Fiona O'Loughlin (Fianna Fail)
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I thank the Cathaoirleach for selecting this important matter. I also thank the Minister of State, Deputy Heydon, for making himself available to take this Commencement matter in the Chamber. I raise the challenges facing the equine sector in Ireland. It is an issue that disproportionately affects my area of Kildare. I will begin by quoting the foreword of a recent Horse Racing Ireland, HRI, report, which stated:

There are few places in the world with a breeding and racing tradition as rich as that in County Kildare. As well as success on the track and in the breeding sheds, the industry provides over 4,700 jobs in the county and over €420 million in annual expenditure. In addition to being the home of some of the most iconic studs and training establishments in Europe, the county features world-famous racecourses at the Curragh, Punchestown and Naas.

Those are the words of the HRI. It is not just a matter of me trying to make a case for my local area. Kildare, as the Minister of State knows, is synonymous with horse-breeding and has been for hundreds of years. This cannot be taken for granted as without question, the industry in Kildare is under threat. Unfortunately, Brexit has had major repercussions on the sector and many have negatively affected domestic breeders. I recently met Ms Cathy Grassick, chair of the Irish Thoroughbred Breeders Association, with whom the Minister of State has also met, who told me there has been a decrease of 27.5% in the number of mares being visited by UK stallions in the past two years. That is significant. Looking at the figures Ms Grassick presented to me, there is a considerable loss of income to the tune of almost €11 million. That is a colossal income deficit that the industry cannot afford. There are other ancillary industries that would also gain if we were to return to the previous level. They are also losing out.

According to the HRI, Kildare is the second largest contributor to the direct economic impact of breeding in Ireland, with total breeding revenue of 23% of the total, which comes out to approximately €102 million. This revenue is generated primarily through bloodstock sales in an amount of €79 million and nominations of €30 million. There are more than 820 breeders registered in Kildare and leading global bloodstock entities have a significant presence. There is also a significant number of smaller breeding operators which collectively also form an important part of Kildare's local economy. Kildare is home to more than 40 stallions, which is more than any other county in Ireland, including several world leaders, based on the success of their progeny.

We must support this industry. The IRE incentive scheme has worked well, and I thank the Minister for Agriculture, Food and the Marine, Deputy McConalogue, for his help and support in that regard. The HRI is now saying it does not have the funds to continue it, so we have to find them somewhere. There is one mechanism I know Fianna Fáil supports and that needs the support of the Government. We need to utilise the Brexit Adjustment Reserve fund. This fund aims to provide financial support to the member states, regions and sectors most affected by Brexit to deal with the adverse economic, social, territorial and, where appropriate, environmental consequences. I have raised this proposal with officials in the Department who I understand are looking at it in detail. Early indications from conversations with the Minister, Deputy McConalogue, seem to be positive.

Irish breeders are up against time with the UK having already put in place a VAT exemption on mares and with a number of high-profile stallions already announced for retirement in the UK. Mating counts are due to be decided in the coming weeks and the Irish equine sector and breeders are going to be serious losers, with an already serious reduction of UK mares travelling to Ireland, as I have outlined. This is due to Brexit, increased cost and health requirements. Without Government action and intervention, not only will this reduction of UK mares continue but this will now be added to by the ability of Irish breeders to send their mares to the UK with VAT charges. I want to know what is happening. I want to know if the Brexit Adjustment Reserve fund will be used for this purpose. It is important.

Martin Heydon (Kildare South, Fine Gael)
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I thank the Senator for raising this critical issue not only for our county of Kildare but for the rural economy, of which the horse racing and breeding industry is such an integral part. It is a key contributor to the rural economy across Ireland. We know that is the case from the 2017 Deloitte report on the Economic Impact of Irish Breeding and Racing, commissioned by the HRI. That report estimated the value of the Irish racing and breeding industry to the Irish economy in 2016 at more than €1.8 billion. The industry employs 29,000 people around the country, directly and indirectly. That gives a sense of the scale and strength of the industry.That is why the Government is so supportive of a sector that is a such key contributor and is very proud to support the horse and greyhound racing fund. I am delighted to have the opportunity to reaffirm to the House, which voted on a motion on that fund last week, my commitment to that fund which is a key economic driver and my support for an industry in which we are world leaders.

