I thank the House for inviting me to discuss the horticulture industry. The horticulture sector makes a very significant contribution to Ireland’s gross agricultural output, with a farm gate output of €400 million in 2015. In terms of gross agricultural commodity output, horticulture is positioned third after beef and dairy.
The sector makes an important economic contribution and generates significant ancillary employment in areas such as preparing and packaging produce, distribution, retail, garden design and landscaping. At the retail level, Irish consumers spend on average €1.2 billion on fresh fruit and vegetables and potatoes, second only to dairy produce. On the non-food side of horticulture, the Irish consumer spends €512 million on plants and cut flowers for the home.
Two sectors of Irish horticulture, in particular, are important sources of foreign revenue. Three-quarters of all mushroom production, or €100 million, is exported annually. Almost €14 million of non-food horticultural products, such as nursery stock, cut foliage, bulbs, flowers and Christmas trees, are also exported, mainly to the UK and Northern Ireland.I am keenly aware of the challenges these sectors now face and, in particular, the mushroom industry following the aftermath of the UK referendum decision to exit the EU, particularly in light of recent fluctuations in currency. In 2015, the Irish mushroom sector had an estimated farm gate output value of €137 million with the UK accounting for 83% of Irish mushroom production of some 61,000 tons. Most Irish mushroom growers are members of CMP, Ireland’s largest fruit, and vegetable producer organization. This EU funded scheme provides a mechanism for producers to work together to optimize production costs, stabilize prices and strengthen their position in the marketplace by becoming part of a larger supply base. CMP draws down significant EU aid each year through its operational program which provides invaluable support to its members. On 15 October, €1.57 million was paid to CMP.
Budget 2017 underpins the Department’s mitigation efforts through strategic investment in key areas of the Department, in its agencies and in the agrifood sector. From providing access to an innovative low-interest agri-cashflow fund of €150 million to agri-taxation measures designed to strategically smooth income fluctuations, budget 2017 provides a robust, pre-emptive response to the Brexit challenge.
In addition, the Department of agriculture, along with the various State agencies, in particular, Bord Bia, Teagasc and Enterprise Ireland, are working closely with the industry to provide the necessary support and assistance. Bord Bia has provided currency and negotiation workshops specifically targeted at the sector, which has been well received by the mushroom industry. In addition, Bord Bia is also investing in a market development program which will assist companies dealing with currency and trading difficulties.
Under the Food Wise 2025 plan, the Department has set ambitious targets for the horticulture sector, principal among these is the plan to grow the value output of the sector by a further€500 million and deliver 1,000 full-time equivalent jobs. This plan focuses on improving sustainability, efficiency, growth and competitiveness. The market is increasingly international and competitive, and ongoing development of the horticultural industry is dependent on its ability to maintain and extend competitive advantages in this environment. Central to achieving this growth is the investment in the development of new technologies that create more sustainable production systems. The Government’s commitment to achieving these targets is demonstrated through the State-funded scheme of investment aid for the development of the commercial horticulture sector, which provides grant aid at 40% on approved costs associated with capital investment in a broad range of specialised horticultural equipment and buildings that contribute to at least one of the scheme’s objectives. All sectors within the horticultural industry are eligible for this competitive grant aid scheme which is normally heavily over-subscribed. The budget for the scheme in 2016 was €4.3 million and approvals were issued to 154 applicants, which will facilitate grower investment costing approximately €13.5 million. Funding for the 2017 scheme has recently been announced. We are awaiting final approval but €5 million is the figure that has been indicated. The scheme is now open for applications. This competitive grant aid scheme represents the main source of State funding for horticultural producers and is vital to improving growers’ competitiveness and the quality of output, as well as allowing growers innovate and diversify production.
As mentioned earlier, the horticulture sector will have access to the €150 million low-interest cash flow support loan fund, providing access to highly flexible loans for up to six years, for amounts up to €150,000 at an interest rate of 2.95%. There is also an option for the first three years to be interest only. Earlier this year, the Department of Jobs, Enterprise, and Innovation introduced the grocery goods regulations under the Competition and Consumer Protection Act 2014. The five main retail multiples control over 90% of the market for fresh fruit and vegetables in Ireland. Their dominant position, combined with a very competitive retail environment, can have a significant impact on producer prices. Key elements of the grocery goods regulations are the requirement for written contracts to be in place between regulated entities. The grocery goods regulations are not about setting the price or prohibiting below-cost selling or certain practices within the food chain. They are aimed at ensuring there are no surprises and that contract terms are honored. These regulations are enforced by the Competition and Consumer Protection Commission. The EU Commission is also examining the issue of relationships in the food chain and there may be initiatives at EU level in the future.
The Government places a strong value on the importance of Ireland’s horticulture industry and continues to support it through the implementation of the Food Wise 2025 plan, which sets out the practical ways in which aspirations for growth can be made tangible and the sector supported as it strives for new levels of success in the decade ahead.
John O’Mahony (Fine Gael)
We will now have the spokespersons for the various groups. Senator Gallagher has eight minutes.
Robbie Gallagher (Fianna Fail)
Cuirim fáilte roimh an Aire Stáit go dtí an Teach. The horticulture sector contributes between €350 million and €400 million to agricultural output at farm gate level and provides over 6,000 jobs in the production sector and a further 9,000 jobs in the amenity services sector. In recent years, this sector has been put under increasing pressure from the large multinationals who are now dominating the Irish sector. It is now a matter of urgency that the EU acts in order to ensure the protection of smaller businesses and producers from the monopolization of multinationals.
