Nov 222011

Edited Version of the President’s speech delivered to the 2011 AGM at the Carlton Castletroy Park Hotel on November 19.

 Edited version of the Speech delivered by Jackie Cahill, President of ICMSA, to the Association’s AGM, 19 November, Carlton Castletroy Park Hotel,Limerick. Special Guest: An Taoiseach, Enda Kenny

 Taoiseach, ladies and gentlemen, I’d like to first welcome the Taoiseach to our AGM here today in The Treaty City. Treaties or the amendment of treaties is a very serious subject and when they are signed under duress and pressure they can lead to very unfortunate results. They’ve never forgotten that in Limerick and it’s a pity – and more than a little shocking – that they appear to have forgotten that fact in some of the great capitals ofEurope. Taoiseach, the whole country has been following, inasmuch as that’s possible, the reports around your meeting earlier this week with Chancellor Merkel inBerlin. We’re very conscious of the fluid nature of the present crisis and to a degree we’re getting used to it – as we’ve had to, after three long years.


We can only imagine the pressure that you’re under and workload that you’re facing as the situation changes on what seems to be an hourly basis. But you’ll understand that there’s a incredible level of anxiety and worry out there amongst the Irish population and it’s particularly worrying time for farmers who, more than most sectors of Irish society, are completely plugged-in to the EU and most specifically the CAP.


I feel that there is a need for the Government to set out a comprehensive programme for the development of our sector; some so-called “joined-up Government” policy for the faming and food sector. We are not looking for another report or body.  We have already had a raft of such reports. What is now required is Government decision to implement a programme of development for the sector and that there should be joined up thinking between what is happening or likely to happen in the market place, what will emerge from the EU in relation to CAP reform and Government policy in Ireland. 


We have failed – and failed spectacularly – to join up all these parts.  The fault lies with many – including, at times, the farm organisations. But the ultimate responsibility rests with Government.


Some people will say that Food Harvest 2020 is the starting position. ICMSA thinks – and has always thought – that the starting position for a solid Irish agri-food sector should be a profitable farming sector.  This is a fundamental requirement but unfortunately it is still being ignored, decades after we first pointed it out as an incontrovertible fact. We hear comments virtually every day now thatIrelandcan supply food to 20, 30, or even 40 million people. Whatever figure comes into the head of the commentator be he or she a public representative, a person with policy responsibility or a commentator. But there is nothing behind this.  From a practical business sense therefore, these comments are worse than useless.  They are giving out false signals and exaggerated expectations which are being relied upon by farmers making investment for expansion.  Of course, we have to seize every opportunity- and we will. But let us keep a firm grip on reality and proceed carefully. The recent history of this country cautions us to move slowly and be sure of those who preach about easy money and double-digit year-on-year growth.


If we ever forget that lesson than the overgrown ghost estates will remind us.    


Those two points, world price and volatility, are fundamental aspects that we ignore at our peril.  As we commence another round of CAP Reform and against the chaos within the euro, what is the likely level of market support which will be available within the European Union over and above world prices?  We must not forget that traditionally prices inEuropewere at times twice the world price and that prices were stable because of actual intervention buying by the European Union.  While WTO talks may have stalled and while we have still tariff protection on agricultural product coming into the EU, this protection has been consistently undermined by bi-lateral agreements and concessionary imports. The Mercosur talks are still very much on the agenda. On the home front, we have Co-ops introducing Seasonality schemes that carry massive fines. The same Co-ops wanted quotas abolished, they got that and we now see them trying to introduce their own quotas. This is not on and a full reassessment is required.


On the dairy side, the current strong prices are reflecting the world situation as there is virtually no market support form the EU at present. However, this market is much more finely balanced – both in terms of supply and demand – and a small change in either or both could see a substantial price reduction. If we talk about expansion at dairy farm level and at processing level, we need to know more about the relationship between the supply-demand balance and international prices and I would put the challenge up to the people with responsibility for policy analysis in all the publicly funded agencies and University departments to address this critical matter.  To-date, they have failed totally to provide anything on which we can rely and plan. This is not good enough and it’s a blatant deficit in policy analysis that must be corrected. 



What does all this mean to us as dairy farmers?


 The Irish dairy industry and particularly Irish dairy farmers are actually facing into a situation where we will be competing on the same market place as our fellow dairy farmers inNew Zealand.  If we are – and it is increasingly likely that we will be – what about the costs of dairy farming here under both the environmental and input headings?


What must be our approach? Irelandmust ensure that in the negotiation of the Single Farm Payment that this greening requirement is deemed to be fully met inIrelandby a continuation of our present farming practice based on permanent grassland and the low carbon footprint and that the greening component of the payment is reduced.


