Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

Question 241: To ask the Minister for Agriculture, Fisheries and Food the extent of growth in the beef, lamb, pigmeat, poultry and dairy sectors in each of the past five years to date in 2010; the action intended arising from trends emerging; and if he will make a statement on the matter. [17299/10]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
Link to this: Individually | In context

According to the CSO, the values of output at producer prices for the beef, pigmeat, sheep, poultry and dairy sectors for the past five years, were as shown in the table below.

*provisional

The market performance of the beef, lamb, pigmeat, poultry and dairy sectors is a function of supply and demand, and has been affected by the recent global economic downturn, exchange rates and other factors. I will be setting out in detail my plans for the future development of these agricultural sectors in the forthcoming 2020 Strategy, which I plan to publish later this year. That said I would have the following specific comments to make on each area.

It is clear in the dairy sector, for example, that the key to future prosperity lies in increased efficiency. We in Ireland have the potential to significantly grow our milk production and take advantage of the very positive outlook for the dairy sector over the medium to long term. We also enjoy a significant advantage in the form of a grass-based production system, which, as well as keeping costs down, will help to achieve greenhouse gas emissions reduction targets. The exploitation of this advantage through the application of modern technology in, for example, grazing and breeding management, will help the sector to maximise efficiency and deal with the kind of price volatility that we have experienced in the last two years and that is likely to recur in the future as exposure to global market forces intensifies. Efficiency will also be the key for the processing sector, with the focus increasingly falling on the need for greater collaboration and rationalisation, as well as investment in R&D and new product development.

Market forces have a major influence on the returns to the dairy sector which fluctuate in accordance with the international dairy markets. Over the past few years the international dairy industry has witnessed extremes of volatility in product prices on an unprecedented scale. During 2007 dairy prices reached record high levels during the international commodity price boom. In 2008 world dairy markets returned to far lower levels primarily due to a collapse in demand caused by the global economic downturn. The slump continued into 2009 before gradually improving later in the year. I continually pressed the Commission to take all appropriate actions to deal with the dairy market situation and the implementation of a range of support measures helped to stabilise the market. The dairy market situation has improved considerably since last Autumn and more recently has shown signs of a robust recovery with increased commodity prices on world and EU markets, and a consequent rise in milk prices.

Beef production is an extremely valuable component of the Irish economy with an export value of some €1.4 billion in 2009. Some 90% of Irish beef production is exported, with over 90% of product now being exported to the high value EU markets. Given recent developments in the international and domestic economy, the immediate prospects for the Irish beef sector remain challenging. As a result of the importance of international trade, the impact of exchange rate developments will be important – particularly in relation to the UK, our largest single market – while, due to challenging economic conditions, a continuing switch to lower value cuts is evident in key markets.

While the market performance of, and price return on, beef products is a function of supply and demand, I am committed to working with the sector in responding to evolving market challenges and in providing a sound framework for the development of the sector. To this end, a number of policy initiatives have been developed or enhanced. These include, inter alia, the Suckler Cow Scheme, Bord Bia Irish Beef Promotion Strategies, Bord Bia Quality Assurance Scheme, Breed Improvement Programmes and the Beef and Sheepmeat Capital Investment Scheme. These complement the actions being undertaken by Teagasc and other State Agencies, and together are important in underpinning production, quality and the ongoing marketing success on the important EU markets. My Department will also continue to work with Bord Bia, the Department of Foreign Affairs and the industry to identify and develop other potential markets.

The pig sector remains an important component of the Irish agricultural sector. With a farmgate value of some €300 million, and employment in the industry of approximately 7,000, the sector provides an important source of income to rural communities all over the country. Almost half of Irish production is exported with the UK accounting for 50% of exports with the remainder split between Continental Europe and third countries. In common with other meats, returns to producers have fallen as a result of the economic recession. Prices fell in 2009 and have continued to decline during the early part of this year. Irish price movements over recent years have mirrored those of the EU as a whole.

