Trevor Sargent (Dublin North, Green Party)

Go raibh maith agat as seans a thabhairt dom labhairt ar chúrsaí talmhaíochta agus bia sa Seanad.

This debate is particularly timely and an opportunity for the House to focus on the undoubted potential of the agrifood sector to contribute significantly to the recovery of the economy. First, however, I express my sympathy to all those who have been so badly affected by flooding in recent weeks. I am aware from my Department's assessment of the impact of the flooding on the agricultural community. The Government has discussed the issue and agreed to allocate €2 million for a targeted fodder aid scheme which will complement a wider humanitarian aid scheme of €10 million to assist those communities most badly affected. It is hoped payments will commence in the very near future.

This has been a particularly difficult year, with low commodity prices, currency difficulties, particularly with sterling, and weakened demand at home and abroad. The global economic turmoil continues to have its effects on all sectors. Throughout the year the Minister, Deputy Brendan Smith, has worked actively at EU level to determine the most effective use of market support measures, notably for the benefit of the dairy sector. In view of the significance of export markets for Irish food products, the importance of such market support measures cannot be underestimated.

The potential of the agrifood sector has long been recognised by the Government, but it is all the more important in current economic circumstances that it is kept in sharp focus. The Forfás report, Sharing our Future: Ireland 2025, points to the importance of the agrifood sector realising its further growth potential and maintaining its place as an important part of the national economy and strategic relevance in terms of food security. The sector is operating in a dynamic environment; if we want to harness its potential, we cannot afford to stand still. We need a new direction for the sector and new thinking is required on what needs to be done. More of the same will not be enough. It is precisely for this reason that my Department and five State agencies - Bord Bia, Teagasc, Enterprise Ireland, BIM and the Marine Institute - have completed an enormous amount of work on a new strategy for the development of the agrifood and fishing sectors for the period to 2020. My Department has long been of the opinion that the agrifood sector should consistently take a medium-term view, to be renewed periodically. The development of medium-term strategies has been a feature of our work for a considerable time, as evidenced by the previous strategies, Agri Food 2010 and Agri Vision 2015.

There have been some recent comments, with which I wholeheartedly agree, about the need for a new medium-term strategy; those making them seemed to be unaware of the advanced nature of the work on the Agri Vision 2020 strategy. The work done to date involved the preparation of a series of papers on the main sectors which are almost complete. These will give an informed basis to a web-based public consultation process and request for submissions which I hope to initiate shortly. I take the opportunity to repeat the invitation to all those with a stake in the agrifood sector to participate actively in the 2020 process, stimulate debate and help chart the course for the future. I know there are no easy answers, but I am convinced that unless the 2020 strategy gives concrete direction to the industry as a whole, it will be a lost opportunity to maximise the potential of the sector.

It is important that the Agri Vision 2020 strategy maintains the impetus gained from the successful Agri Vision 2015 report and action plan. The new strategy will take account of current global and market realities, with agriculture and food taking a central place in the major global challenges of food security and climate change. The plan will focus on the critical issue of competitiveness, the challenges from the global economic downturn, currency fluctuations, climate change and how best to maximise the opportunities arising from a growing international food and energy crops market. We must also ensure that as much as possible of what we need to eat in Ireland is sown in Ireland and sold for a fairer price.

The Government is acutely aware of the competitiveness issues affecting the economy and the particular effect - especially when combined with currency difficulties - on the food industry. The broad thrust of the Government's approach is to take every possible step to help improve our competitive base. This is not an easy process but is being afforded the highest priority and persistence.

The establishment of NAMA is a critical step in the Government's efforts to achieve a properly functioning banking system. We all appreciate the importance of getting credit flowing through the system, particularly in view of the ongoing credit difficulties being experienced in the farming sector. Close contact has been maintained with the Irish Banking Federation and the major banks, which has given me the opportunity to impress upon them the short-term liquidity difficulties experienced by farmers and the wider industry and, in particular, the need to extend normal working capital facilities to farmers.

