Thursday, 3 October 2019
Beef Sector: Statements
I thank the Acting Chairman for the opportunity to come to the Seanad and debate this important issue. I fully understand the pressure beef farmers have been under, arising from a prolonged period of low prices and frustration, which drove some farmers to engage in the picketing of beef factories. From August onwards, my Department facilitated lengthy negotiations with beef stakeholders to find a resolution to the dispute. These negotiations culminated in the beef sector agreement reached in Agriculture House on 15 September. The agreement was a compromise, from which no one got everything they wanted. However, it allowed for processing, which is critically important for farmers with finished animals, to recommence. It also provides a framework for a better relationship between farmers and processors into the future. Achieving that will require goodwill from all participants in the task force.
The agreement takes a two-strand approach that aims to provide immediate financial benefits direct to beef farmers and address longer-term structural issues. A mechanism to implement and measure progress on these initiatives was also set out and agreed upon. As part of the deal, beef producers will benefit from an immediate increase in a range of bonuses. There will be an increase in both the level of bonus being paid and in the number of animals eligible for a bonus.The cumulative effect is that more than 70% of all steer and heifers slaughtered will be eligible for a bonus payment on top of the base price paid.
A beef market task force has been established and it will have its first meeting as soon as possible. This task force will provide leadership to develop a sustainable pathway for the future of the beef sector in terms of economic, environmental and social sustainability. I have appointed Michael Dowling as an independent chairman to lead the task force. Its membership comprises my Department, relevant State agencies and nominees from farm organisations and the meat industry. The task force will provide for a robust implementation structure for commitments entered into in the agreement, with timelines and stakeholder engagement.
The second strand of the agreement sets out strategic measures that will seek to address structural imbalances and enhance transparency in the sector. A number of actions in the area of market transparency, beef promotion and strengthening the position of the farmer in the supply chain were agreed. I do not intend to read out the agreement in full as the text is available on the Department's website. I am satisfied that it contains the best balance of immediate financial benefits for farmers and a series of more medium-term strategic actions. The best approach to supporting the sector, especially in the current context of Brexit uncertainty, is by providing a strong basis of financial support to primary producers, providing supply chain strengthening mechanisms such as producer organisations and ensuring as broad a range of markets to sell product to as possible.
The Government has provided significant financial support to the beef sector over several years. The beef data and genomics programme, BDGP, provides Irish beef farmers with up to €300 million in funding over the current rural development programme. The Department has rolled out a range of other schemes from which beef farmers benefit as part of the €4 billion rural development programme from 2014 to 2020, including the green low-carbon agri-environment scheme, GLAS, areas of natural constraints, ANC, payments and knowledge transfer groups. Suckler farmers also benefit from the basic payment scheme and greening payments under Pillar 1 of the Common Agricultural Policy, CAP. In 2019, a further €20 million was made available through the beef environmental efficiency programme, to encourage farmers to measure the weaning efficiency of their suckler cows.
The beef exceptional aid measure, BEAM, which recently closed for applications, has provided temporary exceptional adjustment aid to farmers in the beef sector in Ireland, subject to conditions set out in the EU Commission implementing regulation EU 2019/1132. The BEAM is funded by a combination of EU aid and Exchequer support and is provided in light of the difficult circumstances Irish beef farmers have been facing as a result of market volatility and uncertainty. Over 34,500 farmers had applied for BEAM by the closing date on 20 September, representing potential commitments of almost €78 million. The Department is examining all appropriate measures to support the different agrifood sectors, including the beef sector, in preparation for the next iteration of the CAP and through the next agrifood strategy to 2030. Such measures should encourage and support beef farmers to make the decisions possible to improve the profitability and the economic and environmental efficiency of their farming system.
Approximately 90% of beef output in Ireland is exported. The development of new market opportunities for such exports is a critical element in our strategy. Developing new markets and expanding existing markets on the basis of market insights is one of the five themes of Food Wise 2025, the ten-year strategy for the Irish agrifood sector. Market development and diversification are also key responses to the challenges which Brexit poses for the agrifood sector, particularly for beef producers and processors. In April 2017, I launched a seven-point action plan on market access. This is being implemented through a variety of actions, including: a market prioritisation exercise and subsequent detailed studies carried out by Bord Bia on behalf of my Department; a market access web portal which was launched in May 2018 and is available on the Department's website; an enhanced programme of Government agrifood trade missions. Beef market access has been a feature of these missions and over the past two and a half years, trade missions have focused on key growth markets such as Asia, the Americas, the Gulf states and Turkey. These missions included participants from across the agrifood sector and featured extensive trade contacts as well as high level political discussions.
Since the Brexit vote in 2016, I have increased the allocation for Bord Bia to enable it to develop new markets and enhance existing ones. The approach of Department and Bord Bia for market development is a combination of targeted research, high-level diplomacy, consultation with important agrifood stakeholders and co-operation with officials in competent authorities abroad. This approach serves to make the most effective use of available resources and to maximise opportunities for market access. Since April 2017, agreement has been secured for the export of beef to several new third country markets, including China, Ukraine, Qatar and Kuwait. Furthermore, during this period enhanced beef access was agreed with Japan, Israel, Singapore, Saudi Arabia and South Africa. It was positive to see another Chinese audit team visiting earlier this month to inspect additional beef plants seeking access to this valuable and growing market.
