Martin Heydon (Kildare South, Fine Gael) | Oireachtas source

I thank the Senator for raising the important issue of the viability of the sheep sector and its importance to our overall agricultural and rural economies, and our food production and exports.

I am pleased to see that the strong performance of the sheep sector in 2020 has continued into 2021 in terms of overall prices. It is good to see the market providing returns which goes some way to rewarding farmers for their hard work, commitment and dedication to producing a world-class product, as the Senator has outlined. Global production patterns and increased demand are expected to support this continued strong performance. The current average price is €6.54 per kg, which is 33% above the same period last year. This is impressive, given that the year-to-date figure for sheep slaughtering is only slightly behind that for the same period last year.

Bord Bia analysis suggests that retail demand for sheep meat increased over the last year, as consumers invested more time in preparing home-cooked meals. In addition, data from the Central Statistics Office shows that 2020 was a strong year for Ireland's overseas sheep meat trade, with 64,000 tonnes exported to 38 international markets at a value of nearly €356 million. This represents an increase of 12% in value terms on 2019. In 2020, 73% of sheep meat products in value terms were exported to the EU, 12% to the UK and 15% to other third-country markets. France remains the single most important export destination, accounting for a third of Irish sheep meat exports in 2020. The future prospects for Irish sheep meat exports remain positive.

As Minister of State with responsibility in the Department of Agriculture, Food and the Marine for new market development, I and my officials continue to work on seeking new outlets for sheep meat, as well as enhancing existing access to as many markets as possible. The sheep meat protocol with China was signed recently. There are a number of steps still to be taken in that regard, but it is another sign of progress in the work the Department is carrying out. We are well positioned to benefit from the opportunities presented by an expanding global demand for high-quality Irish lamb.

Notwithstanding the strong market prices, I am acutely aware of the need to provide support to sheep farmers who are the cornerstone of the sector. Provision for over €1.8 billion of funding was made in budget 2022 for the overall agriculture sector. This is in addition to almost €1.2 billion in EU-funded direct payments received annually to support farm incomes and reward good agricultural and environmental practices. This year's budget provision included funding to allow continuation of the sheep welfare scheme in the transition period until the new CAP. The scheme is an important support for sheep farmers, as it assists them to undertake important management practices such as scanning or mineral supplementation.

The Minister, Deputy McConalogue, has, subject to approval from the Department of Public Expenditure and Reform, updated the reference year for the scheme to 2017 from 2014-2015, as the Senator will know. That will allow for a greater number of ewes to be made eligible for the scheme.

When considering the overall scheme and the new CAP, we cannot look at each scheme in isolation. We must also look at all of the other measures in place. The new CAP will include the agri-environmental scheme, which will build on the green, low-carbon,agri-environment scheme, GLAS, but pay more. Those supports are important.

I can expand on the general points about the sheep welfare scheme in my supplementary reply but I wish to move to the Senator's point about wool, the production of which is an important component of the agricultural industry. Unfortunately, as the Senator outlined, I am aware that the wool industry has been under pressure for some time. I have met with merchants, farmers' representative organisations and directly with sheep farmers. Wool is a sustainable, organic, renewable and natural material that can be used in a wide range of products, such as textiles, fertilizers, insulation and packaging. It fits closely with the goals of the climate action plan to develop a circular and bio-economy.One of the actions in the programme for Government is to undertake a review of the potential demand in domestic and international markets for wool-based products such as insulation and fertilizers. We allocated €100,000 in the budget for this review. A public consultation process was initiated to determine the terms of reference. I can outline the terms of reference in my supplementary reply.