Michael Creed (Cork North West, Fine Gael) | Oireachtas source

I am not talking about any particular person. If the cap fits, wear it, but the point is true. There are conspiracy theorists out there who believe that every step taken by the State is somehow a betrayal of the interests of its citizens. When we look at the history of trade deals, that does not stand up to scrutiny. In that context, we at least deserve the benefit of the doubt in terms of the trade deals we have negotiated but we also need to look at it objectively. For example, the study done independently for the Department of Jobs, Enterprise and Innovation by Copenhagen Economics identified in clear areas, for example on TTIP, the challenges and the potential downsides but the on-balance assessment was that trade within certain parameters is beneficial for us. As an agrifood exporting nation, we need to be very aware of that. Secrecy in respect of our partners in those negotiations brings the system into disrepute and in that sense I have stated publicly that the United States approach to those trade agreements is unfortunate. The European Union's position has been available online.

The issue of access to the courts is very interesting because in the context of Brexit, we are facing very serious challenges to the terms and conditions under which we will access space on the supermarket shelves in the United Kingdom, and we would like to believe that whether it is an artisan food producer or a global Irish agrifood industry, they would have access to an appropriate judicial process to protect their interests. It is not that there is a process for adjudication on these matters, it is that in the context of Brexit, we may wish to have access to an appropriate structure. There is an inclination to jump on an anti-trade bandwagon and I do not believe that, on balance, that serves us well.

I refer to the North-South dimension to this issue, which was dealt with by a number of contributors. Tomorrow, for the fourth time since my appointment, I will meet Michelle McIlveen, the DUP Minister for Agriculture, Environment and Rural Affairs in Northern Ireland and officials at a bilateral meeting in Armagh. The Minister of State, Deputy Ring, also will attend. This is an area of the most extraordinary complexity, which I will outline in some detail. On the dairy side, straddling the Border, we have LacPatrick, Lakeland Dairies and Strathroy Dairy Limited in Northern Ireland, processing a milk pool that is broadly collected from both sides of the Border. The question that arises is that if milk coming South from Northern Ireland for processing in LacPatrick or Lakeland Dairies is to be subject to a tariff post-Brexit, how profitable will that be? What is the product that is manufactured in terms of food labelling? Is it Irish? Is it British? Is it a hybrid? Where does that fit into the labelling regulations about which consumers are entitled to know? That is a glaring example of the complexities we need to work through. I have made the point previously to Minister McIlveen, that the historical aspect in terms of the Border and the Troubles is entirely a separate debate and anything that raises that issue in the context of Brexit is an unnecessary distraction. We need to focus on the practicalities.I am interested in protecting the best interests of Irish agriculture, its export opportunities, primary producers and the co-operatives involved in processing. We need to work through the detail of it, and everything else can be parked for another day. This is not the time to mix issues that, while they may be significant, are not compatible with the debate.

Senator Denis Landy referred to the equine industry. While we are global leaders in the equine industry, the greatest traffic in equine exports is between Ireland and the UK. This is one of the industries that is incredibly mobile. If we put serious impediments in its place after Brexit, the industry could up and leave overnight. The Senator knows this better than anybody, given that he comes from Tipperary, where the industry has a presence. We need to work through all the detail necessary to facilitate the ease of movement that has facilitated the industry to grow and prosper and provide 14,000 jobs. The industry is worth more than €1 billion and there is an ambition in Food Wise 2025 to grow the sector to more than €2 billion. This is challenged by Brexit.

Approximately 350,000 sheep come to the South from Northern Ireland for processing every year. Somebody referred to pigs going North of the Border for slaughter, and it is a daily occurrence. Some 55,000 cattle went North of the Border in 2015 for breeding or slaughter. It is an extraordinarily complex area. We need to work through, with our counterparts in Northern Ireland, arrangements around these issues and identify the best solutions to protect our respective interests. They are not very different interests, although they are different jurisdictions. We have had the benefit of an all-island approach on animal health. What will happen if the UK leaves the EU and begins to unpick veterinary certification standards? It would be an additional cost to business that we could do without. This bears up my assertion that there is no upside whatsoever. This is a case of managing a very challenging and difficult situation which will bring the level of ambition in Food Wise 2025 under scrutiny.

The critical question is whether, given that the value of our exports to the UK is €5.1 billion, we are excessively dependent on our nearest market. I accept Senator Boyhan's point that it is the most valuable market for us to be in. The obvious solution is to search for new market opportunities. They are identified in Food Wise 2025, which mentions emerging opportunities in south-east Asia. This is why I was recently on a trade mission to China, Singapore, Vietnam and South Korea, along with the Minister of State, Deputy Andrew Doyle. This area is identified given that is has an emerging middle class with greater purchasing power. In a very short space of time, while the UK is our premier market for dairy exports, our second biggest market for dairy exports is China, in particular due to the market foothold we have gained in infant formula. While the UK is our biggest export market for pork, our second biggest market is China. If we could clear the remaining hurdles on getting beef into China, in a short space of time it would become a very significant market. Senator Paul Daly and others raised the issue of the beef industry. It is an extremely challenging area.