In addition to third country market access for our beef, live exports are a crucial outlet to improve competition in the sector. I have committed to maintaining a strategic focus on facilitating and developing this trade on a sustainable basis, taking account of stringent animal health and welfare standards. Last year, live exports increased by more than 30% compared to 2017 to 246,000 head. This growth trend has continued in 2019, with live exports totalling 247,000 up to the week commencing 9 September. This is up from 207,000 for the same period in 2018, a 19% increase.
On 11 September, I announced the formal recognition under EU legislation of a beef producer organisation in Ireland. I firmly believe that producer organisations are an important part of the toolkit in building resilience in the sector by rebalancing power along the supply chain. My officials continue to engage with potential groups, as they have done since the inception of the measure in 2016. Nobody should expect that the recognition of such groups will transform the sector overnight or that they can impact global price dynamics. However, if enough farmers join them and if the processing sector embraces them as a positive development, they can help change the relationship between processors and farmers for the better.
There is no silver bullet to solve all the issues facing the beef sector, particularly with the significant threat posed by a no-deal Brexit. However, I am optimistic that the agreement reached last month points the way towards a better way for processors to engage with suppliers. As I have said previously, all actors along the supply chain must recognise their inter-dependency and must work together. I hope the beef market task force will provide leadership in this regard.
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.
I rise to express my concerns about the beef sector's fortunes, or lack thereof, and future prospects. I will begin by expressing serious reservations about the ESRI statement on the beef sector in Ireland and the image it portrays, as I believe it misses some critical points. To evaluate the merits of supporting the beef and sheep industry purely based on the fact that two thirds of the farms are classed as economically vulnerable is a highly questionable approach. The industry needs support. The ESRI statement completely fails to recognise the value of beef and sheep farms to local economies. They provide primary and secondary income to many families, often subsidising other salaried labour and contributing to the pot to an amount that makes it sustainable for farmers to remain on the land. The farmers invariably spend most of the moneys made in the local economy, supporting a myriad of other SMEs: engineers, fabricators, builders, compounders, fuel suppliers, merchants, co-operatives and so on - the list is endless. Furthermore, they create the pool of citizens in a locality that makes up the numbers for schools, churches, sports clubs and communities. The reservoir of young people growing up in the countryside often elect to return to their localities after education or travel in order to start families, careers and businesses and to settle down and put their roots down in a safe and affordable environment. This is more than an economic appraisal of the profitability of beef and sheep farming.
Agriculture has always been a large-asset, low-margin industry. We are all aware of that, and the Minister, like me, has farming interests.Unfortunately, as we all know, land and assets do not pay bills, put food on the table, put children through education, or fund the day-to-day expenses a family incurs. It is only because of the resilience and dogged determination of many working in the farming industry that it is surviving at all. Many gave up a long time ago. It is important to note that there is a serious lack of profit throughout the entire red meat industry. As Senator Paul Daly said, we need to consider alternatives to give farmers other revenue streams.
Processing light farming is a high turnover, low margin industry. A large number of businesses are making slim margins of less than 2% on hundreds of millions of euro in turnover. Sometimes we all are guilty of pointing the finger at companies that make millions of euros in profit, but when turnover is taken into account, the margin is slim. A number of significant retailers are making very little on food and sometimes offset losses on food against other parts of their product offering to keep the food offering available for consumers. These should be worrying signs for the entire industry. Quite simply, the supply chain is broken and needs to be fixed. This is all against a backdrop of increasing environmental pressures in the industry, which results in increased costs with no tangible extra return from the marketplace. The bar is getting higher.
In addition, the extra requirements for our animal health and welfare standards, which are some of the highest in the world, are not being rewarded by the marketplace. The industry cannot achieve a price above the market. Irish beef prices currently sit about sixth in the European league table. However, we can demand transparency and mechanisms that could ensure a fair distribution of profits along the supply chain. Everyone in the supply chain is entitled to a living. Credit must be given to those involved in the beef talks because it was a very contentious negotiation process. There is a lot of emotion and passion involved, and it is a credit to those people that an agreement was reached, even though it will never be that all will be satisfied with it.
Furthermore, we need trust in the supply chain because we do not have enough right now. All stakeholders need to ensure efficient, resilient, profitable and sustainable businesses can evolve. A rising tide will lift all boats. Rebuilding trust in the industry will be a slow process.
We need to recognise the role the red meat sector plays in the countryside, which would be a much poorer place without it. Farmers can be uniquely placed as carbon converters, given that there is much work to be done to drive efficient grass-based production in a sustainable and efficient manner. They can be involved in sequestering carbon, focusing on the demands of the consumer and providing high-quality nutritious food, and be truly valued by society for the public good they provide.
Without doubt, the elephant in the room for the industry is Brexit. If we do not get a sensible outcome, the potential damage done could prove terminal for many in the industry. As we know, Mercosur imports have been a contentious issue, but the reality is that they comprise 1.2% of the European beef market and do not currently present a threat, but may do at some stage. If we do not get a resolution in respect of Brexit and beef, we are burning our feet in the fire when the house is potentially burning down around us. Brexit has the potential to do more damage to price and profitability than almost anything else.
It is not all bad news for the industry. Many of us are probably aware of a report this week from academics in Canada that claims that red and processed meat is probably not harmful to our health, and draws into question some of the work carried out by others. Even though the debate on this continues, however, the report supports the theory that red meat, eaten in moderation and as part of a balanced diet, does not present a risk to human health as some would like to suggest. That is one good message for all of those involved in the industry.