Fianna Fáil supports the banning of below cost selling of vegetables, fruit and potatoes. We have published a draft Bill to amend consumer law in order to provide for the establishment of a national food ombudsman to mediate and investigate disputes. The ombudsman would also oversee the relationship between retailers, wholesalers, and their suppliers and would encourage transparency and a fairer sector so that retailers can compete fairly with each other. It would also try to ensure a more equitable food supply chain since it has been found that almost 40% of Irish farmers have an income of less than €10,000 per annum.
The monopolization of this market by global low-cost chains such as Aldi and Lidl does not incentivise Irish farmers to provide more produce as they are failing to make a profit and, in some cases, barely break even. The horticulture market is totally unsustainable for independent Irish farmers as they cannot afford to keep up with the unsustainable prices across the beef, dairy, tillage and sheep sectors and it is the Government’s duty to ensure a stable income stream for these farmers. The dangers these multinationals pose are ones that need to be taken seriously. Not only have they created a culture in which people are buying cheapest and perhaps compromising quality, but they have also gotten rid of smaller independent shops who simply cannot afford to compete with these prices.
The UK exit from the EU is also a huge threat to Irish farming interests. Our trade links with the UK have led to a large agrifood export market and account for over 40% of Irish exports worth over €4.5 billion annually. Over 50% of our beef exports and one-third of our dairy exports go to the UK each year. Teagasc recently estimated that a British exit could see a reduction in the value of Irish agrifood exports of up to €800 million a year. The fluctuating value of sterling has already hit Irish exporters and immediate action must be taken in order to come to an agreement regarding the possible return of trade barriers.
Almost 80% of employment in the Irish food and beverage industry is based outside Dublin. This means that the negative effects of Brexit are being directly felt by people living in rural communities who may not be able to readily avail of other employment opportunities. A hard Brexit would be disastrous for all Border counties and Border farmers. There is too much cross-Border agrifood trade for this to be taken lightly. It is vital that the Irish Government works with our European and UK colleagues to minimize any disruption to existing agrifood trade in future EU discussions so that Irish farming interests are safeguarded.In 2015 the annual review by the Department of Agriculture, Food, and the Marine showed that the number of Irish mushroom growers fell to approximately 70 nationally. In 1996 there were almost 600 mushroom growers in Ireland. A significant decrease such as this in a relatively short period causes deep concern. However, the issue of most concern is that Ireland is one of Europe’s leading mushroom suppliers. We really are world leaders. We produce 70,000 tons of mushrooms each year, of which 80%, worth €120 million, is marketed to UK multiples. For the majority of Irish growers, 100% of their goods are exported to the UK. We control almost 60% of the UK multiple markets and we produce more than the Germans, Italians and the British. However, the industry is facing threats internally and externally with the introduction of mushrooms produced in eastern Europe displacing Irish product due to their much lower production costs. This is mirroring the issues we have in the horticultural industry with the big chain low-cost supermarkets, and we must act on this to protect Irish interests. A loss of jobs in the mushroom sector will also have a knock-on effect on the tillage sector as the mushroom industry is a significant purchaser of wheaten straw. Goods will stop being produced if the cost outweighs the rewards and, as a result, we could see unemployment skyrocket across these sectors, which are all located in rural Ireland.
The bottom line of these issues is their impact on Irish farmers. They are being crippled by low prices, market volatility, rising input costs and bank credit. It is totally unsustainable and unrealistic to expect farmers to produce more unless they are making a profit on their extra production. The average farm income is estimated at €26,526 per annum, but this is still substantially lower than the Irish average industrial wage of €37,000 per annum. This week, Fianna Fáil discovered that 50% of the 2016 rural development program budget allocation has gone unspent in the 11 months to November 2016. This means that farmers are still waiting for €238 million in payments. How is this acceptable? These payments should be issued immediately and it is appalling and very disappointing that this is not being treated as a matter of urgency. Irish farmers are facing a severe cash flow crisis and the Government must be held accountable for part of this.
Victor Boyhan (Independent)
I am conscious that the Minister of State has responsibility for food, forestry, and horticulture. I am not sure if he is taking questions on forestry today but I have one which I might put to him. He has a wealth of experience in the horticulture and forestry sectors as well as the agriculture sector. As a native of Wicklow, he immersed himself in agriculture and in the community. He represents ably and with distinction the agricultural and urban people of Wicklow and parts of Carlow. I am also aware of his former position as Chairman of the Oireachtas Joint Committee on Agriculture, Food and the Marine and I particularly welcome him to the House today.
Ireland has pinned significant hopes on forestry as a way of offsetting emissions from the agriculture sector. However, to date, new forest plantings have been running behind the target. There are three and a half lines on horticulture in the program for Government, on page 113. They are significant because they refer to Bord Bia’s Origin Green brand and the strategy from 2016 to 2018 which is extremely impressive. I pay tribute to An Bord Bia for the enormous work it does. I visited its office in Clanwilliam Court a few days ago where the people were extremely helpful and positive. It has an amazing amount of good quality literature about supporting the horticulture industry through the agribusiness, horticulture, cut flower and nursery stock sectors. We perhaps do not hear enough about the organization. We see it at Bloom but I would like to see it showcased more. I am not on the Oireachtas Joint Committee on Agriculture, Food, and the Marine but I suggest to those on it that it should invite Bord Bia to talk about horticulture.
