Update: Development of Beef, Lamb, Dairy, Pigmeat & Poultry Industries, 2nd July 2015

Parliamentary Question No. 125  
 
 
 
 
To ask the Minister for Agriculture, Food and the Marine the extent to which he remains satisfied regarding the development of, and future prospects for, the beef, lamb, dairy, pigmeat and poultry industries; if he is satisfied regarding the adequacy of margins to ensure a reasonable return for the producers; and if he will make a statement on the matter.  

– Bernard J. Durkan.  
 

 
For WRITTEN answer on Wednesday, 1st July, 2015.  
 
Ref No: 26650/15 Proof: 129 Order: 125
 
 

REPLY  
 

The Minister for Agriculture, Food      and the Marine  : (Simon Coveney)  

Beef  
 
I am pleased to note that net prices at the end of last week have increased 15% since last September and are now 12.5% higher than in the same point in 2014. Current beef prices in Ireland stand at 107% of the EU15 average. As of the end of last week, the average prices paid (excluding VAT) for an R3 steer stood at €4.15/kg and an R3 Heifer at €4.26.  
 
The Deputy will also be aware that I have provided a package worth over €70 million for the beef sector in 2015. This includes €52 million for the Beef Data and Genomics Programme (BDGP) which forms part of Ireland’s draft Rural Development Programme, and will involve a budget of some €300m over a six year period. The BDGP is intended to improve margins and deliver an accelerated improvement in the environmental sustainability of the beef herd through the application of genomics technology. The Programme received close to 30,000 applications and the ongoing analysis of those applications indicates that the BDGP is fully subscribed. I am also providing funding to improve management practices on farms, through the provision of grants and aid to Teagasc for their research, advisory and education services and through the provision of funding for technology adoption, breed improvement through ICBF, and improvements in animal health through AHI.  
 
Of course, new market opportunities for both beef and live cattle exports also impact on the eventual returns to farmers. The recent openings of the US market, to Irish beef and the lifting of the beef ban in China are major achievements in this regard. I am always conscious of the need to find new markets for Irish beef and in that regard my Department, together with Bord Bia, will continue to target new export opportunities in third country markets.
 
Sheepmeat  
 
The industry wide strategy for developing the sheep industry in Ireland was set out in the Food Harvest 2020 document which envisages a 20% increase in the value of output by 2020.   My approach to building on the significant achievements of the strategy up until now is to drive the development of the industry at home and increase Ireland’s market share of the world market. This will ensure that producers and processors can plan for the future, increasing the value of the industry for the benefit of all. The sheep sector has proved to be a resilient component of Irish stock farming over many years. Indeed, the continuing interest in the sector on the part of sheep farmers is evidenced by the large numbers that attended the Sheep 2015 open day in Athenry on June 22nd, which was organised by Teagasc.
 
In terms of the performance of the sector in 2014, Irish sheep throughput at DAFM-approved plants was up slightly on 2013, with a marginal increase of 1%. To date in 2015 throughput at DAFM approved plants is up by approximately 1% on the same period in 2014, and the average factory price is up by approximately 4% for the year to date as compared with the same period in 2014, though there has been a significant dip in price in recent weeks. At producer level I continue to put in place incentives to ensure that producers see a viable future in the sector. Under the new Rural Development Programme (RDP) I have made provision for improving efficiency and profitability in sheep production under the Knowledge Transfer measure which has a budget of €100m. The experience in the Sheep Technology and Adoption Programme (STAP) has informed the development of this measure. In addition to profitability, the emphasis will be on the key issues of business skills, environmental sustainability and herd health, with increased interaction between individual farmers and advisors in order to customise information exchange. The Knowledge Transfer Programme for the sheep sector will be launched in 2016 when the current STAP concludes. The proposed new agri-environment scheme, GLAS (Green Low-carbon Agri-environment Scheme) will also support, amongst others, extensive and hill farmers, who have shown themselves to be careful custodians of the countryside in previous agri-environment schemes. It includes a menu of environmental actions, many of which will be suitable for sheep farmers.
 
On the export front I intend to drive further the search for new markets. My Department, in consultation with the meat industry and in cooperation with Bord Bia and the Irish Embassies abroad, is constantly pushing for new markets and opportunities. During 2014, we have agreed veterinary health certificates with Lebanon, Namibia, Hong Kong and The Philippines thus allowing for the export of Irish sheepmeat to those countries. Also, during my Trade Mission to China in November 2014, I was able to hand over the completed version of a sheep questionnaire which is a key step in gaining access to the Chinese market for sheepmeat. This represents the first milestone on the road which will lead, I hope, to Ireland gaining access to the Chinese market for sheepmeat in the future.  
 
