Wednesday, 24 October 2018
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.
It is my very great pleasure to welcome to the House members of the Ulster Farmers Union who are in the Visitors Gallery, as guests of Senator Marshall. I met them in the context of our select committee on Brexit. It is very important that they are with us.
I invite Senator Paul Daly to address the House.
I thank the Minister for his statement and I too welcome the members of the Ulster Farmers Union who are here today. Fianna Fáil is committed to protecting and developing agriculture for the 140,000 farming families in Ireland. We believe in the family farm model as the main driver of the rural economy and custodian of the Irish countryside that places environmentally and socially sustainable farming at its heart.
The Minister's Government, however, has undermined that model over the past seven years by presiding over cuts to CAP payments, introducing a disproportionate penalties regime, delayed payments, highly bureaucratic schemes and repeated annual underspends by the Department of Agriculture, Food and the Marine. The underspend in 2017 was €102 million, and it was €106 million in 2016. We have had this debate before. The Minister will have the answers and will again deny such underspends but the figures do not lie. The take-up on the beef data genomics programme was 29% less than predicted, resulting in a 42% underspend. Uptake on the knowledge transfer scheme was also 29% less than predicted and underspend was 83%. The underspend on the targeted agricultural modernisation scheme, TAMS, is 84% but I agree with the Minister's counterargument that there are projects ongoing and because the money cannot be spent twice some of it will be spent next year. I cannot see, however, how he will reach full expenditure. The sheep welfare scheme is underspent by 81% and the hen harrier scheme, launched in 2017, has not yet made its first payment. It is not due until 2019. Payments worth 5% are being processed as we speak but on the figures I have received the first payments will not be made until 2019. The agrifood sector supports over 250,000 jobs in rural communities and is the largest indigenous industry in Ireland, with food and drink exports exceeding €13.5 billion in 2017. Fianna Fáil in government introduced the visionary Food Harvest 2020 strategy for the period from 2010 to 2020. Food Wise 2025 has been generally welcomed by industry but its ultimate litmus test will be if it delivers fair prices and profit levels for farmers on the ground. The sad and harsh reality of the farmers' plight at the moment is seen in their income figures. According to Teagasc, the average family farm income was at €31,374 in 2017, lagging substantially behind the average industrial wage, for which I have a figure of €37,000, although my Sinn Féin colleagues might dispute that. Moreover, some 35% of all farms earn a farm income of less than €10,000 and suckler farmers and sheep farmers continue to depend exclusively on direct payments for their livelihoods, with average incomes at €13,000 and €17,000, respectively.
With this in mind, I welcome the €20 million for the beef environmental efficiency scheme pilot, which is targeted towards the suckler herd. This payment, as the Minister will be the first to admit, is on the back of the Fianna Fáil Private Members' motion for a payment of €200 per suckler cow. If it was not for our negotiations on budget 2019, the programme for Government and the confidence and supply agreement, I doubt this payment would ever be made. While it is a small start, we will continue to strive to secure a payment of €200 per suckler cow for a sector that is on its knees and that will not survive if it does not receive the necessary intervention. I also welcome the €23 million in areas of natural constraint payments, another payment for which we have lobbied hard. I regret that the Minister did not include the farm management scheme in the budget to combat the income volatility that is so prevalent in the industry at present.
As the Minister is aware, Irish farmers are being crippled by low prices, market volatility, labour shortages, bad weather and a lack of competition in some sectors. I will admit the Minister cannot control the weather, which was a major player in the year gone by and has created major problems for many farmers. By virtue of the fact the weather has somewhat improved in the last couple of months, the winter seems to have been shortened and we managed to round up some additional fodder. I hope the Minister does not take his eye off the ball on this issue. The severity of the year gone by in regard to the fodder crisis will only be felt towards the back end of this year, when farmers have received their single farm payment and when suckler farmers in particular have sold their weanlings, and they then go to balance their books. It cost a lot of money for them to get to where they are today, and a lot of additional expense went on buying fodder at the back end of last year and putting out additional fertilisers this year to try to recoup the fodder that was lost last year. While it might look as if we are out of the woods now, I stress that the Minister should keep an eye on this and bear in mind that he may still need to introduce a hardship fund. As I said, the farmers will only realise how dire their position is when, at the end of this year, they go to balance their books. As someone who is out on the ground, I predict that when they do so, there will be a major shortfall because of the additional expenses they have had.
Combined with all of these stark realities, challenges remain on the international front, with EU trade talks with South American beef producer nations and a UK exit from the EU, as well as meeting our climate change responsibilities. I welcome the part of the Minister's statement that addressed climate change. I know, as we all do, that we need to address this issue. However, as somebody who is engrossed in agriculture, I feel the agriculture sector is getting a lot of bad press in this area when it has been to the fore in tackling climate change to date, and, in fact, was one of the first areas to address it. As a result of many of the schemes that were introduced, although it is not a very well known fact, between 1990 and 2016 greenhouse gas emissions from the agriculture sector reduced by 3.5% while production increased by 40%. At the same time, transport emissions increased by 139% and energy production emissions increased by 116%.
