Nov 292016

ICMSA AGM Castletroy Park Hotel Limerick Picture Credit Brian Gavin Press 22

Ladies and gentlemen, I would firstly like to welcome you all and our two guest speakers, the Minister for Agriculture, Food & Marine, Mr. Michael Creed, and the former Taoiseach and former EU Ambassador to the USA, Mr. John Bruton, who will joining us presently, to the Annual General Meeting of ICMSA.

2016 has brought very major changes to the global political arena with Brexit and the recent USA Presidential election being two key developments that could well have seriously negative implications for the development of our sector.  I expect that our two prestigious speakers will give us their insights to these developments today and I hope to hear our Minister set out – insofar as that’s possible now – the Government’s plans to protect our multi-billion Euro food industry not only on the basis of its foreign earnings but also on the basis that is it a truly national economic engine and operates in every town land in the country. The implications of Brexit, in particular, are a cause of major concern in rural Ireland and if the results of the last General Election demonstrate anything it is the wisdom of not taking rural concerns and rural voters for granted. ICMSA has repeatedly stressed the need for politicians to address rural concerns with no less vigour than they are happy to display for urban or suburban communities

Today, I’d like to focus on the matters that are directly presently impacting on our members and their families at present and I know from attending our county AGMs throughout the country that the main source of anxiety and downright despair amongst is the absolutely dire situation regarding farm income – and most specifically the disaster area that has been dairy farmer income.  I look forward to hearing the views of our esteemed guests on this but first I’d like to turn very quickly to the shadow that has fallen over our sector since the UK  Referendum of 23 June.

Brexit presents the biggest single challenge that the Irish Agri-food sector has faced in decades. There’s a perceptible anxiety there that we haven’t seen since the BSE outbreak in the early 2000s.  But we have to keep reminding ourselves that we’re not entirely bystanders in this process: we have a voice and we should be articulating our national interest right now – early and often. The Irish Government, the UK Government and the EU all have it within their powers to ensure a relatively smooth transition and they need to announce that as their ambition.   Even this early in the process, we don’t need sabre-rattling on trade arrangements. We will need an agreement between the EU and the UK that protects both economies and protects the livelihoods dependent on trade between the two parties. Ireland has a centuries-old food export trade with England particularly and that has to continue. ICMSA thinks that the Irish Government would be very wise to set that position out now as a national strategic imperative that we will insist other Member States respect and incorporate into any final arrangements.

In the short term, I would ask the processing sectors of Irish agriculture not to take advantage of Brexit and the resultant currency volatility by cutting producer prices. We should not undervalue what we produce here in Ireland and if Sterling weakens, we need to be saying to UK retailers that they will simply have to pay more.  The systematic undervaluing of farmers’ work needs to stop now and we cannot be expected to pay for Brexit. Nor do we want to hear that the processors are ‘up against a wall’ in terms of what they can pay: We saw with the introduction of the Voluntary Milk Supply Reduction that milk processors –  almost literally overnight – were able to pay more.  Farmers have to stop being the ‘fall guy’; the first option to cut when processors don’t like the look of their own figures.     Whether you are an Irish or South American exporter, the impact of sterling is the same and we need to stop undervaluing ourselves and our produce.

The Government also need to take direct action. Establishing Brexit groups is all very well but until the negotiations commence their status and usefulness is doubtful. We’d be better off setting our desired ambitions for a final deal as I mentioned and waiting to the real process to begin. When it does begin, our issues are already clear: Free access to the UK market, trade deals, CAP implications, common production standards to on farm issues. Something we should do as soon as possible is introduce the Farm Management Deposit Scheme that will allow farmers themselves to plan for volatility. It must also be stressed that Farmers BPS/Greening payment cannot be cut due to Brexit – for too long we’ve had issues arise at EU or world level that are totally unrelated to farming but which always seem to end up with farmers carrying the financial can – the Russian ban is a case in point. This has to stop.

Brexit may also present opportunities for agriculture and we need to identify potential opportunities and invest in them.   In this regard, additional support for Bord Bia to address the market challenges and opportunities needs to be forthcoming from Government.

Trade deals strike fear into Irish farmers and that fear is usually justified. Time after time we’ve been told that the ‘Greater Good’ has to be served by our being undermined by food imports that never have to meet the standards we are happy to insist upon for our own food production.

