Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 9: To ask the Minister for Agriculture; Food and the Marine the steps he will take to support the development of a regionally balanced dairy sector post 2014; and if he will make a statement on the matter. [31632/11]

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Deputy for raising this issue. However, I am not sure what, in the context of development of a regionally balanced dairy sector, he is looking for from me. I assume his question relates to the position post-2015, preparations being made in that regard in the context of the absence of dairy quota and a dramatic expansion of the dairy industry and how we ensure that expansion will provide a dividend for all regions, rather than particular pockets of the country. The honest answer is that it will be difficult to do this. Certain farms, soil types and skill sets will allow particular parts of the country to expand more aggressively than others. Lest there be uncertainty, there is strong viability to produce milk in all provinces. For example, there are pockets of fertile land within disadvantaged areas.

Dairy farms are efficient. We must continue our journey towards efficiency within the dairy sector which is very much under way through structures such as the dairy discussion groups and other initiatives taken by processors in building the business skills base on dairy farms. Glanbia recently launched a proactive initiative and I expect other co-operatives to do the same. I do not see any reason development of a new market for milk and milk related produce cannot be of benefit across the country, be it in the Deputy's constituency or mine in which traditionally people have assumed most of the growth will take place.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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I am aware that this is an issue close to the Leas-Cheann Comhairle's heart. I congratulate Mr. Aaron Forde and his team at Connaught Gold on its negotiations which were completed last weekend.

Perhaps the Minister might address the issue of the balanced expansion of the dairy industry. Naturally, particular parts of the country are ahead of the curve in that regard. However, two critical issues in my part of the country are farm scale and access to processing capacity and the efficiency of processors. The Minister will be aware that farm consolidation relief lapsed in June. Has consideration been given to re-establishing it to ensure farm consolidation can take place, which would help to achieve significant efficiencies in these areas? Also, what steps are being taken to try to improve processing capacity and efficiency? Is it the case that following the abolition of dairy quotas, what will be important is access to a contract with a process in order to deliver milk? That is going to present a big challenge.

Simon Coveney (Cork South Central, Fine Gael)
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The Deputy has made a number of relevant points. On farm scale and consolidation, he is correct that farm consolidation relief ran out at the end of June. I have already submitted a package of taxation measures to the Department of Finance which it is hoped will be approved in advance of the budget. Through that package I am trying to achieve a number of things, the first of which is to increase land mobility in Ireland, in other words, ensuring we will have more land for sale. For example, while the average field in France comes up for sale once every 70 years, in Ireland it only comes up for sale once every 400 years. We have a problem with the availability of land for purchase, which means the price of agricultural land is far higher than it should be. Second, I want to ensure continued support for longer term leases in order that people will be able to get their hands on land to expand in order to achieve scale. Third, I want to encourage the handing over of land to younger farmers fresh out of college who are full of new ideas and energy, whom it is hoped will receive support, in terms of a top-up payment, through the new proposals attached to the single farm payment. We want to get young farmers farming, as only 7% of farmers in Ireland are under 35 years of age, which is not good enough.

Michael Kitt (Galway East, Fianna Fail)
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The Minister's time has expired.

Simon Coveney (Cork South Central, Fine Gael)
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I would like to finish my point. I understand there are not too many questions remaining. As such, we are not restricted in terms of time.

Michael Kitt (Galway East, Fianna Fail)
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I will decide that matter.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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This is an important issue.

Bernard Durkan (Kildare North, Fine Gael)
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We are trying to be helpful.

Simon Coveney (Cork South Central, Fine Gael)
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In trying to achieve economies of scale for farmers on small holdings we want to encourage farm partnerships, not alone partnerships within families but partnerships between neighbours in order that there will be a collective approach towards purchasing or leasing machinery, fertilisers, sprays and so on. Ultimately, we want to see facilities such as dairy parlours being shared to ensure maximum use. We want veterinary bills to apply to a number of farms rather than to an individual farm following the call-out of vets on different days and so on. There is a lot we can do to challenge and encourage farmers to act collectively while retaining their holdings. While not compromising the ownership model, they could buy into a co-operation or farm partnership model which we hope to encourage through the taxation system.

Michael Kitt (Galway East, Fianna Fail)
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Thank you, Minister.

Simon Coveney (Cork South Central, Fine Gael)
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There is a series of items into which farmers with small holdings could buy to help them to become more efficient and thus reduce the cost of their inputs.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Two questions arise from the Minister's reply. Are there any plans to reintroduce farm consolidation relief which lapsed in June?

