Opening Statement of Minister of State Andrew Doyle TD
22 November 2016
The Irish horticultural sector makes a very significant contribution to the Irish gross agricultural output with a farm gate value 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, packing produce, distribution, retail, garden design and landscaping.
At retail level Irish consumers spend on average of €1.2 billion on fresh fruit, vegetables and potatoes, second only to dairy produce. On the non-food side of horticulture the Irish consumer is spending €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 some €100 million is exported annually. Almost €14 million of non-food horticultural products i.e. 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 that 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 €137m with the UK accounting for 83% of Irish mushroom production of some 61,000 tonnes.
Most Irish mushroom growers are members of CMP, Ireland’s largest fruit and vegetable Producer Organisation (PO). This EU funded scheme provides a mechanism for producers to work together to optimise production costs, stabilise prices and strengthen their position in the market place by becoming part of a larger supply base. CMP draws down significant EU aid each year through its Operational Programme which provides valuable support for its members.
Budget 2017 underpins the Department’s mitigation efforts through strategic investment in key areas of the Department, in its agencies and in the agri-food sector. From providing access to an innovative low interest agri-cash flow 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 of Bord Bia, Teagasc & 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 programme which will assist companies dealing with currency and trading difficulties.
Under the Foodwise 2025 plan the Department has set ambitious targets for the horticulture sector, principal among these are to grow the value output of the horticulture sector by a further €500million and deliver 1000 FTE 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 future 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 a rate of 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 €4.3m, and approvals were issued to 154 applicants which will facilitate grower investment costing approximately €13.5m. Funding for the 2017 scheme has recently been announced and 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, the quality of output as well as allowing growers innovate and diversify production.
As mention earlier the Horticulture sector will have access to the €150m 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%.
Earlier this year the Department of Jobs, Enterprise and Innovation (DJEI) introduced the Grocery Goods Regulations under the Competition and Consumer Protection Act 2014. The five main retail multiplies 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 price or prohibiting below cost selling or certain practises within the food chain. They are aimed at ensuring there are no surprises and contract terms are honoured. 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.
To conclude the Government places a strong value on the importance of Ireland’s horticulture industry and continues to support it through the implementation of the Foodwise 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.