Will the Minister of State please set out his plans to get Government back on target in respect of his key objectives for forestry and to promote the diversification of farm activity into forestry where appropriate and suitable, taking into account broad-leaved native species as well as pines, picea abies and all the trees the Minister of State is familiar with in Irish forestry? There is enormous potential, especially for upland farmers or marginal land farmers to get into the forestry sector, and if the Minister of State is seriously committed to pushing out the targets for afforestation, these are key areas that need to be identified and may supplement incomes for farmers in this critical category.
I was a horticulturist. I studied it and for many years made a good living out of it. The Irish farmers’ markets are a key showcase for artisan food, salads, organics, soft fruit, nursery stock and cut flowers. There is one in Dún Laoghaire. There are approximately 70 registered, up and running markets. Artisan food is a broad term but many organic products grown in this country go into that end product. There is the good scope for developing that area. The horticulture sector is important in the Irish economy. We are exporting vegetation for florists to Britain. This year numerous flights from Dublin carried daffodils to the United States. I am not sure many people know that. This sector could be expanded.
I acknowledge the enormous support Teagasc gives through grants and education in promoting horticulture. We need to dovetail that with the Department of Education and Skills, with experts in training and apprenticeships. There is a concern that not enough trained people are coming into the sector at various levels, whether amenity horticulture or food production. There is scope for a group of people who may opt out of education early but who may want to be trained. I have met many who find it difficult to access horticulture training programs at a lower level than a university degree in agriculture or horticulture. Will the Minister of State look into that?
Within a short time of being elected to the agriculture panel in the Seanad, I took the time to visit Monaghan Mushrooms. It is a highly impressive organization. I do not know if the Minister of State has visited it. There was a suggestion that it was having difficulty in getting previous Ministers to visit. I am not here to air the issues of a particular commercial company but the mushroom sector is the largest horticulture sector in the country. The Minister of State mentioned a figure for farm gate values. The last one I received from the Department of Agriculture, Food and the Marine was €136 million for the mushroom sector alone, of which approximately 80% is exported to the UK.
I was in the UK last week and went into several supermarkets to pick up Irish products. There was no Origin Green or “grown in Ireland” stamp on them, which surprised me but I knew where they came from because Monaghan Mushrooms has a policy of putting the farmer’s name on the brand. I was highly impressed by the mushrooms now being produced with added vitamin D, which are walking off the shelves of every supermarket in Britain. That is really pioneering and innovative work by Monaghan Mushrooms. It is great to walk around supermarkets all over London and see mushrooms from Ireland. Why, if they are coming through the Origin Green process, is that not stamped on them? There may be a good reason that I do not know. We have a brand and quality and we need to talk about that.
I will not go into the soft fruit sector to any great extent. When I refer to the nursery stock sector, I mean the trees, shrubs, and flowers, most coming from Holland and Italy.The cut flower sectors in Spain and Israel are coming into this country because of the huge potential in terms of the soil and the conditions in Lusk, in north County Dublin, which in the 1940s, 1950s and 1960s was an area of major cut flower production.
There is great excitement, opportunities, and challenges for the agrifood, horticulture and forestry sectors. The biggest concern I have identified from talking to a range of people in this sector is the need to bring people in to take up new training programs, which will give them the necessary skills at all levels to enter the horticulture sector. There is a synergy among a number of Departments, including that of the Minister’s colleague, the Minister for Jobs, Enterprise and Innovation, Deputy Mary Mitchell O’Connor, to see how we can support the industry but, importantly, how we can prepare young people who want to get involved in this wonderful and rewarding industry. We need to look again at the training and how we can bring them into the sector. I thank the Minister. He is a man from the land who speaks of the land and represents the people of the land. There is a great expectation of him and I wish him well as Minister.
Michelle Mulherin (Fine Gael)
I welcome the Minister to the Chamber for this important debate. When it comes to agriculture, for the most part, it is not the horticulture industry that grabs the headlines. It tends to be the beef or dairy sectors, but that does not take from the importance of the horticulture sector in terms of complementary farming.
The Minister gave us a figure for valuation of output at the farm gate of €400 million. I had a figure of €350 million from Teagasc from 2015, so I am not sure which is correct. In any event, horticulture covers a myriad of produce from mushrooms, protected crops, vegetables, fruits, flowers, foliage and other nursery crops. For the most part, we export that produce.
What is unique for many businesses and producers across agriculture is that the horticulture industry is very labor intensive. It is not as mechanized and requires more people to be involved. Before the budget, representatives of the mushroom sector came before the Joint Committee on Agriculture, Food, and the Marine and set out that 3,500 people work for them, with 60 producers involved. As my colleague said, in 1996 we were talking about 600 producers, so they have had to respond to markets. There is evidence of smaller producers closing down their businesses, some of it in my county where we see metal frames on concrete foundations lying idle, with nothing going on in them. I will speak to that briefly later.
The mushroom sector, with a farm gate output of €120 million, is one of the most significant aspects of horticulture. I fully understand the reason its representatives are concerned about Brexit, being that approximately 90% of the 61,000 tons produced here goes into the British market. It is a testament to the people behind the mushroom industry here that they have the majority stake in the multiple retailers market in Britain where they compete with producers in the UK and from other countries, including from Poland, although I understand that has declined. The fact that they describe input costs for labor at 40% indicates that it is a very labour-intensive industry. It speaks for itself. We want to keep those jobs. I understand they are under pressure to fill jobs, which is a story that coincides with the recovery in the economy and more jobs being available throughout.
Many good points were made in the debate and the Minister has been pre-emptive, particularly in speaking to those in the mushroom industry, but I want to ask some questions. On the Agri cash fund and the €150 million that has been made available by Government, how soon might farmers begin to avail of that because the cost of overdrafts and term loans that the banks are imposing is way above what they borrow the money for from the ECB, which is practically criminal? The sooner that farmers can be helped with their cash flow, the better.