The agriculture sector has proven it can tackle this issue and it will. I hope the Minister will provide the leadership to bring us to the next step. Irrespective of what any commentator says, it is a proven fact that food production needs to increase by 50% before 2050 just to meet the demands of population growth. We need the food so it has to be produced. Ireland is a very carbon efficient producer country. I am fearful that we would diversify away from producing food with low carbon emissions and replace it with food imported from far less carbon efficient countries. That would not solve the global issue. It might tick all the boxes and make Ireland look like we have good figures but this is a global issue. The Minister needs to lead from the front and I hope he does so. While I am not being critical in any way, it has not been highlighted enough how efficient our agriculture is and how we have led on this issue to date. Nonetheless, I accept a lot more needs to be done and I am not shying from the issue or denying that we need to do more.
As the Minister mentioned, the major issue at present is the UK exit from the EU. It is a clear and present danger to the Irish agrifood sector, representing one of the biggest risks to farmers, exporters and jobs since the foundation of the State. Some 35% of all Irish food exports are to the UK, accounting for €4.5 billion in value in 2017. The Government recently confirmed the recruitment of 116 staff for single payment system and fisheries controls for 2019 in the event the UK becomes a third country with the EU. The Minister introduced a €25 million Brexit loan in budget 2018 but, unfortunately, it still has not come on stream. He is now saying it will be rolled out in January, which is a mere two months from the dreaded Brexit date.
I could say more but time is against me. I hope we will have other opportunities to debate this.
I extend a welcome to the board of the Ulster Farmers Union, which is the largest agricultural lobby organisation in Northern Ireland and is a formidable group of individuals.
Agriculture is arguably one of the most important industries on the island of Ireland, North and South. However, as my colleague has already mentioned, it has been plagued by uncertainty, volatility and risk management. It is the order of the day to manage things like weather, markets and political uncertainty in this industry. Decisions we take today will impact for the next five, ten or even 20 years. Agriculture, especially with Brexit, is at a critical juncture. If we get it wrong, generations to come will pay a heavy price and those generations will question the viability of agriculture as a credible career choice. If we get it right, we can still avoid a car crash.
No other industry is as heavily dependent on trade North and South, east and west. No other industry is as mutually dependent or as mutually beneficial with regard to trade as the agrifood industry. I am encouraged by the level of Brexit readiness the Government is presenting. It is developing local, national and international markets and preparing the industry for whatever may come in spring 2019. I am also encouraged by the additional financial support the Minister has detailed. The €20 million of capital funding in addition to the €1.2 billion of EU direct support is certainly welcome, and the support for areas of natural constraint, beef schemes and horticulture, and the €27 million for Brexit related support are all hugely important for the industry. Investment in IT, infrastructure and human resources is also welcome. However, it is important to mention that we need to be aware, as a supply-led and not demand-driven industry, we are not in a healthy position.
I share serious concerns with many Senators and Deputies in these Houses about the Brexit position. I was alarmed when I turned on the BBC news this morning to hear that concerns were expressed at Cabinet meetings in London this week.The UK National Audit Office declared this morning that a no-deal Brexit could mean queues at the Border. Coming from the National Audit Office, that fills me with horror. The office also described the Border situation as "less than optimal". With 11 out of 12 installations not up to scratch, that is a concern. The reality is that infrastructure will not be built in time and will not be in place by the end of March. The BBC news also carried a story from Northern Ireland that the Border development group only started working in July. That is alarming.
All academic studies that I have examined indicate that many industries have solutions to problems with the Border. Agriculture and agrifood is not one of those. I am concerned because ideology and ambition are tainting this discussion. Just as the North-South Border is critically important for the agrifood industry, so too is seamless and frictionless trade between Northern Ireland and Great Britain an imperative. No restriction or impediment to this trade can be accepted by the industry as it would affect us all. The House should remember that any mechanism that can be used to exclude trade or produce will be used by some to disadvantage Northern Ireland and Southern Ireland in markets and in some of their business practices.
Unfortunately, this industry is still heavily dependent on support payments. Furthermore, Europe's support for the industry should not be understated. It has delivered on animal welfare, environmental concerns and human issues. I urge the Minister to be cognisant of the importance of the agrifood industry on the island of Ireland, both North and South, of which I am sure he is very aware. The Government must depoliticise these discussions, because the politics are distracting from some of the pragmatic solutions. It must ensure that agriculture, North and South, east and west, is protected. If one loses, we will all lose. A bad Brexit serves no purpose for anyone. We need level heads and steady leadership to steer us through Brexit.
The UK and Ireland are joined at the hip in agriculture and agrifood. Separation, either between North and South or between east and west, is a price too high to pay. We must not deliver short-term gains at the cost of long-term damage to the industry, because it is a long-term industry. We must protect family farms, labour, jobs, trade and the rural fabric of Ireland, North and South. Agriculture is too important an industry to make a mistake at this point.
