Terence Flanagan (Dublin North East, Fine Gael)
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Question 18: To ask the Minister for Agriculture, Fisheries and Food his priorities in the area of tillage sector reform; and if he will make a statement on the matter. [16988/10]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The maintenance of an efficient and viable cereals sector in Ireland is clearly very important. Not only does it generate an income to our tillage farmers but it is also a key source of feedingstuffs for our livestock sector. Annual cereals production in Ireland has fluctuated around 2 million tonnes in recent years and it is desirable to try and sustain this level of production in order to avoid over dependence on imported cereals.

Since Ireland is a deficit market for cereals, prices here are greatly affected by world prices and supplies. In 2007, increased demands for grain from the biofuels sector and the growing needs of new emerging markets like China and India drove up world grain market prices. In line with this rise in world prices, grain prices in Ireland increased to record levels during 2007 and growers here reacted by increasing the acreage sown. This resulted in a bumper harvest in 2008 with total grain production of almost 2.4m tonnes, the second highest on record.

However, the bad weather in the autumn of 2008 affected sowing of winter crops and this, coupled with poor returns for growers, led to the area planted being reduced again and consequently a decreased 2009 harvest output of about 1.86m tonnes, somewhat short of the long-term average of 2m tonnes. Despite the significant drop in production, grain prices were also down - on average 30% lower than the 2008 level. This illustrates the fact that the grain price in Ireland is a function of developments on EU and world markets rather than a function of domestic supply and demand developments. Preliminary indications from Teagasc for 2010 are that the total winter crops sown is similar to 2009 while early indications show spring barley sowings are lower than 2009.

I am confident that this year will see some recovery in returns for growers due to reductions in the main input costs and some increase in harvest prices, although clearly this still leaves the tillage sector some way to go to achieving acceptable margins. Despite the current economic down turn across the world, the ever-increasing demand for grain within the biofuel industry and growing consumption patterns in developing countries is likely to continue over the coming years. While the various price spikes experienced in recent times are unlikely to be repeated in the short term, it is certainly possible that average world grain prices will grow over the next decade at a faster rate than over the previous one.

My Department operates a range of services aimed at improving the efficiency, quality and viability of cereal production. These services include seed certification, seed testing and recommended lists of varieties. In addition, Teagasc provides research, training and advisory services for cereal producers. The value of all these support services is reflected in the fact that Irish cereal producers have consistently achieved some of the highest yields in the world. In February I launched a major initiative to draw up a long-term strategy for the agri-food, forestry and fisheries sector and the position of the cereals sector will be examined in this context.