These are challenging times and there is no silver bullet to fix the problem. The industry needs to work with processors, retailers, consumers and Government to reach a resolution. Senator Daly's points were well made and there are alternatives that farmers may need to consider to have viable and sustainable businesses.
I welcome the Minister to the Chamber. It can safely be said that as we face into Storm Lorenzo, our beef industry has faced a turbulent and stormy time throughout the summer. Thankfully, we are at the other side of what has been a very acrimonious process that has exposed a serious lack of trust on the part of primary producers in meat processors and the industry as a whole. They believe they are not getting fair play for their product and that there is no recognition that they need to eke out an existence. In a growing industry where a lot of profit is being made by meat processors and retailers, it is hard to believe that those at the beginning of the food supply chain have been in this situation for so long. Clearly, things have come to a head.
All of the players came to the beef talks and were part of the resolution, which is a work in progress. The resolution was not the end point. Work needs to be done to ensure that farming is put on a sustainable footing. I acknowledge the role that the Minister played in bringing the parties together. I imagine that, other than those closely involved with the process, people cannot appreciate the antipathy and differences between the parties, but the Minister managed to deal with the parties concerned. It is to be hoped we are beginning to address the issue in a realistic fashion because, as the Minister said, there is no silver bullet.
Notwithstanding the bad press, for once the issue of the beef prices got mainstream coverage. There is a lot more awareness among consumers and the population at large that beef farmers have a hard time and are in a very difficult situation that needs to be addressed. Everybody appreciates and understands that now. On a positive note, when we all look back to the time of the economic downturn, austerity and recession, we should remember that agriculture was a great source of pride, in particular beef and suckler farming, especially in areas where they are the dominant sector such as in the west and north west of Ireland.
This is something we know how to do and knowledge has been passed on for generations. The current generations have the benefit of education, science and more understanding, but people instinctively know how to farm. The more we invest in the sector and enable farmers to overcome the issues the better. We are investing in jobs that are part of the social fabric of rural Ireland because that is where those jobs are located.
I will touch on subjects mentioned by previous speakers. Certain carbon efficiencies have been achieved since the 1990s. We are now more carbon efficient in beef production than we were in the 1990s. The size of the national herd has increased. I do not think we are getting enough credit for that in all of the conversations about trade and from where beef is purchased. If we are importing beef, it should be subject to a rigorous carbon audit. The only thing that is measurable in Brazil is the fact that it is cutting down the rainforest. There is no way to measure inputs and outputs and how carbon efficient it is. We have a sophisticated system and know what needs to be done.
The Government's climate action plan sets out a roadmap for a reduction in carbon emissions in agriculture, but many other sectors do not have one. We are still learning. Let us give credit to farmers who have played ball and those who are prepared to do more, as well as the Department, Teacgasc and other organisations. A lot of good things are happening and there is a positive story among all of the difficulties. The truth is that we cannot get away from price, which feeds into sustainability and whether suckler farming continues in the manner in which we are used to. If we do not address this issue, the face of rural Ireland will change.
The Minister's Department produced the Annual Review and Outlook for Agriculture 2019. It is interesting to read about the increase in exports to €2.4 billion, which is a 1% increase in value. Slaughter volumes increased by 3.6% between 2017 and 2018. Live exports increased by 30%. These figures show that a lot of work is being done by the Minister, his officials and Bord Bia. The irony is that tracking prices during the same period show they have gone down and have flatlined. There will be a serious issue if we continue to ramp up production. The size of the national herd has reduced, but we cannot continue with this model simply because it is something we are good at. We export 90% of the beef we produce.How can we continue this model? We cannot, which is why the work of the beef market task force is absolutely critical. It has to be grounded in reality. I acknowledge that the Minister has given his seal of approval to producer organisations, but the problem is that farmers do not have bargaining power. They need to be able to come together as a collective. European legislation has been amended to allow agreements between the different players in the food supply chain, namely, the retailers, the meat processors, etc. Farmers need to have clout because they do not have it and just take a price. They need to be encouraged and given the proper support to do it. They need investment to establish something similar to the co-ops which provide benefits for dairy farmers. We need them for beef farmers too and to drive forward with the plan.
Market transparency is critical as we are talking about fair competition and fair prices for farmers. There is no transparency in the market. That should tell us what the farmer gets and what a person pays for meat in a supermarket such that we can guesstimate the difference. Farmers believe all of the money is made in the middle, not by them. Some of this is unfair and the suggestion is that it is anti-competitive, even though the Competition Authority states it has no evidence that it is. The more transparency we have, the more a light can be shone on the issues surrounding cartels, concerted practices and competition.
I would like to see implementation of the unfair trading practices directive. A lot of work was done on it by the European Commissioner for agriculture, Phil Hogan. This is the time for us to see benefits on the ground. The introduction of a regulator will be critical in that regard. The Joint Committee on Agriculture, Food and the Marine met the groceries regulator in the United Kingdom, who has been working to very good effect. It is unfortunate that the multiple retailers are not on board at the task force. If the heads of a Bill to legislate to implement the directive are published, the retailers will have to come to the table because the legislation will impact on them. They ignored the joint committee when we produced a report on the beef industry and Food Wise 2025, but they cannot ignore this issue. It is not acceptable to ignore us because they gain a lot of benefits from operating within a democracy and the protections we give them. It speaks poorly of them that they do not see it as worth their while to engage with us. I ask the Minister for an update on this issue. I know that it comes under the Minister for Business, Enterprise and Innovation, Deputy Humphreys, but the Minister for Agriculture, Food and the Marine will work hand in hand with her on it. It is critical that the regulator have teeth and not come under the umbrella of the Competition Authority which has told us that it is only concerned about consumers. We want to have a regulator who will protect small and medium enterprises and farmers.