Ireland is the largest producer of thoroughbred foals in Europe and the third largest in the world only behind the USA and Australia. There are thoroughbred breeders based in every county and 92% of these breeders own five mares or fewer. Ultimately, that diverse nature and the number of small breeders is the strength of our industry. The value of thoroughbreds sold at public auction in 2019 was €279 million. Britain accounted for some €230 million of this. Some 60% of Irish thoroughbreds born annually are exported and 80% of those are to Britain. That means that Brexit had a very significant impact.

The EU-UK Brexit trade agreement reached in December 2020, which included the Northern Ireland protocol, was welcome. However, the facility to move horses freely without veterinary certification between Ireland and Britain under an agreement known as the tripartite agreement, no longer applies. It is recognised that this has added cost and an administrative burden to such movements. I am acutely aware that smaller breeders, who did not have the economies of scale or the staff resources to handle this administrative burden and cost, were particularly impacted by that.

The European Commission is temporarily allowing transport between Ireland and France under certain rules, until conditions are agreed between Ireland, France and the Commission under which registered horses may travel between the two member states without health certification in accordance with relevant EU regulations. It is expected that these negotiations, which are ongoing, will be concluded by the end of the year.

The Irish Thoroughbred Breeders Association has submitted a proposal for a significant funding allocation from the Brexit adjustment reserve to the Department of Agriculture, Food and the Marine. The proposal is centred on three key supports. First is the development of new and existing markets. As Minister of State with responsibility for new market development, I am keen to see help being given to support that; second, reducing costs and enhancing ease of trade between Great Britain and Ireland; and third, supporting thoroughbred breeders on-farm efficiencies to reduce costs. The ITBA has indicated that the premise of the application is to support Irish thoroughbred breeders as a direct result of the impacts arising from Brexit.

There are significant state aid considerations. State aid requirements are fully applicable to all Brexit adjustment reserve applications. The submission made by the ITBA is currently being considered in this context by my Department. We must make sure we navigate those state aid requirements, which are complex and rigorous. I know many people in the industry and have met so many breeders and this has been raised with me by the ITBA and others. The fact is they have a very strong case about the impact of Brexit. We need to make sure we can navigate those state aid requirements to try to get support to the industry that is very much a bedrock of economic activity in rural Ireland.

Fiona O'Loughlin (Fianna Fail)
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I acknowledge there is a very strong case here. The former chief executive, Shane O'Dwyer, and the chairperson, Cathy Grassick did a really excellent job with the proposal, which I have read thoroughly. It is centred on the three key supports of reducing costs, enhancing ease of trade and developing new and existing markets. The question I asked was specifically around the support of the IRE scheme because it has proved to be really excellent. I did not get a sense from the Minister of State's response that it would be specifically considered. It is really important that we get some positive signs from the Minister of State on that because, as I said, time is of the essence. Plans will be made in the next few weeks. While the proposal in general is being considered we need some more specifics.

Martin Heydon (Kildare South, Fine Gael)
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The Brexit adjustment reserve is where the ITBA has directed its ask and that is where the potential lies. You have to have that demonstrable impact from Brexit and there is no doubt in my mind that this industry has been impacted by that. The Senator spoke about successful schemes and so on. I pointed to the horse and greyhound racing fund earlier as a good indication of the Government's support. The equine support measures coming in under the targeted agriculture modernisation schemes, TAMS, is also something I have advocated very strongly for. It will come in during the new year and will have a huge impact, including in farm safety which is my own area of responsibility. It will make a really significant difference for breeders to be able to invest in their holdings and in safety requirements. We also have the continued support of the National Stud in Kildare and look forward to working with it in its ambitious plans. Brexit threw up issues around VAT which we managed to address around race horses. We have more work to do to support breeders around VAT too. There are a number of different measures by which the Government and the Department of Agriculture, Food and the Marine are supporting the industry across a host of those areas and we will continue to work very closely with all the organisations including ITBA and HRI and the rest of the industry to make sure we support it to continue to provide the jobs and the economic activity so crucial to rural Ireland.