I welcome the Minister for Agriculture, Food and the Marine, Deputy Creed, to the House for this important debate on our very important agricultural sector. I also welcome the representatives from the Ulster Farmers Union. Living in Ballaghadereen, I am very aware of the importance of the North-South working relationship. We have a dairy ingredients plant and much of the milk used in that plant comes from the North. I am acutely aware of the challenges, not just regarding exports but also regarding imports. I am pleased to note that €26 million is being invested in expanding this facility with the support of Enterprise Ireland. Such expansion is a welcome sign of confidence in the industry.
The Minister will be very aware of major concerns in the beef sector, particularly the income difficulties faced by suckler farms which are highly reliant on direct payments. Market incomes on farms are less than zero, indicating that these farms do not necessarily make a profit from production. They are dependent on the single farm payment to sustain them. Obviously, this year's budget has been positive. The Minister alluded to the beef environmental efficiency pilot under which €40 per cow will be available. It is important that the scheme is rolled out as quickly as possible and funding is increased every year. It must not be only a pilot scheme.
In respect of the areas of natural constraints, ANC, scheme, Senator Paul Daly needs to consider the severe cuts to the funding allocated to the scheme in 2008 and 2009. It is a little disingenuous to question the level of funding provided for the scheme. Under budget 2018, an additional €25 million was allocated to the scheme and an additional €23 million has been allocated in budget 2019. That funding is exceptionally important. I live in an area which is highly dependent on this funding. It is extremely positive that we are now in a better economic position and the funding for the scheme is increasing.
With regard to the Senator's remarks on the sheep welfare scheme, I note that is a demand-led scheme. In County Roscommon we are very positive about the scheme because we are very dependent on sheep farming. There are approximately 123,000 ewes in the county and the scheme is worth about €1.2 million. It is important to be factual because it is a demand-led scheme. It is also important that many of the options and measures included in the scheme relate to what farmers are doing already. The purpose of the scheme is to support farmers in drawing down this funding in a manageable way.
The Minister alluded to the difficult year we have had, with various weather events, fodder shortages and broader economic issues, particularly Brexit, presenting major challenges. He also alluded to negotiations on the Common Agricultural Policy. Just yesterday, the head of Teagasc, Professor Gerry Boyle, stated that the need for off-farm income is a fact of life for most dry-stock farmers. That is a factual point. The new CAP must not negatively impact on those trying to run viable farms while also working off-farm to support their families. These farmers are the lifeblood of rural Ireland. Working part-time is essential in many parts of the country. Any commentary on off-farm employment being a negative consideration in active farmers' eligibility to draw down entitlements must be quashed. We cannot have circumstances in which we do not support farmers who work exceptionally hard both on-farm and off-farm.
Climate change and the challenges it presents were discussed, and action is certainly required in this area. I agree with Senator Daly on one point, namely, that the agricultural sector is comparatively carbon-efficient. That needs to be acknowledged because it is not always clearly acknowledged in the wider debate on the challenges around climate change.
With regard to allowing farmers to increase their knowledge, we have had some success with courses. However, as the Minister noted in previous discussions, it is necessary to improve farmers' knowledge of grassland management, nutrient management and their carbon footprint. This is not just about doing a course but about using that information and knowledge to improve efficiency and boost incomes. Nutrient management is proposed to be an integral component of the next Common Agricultural Policy and this must be handled carefully. Farmers need the full income from direct payments to spend on direct inputs. It is important that CAP is simple in its implementation. Farmers tell me they know nutrient management is very important. We know that every farmer in GLAS must have a nutrient management plan as part of the scheme, but we also know of the payment delays that have resulted from trying to deliver this. It is important we set realistic goals as to how we achieve measures.
I also wish to mention briefly the beef data and genomics programme. It is important for the climate change initiatives as well as in trying to create better efficiency within herds. While there was much concern about the programme, it has proved in many cases to result in a profit for many farms. Additional measures that will allow farmers to boost efficiency are critical to sustainability within the agricultural sector.
The recent budget was a missed opportunity on many fronts. There was no real attempt to address the issue of family farm incomes. The Minister will know from the Teagasc survey earlier this year that, excluding dairy, which was camouflaging great hardship, the average income for farming families is €20,000, which is well below the average wage. There is particular hardship in the sheep and cattle farming sector. There is a real, ongoing failure in this State to address the issue of fair prices for the primary producer. Year in, year out, we hear of "custodians of the land" and all this kind of language, but there is no real, fundamental change. Incomes have continued to be squeezed for years. The measures the Government put into the budget amounted to about €52 million. We need a lot more specifics as to where this is going and the impact it will have. In Sinn Féin's pre-budget submission, we stated that we would spend €62 million in the agriculture sector, but this was without having the information the Minister had, that is, that there was an additional €1 billion that the Government found the night before the budget. Those of us in opposition in a democracy need access to the full facts as to what is available to Government in order to put forward alternatives effectively. Even without that information, however, we had provided more for the agriculture sector. Our focus will continue to be on the sector, particularly small farmers and small family farms.