Senator Paul Daly asked about the €22 million that has not been claimed under the beef exceptional aid measure. I called for an extension of the reference period, from May through to July, because animals were slaughtered at that time and people were losing money. With Brexit coming, farmers will need more help, whichever way it goes, and we do not want to send back money.
I listened to my colleague Senator Marshall speak in a previous debate here in which he referred to the EU cheap food policy. That is the framework that led us to this crisis. There has been a failure at both European and Irish level to ensure farmers receive a fair price for their produce. Increasingly, the single farm payment is a subsidy for the meat factories and the multiple retailers to keep prices low.
A number of images from the recent beef protests educated and enlightened the wider public, something that was long overdue. One was of the 20% farmers and primary producers received compared to the percentage for the meat factories and the major retailers which are the power players in the sector but which have never been dealt with at European or Irish level. One example on which we focused yesterday was very revealing. Representatives of the Competition and Consumer Protection Commission, CCPC, were before the enterprise and jobs committee when we probed the anger of the farming community at the fact that, as they saw it, the commission had failed to address the mergers and the takeovers that had consolidated the meat industry and, farmers argued, had led to cartels. Every time there is a whiff of protest by farmers to demand a fair price, legal letters, warnings and press releases are issued. That is nothing new. Five years ago there were beef disputes and protests and the IFA protested outside the office of the CCPC on this very issue. Yesterday we got the CCPC to acknowledge that it is not fit for purpose in terms of what needs to happen. It has wider responsibilities that it is meeting, but it is not fit for the purpose of addressing the issues of a fair price for farmers and price fixing cartels within the sector. Its representatives said an independent regulator or ombudsman for the sector was required. The Minister and his predecessors have known this for years and the anger of farmers shows the frustration which had built up from years of holding back.
The Minister has had to pull the parties together and there has been some progress made, but the core issue is that of a fair price and addressing the gap between what we pay in restaurants and the supermarkets and what the primary producer receives. The challenge for the Minister is to take this opportunity, with the last storm having been calmed, to look at the need for an independent regulator or ombudsman for the agriculture industry. There are huge issues in every sector of agriculture such as dairy where I am told another dip in prices would cause problems again. I recommend that the legislation drafted by my colleague and our agriculture spokesperson, Deputy Brian Stanley, which suggests the introduction of a beef market observatory which would require processors to publish daily price reports. The Minister has engaged with us on this issue in the Dáil recently.
Under the Common Agricultural Policy, we used to have a system of farm payments based on historical entitlements, which served only to preserve inequality as some farmers received more per hectare than others. There are huge variations in what farmers receive in payments and we need to address this issue. My party has long supported having an upper limit of €60,000 per annum for basic payments, with farmers having the option of topping up their payments through participation in environmental schemes.This would allow for front-loaded payments to be made for the development of small and medium-sized farms. It would offer additional supports proportionately to such farms, reward farmers for good environmental practices and build on some of the existing schemes. It is disappointing that the Government is continuing to advocate for direct payments to be capped at €100,000 with loopholes that allow payments above this limit. It is deeply unjust that some of the beef processing factories are claiming these payments.
The Minister was very critical of the Mercosur agreement earlier this year, but there has not been much talk about it since then. On foot of clarification obtained from the EU Commissioner through my colleague, Matt Carthy, MEP, the Government may have started to realise that Ireland has a veto on the Mercosur agreement. The State needs to reflect on the completely uneven playing pitch that exists between the ranchers in Brazil, who are some of the main backers of the extreme right-wing President Bolsonaro and are operating to appalling environmental standards, and the poor wee man on the hill in Donegal, who is driven mad by inspectors and has to bring in agricultural planners to comply with all the environmental standards of the day. As Senator Marshall has said, it is right and proper that we are asked to have all of these world-class standards, but the farmers are not getting the price for the fantastic world-class produce that is fed on grass. Worse than that, they are being asked to compete with Brazilian ranchers who are producing beef to appalling environmental standards. I welcomed the Minister's initial resistance to what was on the table. I remind him that the Government will have an opportunity to veto the agreement at a further stage in the next two years. That opportunity needs to be taken up. The Minister should reassure the farming community that it will not have to face this nonsense.
I ask the Minister to reflect on the low take-up of the BEAM scheme, which has been mentioned. The farming organisations have tried to encourage farmers to participate in it. Farmers have questioned the suggestion that the standards and the conditions that apply to the scheme were coming from Europe. They have pointed out that when the European Commission puts in place a framework for funding, for some reason the Department of Agriculture, Food and the Marine often interprets that framework in a certain way, which can be harsh on farmers, before putting the blame for that interpretation on Europe. That needs to be looked at and lessons need to be learned.
