Bernard Durkan (Kildare North, Fine Gael)
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235. To ask the Minister for Agriculture, Food and the Marine the extent to which price fluctuations to dairy and beef producers may be anticipated with the objective of putting in place stabilisation measures; and if he will make a statement on the matter. [49417/14]

Simon Coveney (Cork South Central, Fine Gael)
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Beef

Price volatility in the beef sector has perhaps never been more evident as it has been over the last three years. Prices rose steadily from €3.22 a kilo at the start of January 2011 to an unprecedented peak of over €4.40 per kilo in June of 2013, but declined to €3.51 in September of 2014 before recovering to the current prices of €3.77. In looking at these changes, we cannot ignore normal supply and demand factors. This year we have slaughtered nearly 10% more animals than last year and over 18% on 2012. Added to this supply increase, there has been a drop in Beef consumption throughout Europe. The combination of these points is clearly having an impact.

Putting structures in place to alleviate the impact of these price changes, and assisting farmers to be better prepared for these fluctuations, have been central to this Government’s term in office. The €1.2 billion per year secured in direct payments each year forms a constant and secure income for farmers, and this is a particularly important buffer as prices fluctuate. In addition, the need to ensure a viable future for the beef sector has been central to the draft €4 billion Rural Development Plan submitted to the EU Commission in July.

The RDP includes a number of elements which will be of benefit to Beef farmers throughout the country, including the beef data and genomics measure which will be worth around €300 million over a 6 year period and should bring about long term improvements to the sector though improving the genetic quality of the beef herd. Also, the continued support under the new agri-enviroment scheme GLAS and the €195 million per year support for disadvantaged areas will be of significant benefit to beef farmers. 

Reducing input costs and improving efficiencies on farms has also been a key focus, and in this regard the funding by my Department to Teagasc, ICBF and Animal Health Ireland is critically important. I have also been active in developing new market opportunities for Irish beef and in recent years markets such as Japan, Singapore, Egypt and Iran have been opened, and we are at an advanced stage in opening the US and Chinese markets and this process is ongoing.

Dairy

In respect of the dairy sector, prices are clearly a function of global market dynamics, with supply and demand issues in markets across the globe affecting prices across different dairy commodity groups in domestic markets. Price volatility is a continuing feature of dairy commodity markets, and it is clear that managing the price peaks and troughs in a way that allows farmers and others to plan ahead is a significant challenge for the sector. This issue was very much in focus at the recently held National Dairy Conference which I hosted in November.

The consensus emanating from the Conference based on numerous analyses is that the long-term fundamentals of global dairy market are strong and intact and that the Irish dairy sector is well placed to gain from the opportunities that will arise. Notwithstanding this any objective analysis indicates that we are currently facing into a period of downward price movement following a prolonged period of high prices. Managing the impact of this kind of volatility, particularly on farmer suppliers, remains a key challenge. Market support measures will have a role and I have called on the EU Commission to deploy them as appropriate to support the markets. Processors and the lending sector will also have a role to play through measures such as fixed price contracts and flexible financing arrangements.

Some market support measures have already commenced. Private Storage schemes for butter, cheese and SMP have already been introduced by the Commission in September in a move which I both advocated and welcomed. The Schemes have been extended to the end February for butter and SMP. The Private Storage scheme for cheese has been discontinued due to overuse by non Russian ban affected countries. Furthermore the commencement date under which intervention will be available in 2015 has been advanced to 1 January. These steps already taken by the Commission, some of which have been utilised in Ireland, are certainly welcome, but all possibilities, including a targeted export refund mechanism, or potentially an increase in the intervention rate, need to be considered. In the context of Private Storage schemes, it is critically important to retain some flexibility around the release date to allow for market conditions.

In terms of tools to monitor the market and anticipate the volatility now inherent in it, it is obvious that any market analysis tools that contribute to our better understanding of the market and which facilitate policy makers in an underpinning of their actions with a clear evidentiary basis is to be welcomed. The availability of timely and accurate market information is of course a critical success factor for in any effort to manage price volatility. At EU level, the primary aim of the Milk Market Observatory (MMO), which was founded earlier this year, is to provide the EU dairy sector with more transparency by means of disseminating market data and short-term analysis in a timely manner. At the most recent EU Council of Ministers meeting and along with a number of other like-minded Ministers, I stressed that the role played by European Milk Market Observatory is critical, noting that the challenge for the observatory is to ensure that the data is as close to real time as possible. It is only through timely possession of this information that all of the actors in the sector will be able to respond appropriately with the measures required. At that meeting the Commission indicated an openness to an examination as to how the MMO could be strengthened further including the provision of more relevant data and trend analysis.

