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

I thank the Acting Chairman and the Members for the opportunity to update the House on current matters relating to agriculture, food and the marine. I begin by emphasising the Government’s commitment to the agrifood and fisheries sectors which play a strategically important role in the wider economy. I fully acknowledge that 2018 has been a challenging year for the agrifood sector in the context of unforeseen weather events and a fodder challenge in the context of broader economic challenges.

The agrifood industry employs 174,400 people, including those involved in primary production and processing and in the food and beverages sector. With roots in every town and village throughout the country, the industry is vitally important to the rural economy. It also exerts significant global reach, exporting to 180 different countries around the world, with exports totalling €13.6 billion in 2017. A unique strength of our agrifood sector is our shared vision for the sustainable development of the sector, Food Wise 2025. The key themes of the Food Wise 2025 strategy of market development, competitiveness, innovation, human capital, and environmental sustainability are more important today than ever in the context of the major challenges we face as an industry.

Brexit is perhaps the most significant challenge to have ever faced the agrifood and fisheries sectors. The inherent uncertainty that comes with Brexit and the negotiation process, and the possible trade implications post the United Kingdom exit are challenging for the sector, to say the least. As the Members will be aware, Brexit poses enormous challenges for the agrifood and fisheries sectors, not least by virtue of their exposure to the United Kingdom market. The UK is Ireland’s largest export market for agrifood products, totalling in value terms €5.2 billion in 2017, while Ireland is the UK’s largest export market for its agrifood exports, totalling €4.1 billion in 2017 also. The potential impact on the seafood sector is substantial. Some 60% of mackerel, our largest fishery, is caught in UK waters, and 40% of the nephrops or prawns, our second largest fishery, are also caught in UK waters.

The most immediate impact of Brexit has been the difficulty caused by the significant drop in the value of sterling against the euro. Irish exporters with contracts agreed in sterling have already suffered a significant drop in the euro value of these contracts. Companies may also face additional costs along the supply chain arising from additional control and certification requirements, and in a worst case scenario, WTO tariffs may be charged on Irish exports to the United Kingdom.

We have been taking effective steps to mitigate the immediate impacts and to intensify market diversification efforts to reduce our exposure to the UK market. We have introduced measures to build competitiveness and resilience on and off farm, and we are working hard on market diversification and development. Brexit preparation is complicated by uncertainty surrounding the current negotiations and the future trading relationship between the EU and the UK. Nevertheless, my Department’s Brexit planning, guided by recent Government decisions, is well advanced. Officials have been working with other Departments and agencies to ensure that they are prepared to fulfil their legal obligations as efficiently as possible when the United Kingdom exits from the European Union.

Another element of our Brexit preparedness involves a more intensive focus on market diversification. Food Wise 2025 outlines the huge potential for growth in agrifood exports to new and emerging markets, especially in Asia and Africa. My Department will continue to seek out and identify new markets, and I am ready to respond to other opportunities that may arise.

In keeping with Food Wise 2025 priorities, I led a successful trade mission to the United States and Canada in February 2018, while in May I led a trade mission to China. I will lead a trade mission to Indonesia and Malaysia next week, while Minister of State, Deputy Doyle, will travel to China in November. These and other missions planned for 2019 will help to enhance and improve existing levels of market access in these destinations.

The subject of Brexit preparedness brings me to budget 2019 and the allocation for my Department. My objective in 2019 was to assist farmers, fishermen and food SMEs who are navigating the challenges of Brexit, supporting those in the most disadvantaged areas, while also maintaining a strong ambition for the development of the food industry.

The 2019 Estimates provide a gross Vote of €1.596 billion for my Department. In addition, I am seeking sanction from the Minister for Public Expenditure and Reform to carry over an additional €20 million in capital funding to bring the total provision for 2019 to €1,616 million. This is in addition to approximately €1.2 billion in direct European Union payments administered by the Department.

I have provided for a Brexit resilience package of €78 million for the agrifood sector for 2019 within this allocation. The measures announced include €44 million of direct aid for farmers, comprising an additional €23 million for farmers in areas of natural constraint, ANC, bringing the total allocation in this payment heading for 2019 up to €250 million, the introduction of a €20 million beef environmental efficiency pilot, BEEP, scheme, and an additional €1 million in funding for the horticulture sector. This brings to €6 million the total provision for a sector particularly challenged by Brexit.

I have also provided €27 million in Brexit related supports for the food industry, comprising €13 million in supports for food industry competitiveness and innovation, €3 million for artisan and micro food and beverage programmes through the LEADER programme and for Lean manufacturing initiatives designed to improve competitiveness, an additional €5 million allocation for Bord Bia, bringing the total grant-in-aid to €46.6 million, which is a 60% increase in funding for marketing and promotion of our food offering since 2014, and €6 million in funding also to progress an €8 million food innovation hub in Teagasc Moorepark, of which €2 million was provided in 2018. In terms of Brexit preparedness, I have provided €7 million for staff and IT costs arising from additional import control and export certification requirements as a result of Brexit.

In addition, my colleague, the Minister for Finance, Deputy Donohoe, announced progress on a key Government Brexit response, the future growth loan scheme, which will be rolled out in 2019 and for which I have provided €25 million in 2018. The scheme will provide long-term - in the region of eight to ten years - unsecured investment finance for farmers and small-scale companies in the food and seafood sectors.

