John Deasy (Waterford, Fine Gael)
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Question 38: To ask the Minister for Agriculture, Fisheries and Food his views on the fact that farm incomes fell by 11.8% in 2008; his plans to introduce policy measures to sustain employment in the sector; and if he will make a statement on the matter. [25989/09]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The CSO's final estimate for Output, Input and Income in Agriculture for 2008 shows that operating surplus in agriculture declined by 11.8% in 2008. This follows an increase of 12.5% in 2007, which was brought about by higher output prices, particularly on dairy and cereal markets. While these high commodity prices were maintained into the early part of 2008, there was a decline in the latter part of 2008, which was deepened by the fiscal and economic crisis. The livestock sector, notably cattle and pigs, did benefit from higher output prices during 2008 and an overall gain in output value for the year. Most of the reduction in operating surplus in 2008 can be attributed to the sharp rise in input costs. Intermediate consumption increased by €458 million or 11.3% primarily due to higher feedingstuffs, fertiliser and energy costs.

There is no doubt that certain parts of the industry are facing significant challenges again this year, however, some reduction in input prices should help to soften the impact of these difficulties. For the medium term outlook the European Commission forecast a gradual recovery aided by growth in global food demand due to population increase and also a longer-term decline in the growth of food-crop productivity. With this in mind preparatory work has begun on a new development plan for the agri-food sector for the period to 2020. It will focus on the critical issues of competitiveness, the challenges from the global economic downturn, currency fluctuations, climate change and how best to maximise the opportunities arising from a growing international food and energy crop markets.

I must state on a positive note that the agriculture and food sector has the innate capacity to help lead the economic recovery in the years ahead. Regardless of the economic difficulties that Ireland currently faces, there is no doubt that this country is fully capable of producing and exporting high quality food and drink products. Despite the challenging market, currency fluctuations and turbulent export environment, Bord Bia estimate that food and beverage exports have declined only marginally in 2008 and in that year were worth around €8.2 billion. Their short to medium term estimates for the sector remain reasonably positive and I believe that this indigenous industry has the potential to boost export returns and approach €10 billion in annual export revenues by 2011.

Beef exports, which are so important, bucked the overall negative trend in 2008 and performed very strongly last year, rising by more than 7% to €1.7 billion with tighter Irish cattle supplies combining with a significant fall in EU beef imports from South America to provide a more positive market environment for Irish beef in key markets. The medium term view is that Irish beef producers have the opportunity to maintain their competitive advantage and consolidate their position on the high value EU markets. As I stated previously, the EU medium term outlook for agricultural commodities is for a gradual recovery supported by growth in global demand and population. These are factors that can work to the advantage of Ireland and will act to underpin employment and the industry.