On the critical issue of the Single Farm Payment, I must be blunt: the proposed base year of 2014 is madness.  It will increase the cost of land to farmers actually farming and it will lead to more land being underutilised. It will also lead to an increased proportion of the Single Farm Payment going to non-active farmers.  It is, in short, a recipe for disaster and will have more negative impact onIrelandthan any other EU Country


The current proposed base year must be changed or at leastIrelandshould get sufficient flexibility so that we can introduce a different base year to protect those farmers currently leasing substantial amounts of land.  This is an issue of common sense, commercial reality and fair play.  If we’re serious about getting a sound set of policies for Irish farming we must get a base year which will suit Irish conditions.  We have already sought detailed legal advice on how this may be done and have been in discussions with the Department of Agriculture.  ICMSA hope to be in a position to make a detailed proposal to the Department on this matter in the coming months. 


The proposal to level-out or ‘flatten’ the Single Farm Payments on a hectare basis leading to a single uniform payment in 2019 must not be implemented.  It would cause major financial problems for large numbers of farmers and farm families particularly those with repayment commitments and who expanded on the basis of the Single Farm Payment. Already banks are discounting farm payments entitlements above the national average by up to 40 per cent. This has a direct and immediate impact on the borrowing capacity of those farms as banks now operate a very rigid assessment of every loan application.  This, on its own, is a major policy issue in the context of achieving the targets of Food Harvest 2020, which now have assumed a status which may be unwarranted and indeed not helpful at all. 


Staying with the European situation, farmers and rural dwellers have been hit virtually overnight with a large number of new environmental regulations which were brought in by rushed or emergency legislation – some of which was not even considered by Dáil Eireann because of the lack of action byIrelandat European level.  It beggars belief that Ireland, with some of the highest paid Civil servants in the European Union, with the Oireachtas Members among the highest paid in the European Union, does not legislate to implement EU regulations in a practical and calm way and we wait until we are forced to do so by the European Court of Justice.  We are then forced to rush through legislation overnight, legislation which is drafted and implemented by the same politicians and Civil Servants whose ineptitude and lack of action got us into the mess in the first place.  This situation has to stop as it is causing unnecessary costs and disruption to business and our way of living inIreland.


I just have to refer to the septic tank issue and the issue in relation to the threshold on the environmental impact assessment to highlight my point.  We have learned nothing from the Nitrates debacle. 



For some time now, ICMSA and others have taken the view that there exists a virtual cartel in relation to the supply and cost of fertilizer; this needs to be addressed at European level as it is not possible to address it given the relatively small market inIreland.  I would call on the Taoiseach to ensure thatIrelandpursue this issue at European level.


 With regard to Energy, on the eve of the General Election, Taoiseach, you will recall that you kindly met us and reiterated a commitment regarding no increase on the carbon tax on agricultural diesel. This subsequently formed part of the Programme for Government.  We expect this commitment to be honoured in full in the upcoming budget in December.   


The relative cost of electricity is still out of line with Europe and it is an issue that the Government must relentlessly pursue as the electricity market in Ireland cannot continue to be insulated from international market forces and thereby passing on their high costs to exporting sectors, such as the agri-food sector. 


With regard to credit, I am very concerned, not just with the availability of credit to fund the expansion that is required and planned, but the actual cost of credit relative to what is available in other countries.  There are signs that the gap between Irish interest rates for the farming and SME sector is widening, relative to other competitor states, as Irish banks seek to rebuild their balance sheets.  However, it is very difficult to get any meaningful measure of the relative cost of credit inIrelandand in this regard, the Central Bank, the Financial Regulator or indeed the Department of Finance have not been of much help.


The forthcoming Budget must not increase capital taxes on the typical family farm inIrelandas it transfers from one generation to the next.  I am very concerned that all the talk of increased capital taxes and relatively small adjustments could see the de facto return of the old death duties.


All the indications, however, are that there will be an increase in the obstacles to this.  If we were to move from a situation where a few short years ago we had schemes such as Installation Aid and Early Retirement to a situation where those two schemes had been abolished and the young farmer was now faced – not with a help but a hindrance – in the shape of a capital tax liability on taking over the farm, then a truly epic act of self-sabotage will have occurred.


Taoiseach, that is really my main point here today. We face enough real obstacles without adding to them through miscalculation or short-sighted budget stunts. We don’t want special treatment for ourselves – but neither do we want to be singled out in a negative fashion. As the country rebuilds itself, we’ll stay the course. We were here before the developers and speculators and we’ll be here when they are consigned to our bad memories. In the meantime, you can count on the farmers ofIrelandand the country can count on the farmers ofIreland


The question is: can the farmers ofIrelandcount on their country and can they count on fair play?