The Minister will be glad to hear that I am concluding on a positive note. I recommend that he should investigate something that is happening on the Inishowen Peninsula. I refer to the encouraging Inishowen uplands scheme, which is funded by the EU. I have no doubt that the Department of Agriculture, Food and the Marine has some involvement in the funding too. It is starting with a pilot project involving approximately 20 farmers who are returning cattle to the uplands. The scheme is also looking at the role of broadleaf trees, and not just mad developments of Sitka spruce. Broadleaf trees can be used intelligently as shelters for animals in winter, just as lakes and pools can be used as water supplies. The scheme is also looking at flood abatement measures and at replacing fertilisers with swards and clover. If the Minister has not had a chance to cast his eye over this superb project, I invite him to come up and meet the people involved in it. They are passionate about farming. They have a vision for the future that ties in with environmental standards. I will monitor the progress of this scheme closely. If it is a success, as I believe it will be, the Minister will want to replicate it across the country, particularly in the west, where the farming territory is more harsh. On a positive note, I invite the Minister to look at the Inishowen uplands scheme and to take note of the issues I have raised. The question of finding a fair and independent arbiter who will mediate between the meat factories, the retailers and the primary producers needs to be grasped.
I hope the Minister will take it into consideration that I am probably the most disconnected person from rural Ireland. When I went back through my family tree recently, I discovered that on the Humphreys side we have to go back to the 17th century to find somebody involved in agriculture. It is a little more recent on my mother's side - I think we had someone involved in agriculture in 1820. That does not mean that I do not understand, or try to understand, the pressures that small farmers find themselves under. I think those who are running small family farms and those who are working for the minimum wage have a lot in common. Both of them are struggling in the current economic crisis.
I listened closely to Senator Paul Daly, who understands this sector and has educated me in many ways through many of his speeches. I think he spoke quite positively today about looking at other streams of income and about the impact that climate change will have on small family farms in rural Ireland. If we are really talking about a just transition, that is where we have to look and provide assistance. Family farms are a central part of the tapestry that is Ireland. It will not exist unless there is a healthy and thriving rural economy. People must be able to live in the countryside with a good quality and standard of living. Senator Marshall has often made those points.
In my home area where I grew up and where I still live, I used to have two flour mills on my doorstep. The Mini was assembled at a British Leyland plant in the neighbourhood. There were coalyards in the area as well. We have no car assembly plant now. The coalyards are gone. All the flour mills are gone out of Ireland, with the exception of boutique-type flour mills. The Odlums mill was the last one to go. At a time when we are talking about food security, I think questions need to be asked about the fact that we cannot mill our own wheat for white bread. I know there always had to be a mix in that regard.
I am grateful for the opportunity to speak about the beef sector. When I looked at the hard figures that are available, I was reminded that agriculture is this country's most important native industry. It is the most important industry in rural Ireland, where it accounts for 170,000 jobs. As I got involved in politics, I went back to look at these hard facts. It has been mentioned that agriculture accounts for 8% of employment, but that increases to 60% outside urban areas. That is how important agriculture is. It accounts for €26 billion in economic activity each year and for 138,000 jobs.
When we think about who will be hardest hit in the event of a no-deal Brexit, we must bear in mind that many of the 80,000 jobs that will be at risk are in the Border counties. Although there will be some counterbalancing of the job losses, that will happen in my home patch of Dublin and in Cork. There will not be a plus sign in the ledger for rural Ireland. It will be bad news after bad news. It is projected that €800 million will be torn out of pockets as a result of Brexit. There is ongoing uncertainty regarding the price of cattle. It is expected that there will be a further €100 decrease in the per-head price of cattle. People in urban Ireland do not understand that this can be the difference between surviving and not surviving. I did not understand it until quite recently. I supported the protests at the factory gates because I knew it was a last shout for the survival of rural Ireland. I am proud to be a member of a party of social solidarity. Like my colleague, Deputy Penrose, I offered the hand of solidarity to those protests.
I read a speech made by the Taoiseach recently in which he remarked said that some jobs and companies in rural Ireland will not be saved. I would like to ask him what those companies are and where those jobs are. We need to know now. We need to start planning. Even now, it is too late to start planning because families in rural Ireland depend so much on jobs.If we have already written off those companies and jobs in the accounts books, can we at least now say where they are? Let us try to right the unfairness that will befall rural Ireland with regard to Brexit.
I have visited the National Ploughing Championships previously to talk to farmers, as I have been genuinely interested in understanding what is happening. The CAP has been reformed. The European Court of Auditors has put a question mark over CAP reforms and whether the CAP still benefits larger farmers. I find a level of frustration among family farmers. In 2017, the average family farm made €31,000 and received €18,000 in CAP payments. Well over 50% of these farmers' income came from CAP payments. That sounds reasonably good but when one pulls back the cover, one can see that 40% of CAP payments go to 10% of farmers. We must get underneath that and understand it. Two thirds of farmers get a quarter of CAP payments. Farmers in County Cork received €170 million in payments while farmers in Leitrim received €18 million. A place with four times the number of farmers gets ten times the subsidy. I am not talking about acreage. I am talking about people and families involved in farming. When those figures were presented to me, I had spoken to people from Leitrim about matters like tree planting and their fears of being hemmed in by the new forestry actions. They have real fears. We have an afforestation programme, which I support, that aims to get forestry up to the European average but we must listen to concerns.