Bernard Durkan (Kildare North, Fine Gael)
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236. To ask the Minister for Agriculture, Food and the Marine the measures he will take to prevent dramatic reductions in the prices paid to producers in the dairy and beef sector; and if he will make a statement on the matter. [49418/14]

Simon Coveney (Cork South Central, Fine Gael)
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Beef

As the Deputy will appreciate, questions of price are ultimately matters to be determined between the purchasers and the sellers of cattle. It is neither appropriate nor possible for me or any other Minister for Agriculture in the EU, to intervene directly on these issues. Indeed, the new Competition and Consumer Protection Commission has emphasised this point again in recent weeks via correspondence directed to my Department. Cattle prices are determined by supply - demand dynamics which are in turn influenced by a range of different factors such as consumer preferences, distance to market, consumer confidence, retail promotions, competition with other meats and the overall macroeconomic situation.

Nonetheless, it is vital that farmers are sufficiently remunerated for producing quality animals. My role as Minister for Agriculture is to create a policy support environment that will allow the beef sector to flourish in line with normal market principles. In the recent budget, I announced a total package of approximately €74 million for the beef sector in 2015, including a provision of €52 million for a proposed Beef Data and Genomics Programme which will place Ireland at the leading edge globally in the use of genomics in beef production. The current Genomics Scheme is being further developed and enhanced as part of a 6-year RDP measure which, once approved by the European Commission, will deliver a payment per animal of €100 for the first ten animals, with the remaining animals being eligible for an €80 payment per animal in participating herds. In 2014, I have brought forward a number of initiatives to help the sector, including the creation of the Beef Genomics Scheme with a budget of €23 million in 2014. I have also ensured that the budgets of the Beef Data Programme and the Beef Technology Adoption Programme are retained at €10 million and €5 million which, when added to residual payments under the Suckler Cow Welfare Scheme, amounts to an investment of €40m in 2014.

We have also had notable successes in securing new market opportunities for Irish beef in recent times, with Japan, Lebanon and Philippines opened in the last 12 months. There has also been significant progress in securing market access to Canada, and I expect that Irish beef will be landing on supermarket shelves in the US next year. In addition, Ireland secured a major breakthrough during my recent trade mission to China and, as a result of this, an inspection team from China has been hosted by my Department over the course of the last week or so. This is an important step in securing access for Irish beef to that market.

I should also note recent agreement on a number of outcomes through the Beef RoundTable process. This agreement addresses a range of the issues raised by farmers in recent months, particularly as regards market signals and product specifications. The RoundTable also endorsed the development of Producer Organisations which should, in my view, go a long way to addressing negotiating power along the supply chain and ensure a fair return to beef producers over the medium to long term.

Finally, it should be noted that prices for R3 steers In Ireland have risen by 26 cents per kilo since the beginning of September. This is an increase of over 7% during this period and Irish prices are now at 101% of the EU15 average price.

Dairy

As the Deputy is aware, dairy prices are a function of global market dynamics, with supply and demand issues in markets across the globe affecting prices across different dairy commodity groups in domestic markets. Price volatility is a continuing feature of dairy commodity markets, and it is clear that managing the price peaks and troughs in a way that allows farmers and others to plan ahead is a significant challenge for the sector.

After two years of extremely high prices, the combination of strong production in key dairy producing countries, including the USA, New Zealand, Australia and the European Union, driven by good weather , increased cow numbers in the US and strong cereal harvests, has seen the emergence of a surplus in dairy products on international markets coming into 2015. Furthermore, with Russia and China accounting for 27% of the traded world market in the dairy sector, the effect of surplus stocks in the Chinese market along with the displacement effect of the Russian ban can be seen as critical factors in setting the context for price evolution in the sector.

The anticipated decline in price in 2015 largely reflects the impact of the aforementioned developments on global dairy markets but that these negative results are expected to be temporary in nature.