The recent EU report on trade deals has highlighted the dangers – particularly for the beef sector. Mercusor and TTIP cannot proceed because of the unfair threat they will present to the Irish beef sector.   However, we have positive interests in terms of other trade deals and ICMSA believes that this where the emphasis should now be placed: For example a trade deal with Japan which would present considerable opportunities for our beef sector.

From a milk perspective, 2016 has been a disaster and it is quite clear – if it wasn’t already – that the current ‘toolbox’ of policies is hopelessly insufficient to address farm income volatility. We now need to look at new and innovative ways to support family farms and I want to stress that again because it is the family farms that are the economic and social lifeblood of rural Ireland.    Our members will not accept the line that ‘the market’ sets your price.  Minister, the market is rigged and rigged markets will not keep family farms in business. There is only so much work one person can do, so scale is not the answer either.  The market is being abused by large processors and retailers and it needs to be fixed by our regulators.   Farmers are regulated almost out the gate at this stage but yet the powerful links further up the chain appear to be able to set their own agenda with no interference from our national government or the EU.  Neither the consumer nor the farmer is benefitting from this flagrant market abuse.  The EU Agri-Markets Taskforce recently published a report on how to protect primary producers in the supply chain and, to be frank, while many of the recommendations are laudable, they just will not protect primary producers or address the dominant position of some players in the supply chain.

We produced milk below the cost of production right throughout 2016, we’re only approaching a breakeven milk price now after the better part of two years.  No milk processor will make a loss in 2016, no multiple retailer will make a loss, the farmer price fell by over 40% while the consumer price at EU level fell by about 2%, farmers were wiped-out but someone along the supply chain benefitted from that wipe-out. The Agri-Markets Taskforce hasn’t addressed this issue and I believe this is the issue that our national Government and the EU chose to ignore.   Family farms are being ripped off by the powers further along the supply-chain and this will have to stop.

Over the last year, dairy farmers have seen milk price collapse and it is a collapse and no other words should be used to describe it. ICMSA estimates that the loss to Irish dairy farmers in 2016 relative to 2014 is €650m and €1.1 billion to the wider already struggling rural economy. Thankfully, global dairy markets have strengthened since July, prices have improved but the milk price being returned to farmers is still below the cost of production. I believe that milk price in 2017 will see further improvements but the long term sustainability of these prices is the challenge. The response to the 2016 collapse was totally inadequate and too slow. We are also concerned that the EU Commission has announced its intention to sell product from intervention shortly despite the fact that the base milk price is still below the cost of production.  This is very premature and should be deferred till the recovery is more established and ‘bedded-down’.

We have seen the damage that poor prices in 2009 and 2012 did to individual farm families. The EU has responsibilities on this matter that, despite its best efforts, it cannot ignore. Unless you and your colleagues put in place appropriate policies to deal with volatility, our members will remain extremely exposed and have to suffer periodic income wipe-outs while the retailers and processors will all survive by passing the negative impacts back to the primary producer.

Frankly, Minister, having identified it as an effective solution ICMSA welcomed the Voluntary Reduction Scheme and we are disappointed that you opposed the introduction of this scheme.   At the Dairy Forum on 21st June, milk processors held out no prospects of milk price improvements until October.

The Voluntary Reduction Scheme was announced in mid July and – lo and behold – July milk price increased. That wasn’t any kind of a coincidence and while I’m not saying that the Voluntary Reduction Scheme is the solution to all our problems, there’s no doubt but that it concentrated the minds of the processors and retailers, for the first time, it gave farmers an option and it put reminded the processors and retailers that if they wanted milk, they were going to have to pay for it.  This is not milk quotas by the back door, as suggested by some processor representatives. It is a voluntary initiative and farmers are free to take their own decisions. ICMSA believes that the Voluntary Milk Supply Reduction Scheme should be a permanent part of policy triggered when milk price falls below 28 cents per litre and we would ask you to support this proposal.  Give farmers an option when milk price is poor and put the pressure back on processors and retailers to return an improved price. Stop giving them a ‘Free Run’.

