Seanad debates

Thursday, 16 December 2010

5:00 pm

Photo of Paddy BurkePaddy Burke (Fine Gael)
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I welcome the Minister of State, Deputy Barry Andrews. The matter I wish to raise is very important. I have raised it with the Minister for Finance who has just left the House. He said he would look very favourably upon including some of my proposals in the finance Bill in January, if possible.

The Minister of State may not be aware that the Food Harvest 2020 report was published recently. It raises many interesting points that could be debated fruitfully in this House on another occasion. It considers piloting new products, new product streams, targeting new markets, resources for new markets, market research and the Brand Ireland concept. It also considers the smart economy, the smart research and development commitment and the commitment to partnership.

The co-operative movement, headed by the Irish Co-operative Organisation Society, ICOS, is seeking the Government's view on where it envisages infrastructure being put in place and funding being made available. It is curious about the markets that could be opened up to it. As the Minister of State knows quite well, the movement has served this country very well over the years. Some co-operatives have become plcs but many still remain. The way forward is to help the co-operatives on the ground such that they will lead the way in developing new products and markets if given the right assistance and if funding is targeted appropriately.

There are two aspects to this topic. The first is a proposal that would substantially help the Irish Dairy Board, the main purchaser of Irish dairy products. It manages a highly seasonal and volatile product. It is important its financial year match the season and the profile of the business. To comply with the law set down for co-operatives, the board's year end must fall between 1 September and 31 January. While this has not caused many problems up to now, the board would prefer to follow the agricultural cycle. It needs such a financial year end because its accounting year fell within the quiet part of the financial year. What it desires would allow it to have a smaller inventory and it would make stocktaking easier. It has many advantages and would be of no disadvantage to the Exchequer. I raised this matter with the Minister for Finance and believe he could include a provision in that respect in the finance Bill in January 2011. It would be of major benefit to the Irish Dairy Board.

With regard to research and development, the promotion and piloting of new products and the targeting of new markets, progress could be farther down the road but it is very important to know the Government's thinking thereon. The Irish Dairy Board could well set up a research and development facility. Funding could be put in place and the board could work with some universities, significantly benefiting the country and the development of new products.

6:00 pm

Photo of Barry AndrewsBarry Andrews (Minister of State with special responsibility for Children and Young People, Department of Health and Children; Minister of State, Department of Justice, Equality and Law Reform; Minister of State, Department of Education and Science; Dún Laoghaire, Fianna Fail)
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I thank the Senator for raising this important issue. The co-operative movement has made a huge contribution to economic and social development in Ireland over many years, not just in the agrifood sector but also in housing, rural services and community development. The combined turnover of Irish co-operatives is estimated to amount to some €12 billion annually and the sector is also a source of significant exports and employment.

Most co-operatives in Ireland, especially those that undertake economic or business activities, register as industrial and provident societies under the Industrial and Provident Societies Acts 1893 to 1978. The principal Act is the 1893 Act. These Acts have been the subject of periodic review since 1922 to address problems such as those relating to borrowing powers for agricultural co-operatives, the need for changes in share capital limits and the need for controls on deposit-taking activities. The system as a whole, however, has not been subject to any comprehensive overhaul since 1893.

In April 2009, the Department of Enterprise, Trade and Innovation published a consultation paper on the Acts. It made clear that the immediate focus of the consultation was to identify any practical difficulties in the Acts as they stand. Essentially, the purpose of the consultation and of the initial stage of the overall review was to identify and deal with practical problems being experienced by societies in respect of the current legislation. The responses to the questions posed in the consultation paper, received from some 30 interested parties, have demonstrated that a sufficient number of such problems exist to justify the promotion of amending legislation.

In addition to the responses received on the April 2009 consultation paper, representations were received from the Irish Dairy Board and the Irish Co-operative Organisation Society in July 2010 requesting a specific amendment to section 14 of the 1893 Act to provide greater freedom to societies to determine their financial year end. In response, the Minister indicated that he agreed that societies should have greater freedom to determine their financial year end than is provided for under the current legislation.