Only today, it was pointed out that the highest CAP payments go to the largest farmers. One sees the farmers at the gates protesting and then one discovers that Larry Goodman and his family received €240,000 in farm payments. He has 8,000 head of cattle and an estimated fortune somewhere north of €700 million. One third of Irish farmers make less than €10,000 per year. That is tough going. A farmer in Wexford received €390,000 under the old process in respect of 3,500 acres of tillage for barley. One talks to farmers who are struggling and they tell me about figures like that. Perhaps the Minister will correct those figures but this is what farmers are telling me. They pointed out that the average farm in Ireland is just 30 ha. O'Shea Farms has some €10 million in total assets yet was given €330,000 in CAP payments. I can share farmers' frustration when they are trying to carve out a living and those figures are in the newspapers, while they get less than €10,000 per year on which to live. For every one of these names, there are hundreds more. I could go through them as I have lists detailing very large payments to very large farmers. Unfortunately, one cannot get lists of the smaller farmers and the payments they receive because no names are published when the payment is less than €1,250. A farmer in Manorhamilton was paid 3 cent in CAP payments. These are figures published on various websites and in research. I can understand why farmers were at the gates. It was because they could see their livelihoods disappearing in front of them. I found it hard that they were being told that the future of the sector was in balance. They were called upon to act responsibly and to save the farming community.
A just transition means that we must give real and positive assistance to rural Ireland. I will stand shoulder to shoulder with rural representatives to argue for the small farmer - the farmer struggling on a low income or struggling to put his children through education. I will stand up in this House on a regular basis and criticise political parties that stand up for the ranchers and for big subsidies to go to big farmers who are well able to stand on their own two feet. Unfortunately, this has been the record in Ireland for far too long. We must protect our rural communities in a very practical and substantial way. They have been under pressure for far too long.
I agree with the previous speakers. I cannot overestimate how valuable the agricultural sector is to our country. It has been widely predicted that Brexit could wipe out parts of the agricultural sector entirely. To say that this sector is vulnerable and is probably hanging by a thread is putting it mildly. The farmers with whom I speak, many of whom are friends of mine, are very vulnerable. A total of 90% of the beef our hard-working beef farmers produce is exported, of which half is exported to Great Britain. Our beef is high quality and sought after yet we have not done enough to support the very people who rely on us to support them. They are the very people across this country who rear and care for the cattle producing this high-quality product. Over 100,000 farms are involved in cattle production. I hear of a backlog pushing prices down and farmers giving up family farms, such is the severity of the pressure on family finances.
I am glad an agreement was reached recently but it was hard won. As previous speakers have said, it is about pricing, which is a significant issue. The Minister spoke about the task force. Can he give a date as to when this task force will be up and running? This summer, farmers needed support. I stood with the local farmers for fairness and a proper reward for good, honest hard work. Farmers have been very much left behind by this Government, particularly small farmers, who feel very left behind. They are the ones who get up early in the morning before the rest of us and who go to bed after the rest of us. The Minister knows that last year was a special kind of hell for farmers with almost biblical weather conditions from one season to the next. We had frost, snow, rain, floods, falling cattle prices, increased costs, the erosion of direct payments and the ever-present threat of Brexit. Yet who did we call on to pull us out of the ditches in the heavy snow? Who did we call on to clear the roads nobody could get to? We called on the farmers. We cannot let farmers down time and again and then, when we need their tractors to pull us out of trouble, expect them to be there. We are approaching winter with storms causing damage at the moment. The pressure on this sector is enormous. We will not be able to ask farmers for help if we are unable to help them. Farmers are greatly affected by weather and it is hard when someone produces such a great product. We have the best product ever. We are entering the winter period when storms are again causing problems. This will be significant.
It is time to ensure fairness. We in rural Ireland must always stand together to support our own. We must give hope to our young farmers to help them stick with an industry that is centuries old. The first Irishmen were farmers. We owe it to our ancestors and the farmers of this country to give them a sustainable industry. We need a sustainable pathway for the beef sector to have any future. This Government needs to ensure that real support is there. With the United Kingdom leaving the EU, we need to ensure that we can find financial support to sustain our farmers. To give them the faith to continue, we need assurances from the EU that we can access CAP market disturbance funding, particularly when we know that a reduction in the overall CAP budget is coming down the track.
The next cycle of the CAP for 2021 to 2027 has a number of reforms and new terms.The Government needs to make sure that our farmers are educated about these new reforms and terms under the climate mitigation and environmental programmes that will be mandatory for them. We need to know that there is a commitment and communication. This is what it all boils down to. We need to ensure that we support education and supports for our young farmers as well as fair pricing and fairness for all shareholders in the production of our beef in order that the sector can continue as it has for years. Farmers feel let down, especially small farmers who have been farming for a long time. Ireland is known for its agriculture; we have the best. I feel from speaking to farmers who I stood on the picket line with that their confidence was knocked, that they were let down and that no one was listening to them. We are where we are today. We need to get this sorted and get this task force up and running. I will ask the Minister for a date for that. We need to make sure that we give our farmers financial support and we also need to know that they feel that the Government is listening to them. We will not have a future without our farmers.
I welcome the Minister. It is not just today or yesterday that farmers were let down by Governments, but repeatedly. We have the proof of that and we only have to look back at the beef tribunals to see what happened and to examine the pathway of payments to politicians, including some who stand up here now and pretend that they are the saviours of the farming community. It was proven without a doubt that there was a direct correlation between payments made to the Fianna Fáil party and its decisions. We have to be honest about it. Injustice and unfairness in the sector has been allowed to continue and it has been facilitated by successive Governments. The unfairness in the pricing and the undermining of the beef sector and suckler farmers, especially in the west, has to stop. That is why I welcome the Beef Plan Movement and other farming organisations that have come out, stood up and said, "Enough is enough".