In relation to the €350m package, we are disappointed that the Government decided not to pay it as a direct payment to dairy farmers as in 2015. There appears to be an agenda against dairy farmers in relation to direct payment. The principle – we were told – was to share this fund across all sectors but dairy farmers are effectively excluded from GLAS, while we have a direct payment for sucklers, and we now have direct payment for sheep. That money isn’t shared across all sectors. So Minister, we are saying we now need to look at a direct payment for dairy cows where the majority of dairy farmers are totally dependent on milk for their income.

In relation to the beef sector, I have to express my extreme disappointment with the follow-up from the Beef Roundtable. Or rather the absolute lack of follow-up.  The Beef Roundtable set out a number to issues to be progressed and while ICMSA was prepared to engage on these matters particularly on the beef grid review, other parties refuse to engage and have reneged on their commitments.

I believe this to be a major mistake and one which has to be confronted immediately. CMSA recently published a report on the Beef Grid that details out a loss to farmers of approximately €80m between 2011 and 2015. To date, not a single source has come forward with figures that contradict our own. Farmers have lost out under this grid, identifiable flaws were designed into it and it needs to be reformed.  One would have to question the continuation of the Beef Roundtable when certain parties agree something and then simply pull back and renege on their commitments.  The fact that they’re permitted to do that under the gaze of officials is even more to be regretted.

2017 is likely to see increased beef supplies and we need to see the US beef market taking larger quantities of Irish beef and we need to see the Chinese market open for Irish beef. But the priority has to be rapid progress in terms of live exports. In relation to the Forum, I must express my disappointment that you did not take up my suggestion to include the live exporters in Forum meetings and I would ask you again to consider my suggestion.

In light of the further concentration at processor level in the beef industry, live exports is the only insurance policy that farmers have and that reality needs to be represented at the Beef Forum.   We also need dedicated units within the Department of Agriculture, Food & Marine and Bord Bia with dedicated budgets to drive the live export agenda. We have the highest standards in terms of live export regulations and a greater focus is needed on live exports specifically in the context of the increased numbers coming from the dairy herd.  The decision of Cork Marts to withdraw from exporting calves is disappointing and only makes more urgent the need to see an action plan from state agencies to ensure that live calf exports increase in 2017.   The opening of the Turkish market, the announcement of a shipment to Libya are all positive, but we need to see numbers increase rapidly in order to put pressure on the meat plants to pay a fair price.

It is simply a mathematical fact that a greater proportion of Irish beef will come from the dairy herd and our beef industry needs to have an action plan in place in this regard. I believe they are ignoring this and this is a very foolish strategy. People need to wake up to the fact that the suckler herd is not going to stay at current levels and we need to develop a credible plan for beef from the dairy herd. Dairy will be the dominant source of beef going forward and I believe the industry and Bord Bia need to wake up and plan on this basis.

Quality Assurance Schemes are now part of farming but it is important to say that farmers have very mixed views on them and need to be convinced of their merits.  Farmers need to see a dividend in terms of milk, beef and sheep meat prices.  We were told that these schemes were required to get into value-added markets but – as usual – the farmers did the work while the others got the dividend. Bord Bia and our processors continually pronounce their sustainability credentials with expensive advertising and marketing campaigns but the farmer supplier is now rightly asking: what about our financial sustainability? There’s never any mention of farmers’ sustainability and the feeling has grown that these quality schemes are little more than waffle – and waffle at the expense of the farmers.

We also need action on input costs. In the six years between 2010 and 2016, farm inputs prices have increased by 12.1% with fertiliser prices over 22% higher and feed prices nearly 17% higher. Relative to 2010, Irish milk prices are 12% lower.   Farmers are being squeezed on both sides and this price cost-squeeze is simply ruining us and must be addressed by policymakers. One of the reasons is regulation: Across all inputs we need to look at the regulations and barriers to competition and remove them where possible. If farmers are going to be forced to operate on global markets, then why can’t we get inputs at global prices? We’re tired of asking the question and it’s high time we got an answer.

The recent Budget has brought some welcome initiatives particularly changes to the Earned Income Credit, Farm Assist and PRSI changes for the self employed amongst others.  On the PRSI changes relating to Invalidity Pension, ICMSA is saying that these changes should be brought in immediately and not the end of 2017.  We welcome your commitment in your post Budget press release to “Consider an ‘Income Stabilisation’ measure, whereby some income can be deferred/saved in a period of high prices, to be drawn down in a period of lower prices.”