A general scheme of a Bill has been prepared in the Department of Enterprise, Trade and Innovation to provide, inter alia, for the following regulatory improvements for industrial and provident societies. It will ease certain financial reporting requirements, extend the company law mechanism of examinership to societies, abolish the statutory limit on individual shareholdings in societies, abolish triennial return of shares and loans and make it easier for cancelled societies to be restored to the register.

The industrial and provident societies and friendly societies (miscellaneous provisions) Bill is included in the Government legislation programme. The Minister hopes to be in a position to obtain the necessary approval of the Government for the general scheme of the Bill shortly. It will then be a matter of the Office of the Parliamentary Counsel drafting the Bill, followed by the presentation of the Bill to the Dáil and Seanad. While every effort will be made by the Minister and his officials to expedite the legislation, it is difficult to give a definite indication of when that will happen.

The agrifood industry, dairy in particular, has a vital role to play in the country's economic recovery. This is identified in the Government's national recovery plan and is based on the potential identified in the Food Harvest 2020 report launched by the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, earlier in the year. The report sets out the strategic vision and targets for the agrifood and fishing sectors. This vision is based on smart, green growth and will place the sector at the centre of the export-led economic recovery. The growth targets set are exports of food and beverages by one third to €12 billion annually, an increase in the value of primary production by our farmers and fishermen of €1.5 billion, and an increase in the value added in processing of €3 billion.

The dairy sector has a pivotal role to play in delivering this growth. The ending of milk quotas in 2015 represents an exceptional opportunity to increase our milk output, and Food Harvest 2020 has targeted a 50% increase in milk production in the next decade. This target is ambitious but is also realistic. However, this is not just about increasing milk production. It is critical that all stakeholders in the sector act in a coherent way to increase efficiency and reduce costs both at farm level and at processor level. Processors must adopt the most effective model to process the additional milk supplies, and new markets will have to be found. There must be an increased focus on research and innovative product development to add value.

The potential to increase farm level output and productivity will be realised through the increased take-up of projects such as the BETTER farm programme, the dairy efficiency programme, the one goal challenge, and the very successful animal breeding and disease reduction initiatives from the Irish Cattle Breeding Federation, ICBF, and Animal Health Ireland. At dairy farm level, the policy of the Department of Agriculture, Fisheries and Food has been to get the required volumes of milk quota into the hands of active producers, to encourage new entrants to the sector and to encourage all dairy farmers to produce with the maximum possible efficiency.

Hand in hand with this opportunity for increased production is the need for development at industry level. A coherent and structured approach from key industry players is required to achieve the necessary scale. This will build on the progress made under the dairy investment fund. The aim of this fund is to assist the modernisation and development of the dairy processing sector by supporting projects. In particular, it was targeted at the efficient production of core and value added products. A total of 19 capital investment projects were approved and awarded Government grant assistance of €114 million which will generate an estimated capital spend of €286 million. It has been recognised for some time that the dairy processing sector must improve its international competitiveness.

The Minister, Deputy Smith, chairs the high level implementation group whose function is to direct and take whatever action is needed to implement Food Harvest 2020 successfully. This group has agreed that actions are needed on production trends, product mix and processing capacity. The Minister also established a new dairy expansion activation group. This is being chaired by Dr. Seán Brady and is comprised of dairy farmers, processors and Teagasc. The group will shortly prepare a roadmap that outlines the specific actions to be undertaken and the key decisions that must be made. It will also identify obstacles to implementation and how these might be overcome. It is in all our interests to contribute constructively to this process and the Minister looks forward to significant progress being made in the coming months on the implementation of the recommendations in Food Harvest 2020.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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Will the Minister of State ask the Department if an amendment can be tabled to the Bill referred to and whether it can be included in the finance Bill in order that the Minister would look favourably on it?