The beef sector is a €2.5 billion industry. Why have these companies been allowed to create a situation where there is a lack of competition in the processing sector? That should not have been allowed to happen but it has happened. Companies are unlimited and, therefore, there is no transparency. It is okay to say that the margins are small but the money is going somewhere, and certainly not to farmers, including farmers in Mayo. I welcome that there appears to be a commitment to set up an independent regulator to examine the sector. The fact that the CCPC could assess that it was illegal to even discuss the price of beef says something about us as a nation. We cannot have transparency where we have a controlled market. The Joint Committee on Agriculture, Food and the Marine recommended that the meat market observatory set up at EU level would be helpful in introducing transparency as well.
Something else that needs to be done and that has been discussed relates to producer groups. Could these producer groups be supported under one of the measures of the LEADER programme? We need to resource producer groups to allow them to set up in the first instance and to be facilitated. We cannot expect farmers to do the work involved in setting up such groups. They are working as it is. Nobody else would work for the amount a farmer is paid per hour.
The beef sector is worth €500 million to the Mayo economy. There are 5,350 beef-only farmers, 2,800 mixed farmers and 73,000 cows. It is not just about the money that is produced through that but the multiplier effect in communities such as the one I come from, which is crucial to the survival of places in Mayo and other communities and towns in rural Ireland. They are dependent on this activity, particularly veterinarians, chemists, fencing suppliers and so on. We need to be careful that we do not let all that go down the pan. It is within our gift to take urgent and immediate action. Regarding profitability, according to Mayo's Teagasc e-profit monitor, the average return is €464 per ha. That includes CAP payments. If the CAP payments are taken out, there is a loss of €16 per ha. That should tell the Minister the importance of the new round of the CAP that is being negotiated and what we need to do for our farm families in that negotiation.
Other programmes within the beef sector such as the BDGP, the beef environmental efficiency pilot, BEEP, and BEAM are too complicated in some cases and do not give sufficient financial return. We need to examine the financial return from those, the time they take for farmers, and make adjustments to make them easier to access. We cannot hope to entice young people into the farming sector with figures such as that. Nobody will encourage young people to take up farming unless we address the issues involved, including price volatility and low margins. We need a base price so that farmers know they are guaranteed a certain minimum output for what they put in. The inequalities within farming must end. We have seen it repeatedly with the larger farmers and in the reference years, 2000 and 2001. Something rotten has been allowed to happen in the farming industry to create this inequality and unfairness.
The farmers I know do not want to be dependent on grants. They want to produce a quality product and get a fair price for it. I encourage the setting up of the national beef scheme, which will cost just €160 million. It is one of the recommendations of the Irish Natura and Hill Farmers Association, INHFA, to support the industry. Let us work together, have a bit of honesty and address the beef crisis. A storm is approaching Mayo as we speak and Senator Mulherin and I will head west. There is also a storm in farming that needs to be addressed. We need to see how the impact of the storm over the next few days will eat into the profitability of farmers. It is worrying for the industry and for rural Ireland, which is dependent on agriculture, and always will be, to be successful.
I thank Senators for their contributions. They were, in many respects, a revisitation of many issues that we discussed with regard to the Backweston talks and, more recently, in the Department in an effort to conclude the most recent difficult chapter in the beef sector.I will give an overview of some of the issues because there was a common thread running through many of the contributions. I will try to cover most of the points that were raised.
We cannot divorce ourselves from the reality that a country that exports a high percentage of all the food it produces is at the mercy of EU and global markets. In public policy over many years we have moved away from a position where the State supports the price of product. We support incomes. That is why we have recognised the difficulty in the beef sector in the last 12 months and responded with €120 million in extra payments directly targeted at the sector through the beef environmental efficiency programme and the beef exceptional aid measure, along with additional effort in the context of market access. Hence the visit by the Chinese delegation and ongoing efforts in terms of live export markets, new market opportunities, funding to Bord Bia and so forth.
The market situation is exceptionally difficult. There is an oversupply in the European Union, and we can discuss the context for that. Consumption flatlining and imports from outside the EU are contributory factors. Looking at the price we receive relative to what the price is across Europe shows that we are within a band that is not widely varied in terms of what we produce, bearing in mind that we must export nine out of ten of the cattle we produce. The challenge in the beef industry is to continue the endeavour to move up the value added chain, to sell the product that is high quality in taste, carcass formation and low carbon footprint. The danger in some of the commentary on the beef difficulties recently was that we would lump all the beef we produce into the one basket, as it were, and lose the capacity to differentiate between efforts that had been made by farmers over many years to improve the genetic merit and quality of the animals they produce and to reward them for that. Whereas the base price is critical, it was equally important that we did not dismantle the bonuses that are paid for products that are responsive to market demands and consumer tastes and preference in terms of welfare, age and so forth and revert to a situation where we were treating all beef producers as the same. That is very important. I hope that in the context of the beef market task force which will be up and running shortly - I cannot give a specific date but I expect it will meet in the next two weeks - we can get a collaborative endeavour on these issues and ensure we have a roadmap for the future that everybody can sign up to.
I have commented previously on the toxicity of the relationship between the primary producer and the processor. Simply put, if that is not addressed, neither of them has a future. One needs the other. A genuine partnership must be forged. They could take a leaf out of the copybook of the dairy industry in that regard, albeit there is a different ownership model. Nonetheless, a proper engagement takes place on a regular and ongoing basis. It is not always a comfortable relationship but there is ongoing engagement. That must happen at every level in the beef processing sector, from local plants to groups and companies, throughout the country. That is important.
