Bernard Durkan (Kildare North, Fine Gael)
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Question 969: To ask the Minister for Agriculture, Fisheries and Food his plans for the future growth and development of the lamb industry with particular reference to home and export markets; if he has satisfied himself that the product is sufficiently competitive at home and abroad; if issues have arisen in the area of markets sought, lost or gained in the past two years; and if he will make a statement on the matter. [11298/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I believe that the report of the Sheep Industry Strategy Development Group provides a proper framework for the future development of the sheep sector. While most of the group's recommendations are to be implemented by the industry itself, a number of them fall within the remit of my Department and the state agencies under my aegis. The current position regarding the implementation of these recommendations is as follows:

A new company called 'Sheep Ireland' which will take over the Department's current breed improvement programme has been established to develop a new programme. An interim Sheep Board, comprising representatives of farming organisations and breeders has been established to oversee this process, with the Irish Cattle Breeders Federation (ICBF) providing the technical and professional service required.

My Department secured European Commission approval for a new supplementary measure in REPS 4 promoting mixed grazing of cattle and sheep. Under this supplementary measure a farmer can qualify for an annual payment of up to €1000 in addition to his or her basis REPS payment.

A trial to examine the feasibility of mechanical carcase classification for lamb was conducted last year. The results of this trial are being analysed. It is hoped that the system will allow for the accurate and objective mechanical classification of lamb carcases and will gain universal industry support. This would aid greatly in price transparency, which is a prerequisite for efforts to improve quality and respond to the needs of the market.

The Lamb Quality Assurance Scheme was established in 2007. This Scheme which is operated by Bord Bia, now has 7000 participants and it is hoped to increase the participation rate during the current year.

The number of new potential markets for Irish lamb is limited due to the relatively high cost of the meat and to cultural factors, as lamb is not widely eaten in many countries of Eastern Europe. As a result, Bord Bia has intensified its efforts to promote lamb on home and export markets. Together with its UK and French counterparts it is part of a generic promotion campaign on the important French market.

Teagasc have developed a comprehensive plan to restructure their sheep support services, including a programme for Technology Evaluation and Transfer farms, which include hill and lowland areas. This approach will provide an opportunity to develop a dialogue with sheep farmers about the application of the latest management practices to their enterprises and to identify research and development needs.

The actions being taken by my Department and the state agencies under its aegis complement those being taken by the Industry. I am satisfied that taken together, all of these actions will be of significant benefit to the sector.

Approximately 70% of Irish sheepmeat production is exported, mainly to the high-value EU market. Traditionally, France has been the major export market for Irish lamb and in 2008 it accounted for more than 50% of Irish sheepmeat exports. The French market, however, has been in decline due to a fall in consumption there. Irish sheepmeat is facing strong competition in France from the UK due to a weakened sterling and from New Zealand, which continues to build up its presence of chilled lamb on the EU market. While Irish exports to France have declined, the impact has been lessened by increased exports to other markets. Exports to Sweden and Denmark have increased significantly in recent years. The issues facing the sheep sector are not unique to Ireland and I have ensured that they have been kept to the forefront at EU meetings.

Following on from the recent CAP Health Check, I received a number of submissions regarding possible future support for this sector. One of my primary objectives in the Health Check Negotiations was to obtain access to unspent funds within the EU's agriculture budget for use by Member States with a wide range of discretion. This was achieved in the final deal and, as a result, Ireland will receive additional funds amounting to approximately €7 million in 2009 (from the National Reserve) and €29 million in subsequent years, to fund measures that are targeted at specific sectors in need of assistance.

I announced yesterday my decision to use the €7 million available this year on a new Uplands Sheep Payment. In reaching my decision, I recognised the difficulties and costs, including compliance costs, facing this sector. I also wanted to ensure that this aid would not create any additional administrative burden for hill sheep farmers. Subject to Commission approval, payments will commence on 1 December 2009, the first date that payments can commence under the EU Regulations. Based on the estimated National Reserve funds for 2009 and the eligible area declared by farmers in 2008, approximately 14,000 hill sheep farmers will benefit from this payment. The aid will be payable on mountain type grazing land up to a maximum of 15 hectares and based on the data available for 2008, it is estimated that the level of aid will be €35 per hectare and a maximum payment per farmer of €525. This measure is solely for 2009. A decision on the use of the unspent CAP funds and modulation monies from 2010 onwards, will be made when further information is available on the detailed rules that will apply to these measures. The EU Commission will shortly table its proposals for the detailed rules for the use of the unused funds and it is expected that they will be finalised in May/June of this year. It is important that these funds will be used efficiently for the development of Irish agriculture.