Paul Daly (Fianna Fail) | Oireachtas source

I welcome the Minister and I welcome the opportunity to discuss this important issue for beef farmers, the agriculture sector and rural Ireland. Like the Minister, I do not intend to revisit the beef sector agreement. It is well documented, and now is not the time for outside commentary on it from politicians or anybody else. The farm organisations must be given time to advocate what was agreed to their members. The ultimate test of its success or otherwise will be in the future when we see how the outcomes affect business in the sector.

While I accept that it was not possible for the Minister to discuss price during the talks, base price is the bottom line here. Much of the agreement is based on bonus. A percentage base figure will determine what the bonus will be, but as the base price goes lower, the bonus will become irrelevant and will not be a determining factor in the overall price to have the desired effect. I accept that it was not legally possible to discuss base price in the talks. Much of the time base price can dominate the conversation, but that overlooks the most important figure in any business model, which is profit, with farming being no different. Anybody who knows anything about business knows that profit is the margin between cost and sale price. In this scenario, due to the cheap food policy the CAP was introduced to secure, one must factor in subsidy.

We must think outside the box on this. With Brexit, the Mercosur agreement, climate action and the perfect storm that is building up around the beef industry, we should examine input and production costs and why there is such a difference between base price and production costs. That is where the Minister, the Department and Brussels can have a big role through the payments. The Minister and his Department will play a big part in the future of CAP, as they have done in the CAP negotiations to date.We have seen reductions in CAP payments through straight reductions and convergence. I hope the latter can play a big role, especially with the introduction of greater subsidiarity in the CAP in the future. I refer specifically to suckler farmers in my area, farther north and along the west coast. Their entitlements were based on payments they received prior to the reference years. With the ten-month or 20-month element and the slaughter premium, they probably built up above-average per-hectare payments. Now, however, these payments are being reduced through convergence, which is another blow to a sector in difficulty, and are being redistributed to people in other sectors who probably, by virtue of their geographical location or farming type, have far greater farm holdings, far more hectares of land. It is a double whammy for the beef farmers that their proposed new CAP will be, from what we hear, reduced by 5% but that they may also lose some of their entitlement value through convergence. This is one thing the Minister can address when it comes to their input costs.

Another area about which we are hearing a lot from the farmers, and it is a key topic of debate at present, is the TB eradication programme. There is an exorbitant burden on the Irish farmer in comparison with the burden on our neighbours in Northern Ireland, England, Wales and Scotland when it comes to what it costs a farmer to try to eradicate TB. Here again, as they say, in any business model if one knows the price one can gain for one's commodity and is not happy with one's margin, one will then look at one's input cost. This is where the Minister, his Department and his officials have a role to play. While it may be illegal, according to Competition and Consumer Protection Commission rules, to discuss the price paid for a product, it is certainly not beyond the bounds of possibility for us to be able to discuss this and try to meet the farmers in reducing their input costs, which I believe will ultimately improve the margin. That is ultimately what it is all about.

A number of measures have been introduced to help farmers, or which were supposed to help but which did not have the desired effect. The Minister mentioned BEAM, the €50 million from Europe, which was matched by Exchequer funding here of €50 million. He quoted the application numbers. We now have a spend of €78 million out of that €100 million. I would like to know today where the €22 million that has not been applied for will go. It was probably obvious from day one, once the conditions of the scheme were set, that there would be a shortfall in applicants. I refer to the conditions attached to the scheme, which was a compensatory scheme for losses incurred. The Minister will probably respond to me by saying the conditions were put on us by Europe as a caveat when giving us the money. However, let us consider the 5% reduction in nitrogen output, which is in essence a 5% reduction in stock. As the average suckler farmer in Ireland has fewer than 20 cows, I will take a 20-cow farmer as an example, for whom this basically would mean a reduction by one cow. The farmer can apply with his 20 suckler cows, at €40 per cow, and he will get €800. To achieve that one-off payment of €800, however, he must potentially sacrifice one cow, which could, depending on breed and quality, produce a weanling for him that would realise €800 per annum. When the farmer sits down to think about this, it is nonsensical to him. Why would he take €800 in 2019 and give up the continuation of a potential €800 per annum? This was a condition too far, and the contradiction and irony therein is that that reduction in Irish suckler herd beef will be replaced through Mercosur on the shelves of other European countries with 100,000 tonnes of beef from South America, where they cutting down rain forests at the rate of one Croke Park every minute. The irony in this is unreal if the condition that was put into the BEAM scheme is supposedly for climate action reasons. The Minister will probably respond by saying the horse has bolted, the scheme has closed and he cannot start changing conditions now. However, he needs to tell us where the €22 million is going and how it can be distributed. If there had been an oversubscription, the payment rate would have been reduced. By equal and opposite terms, does this mean, since the scheme is undersubscribed, that the initial base payment of €100 at €40 can be increased pro rata? I believe the Commissioner is on record as saying that with Brexit coming down the line and the possibility of us looking for future market disturbance measures, if we are seen not to spend the first one we achieved in its entirety, it certainly will not enhance our future chances.

I wish to address a number of other measures the Minister mentioned in his address. Where there is competition, there will be a price. He rightly said that the main driver of competition within the beef sector in Ireland will be the maintenance of live exports. We have not taken enough action, based on the experiences of the year gone by, to increase our lairage facilities in Cherbourg, which will be vitally important. If we do not get the dairy calf off the island, we will continue the glut of beef and therefore compress prices in the beef market.

To address the following issue, we should think outside the box. With Brexit coming down the line, and irrespective of whether tariffs are introduced, we do not know what way sterling will be treated by the world markets, and the value of sterling will affect the price we gain for our beef. We need to look at alternatives. When one talks to the beef farmers, I think they genuinely realise there is an issue and that their business is in crisis. They are open-minded to alternative and complementary incomes. Microgeneration is one that is staring us all in the face. It would kill two birds with the one stone. It would contribute to our climate action targets. The Minister needs to have a path worn into the office of the Minister, Deputy Bruton, to prioritise the necessary changes to the grid and the metering in order that farmers can put solar panels on their sheds and complement - I will not say "supplement" - their income or, at worse, reduce their energy costs. This, as I said, would kill two birds with the one stone. It would contribute to our renewable energy production but also would help farmers in a thinking-outside-the-box fashion to increase their income when, quite possibly, beef prices will be further compressed due to Brexit.

I had a lot more to say, but the Acting Chairman is putting me under pressure to sit down.