On the producer organization funding for 2015, why has there been a delay in payment to the commercial mushroom producers? Such payments would also alleviate cash flow difficulties.
On the renewable heat incentive side, the Minister has described the scheme of investment aid for the development of commercial horticulture sector, which is very important. He is encouraging people to consider applying for that to see if there is something they can do. However, a good deal of horticulture requires heating and if that is done by way of renewable energy, that suits us on many fronts, in particular in terms of our renewable heating targets, reducing our carbon emissions and so on. It is not quite within the Minister’s bailiwick but it affects farmers and, ultimately, it can help reduce their input costs.
Regarding new markets, the Minister described Bord Bia investing in a market development program. With regard to beef and dairy, much work has been done to develop new markets. That is always a good idea because it provides more options and hopefully will improve the price of the commodity. What practical steps can be taken in that regard, and what markets does the Minister have in mind? There is an issue about the produce being perishable and the distances over which it can be transported but there are transport solutions that might preserve such perishable goods for a longer period. What assistance might be available to horticulturists or people in the industry to avail of those solutions?
I welcome the groceries goods regulation and in particular, a standard provision that the contract has to be in writing but also that for both retailers and wholesalers, the payment would be made within 30 days. That is reasonable when we are talking about a perishable good, the lifespan of which is one week or ten days, at best. However, I agree with a previous speaker that the elephant in the room is the multiple retailers. Below cost selling is objectionable. It depresses the price of horticultural products. Also, the grading done is based on the physical appearance of a piece of fruit or a vegetable. There is something wrong with that because this country is wasting 100 million tons of food a year. That is not all down to people buying in the supermarket. Part of the reason is that people in the horticulture industry are required to produce goods that meet the standards of the multiple retailers. If a tomato has a bump on it but nutritionally is the same as one without a bump, it does not make the grade and can end up on the floor. That is unsustainable, coupled with below cost selling. It comes back to low-cost selling. We have low-cost selling of alcohol, these perishable goods, dairy and so on. The argument being made is that we do not want to interfere with the market, but the market is artificial and artificial constraints are being put upon farmers. We have high-quality produce but extra costs are being put upon them. We need more than a laissez-faire attitude. The issue of below cost selling must be tackled.
I would like to hear a vision in terms of what we can do with these frames and concrete foundations lying idle where mushrooms used to be grown previously. Dealing with those could help more farmers’ markets. It is the way to proceed to try to get perishable produce grown closer to home.
The Minister indicated that he is committed to developing a horticulture forum. We want to get stakeholders, producers and all people involved in the industry around the table to speak to the issues and the challenges we face now and ensure that we can build a bright future for our horticulture industry and that it goes from strength to strength.When does the Minister of State have in mind to convene such fora? I ask that he do so as soon as possible.
Pádraig MacLochlainn (Sinn Fein)
I welcome the Minister of State to the House. This is an important opportunity to discuss a sector and industry that is going through a period which can only be described as dangerously volatile. The horticulture industry is a vital, necessary and hard-working sector. We take for granted our ability to walk into shops and supermarkets and pick up fresh fruit and vegetables and we pay little attention and give little thought to the craft, labor, and technique which allows us to do this so effortlessly. I therefore, thank and congratulate all the people involved in the sector for the contribution they make in ensuring we lead healthy, nutritious lives and keep up our vital five-a-day food sources.
I said at the outset that this sector is dangerously volatile at present. In 2015, more than 6,000 were employed in the sector, 1,850 of whom were employed in the mushroom sector. We have discussed the problems in the mushroom sector at length. The industry stakeholders have appeared before the agriculture committee, and the evidence they gave was deeply worrying, as I am sure the Minister of State is aware from reading the subsequent transcript. What supports and safeguards have been put in place since then? The mushroom industry accounts for 43% of the horticulture industry and delivers €137 million in sales, according to the Minister of State’s presentation. Of this €137 million in sales, more than 80% was made to the UK market. Again, we have discussed this at length, but it is simply unsustainable. In light of Brexit, there is simply too much concentration and over-reliance on the UK market. Smaller markets have been carved out in France, the Netherlands, and Germany. It is now up to the Government, with officials from Bord Bia, Enterprise Ireland and whatever other State agencies are required, not only to develop these markets for everyone but also to identify new markets in Europe and beyond. We cannot sit on our hands and wait for a very successful and viable industry to collapse before our very eyes when new markets can be identified to sustain it. Sterling has strengthened somewhat against the euro recently, but this cannot be taken for granted. In a Bord Bia report of 2015, the outlook was for currencies to remain stable and as a result, despite a decrease in exports, for revenues to do likewise. We now know what has happened and the devastating effect it has had on the mushroom industry in particular. As mentioned already, there is far too much concentration by the horticulture industry on the UK market. Of all food exports, 41%, or €4.4 billion in 2015, was directly to the UK.
Brexit is undoubtedly negative, and we cannot afford to rest. Five mushroom producers have already gone to the wall, with 170 jobs gone. Thankfully, one producer has been purchased and has reopened. Our mushrooms, like all our horticultural and agricultural produce, are recognized as being top quality. Our mushrooms will continue to be produced, so the imperative is on the Minister of State’s Department to talk to the other countries and smaller markets already mentioned and to identify new markets into which to expand. Brexit in this regard then should be seen as an opportunity to expand rather than to rest on our laurels and watch the industry collapse before our very eyes. Similarly, there is real capacity for growth and export-led trade in other sectors of the horticulture industry.