In the context of Brexit and the increased likelihood of potentially ruinous farm income volatility, this commitment needs to be delivered in the form of a Farm Management Deposit Scheme and delivered in the next Budget.  On a related matter, there is huge concern amongst Kerry suppliers regarding the recent “out of the blue” decision of the Revenue Commissioners in relation to so-called ‘Patronage’ shares.   This decision has enormous unexpected implications for farm families and we need to address it in the interests of fairness.

In relation to the low-interest Loan Scheme, it is ridiculous that farmers cannot restructure terms loans taken out at high interest rates but can restructure merchant credit and overdrafts. The Government is effectively saying that farmers who took the correct course of action in terms of long term loans to fund investment are now going to be penalised for doing so.  Yet again we see the banks dictating and protecting their high margins at the expense of farmers.  We are also concerned that these low interest loans will be gobbled up by a small number of people with the majority effectively excluded. I hope Minister that you can provide us with assurances that this will not be the case. Farmer debt in June 2016 amounted to €3.3 billion.  There is need for long-term capital at competitive rates and the low interest rate loan scheme will not deliver this.

It would be a major mistake to plan for long-term investment based on a continuation of the current historically low interest rates as interest rates are likely to increase in the medium term. We must ensure they remain at a level similar to our EU competitors but also to other sectors in the Irish economy. At present we pay more than other sectors which, given the level of security represented by farms, is totally unjustified.

The legal system remains a barrier to competition with the legal cost of moving a lien from one bank to another in excess of €3,000. This is yet another hidden charge to competition and we need to address it.  We were told it would be reviewed if it was a problem. Minister, it is a problem and we want that review.

The future of the CAP post 2020 is now coming into focus.   Farmers are acutely conscious of the importance of the Basic Payment Scheme/Greening in terms of sustaining their business and it has been slashed in recent years for many farmers.   ICMSA believes that the system going forward needs to support active farm families and changes will have to be made in this regard. In addition, the suggestions of a 3rd Pillar is worrying.   Everybody accepts the need for risk management but how is this going to be funded? And whose risk is to be managed?

The ANC scheme (formerly the Disadvantaged Areas Scheme) has played a central role in the past in retaining farmers in poorer areas of the country. I cannot over-emphasise the importance of this scheme to farmers and the current review is of major concern to those families.  Those farmers dependent on this payment need to be protected and areas excluded in the past need to be reviewed while payments must be returned to pre-2009 levels. Farming in poorer land areas is extremely challenging and the families carrying it out need to be supported.

Minister, ICMSA acknowledges the improvements in BPS/Greening payments this year for the majority but for the people still awaiting payment, this is no consolation. Farmers submitted their applications on time and they should be paid on time unless the farmer fails to respond to a query.  Most farmers still awaiting payment have received no correspondence and the delay is no fault of their own, this cannot be allowed to continue. The Department have the applications since May and they should be fully processed at this stage. The Farmers Charter sets down commitments that must all be met, including GLAS payments which are now overdue, and indeed, GLAS + payments from 2015 that remain outstanding. Farmers sign up for these schemes in good faith, they have incurred costs to participate and they need to be paid on time.  A Farmers Charter is a very necessary document but the commitments entered into need to be met by all sides.

In relation to TAMS, the inclusion of underpasses should be a priority in the interests of farm safety, road safety and farm developments. The planning system also needs to be addressed in this regard with the removal of costs that make underpass construction unviable. TAMS approvals also need to be speeded up as much of these investments – particularly on dairy farms – are time-sensitive. On the proposal to limit approvals to one year, ICMSA is very concerned by this proposal and we think that considerable flexibilities need to be retained to take account of income pressures in particular.

Climate change and associated regulations continue to remain a key concern for farmers. The draft adaptation plan for the agriculture and forest sector published last week still leaves many unanswered questions and farmers need to be given certainty in relation to investment decisions on their farms. It has been recognised that Irish dairy farming is one of the most efficient globally. Farmers are already playing their role in reducing their carbon footprint – and we’re happy to do so.

But we remain concerned that additional regulations will be imposed on us and we would welcome reassurance from the Minister on this matter today.

