May 6, 2015
Deputy John Deasy asked the Minister for Agriculture, Food and the Marine the schemes, supports, or strategies that are in place to assist tillage producers in view of the pressure on margins arising from the sharp reduction in crop prices, rising input costs and land rental values, and compliance with new EU environmental regulations.
REPLY (Minister Simon Coveney)
The tillage sector makes a key contribution to the agri-food industry directly through provision of high quality, native grown ingredients to support the development of the livestock, food and drinks sector.
Indigenous production of cereals is of course, an important part of primary agriculture production. In addition to generating an income for our tillage farmers, the cereals sector is a key source of seed production, grain for the milling and malting industry and feeding stuffs for the livestock sector.
The long-term average cereal production in Ireland is in the region of 2.2 million tonnes per annum and it is desirable to sustain this level of production in order to avoid over dependence on imported cereals.
The 2014 harvest was estimated in the region of 2.5 million tonnes, well above the long-term average production of 2.2 million tonnes. Since Ireland is a deficit market for cereals, prices here are greatly affected by world prices and supplies.
Cereal prices are highly sensitive to global supply and demand , and volatility in prices is likely to become a constant feature of Irish cereal prices in future and grain producers should factor such fluctuations into their planning and marketing strategies.
Fertilisers may constitute up to 50% of input costs for tillage farms, and despite the decrease in the cost of fuel, prices are expected to remain high due to tight world supplies and the falling fertiliser manufacturing capacity in Europe over the past 10 years.
World fertiliser supply is tightly matched to demand for 2015 and for the foreseeable future and it is anticipated that world demand will continue to increase into the future, maintaining upward pressure on prices to the final consumer in Ireland.
The fall in the value of the euro against the dollar is also exerting upward pressure on prices. Teagasc estimates that fertiliser costs for Irish farmers will be similar for 2015 to 2014.
Food Harvest 2020 outlined a number of challenges facing the cereal sector in the coming years including price volatility, climatic and disease issues, high input prices, small and fragmented holdings and the cost of rented land.
However, the report also pointed to positive projections for cereal prices as markets are relatively well-balanced and world cereal prices are projected to be higher than in the last decade. It is known that global grain production is struggling to meet the increasing demand for food, feed and industrial uses.
In addition to a rising global population creating a bigger demand for cereals, an increasing demand for meat is disproportionately increasing grain demand even further.
The primary growth in requirement for Irish cereals in the years ahead is likely to be for animal feed, given the targets for increased livestock output proposed in Food Harvest 2020 and the recent lifting of milk quotas which is expected to give rise to a considerable expansion in the dairy herd, as well as an increased level of feeding and production per livestock unit.
However, considerable potential also exists in grains for the drink industry such as malting barley and recent significant investments by the large brewing and distilling companies here in Ireland are proof of such potential.
Further, it is envisaged that there will be increased demand for Irish oats milled for human food for the home and export markets and in this context, the success of the Agribusiness sector in securing, long-term contracts with US-based Foods companies to supply milled Irish oats to a premium Irish oatmeal brand in the US market, is particularly welcome.
A consistent supply of protein, grown in Ireland, would give Irish livestock farmers the opportunity to use more natively produced protein feed and to access higher valued markets. Accordingly, I am pleased to confirm that from this year I have introduced a protein coupled aid scheme to expand production of protein crops.
The rate of payment per hectare will be €250 /ha with a ceiling of €3 million for any scheme year. The protein crops eligible for aid are peas, beans and sweet lupins. Protein crops will also qualify under the CAP Reform Agreement as Ecological Focus Areas to meet environmental sustainability requirements.
Further support for tillage farmers will be available through the provision of a Knowledge Transfer measure under the Rural Development Programme 2014 – 2020.
I anticipate that the formation and administration of knowledge transfer groups a cross the Beef, Dairy and Equine sectors in 2015 will extend to cover the Poultry, Sheep and Tillage sectors in 2016.
The innovative scheme design of this measure will focus on key issues that affect profitability and sustainability of the farm enterprise. Other important issues such as farm safety and farm progression will also be covered by the measure.
My Department also operates a range of services aimed at improving the level of production, quality and viability of the Irish cereal sector.
These services include seed certification, seed testing, variety testing and the publication of recommended lists of varieties, research funding through the ‘Stimulus’ competitive research programme and funding for the quality assurance scheme.
In addition, Teagasc provides research, training and advisory services for cereal producers.