The EU Common Agricultural Policy, as the Minister knows, comes from a time when people starved after the Second World War. The world and Europe have changed a lot since then, but CAP is still a policy which is needed to protect European and Irish farmers from the rigours of market forces. The proposed reduction in the overall money available for the new CAP goes far beyond the reduction in the British contribution to the EU. I fear that Brexit is being used as an excuse to cut funding for agriculture and environmental investment. A fully funded CAP is vital across the EU on a range of fronts, and in Ireland it is needed to stabilise high-quality food production, protect the environment and sustain the family farm. CAP has been central to the modernisation of Irish farming over the decades. This family farm model of production is a big part of the Irish food story of mainly meat and dairy produced from free-roaming animals fed on our lush green grasses. The new CAP post 2020 needs to enhance the advantage of the Irish family farm model by sustaining small to medium-sized holdings with decent levels of payments.
Pillar 1, where most of the payment is delivered, needs to be got right. The use of old reference years needs to end and a different model needs to be developed. The proposal to front-load payments in Pillar 1 to ranges of hectares could be a major advance for the smaller family farm. We propose that the first 10 ha to 15 ha need to be paid at a high rate of at least €400 per hectare to all farmers and that the next 10 ha to 15 ha be paid at a rate of at least €250 per hectare, with a low rate on the remaining lands. This would deliver a decent base income for farm families and, as most farms are less than 50 ha, the majority would gain by such a system. We need to see the 30 ha to 40 ha farm getting €8,000 to €10,000 in Pillar 1 as a base income that would make farming viable on these types of holdings. I do not have to explain economies of scale in farming to the Minister or anyone else in this Chamber. Larger farms have the advantage, and will continue to have such an advantage, in the type of front-loaded system we have suggested. The proposed upper limit of payments of over €60,000 should be held firm. This is needed to invest in the family farm model. CAP should not be used to create or support industrial farming in Ireland.
Pillar 2 needs to be about actions that work for both food production and the environment in a genuine way. While farming is only one of the many sectors that produce carbon and gases, land use is one of the main ways of sequestering carbon. This brings a responsibility and an opportunity to farmers. Biodiversity enhancement and carbon sequestration through low-impact farming on the uplands have a big role to play in all this, and this needs to be recognised for its role in Pillar 2. There needs to be investment in the organic sector and development of new product offerings. This new CAP needs to address clearly the issues of young farmers' progression and access to schemes which will re-energise the industry. Each and every farm in the country should play its role in carbon sequestration through appropriate broadleaf tree planting, photovoltaic solar, farm building roofs, and other measures as a part of CAP. Each and every farm in the country should play a role in biodiversity enhancement and species protection as these public goods are also very much to the farmer's benefit and long-term sustainability. The efforts on these issues cannot be carried only by those farmers on lands of natural constraint or, in other words, left to the poor relations to resolve.
Some of our farm sectors, such as tillage, sheep and suckling, have become very precarious and depend on CAP payments a great deal. This is mainly about prices being returned to the farmer. The issue of price for product is not simply a matter of EU rules on free markets but needs immediate Government attention. The targets of Food Wise 2025 need to be re-examined in the context of both Brexit and the stresses in the agricultural sector due to recent intensification. Food Wise 2025 needs to be about higher value more than higher volume, and a fair share of that higher value needs to be enjoyed by the primary producer. The basic intention of CAP must be to sustain the greatest number of Irish family farms possible and ensure that farmers are prosperous and the rural economy vibrant. The greater role now being offered to the member state in deciding how the is delivered must not be wasted by short-termism or feeding the already well-fed. We must be mature and practical in providing for the greater good, which is also the individual's long-term good.
I will conclude with a couple of comments on the pressures on the pig sector. I have been talking to a number of pig farmers in my county of Donegal and I cannot stress enough the crisis they are facing with the increase in input prices in terms of feed but also the price decreases in the factories. There is probably education work to be done for consumers in this country to look for the Q mark when they are purchasing products and to understand the need to support Irish producers, especially those in crisis.I know the Joint Committee on Agriculture, Food and the Marine has corresponded with the Minister about this matter recently. I have made representations also to the European Commissioner, Phil Hogan, on this and we are getting analysis rather than solutions. I hope the Minister will indicate some supports that we can give to this sector that is under serious pressure.
I was devastated for one young pig farmer in Donegal who has continued a tradition handed down to him by his father. He does not want to walk away from that because it would break his father's heart. His father has been involved in it for decades. This young farmer could probably make a reasonable living in terms of sheep and cattle farming in which he is also involved. That would probably keep the roof over their heads, but what is dragging them under water is trying to honour the family's legacy. His case in particular struck me as being very unfair. He is a very hard-working fellow who has diversified and tried all sorts of things and, through no fault of his own but because of the current market, he is under serious pressure. We need the Minister to do something for that sector.