Under the new Common Agriculture Policy there is a range of tools available to mitigate the worst impact of downward price volatility, including Aids to Private Storage, Intervention and Export Refunds and, as recently as earlier this week at the EU Council of Ministers meeting, I have called on the EU Commission to deploy these tools as appropriate. The Single Farm Payment will also provide a measure of income stability during this difficult period. I have also asked the banking sector to tailor their financial products to take account of the kind of price volatility that will be a feature of international dairy markets, and of course co-ops have a role to play in ensuring that their contractual arrangements with suppliers provide a requisite measure of stability. A focus on innovation and the production of added value products will also have a role to play in mitigating the impact of volatility, and a greater use of futures markets may also feature among the tools deployed by the sector.

In terms of how this will evolve in the medium term, Teagasc, in common with a number of other commentators, anticipate that lower milk prices will lead to a slowdown in the expansion of milk production globally through 2015, with global dairy markets set to witness signs of recovery as the year progresses. In the medium to longer term population growth and increasing affluence in developing countries will continue to drive strong growth in demand for dairy products, and I very much believe that Irish producers will be well placed to take full advantage of this demand. .

Bernard Durkan (Kildare North, Fine Gael)
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237. To ask the Minister for Agriculture, Food and the Marine the new markets established for beef and dairy produce in the past four years; the extent to which prospects have improved in this regard; and if he will make a statement on the matter. [49419/14]

Simon Coveney (Cork South Central, Fine Gael)
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Beef

My Department engages on a daily basis with many countries, in collaboration with Bord Bia and Irish embassies’ personnel on market access issues. These initiatives have led to a number of notable successes over the past four years in securing agreement to import from authorities in Japan, Singapore, Egypt, Iran, Lebanon, Namibia, The Philippines and New Caledonia.

Following a decision by the authorities in the US to lift the ban on the importation of beef from the European Union, the Federal State Inspection Service (FSIS) carried out an audit of Irish beef production controls in June 2014. We received the draft final report of their visit recently and we continue to engage in order to complete the steps necessary to gain access for Irish beef to the US market. My Department is working with the meat industry to advance the various technical requirements to ensure commencement of the trade at the earliest possible date.

In November 2014, I led a Trade Mission to China and I secured a commitment from the Chinese authorities to send an inspection team to Ireland to carry out on audit of Irish beef production controls, in particular with regards to BSE. The inspection team arrived on the 10^thof this month and is currently carrying out its programme. While there are a number of stages to complete before Ireland secures access for beef to China, I am hopeful that the inspection visit currently under way will lead to significant progress on the issue.

There is a strong demand for beef globally and my focus is to continually seek to gain access to third country markets which will enable Irish exporters to take advantage of the opportunities that arise.

Dairy

With respect to the dairy sector and whilst traditional markets such as the UK and the EU will naturally remain paramount for Irish dairy sector exports, it is abundantly clear that significant market opportunities exist for the sector in new markets outside the EU in the medium to long term horizon. An examination of the export statistics in the sector gives a real sense of the emerging opportunities in new and exciting markets for Irish dairy produce. In this regard the Deputy will already be aware that more than 85% of Irish dairy production is exported and Ireland exported dairy products to over 130 countries worldwide in 2013, with one third of the value of dairy exports going outside the EU. In 2013, the value of dairy exports increased by 15 per cent to some €3 billion for the first time.

It is abundantly clear that Ireland’s high standards of food safety and environmental sustainability fundamentally underpin this success. As Minister for Agriculture, I have recently witnessed firsthand the potential of the Chinese market in particular. Ireland’s dairy offering resonates with Chinese and other third-market consumers who place safety, traceability and sustainability at the core of their value proposition. Companies based in Ireland exported almost €300m worth of dairy produce to China in 2013 and the expectation for 2014 is that the figure will run approximately 25% ahead of last year. This follows on from the positive announcement from Chinese authorities earlier this year in respect of the results of an audit of Ireland’s dairy sector, which means that Irish plants have been found to fully meet the standards of new Chinese food safety laws. This approval will allow the Irish dairy sector to build on their formidable reputation in international markets, and in the increasingly important Chinese market, and to further capitalise on Ireland’s reputation for green, efficient, high quality dairy production.

Whilst an obvious and significant market, the dairy sector’s new frontiers, in terms of development and consolidation, do reach beyond China. For example, in 2013 Irish dairy exports to Nigeria were broadly compatible to exports to the United States. Exports to Senegal outperformed exports to a number of Ireland’s more traditional near-Europe trading partners. These are examples used to highlight some of the new and exciting frontiers for the Irish Dairy sector.

I can assure the deputy that the development of international market opportunities for Irish Agri food products will continue to be a priority for my Department.