The Nitrates regulations and Nitrates Derogation are up for review in 2017 and the Derogation, in particular, is critical for Irish dairy farmers and must be retained. Any undermining of our derogation would do untold damage to Irish family farms and would overnight make many of them unviable enterprises.   The Nitrates regulations contain many aspects, including ‘calendar-farming’, that are hugely frustrating for farmers and at which we need to take another look. The regulations should be tailored to take account of the practical realities of farming in Ireland.  We simply cannot continue to farm by the calendar.

On a related matter which I raised again last year, Minister, farmers in SAC/SPA areas are now at a massive disadvantage to the point where land abandonment is an issue. The policymakers will simply have to address where a farm family wants and needs to farm at a commercial level in these areas.   Sterilising their land, as is happening now, is a recipe for disaster and will bring greater problems and issues down the line. Land designations and their impact on farm families’ ability to earn an income from farming and develop their farm is a massive issue for farming – and I include Hen Harrier areas – and I believe at this stage a complete review of land designations, along with proper compensation, for the people affected is an absolute must.  NPWS is, in ICMSA’s opinion, choosing to ignore these challenges and I believe they will pay a heavy price in future years unless they address the genuine concerns of farmers.

ICMSA supported the BVD programme on the basis of a three -year programme and, like most farmers, we feel badly let down by the regulators’ intention to extend the programme to 2020.   Minister, this is an issue that is coming up across the country, farmers are fed up of the slow progress from the Department.

There seems to be endless resources to inspect farmers but limited resources to finish off the BVD programme. If the Department and Animal Health Ireland want farmer support for future animal health initiatives, BVD is going to have to be sorted out: PIs will have to be removed immediately and the scheme brought to a conclusion rapidly. Farmers bought into this programme, they have been let down and this damage needs to be repaired immediately.  TB continues to be a major concern for farmers and while acknowledging the improvements in TB compensation earlier this year, the impact of TB at individual farm level is still disproportionate. The areas with high incidences need to be addressed and targeted and the deer issue will simply finally have to be addressed.

On the wider rural development issue, ICMSA and its members are rightly concerned regarding the ongoing decline of rural towns and villages and the failure of state agencies to develop these towns and to maintain existing industries – not to mind attract new ones. Our public services from garda stations to hospitals continue to decline and it is about time that our elected public representatives put down a strong marker that Ireland is more than Dublin and the larger cities.  Rural people want to live, work and prosper in rural areas. I raised these issues in 2015 but unfortunately, matters have not improved.  In relation to rural crime, there is genuine fear amongst rural dwellers and it is about time that the criminals are apprehended and dealt with and the sentences are served when imposed.

Broadband is a key issue for farmers and rural dwellers and in the context of the National Broadband Plan, we need to see the rapid roll of quality broadband and the Government must ensure the company awarded the contract frontload the development of rural broadband.

Flooding, particularly in the Shannon region, but also in other parts of the country – including my own county – caused huge hardship for the individual rural dwellers and farmers concerned earlier this year. I saw the devastation first hand visiting farmers and rural dwellers at their wits end and seeking long term solutions. Nearly 12 months down the road and the same concerns exist.  ICMSA met with Minister for State for the OPW & Flood Relief, Sean Canny, late last week and I would compliment him on his knowledge and understanding of the problem. Twelve pinch points have been identified on the Shannon region with a cost of €25m to address. We would consider that this is good value for money and we also said to the Minister that immediate action is required.  Flood defences are important but we must also address river management and this needs to happen immediately. People cannot continue to face the hardship of early 2016.

The Irish Water (Ervia) proposed pipeline from Parteen Weir to Dublin has very serious implications for the landowners concerned and they are questioning the need for this project and how they can continue to farm during construction and after.    The concerns of these landowners must be fully addressed and taken on board.

Unfortunately, some farmers are not with us today due to farm fatalities and we all have a responsibility to minimise the level of accidents on our farms.   Too many farm families have been touched by tragedy as a result of a farm accident.   We deeply sympathise with these families and as a sector and individually, we have to do more to make our farms safer places to work for ourselves and our families.

Minister, ladies and gentlemen, I have just touched on a number of issues facing us today, there are many others.   The decisions on Brexit in particular will provide a clear indicator to farmers regarding the commitment of this Government and the EU to farm families and rural areas.   We, as farmers, are facing into a very uncertain period and I wish to assure you that ICMSA will do everything possible to better your situation and I wish you all health and happiness in 2017.