I’ll now conclude by returning to the wider question of what options we have as we face what seems to be the unstoppable unravelling of the Eurozone. I’m very conscious that this might seem like I’m straying from ICMSA’s normal patch but these are not normal times and the levels of worry and confusion I witness every day in the farming community is most certainly not normal. It’s against that reality that I now make some observations.


Taoiseach, it is now widely accepted that the German Chancellor has indicated that her country will be pushing for certain momentous changes to the European Treaty.


These changes will effectively mean the surrender of what sovereign fiscal and budgetary powers that remain to us and their centralisation at EU level. We are given to understand that if we do not ratify these changes that an inner core group centred onGermanywill proceed anyway, and that we will be left in some form of associate status or second tier. I do not know for certain whether this is the choice that has been offered. But it is widely and authoritively reported that that was the nature of the choice offered this state. If we assume this to be the case, it seems to me that certain choices must now be made that we can only describe as being of the very first importance to our sector, our business as farmers, and to our country itself.


The first thing to be said Taoiseach is that any such referendum is most likely to fail. The reasons why are probably too numerous and certainly too vague and general to list. But ICMSA is, almost literally, a grass roots organisation and our very definite impression is that such an amendment would attract almost no popular support in this state at present. We may be confused by the dizzying changes and unfolding events we are unhappily witnessing, but we can still count and we know the value of our Foreign Direct Investment companies, we know how many they employ, and we know too what would happen the rate of corporation tax that persuaded them to locate here in the first place, if that rate was now going to be decided in some office in Berlin or Paris.


 This Association – like the wider farming community – has a consistent record regarding support for Treaty changes. But if certain parties are going to be blunt enough to ask us to choose betweenBostonorBerlinthen we should be blunt enough to cite some statistics back at them. Taoiseach, if – as now seems likely – a number of countries are going to be forced out of the Euro with the resulting hard currency being adopted by the remaining states then this state must have a very long and hard look at where our own best interests lie. It is by no means in our interests to remain with the euro where we would become increasingly uncompetitive at the same time as losing virtually all control over our national budget and taxation systems. At present, 37% of our exports are to theUKand theUSwith 44% of our imports coming from similar countries. And even these figures, significant as they are, underestimate the importance of the US Dollar in our trade and this is particularly the case in pharmaceuticals and our own sector of food, which, in aggregate, account for 66% of our total exports.


Taoiseach, the choice between remaining in the euro or leaving the currency will not be easy but our economic future depends on choosing correctly and it seems increasingly obvious that there are certain circumstances in which the best option forIrelandmay very well be to leave the euro so that we can rebuild our economy by exports.


This country never wanted to have to make that choice but it seems likely that it is to be forced upon us. It’s time to really consider the respective merits, and as farmers and people involved in the key export sector, we cannot conceive of a situation where we are systematically made uncompetitive in a manner that will never allow us to grow our economy and so address the debts that have propelled over this cliff edge in the first place.


Taoiseach, I have never addressed such matters before and I have had to think deeply about doing so on this occasion. But it seems to me that we must at least retain the power to make these decisions ourselves. Others have been assuming all the decision-making to themselves for the past year and God knows the results have not been very encouraging. Taoiseach, by their very nature and on a daily basis, farmers deal with the future. We have to decide today what we’ll be doing in six months or one year. That’s only possible against a background of some degree of certainty. We have to know what’s happening. And if we can’t know that – and I understand that it must be impossible just now – then we have to know that plans are being made to give us and our sector the degree of certainty that will allow us to grow the food that can be processed and exported and bring money back to this country.


I realise that I’ve strayed off my own patch, so to speak. But I’m speaking – I’m sure – for hundreds of thousands of Irish people who are increasingly confused by the chaos in the euro but certain that we must now begin to act in our own interest. In exactly the same way as certain other countries have acted in their own interest and at the expense of the whole.


I know that you’ll understand why I felt compelled to express these opinions and I’m certain that you appreciate the levels of unease and anxiety that’s evident right throughout the nation now. We want to know what’s going on. And if we can’t know that then at least we must know that we are going to begin immediately looking after our own national interest in precisely the same way as certain other Member States have done since the very first day of this crisis.


We have more choices than those reported to have been offered us this week. And whatever choice the Irish Government makes, ICMSA and the Irish farming sector will row-in and support so that we can secure and build the exports that alone can give us the way forwards and out of this intolerable bind.


That concludes my Presidential address – my sixth and last Presidential address.


Thank you, Taoiseach. Thank you, ladies and gentlemen. And may I end by thanking my colleagues in ICMSA for honouring me for those six years.