Simon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context

I am satisfied that the removal of milk quotas in 2015 represents a major opportunity for the Irish dairy sector to expand production, increase its contribution to the Irish economy and improve returns to dairy farmers.

The Deputy will appreciate that the significant challenge facing the Government in the context of Budget 2012 was to address the very large deficit the public finances while continuing to provide support for the productive sectors. I am satisfied that in framing budget 2012, the Government demonstrated its commitment to the development of the agri food sector, including the dairy sector.

In particular, the budget day announcement included a strategic tax package designed to assist the development of the agrifood sector, and these measures will be of particular assistance to the dairy sector. These include:

· a stock relief incentive to encourage milk production partnerships;

· reduction in the stamp duty rate on agricultural land from 6% to 2%, so as to stimulate land sales and land transfers. Facilitating land transfers to dairy farmers who are developing their production capacity in the run up to 2015 is a key strategic aim ;

· a restructuring of retirement relief available on capital gains tax to incentivise the earlier transfer of farm assets to the next generation. Encouraging new blood into the dairy sector has been a key element in dairy policy for a number of years now and this measure is entirely consistent with that aim.;

· the retention of the 90% agricultural relief on Capital Acquisitions Tax for transfers of farms valued at €2.5 million or less which are transferred to a son or daughter, or a favoured nephew or niece. This measure will also facilitate the transfer of land to the next generation of dairy farmers;

· the doubling for farmers of the income tax deduction in respect of the increased costs arising from the change in carbon tax on agricultural diesel;

· An amendment to the VAT refund order for farm construction to allow farmers, including dairy farmers, to claim a refund on wind turbines purchased from 1st January 2012.

On the expenditure side, I have provided for significant funding to re-open TAMS, which will include a component for a Dairy Equipment Scheme to encourage capital investment at farm level. I have also provided some €128 million in grant in aid to Teagasc, which plays a key role in the research and knowledge transfer in the dairy sector. This is in addition of course to the €6 million which will be provided in 2012 through unspent Single Farm Payment Scheme funds for the Dairy Efficiency Scheme, which has been a singular success in encouraging participants to adopt best practice and improve their efficiency through their participation in discussion groups.

I have also announced that I intend to begin a consultation process to determine whether additional activity could be undertaken by Bord Bia to complement the efforts underway by industry to ensure the successful promotion and marketing of the expected increase in dairy production. I must stress in this regard that there should be no duplication and overlap between the activities of Bord Bia and IDB or other operators in the industry. It is precisely to avoid any such duplication, and to ensure that any additional activity by Bord Bia adds value to the very successful work of existing operators in this field, that such a consultation is critically important. The question of any additional funding required will be considered in the context of these consultations.

Finally, I should say that the opportunities in the dairy sector will primarily be driven by increasing global population and an associated increase in demand for dairy products as developing economies expand, their peoples become more affluent and their diets become more westernised. These factors, are driving strong milk prices at present, and the medium and long term forecasts are positive, and this will help to support the dairy expansion in Ireland.

Food Harvest 2020 includes a strategic roadmap for the development of the dairy sector and I am personally chairing the High Level Implementation Group to ensure that all of the stakeholders in this very important sector are committed to achieving the ambitious targets that the industry has set for itself.

I am satisfied that we have made a very positive start to the implementation of Food Harvest 2020 and that with a continuation of the commitment that is evident from all stakeholders to date, the target for a 50% increase in production is achievable.