Bernard Durkan (Kildare North, Fine Gael)
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193. To ask the Minister for Agriculture, Food and the Marine the extent to which he has identified weaknesses arising from price fluctuations in the various segments of the food sector; if he has identified mechanisms to address these issues; and if he will make a statement on the matter. [47295/17]

Michael Creed (Cork North West, Fine Gael)
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Managing price volatility is a challenge for the agri-food sector, but significant State supports are in place to assist the sector in managing volatility.

Food Wise 2025, the latest ten year strategy for the agri-food sector, 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 and 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.

The uncertainty around Brexit is a challenge for the sector, but concerns about the impact on the agri-food sector are at the top of the Government’s Brexit agenda. Our ongoing consultation with stakeholders, together with our engagement with UK, Northern Ireland and EU counterparts, will be informed by the need to have the implications for the agri-food sector understood and taken account of as the negotiations unfold. My Department and State agencies are working together to ensure that the short-term and longer term impacts of Brexit are taken into consideration, and that appropriate supports are in place to help the sector to respond and adapt to the new realities.

With regard to farm incomes and volatility, Teagasc's National Farm Survey 2016 showed average farm income of €24,000. Average farm income has been relatively stable over the last few years, fluctuating between €24,000 and €26,000. However, there are significant differences in farm income depending on the farming system and size of farm. It should  also be borne in mind that over 60% of the farms represented by the National Farm Survey are classified as part-time, based on labour input required. On half of farms, either the holder and/or spouse has off-farm employment.

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

Ireland is a small open economy which exports the vast bulk of its food production, and therefore will always feel the effects of volatility on world markets. Dairy farms, which have significantly higher incomes on average than other farming systems, also experience greater income volatility. The introduction of fixed price contracts by some processors is 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.

One of my priorities has been to address the impact of the change in the sterling exchange rate and lower commodity prices in some agriculture sectors.

The “Agriculture Cashflow Support Loan Scheme” was such a mechanism and was developed by my Department in co-operation with the Strategic Banking Corporation of Ireland (SBCI), making €150 million available to farmers this year at interest rates of 2.95%. There has been a very positive reaction by farmers to the Scheme, which has proved that significant demand exists for low cost flexible finance.

The new Brexit Loan Scheme announced in Budget 2018, based on the template of the Agri Cashflow Loan scheme, aims to make up to €300 million of working capital finance available to SMEs and mid-cap businesses. Given their unique exposure to the UK market, my Department’s funding (€9 million out of total public funding of €23 million) ensures that at least 40% of the fund will be available to food businesses. Due to State Aid rules, this scheme will not be available to farmers and fishermen. However, my Department has secured funding of €25 million to facilitate the development of further Brexit response loan schemes for farmers, fishermen and food businesses in 2018. Further details will be announced in due course.

I am confident that my Department is taking every step to support measures which mitigate price volatility and improve competitiveness in the sector.