I warmly welcome the Minister to the House. I will not repeat what the other speakers have said but I especially welcome the Minister’s emphasis on market diversification. There are challenges in the agricultural sector and we can either look back and be very negative or look forward and see the great opportunities available. There are opportunities in any challenge, and we have got to find those opportunities.
I acknowledge the Minister's work in terms of Food Wise 2025. He has been abroad and in his contribution he spoke about the potential of the Asian and African markets and that his Department will continue to identify new markets. He stated also that he led the successful trade mission to the United States and Canada in May. He also led a mission to China, he will travel to Malaysia, and his Minister of State will travel to China. That is what I call seeking new opportunities for agriculture because that is what it is about. The challenge is whether we do or die or get on with it and do something. It is important to say that.
I attended a breakfast briefing by Teagasc this morning. I congratulate the Minister on his appointment of Mr. Liam Herlihy, who gave a very impressive account of himself this morning. Professor Gerry Boyle spoke about Teagasc's progress and plans. It is a wonderful organisation but sometimes we do not talk enough about it, its wealth of knowledge and experience and its mission, which is to develop integrated research and an advisory and training service. That is very important. Unless farmers, collectively, are at the coalface in terms of innovation, imagination, knowledge, science and research, we will no longer be in the marketplace.
Agriculture has moved on. It is a science. There is a place for every element of agriculture, and that is not to take away from the work of small farmers, but we have to work in co-operation with and support each other. We have to embrace innovation, collectivity and connection with other people. Agriculture is a very progressive science and some people to fail to realise that.
I acknowledge the great work done by Bord Bia, which is a fantastic organisation, to promote Irish food and agriculture. With Food Wise 2025 and the planned strategy for Bord Bia, great things are happening, but we must consider the question of sustainability. For far too long we have abused the word "sustainability". It is no longer good enough to talk about sustainable farming. We have to prove sustainability and convince the people in the markets that we are sustainable. Sustainability in terms of agriculture and our food is important.
We cannot commit enough money and resources to organisations like Teagasc, training and farm apprenticeships. People are coming into agriculture at different levels, but we need to continue to promote knowledge-based information and research. I have visited the Teagasc food research centre at Moorepark and Grange. They are wonderful places, but few people know about the wonderful work they do. I stress the importance of continuing to assist farmers in terms of advice and education, and the role of Teagasc.
I do not want to let this opportunity pass without paying tribute to the former Deputy, Seymour Crawford, who died recently. I have just come from the British-Irish Parliamentary Assembly, which is meeting for a few days, where he was mentioned by people on all sides. Seymour Crawford was a farmer and a politician who brought practicalities to his work and who was sensitive to the difficulties of farming. He was a Border county man with his own tradition. He brought a uniqueness to political life, but he was also very much involved in the IFA.
When we met people from the farming community and those who represented the farming community in recent days, there was a belief that we could somehow come together to market the great island of Ireland and its potential in terms of agriculture and food. One of the major challenges for Ireland, Northern Ireland, Britain and everyone is how we can come together to embrace the uniqueness of the island of Ireland in exploiting and marketing our produce.
There are many positive developments in agriculture. We do not always get them out there but I especially commend Teagasc, which is an excellent organisation. It is doing an excellent job, but we will have to use that organisation more to assist farmers in terms of education and innovation.
I welcome the Minister to the House. I want to make a couple of points on which I would like to hear his views. We had a briefing this morning from Teagasc and one of the key features that came across was the issue of climate change and that approximately 33% of reductions in terms of meeting the target to reduce emissions by 2030 are expected to come from the area of agriculture. The projection is to reduce emissions from agriculture by approximately 25% in terms of its total emissions. There are slightly contradictory elements to that. First, we appear to be quite efficient, relative to our partner countries in Europe, in terms of emissions within farming, particularly within dairying, which is mainly grassland based. At the same time, in respect of hard numbers, we are looking at increasing emissions in terms of herd and dairy numbers. We are looking to reduce emissions while at the same time the dairy herd is increasing.
In a wider context, what measures does the Minister believe could be brought in at some policy level to facilitate farmers in the reduction of emissions while ensuring they can continue to be viable? Farmers are operating in world markets. In terms of the public, every euro spent at the farm gate has a multiplier effect of approximately €4, so it is very important. I am looking at it in the overall context that agriculture is a major contributor to the economic fabric of both rural and urban areas nationally. We face challenges in terms of climate change and emissions. Agriculture is a fundamental element of that. What policy changes or shifts could be put in place to ensure that farmers are able to reduce emissions on their farms?It is something we must address. Climate change has entered common parlance in a relatively short time.
I wish to touch on the issue of fodder. The Minister might outline his perspective of the situation and how it will unfold in the coming months. Farmers and feed suppliers have concerns. What contingency measures are being put in place to ensure that, if more fodder difficulties arise, we will be able to deal with them?