The world’s population is constantly increasing. This population needs to be fed. Ireland with its climate, quality, and standard of produce can become a leader in food production. Fields of vegetables, fruit, potatoes, mushrooms and salad leaves can all be grown quite successfully on our shores and exported into new markets. Prepared consumer food is a sector that has huge potential for growth. In these times of convenience and fast-paced lives, pizzas, sauces, soups and value-added agriculture have longer shelf lives compared with fresh produce, while maintaining the quality of Irish produce.
Expanding and creating new markets is one suggestion I have put forward that will help support and sustain our horticulture industry. There are others. In my party’s alternative budget, we costed the setting up of a national horticulture industry forum. The Minister of State’s Government has also committed to this. Why is this industry in crisis still waiting for this to happen? This forum needs to be set up without delay and on an all-Ireland basis. The Border does not recognize the problems now threatening the survival of the sector, and island-wide participation is therefore needed. The European Union also needs to step up to the mark in this regard. The horticulture industry needs supports and subsidies to see out the Brexit storm. Similar emphasis needs to be placed on this industry as on agriculture to get over Brexit and what is in essence, a European problem in which we are all implicated as a result of the decision of voters in the UK.
I have one last issue to raise. Below-cost selling of fresh produce by the multiples and large supermarkets is demeaning and disparaging of the hard work and labor that Irish producers put into producing top-quality produce. This practice, which happens day in and day out, needs to be stopped, and this fresh, nutritious food needs to be respected. I call on the Minister of State again to consider bringing in measures to stop this practice. Lastly, I again thank our producers in this industry for the effort they put in and I appeal to our consumers, without sounding too protectionist, to buy Irish, support Irish jobs and help keep the Irish horticulture industry going from strength to strength.
James Reilly (Fine Gael)
I will be very brief. I welcome the Minister of State to the House and very much welcome the opportunity to speak to this issue. Many Senators are focused on the mushroom industry, and rightly so because it is in difficulty. As Senator Mulherin said, energy costs are an issue, and support for green innovation would send a strong message from Government about our serious intent regarding the environment.
One matter I will mention, as others have, is below-cost selling. However, unlike others who have concerns about this issue because of Brexit, I have been concerned about it for quite some time, as have the people working in horticulture in Fingal, in north County Dublin, from where at one time over 70% of the production of horticultural products took place. The figure is now around 60%. They have been at the wrong end of below-cost selling for quite some time, and it has put many of them out of business. I find it deeply disturbing that in our agricultural nation there is only one scallion producer left. Only three or four people are now involved in the production of outdoor lettuce, and the same goes for winter production of cauliflower. Very few young farmers are joining the sector; some would say none are doing so. The figures I have been given show that around 36 farmers are responsible for the vast majority of horticultural production in the country, which is pretty scary. What do we do on the day the multiples put them out of business? What do we do on the following day, when the forty-foot containers stop arriving into this country and we suddenly find we have lost the skill set that has taken generations to build up? As Senator Mac Lochlainn said, these people work very hard in very difficult conditions against the weather and against the market to make sure that we have fresh vegetables on our tables. There is an obesity epidemic in this country that we are trying to address, and vegetables form a huge part of addressing the issue in people’s diets.
I welcome, however, the grant support given in recent years by the Government: €4.5 million this year and €5 million next year. Although many sectors of horticulture do not export to the same extent as the mushroom industry, they now face serious problems as well because they face cheap imports as the pound weakens and it becomes cheaper for them to sell product back in Ireland. As I said, I fear the day when, because of below-cost selling, multiples will put the remainder of our farmers in this sector out of business.
I want to tell the House one salutary tale. Back in 2009-10, a major multiple in this country encouraged farmers in Dublin and Meath to set up a co-op. They were stringent in the criteria they set for the refrigeration of the food for the standards that had to be met and a significant investment was made. Indeed, the Government may have contributed something to it as well. They got the contract in September and this new building opened. The following March, it was gone. The contract was withdrawn and they were forced to sell it.
I appeal to the Minister of State, Deputy Doyle, my Government colleagues, and everybody to start changing the balance of power in this market that Senator Mulherin has alluded to. It has gone too far in one direction. The market is determining what people are able to make a livelihood in this sector and that market is being controlled by a small number of multiples. It is not sustainable. It is dangerous, from our country’s point of view, in terms of being an island nation and being dependent on imports for lots of goods. This is one area where we have the skill set. We have the land.
Having traveled the world as a Minister, a point I would see as a positive is that whereas many countries see Europe as clean, they see Ireland as green. They put a high premium on that. We should not allow our horticultural farmers be put to the wall by unscrupulous business practices of multiples. I accept we all love to see cheap produce on the shelves, but the below-cost selling of vegetables and fresh produce is detrimental to our overall economy. I, for one, feel it should stop. Whether or not that requires the reintroduction of legislation on below-cost selling is a matter I would leave to my Cabinet colleagues to determine but something meaningful has to be done if we are in any way to be able to sustain the current farmers who are in horticulture and encourage new farmers into the sector. Many farmers see no future in it and their children see no future in it.
I welcome the opportunity to address this issue. I hope these statements in the House will lead to action. I welcome the fact the Minister of State will develop fora to deal with this but I hope that rather than being merely a venue for people to speak about the problem, the Minister of State will come back with solutions and actions to implement them.
