Andrew Doyle (Wicklow, Fine Gael) | Oireachtas source

I apologise; my voice is a little bit groggy and I hope I manage to stay audible for my opening statement.

I welcome the opportunity to make a statement to Seanad Éireann on the organic sector, for which I have special responsibility within the Department of Agriculture, Food and the Marine. For the information of the Members of the House, I propose to give an overview of the organic sector in Ireland, the supports that are available, the market situation and the challenges and potential opportunities that exist. I look forward to the contribution of Members on this important matter. I will put the sector into context. While the organic sector in Ireland is still relatively small in regard to agriculture as a whole, it is experiencing considerable growth. There are currently 2,127 organic operators in Ireland, of whom over 1,700 are farmers. The area of land under organic production has expanded dramatically under the current rural development programme, thanks to a suite of supports that have been put in place.

The latest figures indicate that there are now 72,000 ha under organic production, an increase of nearly 50% since the start of the programme in 2014. The growth of the sector has been specifically fostered through the new organic farming scheme, in particular, which was introduced as part of the rural development programme, along with dedicated capital investment schemes and better synergies with other schemes such as GLAS.

The new organic farming scheme was launched in April 2015, with a budget of €56 million over the lifetime of the rural development programme. It has been very successful since its launch, attracting 942 applications in its first tranche and 322 in the second. To put this in context, the highest number of applications received previously was 380 in 2010. I also want to draw attention to the fact that over 500 of the organic focus scheme applications received in 2015 were from farmers converting to organic farming for the first time. The upsurge in interest represents the first real expansion of the production sector for many years and is very encouraging.

By way of comparison, the highest number of new entrants to organic farming heretofore was 158 in 2009. The new scheme has three times that number. When combined with organic farmers participating in the old or existing organic farming schemes, this means that we now have 1,740 organic farmers in the system. This is a major step forward by any standards. The new scheme is a major success and we have already met our targets for the entire RDP period. One of these targets was to convert some 16,000 ha of new land to organic production. Following the first two tranches of the scheme, we now have 26,000 ha in conversion, a 60% increase on the original target.

We have not forgotten those farmers operating under the old organic farming scheme. Following extensive negotiations, the Commission agreed to extend the benefits of the higher OFS payments under the new scheme to the old scheme participants. Furthermore, the Commission has agreed that we can extend the contracts of people operating under the old scheme so that all participants can now be confident of a secure system of supports right up to the end of RDP period. We have effectively managed to synchronise all our various contracts of support for the next five years.

For the first time, this allows us to plan ahead with confidence in terms of supplying and developing an organic food market. In planning ahead for the current RDP period, we were very conscious that organic farmers have very special requirements in terms of on-farm equipment and facilities. Under TAMS II, therefore, a dedicated capital investment scheme has been put in place for the sole benefit of organic farmers, providing support for the widest range of equipment and structures of any TAMS scheme. Such investments are eligible for 40% grant assistance, with 60% grant assistance for qualifying young farmers.

We have also put in place a ring-fenced and very flexible investment scheme for organic processors. The scheme is wholly State funded and offered grant aid to €500,000 for individual projects. The scheme recognises the importance of innovation and keeping abreast of technological developments. It directs financial assistance towards projects which facilitate the adoption and application of new technologies. While the financial supports are essential, other support mechanisms are also critical to future development. The importance of providing education and training for those considering organic options and existing organic farmers cannot be underestimated. Since 2010, the inclusion of an organic training course as an essential prerequisite to joining the organic farming scheme has provided farmers with a good understanding of the regulatory requirements but, above all, enabled farmers to make informed decisions regarding their organic options.

One of the most successful initiatives in raising awareness of the organic sector for other farmers and the general public has been the demonstration farm programme. It is run by Teagasc and funded by my Department, and continues to go from strength to strength. For young farmers, and even successful established producers, there is plenty to learn and new ideas to help improve various enterprises. I would like to commend Teagasc, especially the organic advisory staff and the participating farmers, on the time and effort they put in to making the programme a success. The Organic Growers of Ireland internship programme has also been a successful initiative which has provided practical guidance and training for young farmers who are considering organic horticulture.

From an organic farming perspective, the market situation, challenges and opportunities are largely dictated by the demographics of our organic farming sector. The majority of organic farmers are engaged in beef and-or sheep production, with relatively low numbers engaged in tillage and dairy. Increased participation in the organic farming scheme means that when these operators have completed their conversion period, there will be an increased volume of organic beef and sheep available for sale. Research shows that market opportunities exist for Irish organic beef. The market for organic lamb is, however, more challenging. The most important challenge for us now is to ensure that we develop the market for organic product in tandem with the growth in production. This will be the keystone of long-term sustainable growth.