I would like the Minister to address the two specific points I have raised.
I welcome the Minister and pay tribute to him for his determined and competent work in the Department, as well as for the results achieved since attaining office in his ministry. I might use the occasion to reference something important that happened in my area yesterday. I wish Lakeland Dairies and LacPatrick success in their merger and congratulate the shareholders of the former on their courageous and far-seeing decision yesterday. It is good news. Lakeland Dairies is a crucial employer in the region and the jobs it provides are valuable. The Minister was in the area some time ago for the opening of the new dryer in Bailieborough. It has been a great success. There are at least 100 jobs in the Bailieborough plant alone. It is important for the suppliers, as it is also a good suppliers co-op.
I acknowledge a number of important achievements by the Minister's Department in the recent budget. I am delighted with the increase of €23 million for areas of natural constraint, ANCs, previously known as severely handicapped areas, bringing funding back up to original levels. It is an important direct payment to farmers. I am also happy with the maintenance of agriculture taxation measures and the suckler cow grant. There were a number of tangible achievements for farmers in the budget.
I acknowledge the Minister's work and encourage its continuation in exploring new markets. He has had a number of successes, for example, the opening up of important export markets in China and Kuwait. It is not enough to navel gaze about Brexit. We must act. In that context, the loan scheme is good news, but it is also essential that we concentrate on opening up new markets, which is being done effectively. I welcome that news.
A point was made about climate change and agriculture. We had a wonderful briefing this morning by Professor Gerry Boyle, the director of Teagasc, on the importance of climate change and the mitigation measures that could be put in place. I urge the Minister to support the sector as much as he can and provide farmers with the wherewithal required. There is great anxiety among farmers to meet targets, but they need support. Afforestation, particularly on small parts of farm land, is important. Some farmers have told me that the premium cutting off after 15 years is a disincentive. It is a difficult matter with which to deal, but I want to make the Minister aware of it being an issue for some farmers. It is important that as many incentives as possible be retained for the agriculture sector.
It should be recognised that production in Irish agriculture is very carbon efficient relative to that in other countries. There is not much point in replacing food production in Ireland with food production somewhere else if carbon output levels remain similar. That would not achieve anything in tackling climate change. Displacing our food production to a country where the environment is not as friendly towards carbon controls would hardly be good, but that is not to say we should not be ambitious in reducing our carbon emissions and supporting farmers to do so. The presentation by Teagasc was helpful. On that note, I join Senator Boyhan in congratulating Mr. Herlihy on his appointment as chairman of Teagasc and wish him well. His experience in Glanbia will stand him well in the role.
I thank the Minister for his presentation. The agriculture sector is going well, but it merits the House's constant support.
I thank the Senators who contributed to this broad-ranging debate on the agrifood sector. Before I go into details, I echo the sentiments expressed by Senator Boyhan on the passing of our former colleague, Seymour Crawford, who was a man of great intellect and common sense and would always have been at the heart of agricultural debates win the Houses. My sympathy goes to his family on his passing.
I also echo Senator O'Reilly's comments on the new merged entity of Lakeland Dairies and LacPatrick. I wish Mr. Michael Hanley and his management team all the best as it beds in.
There were a number of common threads to the Senators' contributions and I will try to deal with them as effectively as possible. As some mentioned, it is important to set the debate on agriculture in context. Sometimes, we are overwhelmed by the negativity surrounding incomes in the agriculture sector. Obviously, that is a critical issue for farmers, but as an island nation that exports our agricultural offering to more than 180 countries worldwide, we should never lose sight of the big picture. The Food and Agriculture Organization of the United Nations has stated global food production needs to increase by 70% by 2050 to feed the world's growing population. That is an opportunity for us. In taking it and given that the environment is important, we must produce food as sustainably as possible, but we are starting from a relatively good position. Perhaps it is not widely known, but, alongside New Zealand, this country is considered to be the most carbon efficient on the planet in dairy production. We are also the fifth most carbon efficient producer of beef in the European Union. That is not for one moment to argue that we deserve a pass on the legally binding obligations on the agriculture sector to achieve certain targets by 2030 - far from it. We can, will and must do more, primarily because it is the right thing to do by future generations but also because, if we do not do it, we will be clobbered by punitive financial penalties. Another reason we must do it is the market and the consumer demand it of us. I have been privileged to be on trade missions with representatives of the food industry.I have been in those boardroom meetings with our retail partners globally when they have asked us about our credentials from the point of view of sustainability. If we want to move our product higher up the value-added chain, get a better price and be better able to deliver a better price to the primary consumer, then we must embrace the sustainability agenda in the context of agriculture. On the basis of my engagement with farmers and farm organisations and leaders I believe they are up for that challenge.
