Written answers

Thursday, 29 April 2010

Department of Agriculture and Food

Food Industry

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 46: To ask the Minister for Agriculture, Fisheries and Food the impact that grounding of flights as a result of volcanic ash has had on agricultural exports; and if he will make a statement on the matter. [16897/10]

Photo of Brendan SmithBrendan Smith (Minister, Department of Agriculture, Fisheries and Food; Cavan-Monaghan, Fianna Fail)
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The cancellation of flights following the volcanic eruptions in Iceland has had a low impact on the food industry. Up to 97% of food exports are moved by road and sea. Investment in the road infrastructure in Ireland means that containers can switch quite easily between ports. Some specialist seafood products are exported by air to Japan, but as this is not the peak season, impact on sales is not expected to be significant.

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 47: To ask the Minister for Agriculture, Fisheries and Food his plans for the future development and expansion of the beef, lamb, pigmeat, poultry, dairy and cereal sectors; the extent to which market forces have affected each sector negatively or positively on an annual basis over the past five years to date in 2010; and if he will make a statement on the matter. [17003/10]

Photo of Brendan SmithBrendan Smith (Minister, Department of Agriculture, Fisheries and Food; Cavan-Monaghan, Fianna Fail)
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The market performance of the meat, dairy and cereal sectors is a function of supply and demand, and has been affected by the recent global economic downturn, exchange rates and other factors. Plans for the future development of these agricultural sectors will be set out in detail in the forthcoming 2020 Strategy, which I plan to publish later this year. Dairy Sector

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

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. Pigmeat

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 pig 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 food service 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. Poultry

The farm gate 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. Lamb

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:

By encouraging Irish consumers to buy more Quality Assured lamb.

By 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.

By 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. Cereal Sector

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 also a key source of feedingstuffs for our livestock sector. Annual cereals production in Ireland has fluctuated around 2 million tones in recent years and it is desirable to try and sustain this level of production in order to avoid over dependence on imported cereals.

My Department operates a range of services aimed at improving the efficiency of, quality and viability of cereal production. These services include seed certification, seed testing and recommended list 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 cereals producers have consistently achieved some of the highest yields in the world.

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