Andrew Doyle (Wicklow, Fine Gael)
I thank all of the Members for their contributions. It is quite obvious from listening to everybody that there is both a keen awareness of the challenges facing the horticulture sector and a value put on the sector in what it contributes. I note Senator Boyhan was actively involved in the horticulture sector when we both were on the local authority many years ago.
I number of important points have been raised and I will try to deal with them. In response to Senator Gallagher, multinationals are a problem. We see, interestingly enough, that the two dominant retailers in the Irish retail and grocery sector are both Irish. There is 0.2% between them. They have leapfrogged each other. Between them, they account for 44% or 45% of the retail market. The remaining four or five take up another 45% and the smaller outlets take up the rest. Therefore, the two have a dominant position.
In my first term in the Dáil, I brought out a groceries, consumer and competition protection Bill, ironically, with my colleague, the Minister, Deputy Creed, where we were trying to bring about a structure for the relationship between the primary producer and the processor or, as Senator Reilly pointed out, the co-op. I visited that co-op as an Opposition spokesman when it was going well. Their demise was unfortunate and unnecessary because they were doing what their customer demanded, but for other reasons, they were unable to continue to trade.
The grocery goods regulations are the result of consistent lobbying by producers, farm organizations, and politicians. In the previous Dáil when I was Chairman of the Joint Committee on Agriculture, Food, and the Marine, we brought out a report on this matter. We had a certain level of impatience with the pace with which the Competition and Consumer Protection Act 2014 regulations were brought out. The regulations came into effect on 30 April this year. They will run for eight months. I understand the Competition and Consumer Protection Commission must report on its activities over the eight months by the end of April 2017 outlining exactly what happened, how many took place, any breaches which occurred and any follow-up measures that were taken because there is quite a deal of legislation which covers breaches which extend to prosecution. The objective is to review these regulations and see if they are working.
Personally, I believe that we may have to go further. In Europe, opinion is divided on what should be voluntary and what should be statutory. The CAP 2014-2020 acknowledges this imbalance in the relationship between various stakeholders along the food chain and encourages the establishment of producer organizations. I would concur with that. We have producer organizations in the mushroom sector. If there is anything we can see from that, it is that those organizations have helped to offer some level of protection and a channel of support for marketing and investment in the mushroom producing sector. The same could be applied across the protected crops and potatoes. As the Senators well know, there are basically four nursery stocks: mushrooms, potatoes, protected crops and vegetables. There are various opportunities that we should follow and there is probably potential to draw down EU funding in that vein.
The question on forestry is one I had better not forget. We hope to have roughly the same hectarage as last year, namely, 6,500 hectares. The target is to get to 7,000 hectares by 2018, and up to 8,400 hectares, roughly by 2020. I would make a couple of points. I have taken any opportunity I have had to engage with the wider forestry business. We are at 25.8% in the broadleaf plantation. Our aim is to get to 30%. The native woodlands scheme out to 2020, which we launched in the summer, is incorporated in that. Along with the incentives for broadleaf production, that should get us to 30%. To get to 7,000 hectares, the enclosed-unenclosed definition will be changed. It is based on soil quality. If the soil is determined to be GPC 3, which has growth potential, it will qualify for the higher rate of grant, enclosed or unenclosed. We are reviewing it to see if we can incentivise it. There are other initiatives happening. There is an ongoing threat response to the hen harrier, which may highlight that we have adopted a very cautious approach to the hen harrier areas and that, based on best practice in places such as Northern Ireland, there may be flexibility to release land that is eminently suitable for plantation. Much work is happening in the forestry sector, including agriforestry and other initiatives. One of the basic challenges is to instil in people that planting a plantation is not an either-or situation. Speaking from personal experience, to have a section of a farm planted adds to the farm production and the value of it and its ability to redeem an income to the farmer. We must regard it as a whole-farm management package rather than just an either-or. There is significant resistance in certain areas of the country. I have met them and I am trying to convince and reassure them that to want to plant more land is not a threat. We see the jobs that are created downstream as a result of the sector and the value of it. Given that it is not particularly relevant to the debate, I will leave it at that.
The mushroom industry has been challenging. Although I have not visited Monaghan Mushrooms, I have met the main person in Monaghan. Quality assurance is a matter for Bord Bia. Not all mushrooms by Irish companies are produced in Ireland. Bord Bia is better equipped to answer about quality. Bord Bia’s overall budget for the horticulture sector is €4 million and it is examining alternative markets in other parts of the world. That is down the line. Brexit has happened for the horticulture sector in the form of currency fluctuations. Today, sterling is at 85 cents. Last week, it was 90 cent and it was predicted that it would reach parity. There is great uncertainty, which leads to volatility and nervousness. The Senators are right that the freshness and quality of our mushrooms is unparalleled. The product going to the UK market is reliable and freshly delivered on time. While other countries will supply at a more competitive price, when one factors in wastage, unreliability, and reputational issues, the Irish mushroom holds its head up, as it were. This also applies to other products.
Last Thursday, the Minister for Agriculture, Food and the Marine, Deputy Michael Creed, and the CEO of Bord Bia, Mr. Aidan Cotter, were in the UK with the CEO of one of the major multiples. This is not the first time they have been there. There is ongoing engagement with them to reinforce the message that if they let the sector go without some adjustment in price – and there has been movement in it – and unless there is an acknowledgment of the need to address it very quickly, their supply base will diminish. One or two of the growers which went out of business have restarted, although the lead-in time is significant. If it goes to a point at which the supply base is not big enough, the major retailers will have a problem to which they will have contributed. We are working on it.