Earlier, reference was made by speakers to Teagasc, which is a fantastic asset in our armoury in terms of meeting that challenge. Teagasc delivers advice, undertakes research and delivers education by way of knowledge transfer to farmers. We have invested in Teagasc over the years, including most recently in the context of Brexit. We have invested in the prepared consumer food hub and the meat technology centre as well as a food innovation hub in Moorepark on the dairy side. All of this is part of preparing the groundwork for efficiency in farm production.
One third of emissions come from the agricultural sector. In that context our profile is different from the emissions profile of other countries, but that is because we do not have the legacy of heavy industry here. Some ill-informed people will point the finger and say that agriculture is a major contributor. In terms of our profile we are, but in terms of our carbon emissions per unit of output we compare favourably by international comparison. That is not widely understood. Anyway, we can and will do more.
Senator Kieran O'Donnell asked what we could do. There is no silver bullet but we can do many things that collectively will improve the emissions profile of the agriculture sector. For example, we are spending €300 million in the current rural development programme, which runs up to 2020, on improving the genetic merit of the beef herd. What will that do? It will improve profitability for farmers. That is a by-product in a way but it is an important by-product. The herd will have a smaller suckler cow but a bigger weanling. It will have a cow that is in calf every year and that calves easily. There is one consequence of all the genetic data that we gather - knowledge is power. This knowledge will enable the farmer to make breeding decisions on the herd that will improve the profitability but drive down the farmer's carbon footprint as well. We are investing significantly. We are world leaders in the context of the collection of data relating to our beef herd.
We are using milk recording as an instrument or tool to inform breeding decisions on the dairy side. The dairy side is attracting a good deal of attention in the context of the growing dairy herd at present. People are saying that we are growing our herd and contributing to emissions. If we have a herd that is more and more genetically efficient, then we will be able to reduce further the carbon footprint of our dairy output. We need to bear in mind the context of the Paris Accord and the framework within which we are operating legally. The Paris Accord holds that we must reduce our carbon footprint but that is in the context of not compromising food production. That is important. What is the point in dismantling what is a carbon-efficient industry, one on a journey to greater carbon efficiency that stands up to any international scrutiny? What is the point in dismantling that and have the associated product displaced on supermarket shelves by product that has a heavier carbon footprint?
It is important that we continue to engage in this journey. Senator Boyhan remarked about agriculture being very much a science-based industry. That is true. We need innovation, research, development and application through knowledge transfer etc. We need more young people. I am conscious that as I address the House we have a school delegation in the Gallery. There are real and important career opportunities in agriculture for the future. Not only are there important opportunities inside the farm gate but we need the best available science, technology and marketing graduates to assist in the journey that this important and exciting industry has embarked upon.
Collectively, we can meet the targets, reduce the carbon footprint and simultaneously improve profitability for the industry. An interesting pilot has been under way in recent years involving the IFA and the Environmental Protection Agency. The agency does not in any way pull its punches in the context of its obligations to ensure the industry is as efficient as possible. The cumulative research delivered from the pilot project led to the conclusion that by reducing carbon efficiency we also increase profitability. The actions taken are good for the environment and good financially for farmers too. We need to accelerate that journey because we will miss our 2020 targets - there is no point in saying otherwise. In any event, we simply cannot afford to miss our 2030 targets because, for all the reasons I have outlined, they are critical.
Genetics are important. We are grant-aiding low-emissions slurry spreading. What does that do? It reduces the ammonia release when a farmer spreads slurry in the countryside. That is really important. That is one of the emissions areas where we are right up against the ceiling and so we need to take action in that regard.
Switching from calcium ammonium nitrate, a nitrogen product for fertiliser, to protective urea reduces the nitrous oxide release. That is really important. Many simple steps can improve significantly the efficiencies. As I have said there is no silver bullet but we can do many things without compromising food production. We can continue to realise the true potential of our agriculture sector, which, for many decades was constrained by virtue of quotas in the dairy side. We are now unleashed from those constraints. However, the environment will be a new constraint except that we will box clever in the context of meeting and achieving our potential. We need to do this in a collaborative way. That is a key point. It is a matter for state agencies, my Department, farm organisations and the processing sector. All of us together can ensure we do this in an informed way.
Another point mentioned by many Members was the Common Agricultural Policy and the journey we are on to a new policy post 2020. The greatest fear I have concerns the budget available for it. We have been in the vanguard of an endeavour to create some political momentum around protecting the current level of the budget. That is not easy because to reverse the proposed cuts we need unanimity around the table in Europe. The proposed Common Agricultural Policy cuts of 5% would mean in an Irish context cuts of €90 million per annum for farmers. The Commissioner for Agriculture and Rural Development can only spend the money given to him by member states. It is not open to the Commission to borrow money. The Taoiseach has addressed the European Parliament and said that we are prepared to contribute more. We make that offer not from the point of view of Ireland seeking the traditional handout or additional contributions. We are a net contributor to the European budget and project. In fact, we are among the highestper capitapayers into the European project. That point is not often understood in the context of the offer we are making to contribute more. As I have said, agreement needs to be unanimous. Unfortunately, the critique of many member states of the Hogan proposals of early June centred on the view that the cuts did not go far enough. The analysis of the Commission proposals from the Dutch, Danes, Swedes and Austrians concluded that the cuts in agriculture did not go far enough. It will be a sizeable task to reverse the political decision of those member states and to ensure we have unanimity around a greater budget contribution.