Following a request from the Minister, the European Commission agreed in May to advance 70% of the single farm payment from 16 October to assist farmers experiencing difficulties in the dairy market and other sectors. As a result, more than €850 million has been paid to 120,000 farmers since last month, a full six weeks earlier than provided for under the rules of the scheme. The level of advance payment, at 70%, is unprecedented. Following the issuing of the advance payments, my Department began issuing payments of the balance of 30% from 1 December. Assuming all applications are cleared for payment, a further €380 million will have been paid to farmers in December, bringing to €1.24 billion the total amount paid between October and December.

In further recognition of the income difficulties experienced by farmers, the Dáil has approved a Supplementary Estimate for my Department which will allow the advance payment of some €85 million under the farm waste management and rural environment protection schemes which would otherwise have fallen to be paid in the new year. My Department's expenditure on REPS this year will reach a record level of €369 million, paid to a record number of 62,000 participants. In addition, spending on the farm waste management scheme in 2009 will be €286 million. By the end of January, Exchequer spending on the scheme will be approximately €1 billion.

The prices farmers receive for their products represent the most important way in which they can enhance their incomes. Unfortunately, we have experienced a significant weakness in prices achieved for dairy, beef and cereals this year, as well as in horticulture. We are all aware of the particular difficulties experienced by the dairy sector, although, thankfully, there have been some signs of price recovery in recent weeks. The past year has clearly demonstrated the value of market management mechanisms which prevented a bad situation from becoming worse. In the course of last year's CAP health check negotiations we were to the forefront in arguing for the retention of these measures. As a result of pressure from Ireland and, subsequently, a number of other member states on the Commission, many of these measures were activated to help stabilise a difficult position.

In addition, in recent months, an increasing number of member states, among which Ireland was a central player, pressed the Commission to address the difficulties in the dairy sector. The outcome was positive, with agreement on the need to maintain the effective use of market measures, including intervention and private storage aid, as well as the introduction of what will now be a €300 million dairy fund as a means of providing direct support for dairy farmers. Crucially, we have impressed upon the Commissioner who has accepted the point that there must be a controlled release of butter and skimmed milk powder from intervention stocks to avoid any negative shock to prices.

One of the key outcomes negotiated in the health check was the agreement to abolish milk quotas in 2015. In this regard, there is no turning back. The industry must now deal with the challenges and opportunities presented by abolition and the Minister will play his part. He is already playing his part, following his agreement to make milk quota available to support a major dairy research project, conducted by Teagasc, aimed at the development of profitable expanding dairy farms as we move towards quota abolition.

A further forward-looking initiative that has been facilitated by the health check outcome was the opportunity provided by this year's 1% increase to allocate 14 million litres to 70 new entrants to dairying under a new entrants' scheme. These are young farmers who have a genuine future in the industry. The scheme has been an outstanding success in terms of both the quantity and quality of applicants. The successful applicants are today participating in their first training workshop, facilitated by Teagasc. In terms of the further 1% of additional quota that will be available next year, the Minister, Deputy Smith, stated his intention to consider how the scope of the scheme may be expanded to new and recent entrants.

For an industry that exports 85% of its produce, valued last year at €2.3 billion, the anticipated growth in world demand should bring real benefits. The beef industry is even more dependent on exports with more than 90% of production exported. As important as export earnings are to the economy, this level of export dependence makes the sector susceptible to fluctuations and trends in international and EU markets. The global economic downturn has seen consumers curtail spending and a consequential decline in beef consumption throughout Europe this year. This fall has been especially noticeable at the high-value end of the market, a segment of the market specifically targeted in recent years by Irish producers and processors.

That being said, the organic sector, although small, has bucked this trend and continues to grow 11% year on year. With 70% of consumption of organic food coming from imports and a €2 billion under-supplied market in the nearby UK, organic production is increasingly attractive for Irish farmers.

None the less, as in the dairy sector, the medium-term prospects are encouraging. Rising population levels, forecasted improved standards of living, growing urbanisation and changing dietary patterns, especially in Asia, are all contributing to increasing food demand. Furthermore, the European Commission has estimated that EU beef and veal production is expected to decline by almost 5% by 2015. This will lead to a supply gap within the EU of 600,000 tonnes by 2015, providing market opportunities for efficient market producers. Irish producers are well placed to benefit from these opportunities.