Mindful of these challenges, my Department is working closely with Bord Bia - its officials are meeting me today - to develop organic markets for our organic produce, especially sheep meat. Bord Bia undertook a detailed analysis of the organic sheep meat sector in 2016 to gauge quantities of organic product coming to the market in 2017, with a view to identifying markets for this produce. This work will continue. I would like to acknowledge the work Bord Bia continues to do to raise the profile of organic food among consumers at home and abroad.

Ireland has developed a strong reputation internationally for its organic farmed salmon, and is the biggest producer of organic farmed salmon in the European Union. Demand for Irish organic salmon has grown by 11% since 2012, with the estimated value of the export market in 2015 reaching €64 million. There is clear potential for growth in this sector.

While there are undoubtedly real challenges in terms of developing markets, there are also promising and encouraging signs for the future. Bord Bia has indicated that there has been a rise of 23% year-on-year in the sales of organic food in major multiple outlets, increasing the market share to €142 million. This is a very positive reflection on organic farming in Ireland and mirrors a growing trend right across Europe. Demand for organic food products has continued to rise over recent years, with the global market for organic agricultural products up by 355% from 2000 to 2015, climbing from €16.8 billion to €76.7 billion, according to a report presented at the BIOFACH world organic trade fair in Nuremberg last week.

We need to focus on how we can further grow our share of that market, by exploring opportunities such as increasing our overseas presence. Ireland has maintained a strong presence at the BIOFACH trade fair for several years now and this has been proven to generate new export opportunities for the Irish producers involved.Back at home, research suggests that over 90% of Irish shoppers now buy organic at least once a week, which is clear evidence of the growing public awareness of the organic brand. We have an opportunity to capitalise on this. This includes replacing imported organic products with Irish goods wherever possible.

I cannot conclude without mentioning Brexit. Brexit is a recognised challenge for the Irish organic sector. In the first place, the UK is a very important market for our organic produce. However, currently both countries are producing organic food to harmonised  EU regulatory standards. Any deviation from these harmonised standards could lead to a disruption in trade in the short term with potential increased bureaucracy and costs to exporters. This is an area we will continue to monitor closely as the process for negotiating Brexit begins.

I have concentrated on informing Members of the House about the current state of the organic sector in Ireland referring both to its challenges and opportunities. While challenges do exist, opportunities are available to those who have the vision to tap into a sector which is seeing unprecedented growth. Going forward, I would like to see existing markets consolidated. The evidence suggests that there is further potential in the sector but in order to grow sustainably, it must be market driven. As Minister of State with responsibility for the organic sector, I am committed to the sustainable development of the organic sector and I hope that Members, as public representatives, will assist me in this objective through the encouragement of those considering the organic option, the maintenance of existing organic producers and the development of the sector generally.

Bord na gCon is the statutory body which is responsible for the following: the control, promotion and operation of greyhound racing; the overall control of coursing; the promotion of greyhound exports; the operation of totalisator betting; the regulation of public sales of greyhounds; the making of grants for prize money; the allocation of grants to improve amenities at tracks; the licensing of greyhound tracks and their officials; the authorisation of bookmakers to conduct business at tracks; and the collection of levies on course bets. In that context, it runs commercial operations in a number or greyhound stadia. In total, there are 17 greyhound tracks licensed by Bord na gCon, with Bord na gCon currently owning Shelbourne Park, Harold's Cross, Cork, Tralee, Waterford, Youghal, Limerick and Galway. It also has a 51% share in the Mullingar track.

In an economic report by Jim Power in 2010, it was estimated that the greyhound racing industry is responsible for sustaining in excess of 10,000 full and part-time jobs directly and indirectly, many of them in rural communities, and that it injects an estimated €500 million into local economies. The greyhound breeding industry is also very export oriented with over 75% of greyhounds now running in the UK being Irish bred. Greyhound racing attracts thousands of tourists to Ireland from many countries, particularly France, Germany and the UK, and it works closely with Tourism Ireland, Fáilte Ireland and the various tour operators. Ireland is regarded as a world-class player in greyhound breeding and there is considerable potential for further development in this area. The Irish Greyhound Derby, which is run in Shelbourne Park, is one of the richest greyhound races in the world.

