sector. A budget of €250 million has been allocated to the scheme with annual payments of €80 per cow, payable over five years, available to suckler cow farmers who undertake to comply with the animal welfare measures set out.

A capital investment support scheme was also announced last week, directed towards improving efficiency and competitiveness in both the beef and sheepmeat primary processing sectors. The support package, amounting to €50 million, should trigger overall investment of some €120 million. Enterprise Ireland will manage the scheme and evaluate the suitability of investment projects submitted for grant assistance. Specific details will be announced shortly. This is additional to the €300 million dairy processing capital investment programme which is referred to in the partnership agreement, and to which I will return presently.

Limitations in the ability of the milk quota restructuring scheme to meet the demands of active milk producers around the country led me to announce, in March of this year, my intention to change the means through which milk quota is transferred. Following a six-month consultation process with the farm organisations, including discussions in partnership, I announced details of the new milk quota trading scheme which will operate for the 2007-08 milk quota year.

The new trading scheme is composed of two elements — a priority pool and a market pool. The priority pool, comprising 30% of the quota offered for sale, will be made available to priority categories — successors, lost leases, young farmers and category 1 producers with quota of up to 350,000 litres — at a maximum price of 12 cent per litre. The market pool, through which the remaining 70% of quota will be traded, will run as an exchange. Market cooling measures are an important feature of the new scheme. Two schemes will be run in the first year, the first as early as possible in January and the second in March 2007. A review of all aspects of the scheme, involving all stakeholders, will be carried out after each exchange.

Surprisingly, some sellers appear to believe their freedom to trade quota is being restricted as a result of this new trading scheme. The new system will afford buyers and sellers far greater freedom to determine the volume and price of quota they wish to buy and sell than was the case under the old milk quota restructuring scheme. Rather than being restricted, sellers are being provided with the opportunity to obtain a better price for their quota than would have been the case had I continued to implement the milk quota restructuring scheme for a further year. Part of the rationale of the scheme was to encourage those wishing to exit the sector for personal or family reasons to do so while securing a market return rather than the fixed price available in the old scheme.

The objective of the new dairy processing investment fund is to support capital investment related to the processing of dairy products. It is stimulating the necessary investment in the Irish dairy sector to ensure the long-term competitiveness and viability of the dairy industry in Ireland. The fund, consisting of some €300 million in the next three years, will include €100 million of Government grant assistance and is dedicated exclusively to investment in dairy processing. I have done so because I believe fundamentally that this sector needs a confidence boost at this time, which is a period of great adjustment and an appropriate time for the Government to extend its support in the most pragmatic and tangible way. The closing date for applications to the fund is 23 November next. I hope the dairy industry will take the opportunities presented by the fund in an innovative and modern way. We must move together in building a new future for the dairy processing industry.

Efficiency and innovation, driven by sound scientific knowledge, will be essential to enable the food industry to meet future consumer demands in an increasingly competitive global market. With this in mind, the Department and related State agencies are investing considerable resources in agriculture and food research with a view to considerably enhancing our research and development capability.

I have referred to just a few of the measures contained in the agriculture chapter of the partnership agreement, which is a very comprehensive document and includes actions on all the main farming sectors, as well as on the development of the food industry. It also includes important measures on animal health, including a 50% reduction in disease levies, and includes commitments to continuing high levels of service to farmers by the Department. The strong focus on the future in the document is further underlined in the sections on "renewable energy", "enhancing the environment" and "measures to encourage structural change".

People have asked about the continuing relevance of social partnership and what it actually achieves. We should reflect on the words of the Taoiseach when he stated:

Social partnership has helped to maintain a strategic focus on key national priorities, and has created and sustained the conditions for remarkable employment growth, fiscal stability, restructuring of the economy to respond to new challenges and opportunities, a dramatic improvement in living standards through both lower taxes and lower inflation, and a culture of dialogue, which has served the social partners, but more importantly, the people of this country very well.

This is what partnership is about.

The agricultural undertakings set out in partnership are clear evidence of the Government's commitment to farmers and rural life in Ireland. The unprecedented increase in Exchequer funding has the dual aim of improving the levels of competitiveness in the agriculture, food and forestry sectors and helping to ensure increasing levels of respect and enhancement for the environment. It is fully in line with the EU rural development framework and is consistent with the Government's vision for the future of farming and the agri-food sector in Ireland, as set out in the Agri Vision 2015 action plan. The huge Exchequer commitment contained in the partnership agreement is concrete recognition of the need to fully resource and implement the action points set out in that plan. That should be acknowledged by all.