As with all of the debate on Brexit, there is no silver bullet. There is no one issue. With apologies to Senator Pádraig Mac Lochlainn, there is a simplicity about the suggestion that a single Brexit Minister, which Fianna Fáil also raised, would solve all the issues. It is so enormously complex across all Departments that it oversimplifies the issue. The issue requires a whole of Government approach and not just saying it is the responsibility of Deputy Michael Creed, Deputy Mary Mitchell O'Connor or whoever. The issue has an impact in practically every Department. One would struggle to find a Department that will not be impacted by Brexit. Even in the UK, there are three wise men. David Davis, Boris Johnson and Liam Fox are leading their charge. Let us see how they progress it.

We are fortunate that we did a lot of pre-planning, as did many other reputable bodies, institutes and individuals. When, on 6 May, I was appointed Minister for Agriculture, Food and the Marine, the Secretary General gave me a substantial file and the two biggest parts of it were the climate change agenda and Brexit. Although we had hoped that by 24 June it would be in the shredder, it has moved to centre stage and informs every single thing we are doing. We have a dedicated Brexit unit in the Department. I take the point about my Department colleague, Mr. Paul Savage, who does tremendous work in the area and is involved in the dedicated Brexit unit, as are many others. It is a very hard-working unit and is scoping out all these issues. After my first meeting with the Northern Ireland Minister for Agriculture, Environment and Rural Affairs, Michelle McIlveen, MLA, we decided senior officials, North and South, should begin the detailed parsing and analysing of the issues and it has been ongoing since summer.

We established a stakeholders forum, given that we are not all-knowing. It is important that my Department and officials, and the agencies that operate under my Department, hear at first hand what the issues are. The immediate manifestation has been sterling fluctuations. I cannot fix the market or control currency fluctuations. Neither can I determine the price of beef or milk, and anyone who says he or she can do so is being deliberately misleading. What we can do is ensure we are as well informed as we can be as we attempt to navigate a route to bring the industry through this extraordinary challenge in the best shape possible. Some of the response is finding new markets. Some of it is encouraging our agrifood sector to move up the value chain and insulate itself against the worst excesses of the market in order that it is moving in an area where prices are premium for the product we are producing. Fortunately, we have this collaboration between the State agencies, research and development, and the big food companies. While we were travelling this road before the Brexit decision, it is important we accelerate it.

One of the things I asked the agencies under my Department, including Bord Iascaigh Mhara, Enterprise Ireland and Bord Bia, to do very early on was to make direct contact with their individual client companies and tailor-make specific interventions that would assist them to come through. They have been engaged in workshops on currency fluctuation management, hedging options, strengthening engagement and deepening their understanding of the UK markets they are working in. Last week, I was in the UK meeting the CEO of one of the major multiples and saying that while we are in a difficult space, we are not surrendering the hard-won yards the Irish agrifood sector has made over several decades in terms of supermarket shelf space. We can and will rise to the challenge. We are working through it.

One of the initiatives that will help the industry come through is access to affordable finance. We had this initiative in the budget and Senator Kieran O'Donnell raised the question of how it will work. It has been leveraged by €11 million we got in the July compensation package. There was a €350 million package. Our share of it nationally was €11 million. We put €14 million with it and leveraged €150 million. We used the €25 million we put into it to subsidise the interest rate and put in a guarantee against first losses on the loan. It is a loan fund of a maximum €150 million at an interest rate of 2.95% and a six year term. The Strategic Banking Corporation of Ireland, SBCI, which is administering the fund, will soon make a call for partners to deliver the loan at a local level. I have spoken to the CEOs of the pillar banks, AIB and Bank of Ireland, and Ulster Bank. They are all enthusiastic about participating in delivering the fund at that interest rate to their clients. It is not an encouragement to farmers to borrow their way out of the difficulties but to say that if farmers have credit at a more expensive rate, particularly merchant credit or overdrafts at a high interest rate, this is an opportunity.It is working capital and has minimum red tape around it. It is a groundbreaking financial product. In many respects, and Senators have raised this issue regarding the agrifood industry generally, there is now a template for how to access low cost finance for other sectors. The agrifood industry will need that. A Central Bank report in April 2016 provided a league table which showed, unfortunately, that we are at the wrong end of the table in terms of interest rates paid relative to those paid by our eurozone counterparts. My recollection is that Austria had the lowest rates and we were at the wrong end at an average of 5.7%. Senators will appreciate that with a rate of 2.95% this is a significant product we can use.