The €150 million loan fund is for producers. Most mushroom growers have a production element and a processing element. The major element, 1,000 people, is not part of it. It probably does not have the same challenges, although it has some challenges. The loan fund is targeted. It was a livestock fund of €11 million that came from the EU. The Department of Agriculture, Food and the Marine considered its own resources and added €14 million to it, and it went to the Strategic Banking Corporation of Ireland, SBCI, and got clearance from the Commission to allow it to extend beyond the livestock sector, especially to arable farmers and mushroom growers. Yesterday, I heard the Minister for Agriculture, Food and the Marine, Deputy Creed, say it would be rolled out in January. The SBCI has engaged with the pillar banks to roll it out as quickly as possible. It will be a game changer. It is urgently needed but it must be fine tuned so there is no improper lending. The fact that no security is required adds to the need to get it right from the start.
The lean initiative will be piloted with four or five mushroom growers. It will use Teagasc and Bord Bia, linked in with Enterprise Ireland, to examine how to assist growers in leaner production techniques. There is already a lean arrangement with Monaghan. When I met the CEO of Monaghan Mushrooms, this was one of the initiatives that was highlighted to us. It could be a significant benefit to growers in cost reduction. Costs are approximately one-third compost, a little over one-third labor, and the rest is ancillary. Compost and labor are the significant costs in mushroom production and anything that can improve efficiencies in them is to be encouraged.
The renewable heat incentive, RHI, is a matter for the Minister for Communications, Climate Action and Environment, Deputy Naughten, and we have met him. A couple of mushroom growers have renewable heat and some have not finally commissioned them and will not do so without an RHI or unless oil prices increase. There is a cost balance. In the wider vegetable sector, even if a product is considered seconds and is not going to make it to the market shelf, it should be possible, when people need food, for it to be a source of energy. It can be used as a form of biomass in a waste to energy initiative. Have I left anything out?
Pádraig MacLochlainn (Sinn Fein)
The forum.
Andrew Doyle (Wicklow, Fine Gael)
Sorry. I forgot about it, although I have it written down in two places here. I am waiting for final confirmation from the Minister, Deputy Creed. The forum we envisage will bring all the stakeholders together. I will convene it and engage with it. It will be different in some way from the dairy and beef fora. It is about identifying problems but also about figuring out solutions. We have an organic focus group and different models of fora, and we are trying to get one that is tailor made for the horticulture sector. In December, I am going to a nursery stock farm in north Dublin, where I have been before, to see their issues. I have visited some of the people Senator Reilly mentioned who are involved in tomatoes, lettuce, and scallions.I visited most of those people during the summer, as well as producers of strawberries down in Wexford. We are trying to create a forum that covers the four legs of it. Bloom was certainly a very good showcase of what is available. The downstream business figures from the Bloom festival, from within a month of it and from within a year of it are staggering for certain sectors in the wider horticulture family. Not everything benefits equally. Fresh vegetables are not big beneficiaries of it. I would say that nursery stock and cut flowers are the biggest beneficiaries. We export €14 million worth of non-food horticulture, which includes cut flowers. Amenity plants are being traded internationally. Daffodils are going to the United States and the United Arab Emirates. There is that sort of potential and we need more of it.
Brexit has done one positive thing for the specific sectors of agriculture that are in the eye of the storm: it has alerted an alarm for the absolute need to develop new markets. In September, the Minister, Deputy Creed, and I were in four countries in Asia. I was in Vietnam and Korea and the Minister was in China and Singapore. Beef was a significant part of both of our agendas in order to further that process. It was also an opportunity to showcase all Irish food. We had food evenings where we hosted restaurateurs, hoteliers, agents and food buyers to try to emphasize to them the benefits of Irish food. Origin Green is a huge marketing operation. We are the only country in the world that has a carbon navigating system by which we can tell what the carbon footprint of any product is. The three S’s are safety, security, and sustainability. That is what the marketing of Origin Green is out there to promote. It is gaining traction and we have a good reputation. It boils down to traceability.
However, it is slow. So much of our market depends on one particular destination, which always will be a significant market for us, as our nearest neighbor. Traditionally, long before the EU, we were major market traders, particularly for lower-value products. We have developed a value-added export business to the UK and to other countries. We really must make sure that we have some level of independence from that to give ourselves a better bargaining position. Nobody knows what is going to happen with Brexit. Not even the Prime Minister of the UK knows, when she triggers Article 50, whether she will get it through without the endorsement of the House of Commons, which is how it stands at the moment after the ruling of the UK’s Supreme Court. We are in very uncertain times with regard to Brexit. The main market’s positioning during Brexit and post-Brexit is uncertain. Sterling has a significant impact on everything we sell to that market.
Senator Mulherin asked a question about the disused mushroom facilities. That is a challenging issue. The Senator is from the west of Ireland and there are disused facilities there, as well as in other parts of the country. In parts of the country, there is Údarás na Gaeltachta and, in other parts, there are rural development companies. I think it will take ground-up initiatives. It will take people with ideas to come together, whether that is co-operatively, community-based or as a business, to develop ideas with the local enterprise offices and perhaps Teagasc and see what sort of ideas they will have and what uses they can be put to. They could create jobs and economic activity around them. I believe it would have to be profitable. There will have to be a business plan.