Pork remains the most-consumed meat worldwide and consumption is expected to increase steadily over the next decade. In order to best position the Irish industry to share in that growth, I am progressing a number of initiatives. Teagasc has prepared a development strategy for the Irish pig industry, which identifies the issues facing the sector and makes certain recommendations. Measures have been proposed that need to be taken to position the sector for a successful future and a 'Pig Industry Strategy Steering Group', which includes representation from my Department and all sectors of the industry, has been established for the purpose of implementing the recommendations of this development strategy. I will continue to work with industry stakeholders to advance these recommendations.

On marketing and promotions, the domestic market remains the most important for Irish pigmeat, accounting for 50% of our production. Therefore, protecting and maintaining the market share of Quality Assured pigmeat in Irish retail is critical for the Irish industry. Bord Bia will continue to work with the industry and invest heavily in consumer promotions at retail and education programmes at foodservice level to promote Quality Assurance.

The ongoing marketing initiatives conducted by Bord Bia both at home and overseas are instrumental in supporting the pigmeat sector. Resources have been increased by Bord Bia, through the Marketing Fellowship Programme, in the market development of more customers for Irish pig meat within the EU. By targeting the end users and further manufacturers directly, we can shorten the supply chain and return greater value to exports. We currently export to over 20 non-EU markets and it is my policy and that of the Government to ensure that Irish producers have access to markets worldwide. My Department will continue to work with Bord Bia, and the Department of Foreign Affairs and the industry to identify and develop other potential markets.

The farmgate value of Irish-produced poultry meat is thought to be approximately €150 million. Despite considerable competition from imports the domestic industry has proven to be quite resilient in recent years. The majority of Irish product is consumed in this country with exports focussing largely on by-products. The target over the medium term is to increase the share of the Irish poultry meat market being supplied by Irish producers. To this end Bord Bia is developing and enhancing policies with regard to Poultry Quality Assurance.

Although the scarcity of supply is currently helping to support producer prices, market forces have negatively affected the lamb sector in recent times. As one of the most expensive meats on the retail shelf, tightened consumer spending has impinged on demand on all main markets. A weaker euro/sterling exchange rate has reduced Ireland's competitiveness on the French market - our largest export market for lamb, where we compete directly with British exporters.

Bord Bia's promotional strategy for the Irish sheep sector addresses these market forces in the following ways: encouraging Irish consumers to buy more Quality Assured lamb; collaborating with its French and English counterparts in a campaign to reverse the decline in consumption of lamb on the French market, which accounts for over 50% of our exports; and working with individual exporter to increase the amount of exports to higher value markets such as Germany and Scandinavia and thereby reduce Ireland's dependency on the French market. Bord Bia will spend up to €1 million this year on such promotional campaigns.

Earlier this month I launched a three-year, €54 million grassland sheep scheme, the funding for which, comes from unused Single Payment funds. The focus of this scheme is on breeding ewes and it should help to prevent further declines in flock numbers, by giving farmers a real incentive to maintain their production levels. It should also provide sheep farmers with a much-needed boost to their incomes. The sector should also benefit under the Rural Development Programme, where an indicative figure of €8 million has been allocated for sheep fencing and mobile handling facilities, to help sheep farmers in reducing labour input. In addition to this extra funding, last year I assigned €7 million from the 2009 Single Farm Payment National Reserve to 13,000 hill sheep farmers, under the Uplands Sheep Payment Scheme. Teagasc has also allocated almost €1.5 million for sheep research for 2010.

All of these supports complement the work being undertaken by my Department, its state agencies and the industry, following the recommendations of the Sheep Industry Development Strategy Group – "the Malone Report". This report provides a clear blueprint for the development of a more profitable sheep sector in Ireland and covers production, processing and marketing. While most of the recommendations in the Malone report fall to be implemented by the industry itself, my Department is playing its part by providing assistance for areas such as breeding and quality assurance.