Written answers

Wednesday, 13 July 2016

Department of Agriculture, Food and the Marine

Farm Household Incomes

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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240. To ask the Minister for Agriculture, Food and the Marine the degree to which he expects to enhance incomes for farm families over the next five years; and if he will make a statement on the matter. [21576/16]

Photo of Michael CreedMichael Creed (Cork North West, Fine Gael)
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Food Wise 2025, the new ten year strategy for the agrifood sector published in July last year identifies the opportunities and challenges facing the sector and provides an enabling strategy that will allow the sector to grow and prosper. Food Wise includes more than 400 specific recommendations, spread across the cross-cutting themes of sustainability, innovation, human capital, market development and competitiveness; as well as specific sectorial recommendations.

The implementation process for any strategy is vital for its success. I chair the Food Wise High Level Implementation Committee (HLIC), with high level representatives from all the relevant Departments and State agencies. The committee reviews progress on detailed actions on a quarterly basis, in order to identify and solve problems quickly. Stakeholders regularly present to the committee meetings on their priorities for particular sectors or themes and by the end of this year, the HLIC will have reviewed in detail progress on the five cross-cutting themes and the twelve individual sectors outlined in Food Wise 2025. So it is very much a live and continuously updated process. For example, the HLIC convened, following the UK vote to leave the EU, to agree on a coordinated approach for the agrifood sector.

I launched a first year progress report on Food Wise 2025 entitled ‘Steps to Success 2016’ earlier today. Of the 330 detailed actions which were due to commence in 2015 or 2016, 28% have been achieved or substantial action has been undertaken; and a further 67% have commenced and are progressing well. A detailed report on the status of Food Wise 2025 actions is available on my Department’s website together with the first year progress report.

As a small open economy which exports the vast bulk of its main agricultural commodities, Ireland will always feel the effects of volatility on world markets. However, there are measures in place to help Irish farmers through these periods. I believe that moving up the value chain where possible, in terms of the type of products sold and how they are produced, is an important insulation against volatility. The Food Wise strategy for the sector contains detailed recommendations aimed at improving value added and productivity at farm and food industry level through a focus on sustainability, efficiency, knowledge transfer and innovation.

I recently met with the CEOs of the main banks and stressed the need for them to be flexible in the context of increased income volatility. The banks told me that they recognise and are responding to the challenges facing farmers in this regard. They all offer options such as moving loans to interest-only repayments and extending overdraft facilities. They all stated that they are committed to the sector for the long term and are aware its cyclical nature. I also took the opportunity to question the banks on the relatively high interest rates for SMEs in Ireland compared with those across Europe.

Partly in response to these relatively high interest rates, my Department has just published a request for tender to procure an ex-ante assessment to assess any current failures in the access to finance market in Ireland. This is a first step towards the potential introduction of Financial Instruments under the EAFRD Rural Development Programme and the EMFF Seafood Development Operational Programme.

Access to finance was discussed at the Dairy Forum in June, with an exchange of views with the main banks now a part of the agenda at each meeting. Before the meeting I formally launched the Dairy Forum’s ’Financial Management Initiative’, a programme of cash flow and financial management training and advice for dairy farmers, which is an appropriate and practical initiative at this time.

Access to finance was also discussed at last month’s meeting of the Food Wise 2025 High Level Implementation Committee, which heard from representatives of the SBCI and the Irish Strategic Investment Fund (ISIF). Both are now active in the market. In its last report in January, the SBCI stated that of the 4,619 loans amounting to €172 million drawn down by SMEs, 26% had been accessed by agriculture, which is currently its largest sector.

My Department will continue to engage with the Department of Finance on key agri-taxation policy objectives, including responses to income and price volatility.

While there are no specific risk management tools included in the Rural Development Programme, risk management is one of the topics covered by Knowledge Transfer Groups. Animal disease risks are covered by the Targeted Animal Health and Welfare Advisory measure.

Fixed price contracts are increasingly becoming a feature of the producer/processor relationship in the dairy sector, with numerous milk purchasers offering such contracts, which provide producers with the opportunity to lock in prices over the medium term, taking costs of production into account. Such relationships are a welcome development in terms of their potential to mitigate volatility.

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