Apart from the sectoral challenges and opportunities, one of the most significant issues that will impact on the future of the agrifood industry is the shape of the future Common Agricultural Policy, CAP. While funding arrangements for the CAP are fixed until 2013 under the current EU financial perspectives, all aspects of the EU budget are being reviewed. This will be followed by negotiations to determine the composition of the next financial perspectives of the EU from 2014 to 2020, including the funding available for agriculture and rural development.

In the negotiation on the new financial perspectives there will be competing pressures for funds, including pressure for less money overall for CAP as a share of the EU budget and in absolute terms. In this regard, the recently leaked Commission draft paper is of concern to us in that it advocates major policy changes and lower funds for CAP. We have serious concerns at some of the options mooted in the leaked document from the Commission on the budget review. There is speculation that it will be subject to significant re-writing and we will press for that. We have a particular concern at the notion of co-financing of direct payments. In current circumstances, this would obviously be unaffordable for Ireland and also for many other member states. More fundamentally, it would arguably represent re-nationalisation of the only real common policy of the EU.

Decision making on the financial perspectives will, for the first time, come within the co-decision process where the European Parliament as well as the Council of Ministers has to agree to the results. This is obviously a more open and democratic process but, as it is new, it leads to some uncertainty about the outcome. Our overarching view is that we need a strong and adequately resourced CAP after 2013. This is a point we have pressed strongly in discussions to date and for which there is good support in the Agriculture Council. In view of the new co-decision making process, we want to work with our MEPs to ensure the best outcome for Ireland and for the Irish agrifood sector.

Food security and climate change are key challenges to be addressed in the coming years. By 2030, the planet will need to produce 50% more food, with less land, water and energy as inputs. Food companies are faced with the challenge of meeting the needs of an ever-increasing population while, at the same time, limiting the impact of their activities on the environment. On the occasion of the World Food Day 2009, I made the point that we need to consider where our food comes from and our joint responsibility to achieve food security. Even in a developed country like Ireland it is incumbent on us to consider our own food security and, furthermore, how our natural advantages and expertise in food production can be leveraged to assist in meeting long-term increased global demand.

This is an important and timely debate. There are obvious challenges facing the Irish agrifood sector but, more importantly, significant opportunities for the growth and development of the sector which is of enormous economic and social benefit to the country, particularly in our rural and coastal communities. We need to have a serious analysis of the sector based on the facts and realities, not on rhetoric and soundbites. No more than any other sector in the economy, the agriculture sector has not been immune from the difficult choices the Government has had to make. No analysis of the sector and its prospects can conveniently ignore the fiscal realities.

Despite the difficulties in the public finances, the Government is investing a record level of €369 million in funding for REPS. Within a matter of weeks, total spending on the farm waste management scheme will have reached €1 billion, by an enormous distance the highest ever on-farm investment in the history of the State.

When the future of the Irish pork industry was threatened in December last, the Government acted swiftly to secure the industry by restoring public confidence and by providing a financial facility worth up to €200 million. These are the actions of a Government committed to securing an industry's future and viability, in this case a production and processing industry worth €1.1 billion employing 6,500 people and 500 pork producing farm families.

The Irish agrifood industry is worth in excess of €8 billion annually in exports to more than 170 countries. It has proven itself to be robust and resilient. It has faced and overcome challenges in the past and no doubt it will emerge from this economically challenging time well-placed and conditioned to take advantage of the undoubted opportunities.

The 2020 Agri Vision strategy presents an opportunity for everybody with a stake in this most important of sectors to contribute constructively to the development of an updated vision for the next decade. The sector must be flexible, creative and innovative, and one of the most efficient across Europe.

I am optimistic and positive about the industry's future, notwithstanding the serious difficulties faced this year. I am confident about its potential to contribute to the recovery of the economy. The Government recognises that potential and we want to work with the industry and all those who are involved, from the primary producer right through the chain, to ensure the sector reaches its potential and maximises the contribution it can make to the growth and development of the economy nationally, and equally importantly to many local economies and communities throughout the country.