There were many references to the mushroom sector. This sector has been in the firing line. My colleague, the Minister of State, Deputy Andrew Doyle, has met with representatives of the horticulture industry and some of the major players in that industry. It is a very difficult environment. Under the low interest loan fund, and under de minimisrules which is a way of overcoming the state aid regulation, we are making some of that access to funding at low interest rates available to the mushroom industry. In addition, in the budget we increased the capital grant scheme for the horticulture sector to €5 million. Recently, we paid in excess of €1 million - I do not recall the exact figure but it is probably approximately €1.5 million - to one of the major producer organisations for the mushroom sector. It is a transnational producer organisation.

The point was made that this is not an sector where alternative markets are an option because of the short shelf life. It is the most convenient market for us. It is the closest one and the cheapest to access. However, one of our main challengers for market shelf space are the Poles. They have many advantages, including that their minimum wage rates and ours are significantly different, but if they can bring their product that distance to the market it suggests that we should possibly explore alternative markets as well. Obviously, markets in the eurozone would bring advantages. We cannot afford to say "No" to any area. The UK is undoubtedly the market with which we are most comfortable and it has served the industry and its expansion well. This is one of the areas most exposed to the challenges and through a series of initiatives, such as the low interest loans, capital grant scheme and support of the producer organisations, we are trying to work with the organisations to see what we can do. We remain open to further dialogue and suggestions regarding an area that is particularly difficult and exposed, given that it is a high volume and very low margin industry. The movement of sterling versus the euro, year on year from September to September, is over 20%. That tells its own tale in respect of a low margin business.

With regard to fisheries, the Common Fisheries Policy is an extraordinarily complicated tapestry that has been woven over several years of December Council negotiations. When one unpicks one strand of that, which is the UK when it decides to leave, the tapestry begins to unravel. This will be an enormous challenge. We are a shareholder in over 30 of the 40 species of fish for which the UK holds a quota. Imagine it simply in geographical terms. Consider the UK and its coastal waters and if, for example, one of the terms of its Brexit negotiations, and this is a big "if", is that the UK takes access to those territorial waters exclusively. That means all of the fishing endeavour that takes place across the European Union, where there are shared rights to fish, will spill into a smaller space because the UK will control exclusive access to its area.

In terms of a finite resource of fish stocks, that will bring enormous challenges for the industry. The annual total allowable catch, or quota, is based on science and the fishing effort is retrofitted into the science. That is an uncomfortable exercise every year for the industry. Unfortunately, fish do not recognise any borders drawn on maps and obviously individual states, particularly if they are outside the European Union, will have an entitlement to regulate their own coastal waters, so fishing efforts will be restricted to those who fly the UK flag. Interestingly, however, much of the UK fishing effort has been privatised and now flies foreign flags. One of the hallmarks of the industry in this country is that we have retained quotas in public ownership and they are allocated to the industry almost on a monthly basis, by agreement and in consultation with the industry, after the October or December Council as they may apply to the species of fish. Brexit is going to be extraordinarily complicated because the UK will then move into an area in which we will still negotiate with the UK but where it will have exclusive access to its own waters. That is a challenge.

I hope I have dealt with most of the issues. Senator Mulherin raised the issue of climate change, which is relevant in the context of the greater food industry, and mentioned comments by the former Irish President, Mary Robinson, on veganism and vegetarianism. The ambition we have for the agrifood industry in very much grounded in sustainability, but it is sustainable intensification of our agriculture. We have a very good story to tell in terms of our sustainability credentials. We are, bar none, the most carbon efficient producer of milk on the planet. In the European Union, we are the fifth most carbon efficient producer of beef and, by virtue of incentives such as the green low-carbon agri-environment scheme, GLAS, and the beef data and genomics programme, we are driving down our carbon footprint each year. Those incentives are informed by meeting the challenges of climate change. The investment we make each year in the forestry sector is very significant, with over €3 billion spent by the State on forestry between 1990 and 2015. We will continue that in the budget this year, which provides over €110 million for the forestry sector. That is reducing our carbon footprint.

Yes, we have more to do and the sector will not shy away from that. However, it is subject to some unfair criticism from commentators because it contributes a high proportion of the State's greenhouse gas emissions. That happens because, as a nation, we never had the historical legacy of heavy industry. Although the sector is a significant contributor to domestic carbon emissions, it is nonetheless a very carbon efficient producer of food. It would be at least ironic and ultimately counterproductive to dismantle a food producing sector that is carbon efficient, while stating that we have obligations to produce food to feed a growing world population, and consequently import food at the cost of very substantial air miles or nautical miles. For example, ships steaming with beef from South America would have a far higher carbon footprint. There must be joined-up thinking. We believe that sustainable intensification which is geared towards meeting a global demand for food is the way to proceed. Certainly, my Department is up for the challenge of meeting the twin objectives of reducing our carbon footprint and increasing our food output.

I believe I have dealt with most of the matters raised.