MOTION ON AGRICULTURE AND THE BEEF CRISIS
27/03/2019 – 18:30
Deputy Declan Breathnach: The seanfhocail “Mair, a chapaill, agus gheobhaidh tú féar” or for those not too familiar with it “Live, horse, and you’ll get grass” reminds me of the Government’s attitude particularly since the onset of Brexit. The farming community is not seeking a handout; it is seeking the Minister’s hand at the tiller supporting them, encouraging them and seeking the necessary measures to make it viable. No farmers here want a handout; they want a hand up.
The crisis in our beef industry has been severely compounded by stock numbers and the uncertainty of Brexit. In 2018 we had the highest kill in 15 years, with 1.8 million cattle killed, 80,000 more than in 2017. Over a five-year period, the increases ranged from 40,000 to 120,000. Obviously those increased numbers have had an impact on both supply and demand. The perfect storm has been brewing and the Minister has known about it for a long time, right from the onset of the mushroom crisis when Brexit was announced, and coupled with this, the increased production I have mentioned has tipped the supply balance on the scales.
Farmers say that meat factories are making money and there is no doubt that they are. However, they are also struggling to sell prime cuts that have reduced from €8 per kilogram to €5 per kilogram. Many will claim there is a silver bullet with China or the wider Asian market, but we all know that they are mainly looking for the cheap cuts.
From a farmer’s perspective, a poultry farmer in Poland can fix his price 12 months in advance. A grain farmer in Ireland can forward sell his grain. The relative success of the milk production in Ireland in the past five years has been based on farmers knowing well in advance the price per litre. I firmly believe it is time for the beef manufacturers and the beef producers to become friends and deliver what is needed for this industry, which is forward pricing.
Minister for Agriculture, Food and the Marine (Deputy Michael Creed): I would like to make some general observations before dealing with some of the specific issues raised in the motion and the debate. I fully acknowledge that while the Irish beef sector has a global reputation for excellence and is considered a world leader in terms of quality, food safety, traceability, welfare, genomics and sustainability, there are serious challenges. We must strategically and collectively tackle issues such as Brexit, low margins, sustainability and efficiency, dairy to beef challenges, as well as relationships and relative strength in the supply chain if we are to sustain the sector for the long term. None of these issues is new and none can be resolved easily. We have a collective interest in working together to think strategically about what measures should be taken to support the beef sector to deal with these challenges. It is not as simple as talking about price margins. No Minister or Government can dictate the price of beef, milk or a loaf of bread but what we can do is try to direct supports strategically in a way that builds efficiency and profitability at farm level.
I will now turn to a few specific issues raised in the course of the debate this evening. Deputy O’Keeffe alluded to Department’s presence in overseas markets. It is worth noting that we have had eight successive years of volume and value growth. I recently announced eight new agricultural attaché posts in a number of embassies, including in Mexico City, Tokyo, Seoul and Berlin, all identified by my Department as priority locations. We will also take on local hires in certain locations to provide local knowledge and specialist expertise in supporting our market access and trade development work. There are currently eight agricultural attaché posts in embassies in the European Union and across the world, including in Beijing and Washington DC. Last year, I also increased Bord Bia’s staffing allocation by 32, located both in Ireland and abroad. This will help to drive growth in our food and drink exports as a key response to Brexit.
An enhanced programme of agrifood trade missions will continue this year with plans for trade missions, informed primarily by consultations with the industry and following in particular, trade negotiations concluded by the EU in places like Canada, Japan and Korea, which I will be visiting. I will also be visiting Algeria and Egypt, which will be of interest to Deputy O’Keeffe in the context of his references to north Africa and its potential in the context of live exports.
The EU-Mercosur negotiations have not progressed to the point where any agreement is likely to be concluded in the short term. There are well known sensitivities vis-à-vis Mercosur beef access to the EU market and Ireland has continued to express its strong concerns, both directly to Commissioners Malmström and Hogan and through ongoing collaboration with like-minded member states. There undoubtedly is a need for continued vigilance in respect of the conduct of all future trade negotiations and I will continue to insist that they are handled appropriately and in a manner that safeguards our interests.
Exports of live cattle increased by over 30% in 2018, and this growth trend continued into 2019. I have always acknowledged that live exports are a critical part of Ireland’s livestock industry. They play a significant role in stimulating price competition and providing an alternative market outlet for farmers, underpinned by the highest standards of animal welfare.
The Minister of State, Deputy Doyle, has provided details of the additional lairage capacity anticipated in Cherbourg. Based on current ferry sailing schedules this provides increased capacity of some 1,200 animals per week.
With regard to flexibility on state aid ceilings, the European Commission recently announced that the maximum threshold limits under the agriculture de minimis regulation will increase from €15,000 up to €25,000. This will allow for greater flexibility and efficiency, notably in times of crisis.
My Department, working with the Department of Business, Enterprise and Innovation and Enterprise Ireland has also received approval from the EU Commission for an Irish state aid application, allowing an Irish food company to receive state aid funding for the diversification of its activities. The potential for this approval to act as a template for assistance to the broader agrifood sector within state aid rules is currently being explored.
