Bernard Durkan (Kildare North, Fine Gael)
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487. To ask the Minister for Agriculture, Food and the Marine the extent to which he is satisfied in respect of the future prospects for the cereal growing sector over the next ten years; and if he will make a statement on the matter. [39844/13]

Simon Coveney (Cork South Central, Fine Gael)
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The maintenance of an efficient and viable cereals sector in Ireland is clearly very important to the well being of the agrifood industry. Indigenous production of cereals is of course, an important part of primary agriculture production. In addition to generating an income for our tillage farmers, the cereals sector is a key source of grain for the milling and malting industry and feeding stuffs for the 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. According to the CSO Cereals Supply Balance sheet Ireland had 74% self-sufficiency in cereals in 2010/2011.

A feature of Irish grain prices over the past seven years has been the significant degree of volatility between years, with Irish grain prices inextricably linked to prices available on international markets. Prices are linked to world harvest output in any given year, with world prices showing increased volatility due to extreme weather influences and speculation by traders entering the commodities markets. In recent years, excess world supply of coarse grains and maize has forced down the price for Irish cereals, while reductions in world cereal harvests have created price spikes.

Teagasc estimates for green prices from 2004 to 2013 demonstrates the volatility of Irish cereal prices over this period. From 2004 to 2006 the farm gate green price of the main cereals in Ireland (wheat and barley) was relatively stable at just over €100/tonne. A reduction in the world harvest in 2007 saw prices peak at €200/tonne, before falling back to less than €100/tonne in 2009. Prices rose steadily in 2010 to €155/tonne, €165/tonne in 2011, before peaking again at €200/tonne in 2012 following a major reduction in world grain supplies due to unfavourable weather conditions in the USA, Australia and Eastern Europe. Grain prices for 2013 have been falling steadily from the peak of 2012 as world harvest estimates for cereals, and especially maize in the USA, are showing an increased level of output over previous years. Current green farm-gate prices for barley are in the region of €145/tonne and €155/tonne for wheat. This volatility in prices is likely to become a constant feature of Irish cereal prices in future and grain producers should factor such fluctuations into their planning and marketing strategies.

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, research funding through the ‘Stimulus’ programme, and funding for the quality assurance scheme. 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.

Food Harvest 2020 outlined a number of challenges facing the cereal sector in the coming years including price volatility, climatic and disease issues, high input prices, small and fragmented holdings and the cost of rented land. However, the report also pointed to positive projections for cereal prices as markets are relatively well-balanced and world cereal prices are projected to be higher than in the last decade. It is known that global grain production is struggling to meet the increasing demand for food, feed and industrial uses. In addition to a rising global population creating a bigger demand for cereals, an increasing demand for meat is disproportionately increasing grain demand even further. It is predicted that global demand for cereals will reach 3 billion tonnes by 2025 compared with 2.3 billion tonnes currently.

Global grain stocks are known to be reducing over time and this should also lead to improved market prospects for Irish cereals. With the world population projected to grow to 9 billion by 2050, it is vital that the agriculture sector, including the Irish cereal sector, can meet the increased demand for food, not just in the next ten years, but through to 2050. Signalling an intention to migrate away from the use of food in the production of biofuels, in October last, the European Commission published a proposal that seeks to introduce a 5% ceiling on the use of biofuels derived from sugar, cereals and rapeseed as part of the count towards the EU’s 10% target for renewable energy in the transport sector by 2020. The proposal seeks to encourage future investment in advanced biofuels such as municipal waste and agricultural residues that do not compete directly with food and feed crops.

Food Harvest 2020 highlighted the importance of optimising yields, tackling high costs and targeting higher priced domestic markets in order to reverse declining production trends and made a number of recommendations on competitiveness, branding and marketing. Some progress has been made on these recommendations and in recent months the Tillage Stakeholder Group presented their development plan to the Food Harvest High Level Implementation Committee (HLIC). This plan identified opportunities and was devised to stimulate concerted action by the sector so as to exploit to the maximum the potential identified by the stakeholders. The HLIC welcomed this report and noted that many of the issues required a strong cross-industry approach if they are to be progressed. They advised that industry should start this process and the group should revert back to the HLIC at a later date on the progress achieved.

The primary growth in requirement for Irish cereals in the years ahead is likely to be for animal feed given the targets for increased livestock output proposed in Food Harvest 2020. However, considerable potential also exists in grains for the drink industry such as malting barley and recent significant investments by the large brewing and distilling companies here in Ireland are proof of such potential. Further, it is envisaged that there will be increased demand for Irish oats milled for human food for the home and export markets and in this context, the success of the Agribusiness sector in securing, long-term contracts with US-based Foods companies to supply milled Irish oats to a premium Irish oatmeal brand in the US market, is particularly welcome. Production of oats is also declining globally and therefore it is envisaged new export markets will continue to come on stream for Irish oats. I am confident that demand will be sustained for a strategic supply of native cereals as raw material for our brewing, distilling, flour and oat milling industry and for the expanded livestock and dairy production foreseen in the Food Harvest 2020 report.