To be honest, I do not think I can speculate on what would actually fit all of the facilities. In fairness, there was consolidation from 600 mushroom businesses down to under 100 over a 15 or 20-year period. That is a significant consolidation. I know plenty of people who were in that business and exited it as scale became very important. Even within those 70-odd growers, as Senator Boyhan said, some of the bigger growers have satellite producers who put their name on the products. That is very welcome, but without that core centre, those satellite growers would not be of a big enough scale. It is a bit like egg production. The same principle applies in which there are satellite growers producing for a central company. I attended a poultry and chicken conference last week or the week before in the constituency of Cavan-Monaghan. It is the same principle. It will only work if it has a business case in a local area. The kinds of supports that are out there are important. If the business is worthwhile, local enterprise offices, and maybe Údarás na Gaeltachta in some areas, could offer supports on how to carry out feasibility studies and develop business plans. That is what the local enterprise offices are there to do.
Did I miss any points?
Victor Boyhan (Independent)
What of ongoing training and education?
Andrew Doyle (Wicklow, Fine Gael)
That is very important. Teagasc has renewed the recruitment of staff. Mr. Dermot Callaghan has been appointed as head of horticulture development. He was already in Teagasc and his previous position has been filled. One of the other things that we are looking at doing is a knowledge transfer between Bord Bia and Teagasc, as well as working with individual growers in various different sectors, particularly sectors that are vulnerable at the moment. The aim is to develop a knowledge transfer model. It works. We are trying to do the same in forestry, by the way. The Talking Timber and Talking Hardwoods events are about bringing stakeholders, growers, and producers together.
If we develop lean pilot programs for mushrooms and they prove to be worthwhile, the next step is to roll that out. Part of the rolling-out process is to share that knowledge with the other growers. I have been in beef discussion groups myself. There is nothing more useful than standing in a field or shed going through statistics and practices with a facilitator. One can pick up useful snippets of information at each meeting that one can bring home and apply. If we get lean programs up and running and they prove to be an assistance, I believe that really would be a great way to impart knowledge.
Warrenstown College used to teach a horticulture program. I think Kildalton College may do it now. I believe it is important, at agricultural college level of FETAC levels five and six, that we train people how to produce vegetables and horticulture products. Following on from that, it is also important that we teach them how to run a business. That involves management skills and follows on naturally. That is the way I was trained as a farm manager. People learn how to do it first. They think they know everything about it when they are 17, but when they then go onto somebody else’s farm, they realize how little they know. Eventually, they learn how to run a business. That is always going to be of key importance.
There are always going to be entrepreneurs in any of these businesses who are drivers and are to be admired. Not everybody has that capacity. Working with them and with the people who have the technical skills gives the whole sector the potential to grow, as outlined in Food Wise 2025.It was there before but it was far more fragmented. Now there is the chance to create added value and use the opportunity, as somebody stated, to create awareness. More people want to know from where their food has come.
I have attended the launch and first session of a farmers’ market workshop, mentoring people on what they need to do for these. The first one was in my own neck of the woods in Tinakilly last Wednesday morning and I had a look. A woman who goes to quite a number of these markets was giving her story and there was a representative of Bord Bia, which organised the event. It was very well attended and there were 40 or 50 people in the room, all of whom were either interested in or already in farmers’ markets. Apart from anything else, they were giving tips and indicating what to do when part of a farmers’ market, either setting one up or being part of a wider group. That is a knowledge transfer programme from Bord Bia. In some ways, farmers’ markets do not reach everybody but many people are certainly aware of them and the fact that they exist reiterates the need for people to look at labelling and where food is produced.
I agree with Senator Mac Lochlainn’s comments. Two or three years ago, a couple of retailers landed 40 ft. containers in here with certain vegetables and undermined native growers’ bonanza season that they depended on by selling products at a certain level. They could not have supplied the domestic market for the season but they advertised vegetables for almost nothing, meaning everybody had to rush to lower their prices. It set the bar so low it was disgraceful. Two years ago, the agriculture committee of the last Dáil wrote to all the multiples and asked them not to engage with that practice again, as did the farming organisations, and it got a certain level of commitment in that respect. It behoves all of us to highlight that growers, especially seasonal farmers, depend on getting a fair price. Vegetables in the shopping basket are not the most expensive commodity and it is discretionary goods on which retailers make a profit. People buy those items on impulse or in some cases I should not mention, the prices of products for a household can be increased.
It is absolutely disgraceful behaviour and I call on all multiples to desist from such a practice as it serves no purpose in the long term. It puts our primary producers, in particular, under serious financial strain when they are trying to come back next year. They do everything right in terms of quality and if that is what it takes to get people in through the door, it is a pretty poor statement of where we are from the retailers’ perspective. There are many other ways of getting the same result, including coupons. For God’s sake, do not screw the people who have a seasonal expectation to make their annual income.
Michelle Mulherin (Fine Gael)
I asked if the Government will, through the law, tackle low-cost selling further to what has been indicated. The Minister of State might be calling on them but it falls on deaf ears. I also asked about producer organization funding for 2015 as there have been concerns expressed by farming organizations about delays.
Andrew Doyle (Wicklow, Fine Gael)
The groceries goods order predates my time here in these Houses; it came in under a previous Administration. It was abolished, in essence, and I am not so sure it can come back. I would like to see a strengthening of the position of the primary producer. I would like to see prosecutions where there have been breaches of the groceries regulations. I have highlighted that people will not get away with that. I favor a name and shame process in this respect. As I stated with regard to the producer organization issue, the payments for 2015 were made on 15 October, amounting to €1.7 million.
John O’Mahony (Fine Gael)
I thank the Minister of State for that very comprehensive response to the questions and report on activities in the Department. I also thank Senators for contributing. When is it proposed to sit again?
Michelle Mulherin (Fine Gael)
Tomorrow at 10.30 a.m.
Source: KildareStreet – Horticulture Industry: Statements: 22 Nov 2016: Seanad Debates