The provision for the seafood programme has been increased by €6 million to a total of €133.8 million. This will help fund vital investment in Castletownbere and Killybegs fishery harbours.The Government's continued investment in and commitment to the rural economy is reflected in the rural development programme, RDP, 2019 allocation of €638 million.

The publication by the Minister for Finance of the "Progress Implementation Update of the Agri-taxation Review 2014" shows the excellent progress made over recent budgets with the implementation of almost all of the 25 recommendations, which has resulted in positive changes for Irish agriculture, especially in the areas of land mobility and succession. Budget 2019 built on this work by the following: lifting the restriction under income averaging permitting farmers with additional self-employed income, for themselves or their spouses, to participate for the first time; renewing important reliefs for the sector for a further three years; stamp duty exemption on transfers of land to young trained farmers; 25% general stock relief on income tax; 100% stock relief on income tax for certain young trained farmers; and, 50% stock relief on income tax for registered farm partnerships.

The increase in the earned income tax credit by €200 to €1,350 and increased supports for the self-employed were also very important. Most farmers, foresters, fishermen and small food processors are self-employed and will see their tax liability fall with the increase in the tax credit. The Minister for Finance's decision to maintain the value added tax, VAT, flat rate addition for unregistered farmers at 5.4% was also welcome.

The other very significant policy development on the horizon for the agrifood sector is the reform of the Common Agricultural Policy, CAP. Proposals for new regulations for CAP 2021-27 were published on 1 June last by Commissioner Hogan. The proposals, as drafted, involve significant changes, including in governance, the distribution of direct payments among farmers and the increasing environmental conditionality attaching to such payments. Risk management measures and measures to support young farmers and new entrants are mandatory under these proposals, and there will be a significant emphasis on education and technology adoption. At least 5% of rural development funds will be ring-fenced for the LEADER programme.

The Commission's objective is to have the proposals adopted by the co-legislators in spring 2019, prior to European Parliament elections in May that year. Preliminary discussions of the draft proposal took place at the informal Council Special Committee on Agriculture, SCA, in Sofia, Bulgaria and agriculture Ministers discussed the proposals in more detail at the recent Agri-fish Councils, most recently in Luxembourg on 15 October. In general, member states have expressed concerns about the level of the budget and the different nature and additional complexity for reasons stated.

I am pleased to see the continued commitment to direct payments in the new proposals. They are a crucial component of the family farm income and their value cannot be underestimated. Another key feature is the increased environmental conditionality of the CAP post 2020. A minimum of 40% of the CAP budget for each member state must be devoted to the environment and climate change.

I have always been clear that protecting the environment and maintaining our agrifood sector go hand in hand. It is not possible to have one without the other? I want to see a future CAP playing a major role in supporting the farm sector to contribute to climate change mitigation and improved water quality and biodiversity.

My officials and I are working constructively on the CAP proposals. My Department has engaged in a consultative process with all stakeholders involved. In February of this year, I launched my Department's public consultation process. As part of that process, I and Minister of State, Deputy Doyle, participated in six public meetings held to discuss the future of the CAP in various locations around the country. The public consultation was followed by a consultative conference with stakeholders in July. The outcome of the public consultation process and the stakeholder conference is feeding into the Department's analysis and consideration of Ireland's position on key issues in the proposals.

Of course, CAP proposals are intrinsically linked to the proposals for the overall EU budget, the multiannual financial framework, MFF. The MFF proposes a 5% cut to the overall CAP budget. While decisions on this are a matter for Heads of State and Ministers for finance, I have worked with my colleagues in the Agrifish Council to gain agreement on the need to protect the CAP budget. The retention of a sufficient budget for the CAP is an essential requirement for Ireland. This is even more important against the background of Brexit.

As I mentioned, increased environmental ambition will be a key element of CAP post 2020. This dovetails with the sustainability focus of Foodwise 2025 and the Department's national and international climate change ambition and obligations. This is one of the most challenging issues we face as a sector and, while Irish agriculture is comparatively carbon efficient, we cannot be complacent as there is more to be done.

At farm level, my Department and its agencies are actively involved with the farming sector, through initiatives such as the Origin Green farm sustainability and quality assurance schemes and knowledge transfer schemes. My Department is supporting a number of other schemes and measures under the rural development programme to help farmers improve their farm's environmental performance. Measures such as the green low carbon agri-environment scheme, GLAS, include specific elements to support climate change objectives whilst our organic farming scheme supports organic farming as an alternative farming system contributing to improving soil quality and mitigation and adaptation to climate change. Improving breeding and maintaining the carbon efficiency of livestock is also critically important. This is actively supported through our beef data and genomics programme, BDGP.

Building on the success of this programme I have just announced a new €20 million pilot scheme, the beef environmental efficiency pilot, which will be targeted at suckler farmers and specifically aimed at further improving the carbon efficiency of beef production by measuring the weaning efficiency of suckler cows. On the dairy side, the economic breeding index is identifying the most efficient animals for a grass-based production system. In terms of sequestration, or the capturing of carbon, our most significant intervention is the national afforestation programme. We are investing heavily in the afforestation scheme to encourage landowners to establish forests on their land. My Department is also investing heavily in research and I have recently announced an additional €5.4 million in research grant awards. This brings the total grants awarded for collaborative inter-institutional agrifood research under my Department's 2017 competitive research call to over €19 million.

This is a very brief overview of some of the key strategic challenges that we are dealing with as a sector. I am very happy to engage with colleagues on any specific areas of interest they may have and to answer any questions or provide clarification on individual issues.