PIGMEAT  
The development of the pig sector is a priority for me given that the industry accounted for almost 7% of the output value of the agri-food sector in 2014 and is the third most important sector after beef and dairy. There are approximately 440 commercial pig producers producing about 3.5 million pigs annually. The pig industry supports approximately 7,  000 jobs including production, slaughter, processing, feed manufacture and services.
The Irish pig sector competes in an international environment. Producers and processors face ongoing challenges from both other EU and international competitors and they must continually innovate and improve to maintain their presence in the international marketplace. They are also reliant on existing markets remaining open. The closure of the Russia market in 2014 is an example of the volatility which market closures can bring. However market access opportunities secured by DAFM in Vietnam and the Philippines are helping to off-set the effects of closures elsewhere.
I am conscious of the fact that prices have come under pressure in recent months and the difficulties that this causes for producers. Having said that, it must be noted that Irish prices remain above the EU average and at week endng 21/6/15 the average Grade E price increased to €154.04/100kg. However I would also add that like any other EU Minister I do not have a role in the setting of prices. This is a function of the market.  
Earlier this year I called on the European Commission to monitor the developments on markets and where necessary, to quickly activate safety net provisions such as public interventions and/or private storage aid. This resulted in the introduction of the Aids to Private Storage scheme for the pigmeat sector which opened in early March of this year. However due to the fact that EU pigmeat market prices stabilised somewhat over recent weeks and the uptake of the scheme by operators dropped to minimal volumes, the Commission closed the scheme.
The threat of disease outbreak in the sector underscore the ongoing focus on animal health and disease prevention and control strategies. In this regard I am pleased that the Rural Development Plan (TAMS II) includes funding targeted at improved farm animal health and welfare, in addition to funding for housing, investments in energy, water meters and medicine dispensers which will benefit the sector  
The research and targeted promotional work being carried but by a wide range of stakeholders, together with the acknowledgement of the quality, sustainability and competitiveness of Irish pig meat will help to position the sector in the future.
 
My Department has recently initiated a Pig Industry Stakeholder Group chaired by Dr Sean Brady. This group will examine the various aspects of the industry. Elements such as quality, food safety, animal welfare and environmental sustainability, which are at the core of policy initiatives such as Food Harvest, Bord Bia Quality Assurance Programme and Origin Green.  
 
Poultry  
The poultry sector is an important sector in the Irish economy accounting for almost 2% of agricultural output and about 6,000 jobs primarily in rural areas. Poultry is considered a versatile source of protein and consumption has improved over the last few years. The predominant outlet for Irish chicken is the Irish retail market, where there is storing demand for fresh raw Irish product.  
A growing understanding and utilisation of so-called 5  ^th  Quarter products, such as feet, together with international demand for cuts which are not in demand domestically, will ensure the continuation of export opportunities. The sector has benefited in the past from a number of support initiatives, including the provision of capital investment grants, ongoing Bord Bia promotional campaigns and the development and operation of the Bord Bia Poultry Quality Assurance Programme (PQAS).
Support will also be provided through funding under the Rural Development Programme to up-grade existing buildings and funding to support the construction of new housing, animal welfare and safety, as well as participation in Poultry Discussion Groups.  
 
Dairy  
The farm gate milk price currently stands in the region of 30-31 cents per litre including VAT and bonuses. However sentiment had improved somewhat earlier in 2015 primarily based on broadly positive auction results at the Global Dairy Trade Auction (GDT). The positive momentum in dairy markets early in the year was welcome and had contributed to a return of more positive market sentiment. More recent results, however, have seen  some decreases and have brought the index back to late 2014/January 2015 levels.
 
There is no doubt that softening of global dairy markets has had an impact on dairy farmers in Ireland and throughout the EU. The price situation in Ireland is not much different from other EU MS reflecting the global nature of this problem. Using cross country comparable data from the EU Milk Market Observatory the most recently available complete data shows that the milk price in Ireland is approximately 22% below the same month in 2014, slightly above the 18% decrease on average across the EU. T  he announcement by Russia that it has extended its trade ban for another year will not help an already difficult situation.  
 
Overall however I remain confident about the medium to longer term prospects for the sector which I believe continues to be very bright, with growing global demand expected to support prices in the years ahead, but it is clear that there will be continuing volatility around this positive trend. My focus now is ensuring that the correct balance of policies and supports are in place so that the Irish dairy sector can overcome the effects of volatility over the next while.