Damien English (Meath West, Fine Gael) | Oireachtas source

I thank the Senator for raising this issue. We have had to have an important conversation on import substitution and food security. In recent years our supply chains were tested by Brexit, then Covid and now the terrible events and atrocities in Ukraine. There is an urgency around looking at food security issues, and import substitution is something that is close to my heart and which we have discussed in this House before. Covid and Brexit have taught us that we need to look at that again and seek out any opportunity we can to produce at home on our shores. That in turn creates jobs and gives us added security and opportunities. I would be happy to explore these options with the Senator.

The events of the last two weeks in Ukraine have brought about a different conversation and they have brought much more urgency to that issue. The Government is monitoring the impacts of this crisis closely. We have been working closely with our EU partners and fellow member states on the adoption of sanctions in response to Russia’s violation of Ukraine’s territorial integrity. Ireland is fully committed to the comprehensive implementation of the four EU sanctions packages adopted to date, which will have an impact on our economy and industries. We have to plot a course through that to assist businesses and domestic customers through those difficult times.

While the effects of the series of sanctions being implemented may not be directly significant for Ireland, the Irish economy remains exposed to the indirect spillover effects resulting from the sanctions and the general geopolitical instability. We can see the price increases in many sectors already. Sanctions will not be cost-free for Ireland or for other EU member states, as evidenced now by the sharp increase in flour prices and in the price of other commodities but we were left with little choice due to Russia’s behaviour. We all agree that this is important but we also have to find ways to manage this for our economy. Russia and Ukraine account for one third of global grain production, while the EU imports more than two fifths of its gas demand from Russia. It goes without saying that Russia’s systemic role in energy supply will have significant impacts on prices because some the costs of flour production are down to both the price of grain and the price of energy.The implications for inflation and production costs are also significant because of those energy costs. Unfortunately, pass-through price effects are expected in other sectors apart from flour production, such as fertilisers, fuel and transport costs. The knock-on effect will be quite serious. I am aware that representations have been made by the bakery sector on the implications of flour and gas costs on the price of bread and other products. My Department is working with our enterprise agencies and other Departments, including the establishment by the Taoiseach of a new group at Secretary General level, to update, advise and co-ordinate all aspects of our response to the conflict, to assess the full impacts of the sanctions and to develop mitigations and contingency plans to support enterprise and traders.

Unfortunately, there will be no easy solutions to addressing the indirect consequences of imposing these sanctions on Russia and Belarus. The question of implementing measures on a sectoral basis would require careful consideration and should be balanced by consideration of other potential mechanisms in addressing the impact on the most vulnerable consumers and sectors. On flour production and flour milling in general, we need to look into the feasibility of doing further processing in Ireland. It is something we should look at, exactly as the Senator said. Since Brexit, the rules of origin impact on flour have resulted in unintended consequences because we import most of our flour from the UK, and through Canada, although recently imports from Northern Ireland have surged, thus avoiding potential tariffs and cross-border delays. I agree with the Senator that it is probably opportune to look specifically at the issue of supporting companies and the feasibility of doing further processing and flour milling in Ireland to secure our supply of this vital ingredient.

I certainly have an interest in organising that meeting with Enterprise Ireland and will join it I can. If there are guys like Andrew Kavanagh and Raymond Kavanagh, who are seeking support to make this happen and already have planning permission, I would be very interested in seeing how we can progress that for them and for others. While the Government will intervene in different ways to deal with the current pressure right now, the Deputy is suggesting it deals with the long-term solution, which is something we should certainly be looking at. I am happy to work with the Senator on it. I will talk to our guys in Enterprise Ireland to see if we can organise a meeting to make that happen.