As for access to finance, a €300 million Brexit loan scheme is available to SMEs, including agrifood businesses, to provide working capital support to enable eligible Irish businesses to implement the necessary changes to address the challenges posed by Brexit.
This morning, together with my colleague the Minister for Business, Enterprise and Innovation, Deputy Humphreys, I launched the €300 million future growth loan scheme, which has been developed by our Departments together with the Strategic Banking Corporation of Ireland and the European Investment Fund. I acknowledge that it is later than I would have liked. It was complex. We worked with strategic partners, the Strategic Banking Corporation of Ireland and the European Investment Fund, and it required primary legislation in this House. It is a long-awaited source of finance for young and new entrant farmers who often do not have the leverage in the marketplace that others do. I believe the scheme will provide an important opportunity for a particular cohort of farmer.
On bonus payments by factories, a quality payment system, QPS, providing for differentiated payments in respect of certain grades of cattle at slaughter plants was put in place in 2009. This payment system is a commercial matter, negotiated by meat processors with farming organisations. I am generally supportive of the proposition that the grid system should reward beef farmers for quality production and I have offered technical support from Teagasc if the parties involved wish to revisit the design of the quality payment system. I must emphasise, however, that the grid system is not a State property. The payment system is informed by where the cattle land on the grid, which is negotiated between processors and farm organisations.
Reference was made by a number of speakers to movements and residency with regard to the additional bonus payments. The conditions required to obtain the bonus payments are determined by processors – in consultation with the demands of the marketplace – to incentivise or reward production meeting the specifications of retail customers. They are not conditions determined by law or by my Department and we have no role in their operation or implementation. I believe that quality payment systems are important as they reward farmers for compliance with those regulations as demanded by the marketplace.
With regard to my Department’s role in carcass classification and presentation, as raised by my colleague Deputy Denis Naughten, controls in slaughter plants are carried out by a dedicated team of specialist staff in the beef carcass classification section within my Department. They take their work very seriously indeed. In 2018, almost 550 inspections were conducted. Since January 2019, controls have been supplemented by additional monitoring by the Department’s veterinary public health inspection staff in the factories. It is important to make it clear that the controls applied by this dedicated team of people in my Department are significantly in excess of those required under EU law.
I stress that one of the unique strengths of the agrifood sector has been the shared vision for the sustainable development of the sector in Food Wise 2025. It is crucial that we all continue to work together. At the last beef round table, I highlighted the need for stakeholders to recognise their interdependency and to work to increase the strength of all links in the supply chain. A collaborative approach could, I believe, significantly progress a number of important issues including: the development of beef producer organisations; exploration of new bioeconomy value streams; the development of geographical indication, GI, status for Irish beef; and initiatives to improve price transparency, building on existing measures such as my Department’s Beef Pricewatch app and the EU Meat Market Observatory.
Every effort is being made to improve the sustainability of beef farming in Ireland, economically, socially and environmentally. The sector faces a significant challenge in the form of a no-deal Brexit, but the Government is working hard to ensure that, if that worst-case scenario occurs, the right supports are in place to mitigate the impact on beef farm incomes.
In the brief time left to me I would like to acknowledge all of the people, including representatives from the farm organisations, who have travelled long distances to be in the Public Gallery this evening. I will respond in some detail to some of the issues that were raised by Members in the House.
Deputy Niamh Smyth seemed to imply that we were, for some reason, ignoring the Dutch and the Spanish markets. That is quite simply not the case. Almost one third of our exports go to mainland EU and European markets. The Netherlands is one of the most significant markets within that.
I agree wholeheartedly with Deputy Breathnach on forward pricing, producer organisations, negotiated contracts and strengthening the position of farmers in the supply chain. In discussion on these matters with farmers invariably I am confronted with the fact that we are price takers. While it is not the panacea for all the ills, if we can organise it can strengthen the relative position of farmers in the supply chain and in this regard we have approved a number of organisations to act as facilitators for producer organisations.
The motion refers to €200 per suckler cow. I believe that we need to have an honest debate around this. It seems to imply a coupled payment: if one was paying on every cow, then the more cows a farmer has the more he or she would get paid. This would run contrary to the direction of travel we have been going in, which is to reward quality and not make payments contingent upon having numbers, so farmers can adapt their holdings to reflect market realities. I have an issue with this but I am open to a discussion around it. I am certainly committed, in the context of the broader CAP negotiations, to get the best possible deal.
I cannot let Deputy Clare Daly’s point go with regard to climate. If we could move the Irish beef industry lock, stock and barrel to any mainland European country that also has an industrial heritage history, our emissions profile would be insignificant. We have an emissions profile as high as it is because Ireland never had the industrial revolution industries here. This is not to claim that the beef industry needs a free pass. It will do more and it has to do more. Last week we were confronted by kids protesting. They are informing consumer decisions around the globe, not just here. Ireland is an international player in those markets so we have to do more to drive down our carbon efficiency. We start, however, from a very good point.