If we can secure an adequate budget then we can begin to tackle the things that are really important in the context of meeting climate change targets, creating incentive in agriculture in that area and addressing the generational renewal issues relating to the age profile of farmers etc.
I want to deal briefly with the Brexit issue, which has been alluded to by several speakers. I will set out a graphic example in the context of Lakelands and LacPatrick. This was alluded to by Senator Hopkins in her contribution. Some 28% of the milk pool in Northern Ireland comes south for processing to plants in the Republic. That is only a small example of the all-island approach we have to the agrifood economy. We send cattle north. Farmers buy cattle in the west and they are bought by farmers in Northern Ireland for finishing. Sheep come south for processing. It is a seamless all-island economy.
In 2017 we exported €700 million worth of product to Northern Ireland and Northern Ireland exported approximately €600 million to the Republic in value terms. The all-island economy is very much in the cross-hairs of the Brexit conundrum and how we resolve the issue. That is why the issue of the Border and the Government position in the context of the negotiations under way on Brexit are really important. We cannot have a situation whereby that trade is impacted. We cannot allow the other issues that arise from the Border and the identity politics of different traditions on the island, especially in Northern Ireland, to have an adverse impact. We know about the implications of going back to a situation where the Border infrastructure would be reintroduced. That is what informs the Government position in the negotiations.Diversification is equally an important part of that strategy, for example, beef exports to China started earlier this year. We have been following the opportunities available to us by virtue of our membership of the European Union in a focused way. We are riding the coat-tails of recent engagement by the Commission on new or improved deals between the EU and other trading blocs such as Canada, Mexico, Japan and Korea, following in and opening up opportunities for the Irish agrifood sector. Who would have thought, not that long ago, that while the UK is our biggest market for dairy products, for example, it imports 80,000 tonnes of cheddar cheese a year, the next biggest market for Irish dairy exports would be China? It is also the second biggest market for pork exports. I appreciate that Senator Mac Lochlainn has raised the difficulties for the pork industry. It is not one that benefits directly from CAP supports but the global reach of the Irish agrifood sector and new market opportunities is an important way of minimising the risk associated with Brexit.
It is important to be truthful about this, when we talk about a good Brexit outcome we are hellbent on trying to achieve a trading relationship as close as possible to the current one, bearing in mind that is not easily facilitated by red lines imposed by the UK on leaving the customs union, the single market, etc. A good deal can never be as good as the deal we have. When it is outside the customs union and the single market a good deal means costs and friction for the industry here and that means loss of profitability and jobs. Brexit is a damage limitation exercise from our point of view. I believe it will also inflict damage on the UK but it is a democratic decision that we have to respect and get on with.
Given our significant exposure in the agrifood sector, €5.2 billion worth of our exports went into that market in 2017, that is over 50%, 280,000 tonnes of our beef, 80,000 tonnes of cheddar cheese. In the context of a worst-case scenario, a hard Brexit and World Trade Organisation, WTO, tariffs on those products, it is not easy to find a home. That is a nightmare scenario that I do not believe is likely because of the scale of the calamity were it to happen. I believe the British Prime Minister recognises that reality as well but the negotiations are not easy. Market diversification is a key part of the strategy but the UK should, and hopefully will always, be probably the most important single market for us because of our geographical proximity, and cultural and historical ties. It is the market we understand best. It is the best paying market for many of the commodities we export. That is why our endeavour is to keep the relationship as close as possible to the present one but bearing in mind that a good Brexit outcome is not as good as what we enjoy now.
I firmly believe this industry has great potential. It was once described in the other House as a sunset industry. To reverse that analogy, it is only sunrise time. The potential is enormous here. In the context of a growing global population we have real natural advantages for the industry in our grass-based sustainable production system. We need, however, to marry that natural advantage with the benefits that new technology will bring us so that we can maintain our position as a world leader in this sector. That is possible because of the collaboration on which the industry is built. We are too small to do things except in that way. That close collaboration between the Department and the agencies in the Department have been referred to in the context of Teagasc and An Bord Bia but it applies also to the dairy processing sector, the meat industry, the farm organisations, etc. That is what has enabled us to achieve what we have, which is not insignificant, particularly in the context of the difficult years and the engine that the indigenous sector has been to our economic recovery. It is also what will see us through all the challenges that have rightly been outlined by Members. The overwhelming message we should send to the community at large is that this sector has great potential. We need to do more on efficiency, such as grassland management, to make sure we are as efficient and as good as we can possibly be. If we are that we will navigate and overcome the challenges ahead of us.