Leo Varadkar (Dublin West, Fine Gael)
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Question 375: To ask the Minister for Agriculture, Fisheries and Food the incentives from his Department and his Department's agencies for the production of bio-fuels; if he will review these in view of the current world food crisis; and if he will make a statement on the matter. [17740/08]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The following incentives are available from my Department to encourage farmers to produce bio-fuel feedstocks (energy crops).

An EU premium of €45 per hectare available under the EU Energy Crops Scheme.

A National Energy Crop Premium worth €80 per hectare.

50% establishment grants for willow and miscanthus.

Areas sown with energy crops may also qualify for the single farm payment. The Department's agencies do not pay direct subsidies for bio-fuel production. Teagasc provide advisory services to farmers to develop more efficient production systems generally and improve crop yields. Research undertaken by Teagasc assesses the opportunities provided by bio-fuel crops and communicates this information to farmers.

I have no plans to review the energy crop incentives given the relatively small area devoted to energy crop cultivation in Ireland. The percentage of agricultural land under energy crops in 2007 was less than 0.02% comprising some 9,000 hectares. Teagasc estimate that potentially some 75,000-100,000 hectares of land could be devoted to energy crops in Ireland without impacting negatively on food or animal feed production. There is potential to expand the feedstock base with the advent of new second-generation bio-fuels, which use non-food feedstocks such as wood biomass.

The current rise in food prices is largely associated with rising world population and increased demand in some rapidly developing economies where demand is outstripping supply. Other factors include declining stocks of grain, speculation in commodity futures, higher energy costs and export restrictions imposed by some countries. The diversion of more land to produce bio-fuels, particularly corn-derived ethanol in the USA contributed to the surge in cereal prices in 2007.

In response to the current high prices for cereals and the abolition by the EU of compulsory set aside, extra land is being devoted to cereal production in Ireland and across the Community in 2008. It is forecast that the 2008 wheat crop in the EU could increase by 17m tonnes compared to 2007. As crops for bio-fuels, are estimated to account for about 3m-4m tonnes of production, the additional 13m tonnes of cereals at EU level should help increase the availability of stocks for food and animal feed.

In 2007, the EU Commission carried out an 'Impact Assessment' to assess the effect of the 10% bio-fuel target on transport fuel on EU-27 agricultural markets in 2020. The assessment concluded that the 10% bio-fuel scenario would not overly stretch land availability, and as a consequence food production. The EU Commission recently proposed new sustainability criteria for bio-fuels, that are counted towards the 10% target. As part of the monitoring and reporting system for bio-fuel production, the Commission will be required to analyse, among other items, the impact of EU bio-fuel policy on the availability of foodstuffs in exporting countries, the ability of people in developing countries to afford these foodstuffs and wider development issues.

The reality is that bio-fuel production is currently one of the few practical ways of making a real impact on oil dependence and greenhouse gas emissions in the transport sector. Nonetheless the objective should be to ensure that bio-fuels, are produced in a sustainable fashion and not have undesirable consequences for food production, the environment and biodiversity.