There is another point on which we would do well to reflect and which was mentioned by some Members. Food is cheap, perhaps too cheap. That is something we must address globally. One third of all the food produced in the world is wasted. The developed world is the main culprit for the levels of food waste. The carbon footprint of that wasted food is the equivalent of almost 10% of total greenhouse gas emissions globally each year. That is an issue we must tackle. People listening to this debate will say that I want to increase the price of food, but I want to find the right balance because we are paying an enormous price for the greenhouse gases that are emitted in producing that food. We must look at the policy instruments we have, including the CAP, and how they interact with our climate change objectives to ensure that, on the one hand, we do not have a policy instrument that is fuelling food production while, on the other hand, we are paying the price for that in the consequent greenhouse gas emissions and so forth. We must find the appropriate interaction of policy instruments to ensure we are properly synchronised on those issues.
One of the ways we will make progress on that is by shining a light on the supply chain and who is getting what out of it. Reference has been made to one view on what some parties are getting out of it but there is a myriad of views. We must get proper information on who is getting what along the supply chain in the beef industry, ranging from producers to processors, retailers and distributors, and ensure that those at both ends of the spectrum, producers and consumers, get a fair deal. Greater transparency in the middle is what is lacking. There is also the unfair trading practices regulation. It was said previously that there is no single bullet here, but transposing that into law will help. That effort is under way between my Department and the Department of Business, Enterprise and Innovation. It will help to shine a light on who is getting what.
I do not intend to trespass on the debate about the CCPC. I have heard some of its public commentary about what it perceives to be its role. I want a regulator for the sector, but some of the things I have heard it say do not enthuse me. The Government will make decisions on where this issue will go. The unfair trading practices, UTP, directive and a regulator for the sector will be part of the public consultation process that will happen shortly. It is an important confidence-building step that if there are any issues or uisce faoi thalamh here in terms of skulduggery or otherwise, they are exposed. I am not alleging that they exist but we need the reassurance and the appropriate agencies with the appropriate powers to ensure that can happen. Transposing the unfair trading practices regulation into law and bolting additional measures onto it, including a regulator, will be important. The beef market task force is an important first step. Obviously, it will engage with retailers. It will also engage with the market observatory in Brussels to be updated on the additional progress it is making in shining a further light on who is getting what in the supply chain.
The beef exceptional aid measure was mentioned in the context of the €100 million. These are demand-led schemes. They are designed on the basis of the quantifiable losses that were incurred in the sector from September 2018 to May 2019 and approved by the Commission on the basis of those losses. The submissions made the Department relative to those of other bodies that were engaged with the Commission on the matter were similar in terms of quantifying them. Then we had to prepare a scheme, on the basis of the data we have, that would cover every potential applicant, and hope that everybody applied. I believe some of the negative commentary on the scheme dissuaded people from applying. That is regrettable.
It is similar to other such schemes. If one considers the sheep welfare scheme introduced by the Government, at €10 per ewe for 2.5 million ewes, it was anticipated it would cost approximately €25 million. Farmers made applications for approximately 80% of eligible ewes so it ended up costing approximately €20 million. It is approximately 80% again, which is normally the case. However, one cannot got back to the Commission and say: "These were the quantifiable losses but because there is only 80% of those eligible to apply we want to increase the payment for the losses we quantified". The scheme is the scheme.
My point is that it is a demand-led scheme. It was open to everybody to apply.Criticism has been levied about the terms and conditions that were attached and we were faced with a request for a supply reduction measure. I believe the route we took, which did not prescribe a head count reduction, but dealt with it through the organic nitrates load on any individual farm was the best way to proceed because it gave farmers individual flexibility to manage the comings and goings from their individual herd number, selling cattle earlier and buying cattle somewhat later to manage. I appreciate that is more challenging on a smaller holding but is preferable than telling farmers that they had to reduce their head count number. I think that is the best way forward. Indeed all previous schemes of this nature, which required assistance from the EU for a market disturbance, had similar instruments, for example, the dairy scheme previously had a supply reduction element to it. It was not breaking new ground. Such schemes always come with terms and conditions attached.
I firmly believe Senator Marshall's point, namely, that this is a low income but crucial sector. Some of it is only sustainable in the long term because people have off-farm employment but the multiplier effect in the rural economy of a beef or a livestock enterprise is significantly greater than what is generated by foreign direct investment because the farmers are buying all their inputs locally, selling locally and they are supporting all of the supply chains that Senator Marshall outlined. That is the reason it is critically important that this sector is supported, albeit that it is a low income sector but the edifice it supports in terms of the thousands of jobs in the meat processing sector, the export earnings, the fertiliser, the veterinary services, the hardware stores is a major input into the local rural economies. That is the reason that in the context of the budget next week and the challenge of Brexit we are particularly focused on ensuring that in terms of the difficulty that could be visited on the agrifood and livestock sectors, in particular in a no-deal Brexit, is to the forefront of our mind in terms of the supports that will be necessary in the context of Brexit occurring.
I thank all Members for their contributions. It is a particularly difficult time in the beef sector, but this is also a sector that has proven its resilience time and time again. People have, as they often do, writ the demise of rural Ireland large only to be confounded by the resilience of the people living there and that is equally true of those involved in agriculture, livestock sectors and in the beef industry in particular.