The 2015 audited accounts of Bord na gCon have being submitted to my Department and were submitted to Government yesterday for noting. The accounts show some positive metrics for Bord na gCon but it remains the case that the financial position of the board is extremely challenging and would be considerably worse without the additional subvention from the horse and greyhound fund in 2015. This was an additional €2.8 million - up to €13.6 million. In overall terms, the turnover from racing activities increased by 12.5% from €25.02 million in 2014, to €28.16 million in 2015 due mainly to the introduction of its new food and beverage business. While on-course wagering experienced a decline, which was also a feature of horse racing, the impact on tote turnover has been reduced through the introduction of numerous international co-mingling customers and the growth of online wagering on the tote following the introduction of the Barking Buzz app.

Having said all this, Bord na gCon has been operating in a very difficult financial environment for a number of years, in particular since 2011 when it took on considerable debt as a result of the development of the Limerick stadium. In 2014, against the background of reducing income for the organisation through the recession and the significant debt burden, my Department commissioned an independent report into certain matters relating to Bord na gCon, including its financial performance and prospects. That report, known as the Indecon report, provided a roadmap for the sustainable development of the greyhound sector and in that context, recommended a number of asset disposals, including Harold's Cross, in order to reduce the debt burden. The first asset disposed of was the former Bord na gCon headquarters in Henry Street in 2015 for approximately €700,000 with the proceeds being offset against Bord na gCon's debt.

Bord na gCon is continuing to work very closely with its banking partners to manage issues arising from legacy debt of €12.5 million relating to the Limerick stadium, which continues to hang over the industry and inhibit its development. The board also operates a term loan facility of €6 million which is subject to fixed annual repayments. The balance of this facility was reduced to €3.9 million as of 31 December 2016. In addition, the board has an approved overdraft facility of €6.25 million. Currently, net group debt stands at €20.3 million down from €21.6 million in 2015 so the debt is moving in the right direction but at a slow rate.

One of the key risks to the future of the industry is the scale of the debt that still remains. I understand that having considered the matter and having regard to the recommendations in the Indecon report, Bord na gCon has decided to cease racing at Harold's Cross with a view to putting the stadium on the market in order to reduce its debt levels and increase its capacity to provide support and assistance to the industry. While this is very regrettable, its view is that there is no other option if the burden of debt on the organisation is to be reduced in any meaningful way. I understand that its intention is to transfer the Harold's Cross racing schedule to Shelbourne Park and that all 12 staff at Harold's Cross will be offered redeployment.

It should be noted that any sale of Harold's Cross will require the consent of the Minister for Agriculture, Food and the Marine and the Minister for Public Expenditure and Reform. Ministers will consider any specific proposal for its sale, having regard to the Indecon recommendations, the value obtainable, the need to avoid any further burden on the taxpayer and the need to reduce the significant burden of debt so that resources can be better deployed towards the development of the sector rather than the servicing of the debt.

There has already been significant Government commitment to this sector in recent years with the contribution of the taxpayer through the horse and greyhound fund having increased from €10.8 million in 2014 to €16 million in 2017. The Government remains committed to continuing to support this vitally important sector. However, it is clear that if it is to have a sustainable future, the burden of debt on Bord na gCon must be reduced. In this regard, the board has its own responsibilities to discharge which involves some very difficult decisions. It cannot be the case that the entire burden of resolving the sector's difficulties always falls on the taxpayer. This may involve some very difficult decisions.

I intend to bring the heads of a greyhound industry Bill to Cabinet next week followed shortly afterwards by pre-legislative scrutiny by the Joint Committee on Agriculture, Food and the Marine.The Bill seeks to address in general terms issues relating to the governance and regulation of the greyhound racing sector. The heads reflect recommendations for legislative change made in the Indecon report, commissioned by the Minister for Agriculture, Food and the Marine in 2014, in the greyhound report of the Joint Committee on Agriculture, Food and the Marine published in 2015, and in the Morris review of anti-doping and medication in Ireland, commissioned by Bord na nGon and published in 2016. They address governance issues in Bord na gCon, provide a robust legal basis for strengthened regulatory controls in the industry, modernise sanctions, improve integrity and include the welfare of greyhounds as one of the statutory functions of Bord na gCon. In addition, it provides Bord na gCon with powers to make regulations in regard to substances that may be used or given to a greyhound, prohibiting the use of certain substances and setting thresholds in relation to others.

I very much look forward to engaging with colleagues in a positive and constructive way on the development of this Bill. It is clear that the development of the sector depends entirely on its reputation, and a robust and modern legislative framework is a critical part of that dynamic.