Simon Coveney (Cork South Central, Fine Gael)
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Yes.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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On farm partnerships, the Minister will be aware that part of the difficulty in this regard is that partnership law dates back to British rule. The law in this regard is completely outdated to meet the needs of today. This is part of the risk associated with going down the road towards partnership. Does the Minister propose to introduce primary legislation to deal specifically with farm partnerships or to reform the partnership process in general? The processing capacity will be a challenge in all parts of the country but particularly in my part of the country. Without a contract to deliver milk to a processing facility, many farmers will not be able to re-establish dairying in our region.

Simon Coveney (Cork South Central, Fine Gael)
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On the question about the farm consolidation relief, I would like to see this re-introduced but it is not a decision for me. I have made the recommendation but we will have to wait for the Department of Finance to issue a response. I do not want to make too many promises in advance of the budget. We have a package of taxation measures which are currently under consideration. We have submitted them in plenty of time and I hope I can have the majority of them agreed. The farm consolidation relief is one of them.

If primary legislation is required to deal with partnerships, I am happy to introduce it. I am informed much can be done without the need for primary legislation. Teagasc is supportive of this concept and it has done a lot of work in this regard. I am hopeful that next year a number of partnership pilot projects will be set up in the west and in other areas and in different types of farm settings in order to demonstrate to other farmers how this can work without a compromise of their ownership or their decision-making. It will also show them that they can also forego participation in the partnership model if they wish and without a large cost to themselves as I understand this is a big worry for farmers.

The Deputy is correct in his view on processing capacity. The required investment by the processing sector in Ireland could be measured in hundreds of millions of euro over the next ten years in order to deal with the increased volumes of milk. We must face the fact there has been no investment at all in dealing with extra volume of milk since the mid-1980s, since quotas were introduced. We still produce 5 billion litres of milk every year, just as we did in the mid-1980s. I acknowledge there is an issue. As quotas are phased out we will also see contracts being phased in. In other words, there will not be an unbridled expansion of milk production as farmers will not be able to produce whatever they want and expect it to be bought and collected from their yards. We will need to have some kind of contract or supply model or a co-operative model to respond to an absence of quotas. The challenge is to ensure that this is provided in all parts of the country so that farmers will have an opportunity to expand.

Michael Kitt (Galway East, Fianna Fail)
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Two brief questions from Deputies Moynihan and Durkan.

Michael Moynihan (Cork North West, Fianna Fail)
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I refer to Deputy Naughten's question about peripheral regions. There has been a acknowledgement of the counties where dairying is to be expanded and this has been referred to in the House on many occasions. Over the past 30 to 35 years, there has been a significant movement away from agricultural production on the western seaboard and in peripheral regions. There are parishes where half the land is afforested. The dairy industry was the industry that began the co-operative movement in some of the poorer regions of the country and it was the mainstay of the western side of the country With the abolition of quotas we must ensure that the dairy industry and milk production is maintained in these peripheral regions. As the Minister has acknowledged on several occasions this is not just an economic policy but also a social policy. We have to ensure that these regions are garnered and while they may not have the most fertile land or cash-efficient production methods, these societies have a value and they should be encouraged to continue in agricultural production.

Bernard Durkan (Kildare North, Fine Gael)
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I strongly support the views expressed by the previous speaker. The Minister and Deputy Naughten have identified a very important issue. The Leas-Cheann Comhairle will be pleased to know that my grandfather, born in 1865, supplied milk to the establishment now called Connacht Gold. Depopulation in rural Ireland was the issue at the time and there was a need to counteract the impact of social deprivation and constriction. The views of Sir Horace Plunkett are still true to this day. I ask if these views might be implemented by way of more co-operation and a re-introduction of the co-operative system to ensure that the basic family farm producer is not ostracised and pushed out of the system. Provision should be made for two concepts, the viability of that unit and the need to ensure that rural parts of this country retain an economic value and are not regarded solely from the point of view of tourism. Given the Minister recognises the importance of the situation, I ask if he will use his good offices with his European colleagues to ensure that this concept is promoted to the greatest extent possible because it will lead ultimately to greater employment.

Simon Coveney (Cork South Central, Fine Gael)
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The last two speakers made comments rather than asked questions.

Bernard Durkan (Kildare North, Fine Gael)
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It prompted a question and an answer.

Simon Coveney (Cork South Central, Fine Gael)
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The difference between politicians and economists is that we have a social responsibility as well as an economic one to ensure the country has a functioning economy and also a society that functions.

Bernard Durkan (Kildare North, Fine Gael)
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That is correct.

Simon Coveney (Cork South Central, Fine Gael)
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This is why I have repeatedly said that I have a dual priority. The first is to meet the targets in Food Harvest 2020. The second is to develop the potential of a significant opportunity for increased agri-food production while at the same time trying to support parts of the country which do not have the capacity to avail of the opportunities for growth because of farm size, fertility of land and a series of other restrictions, such as SAC designation.

However, we must work to increase the productivity and efficiency of small farms and smallholdings with limitations in land type and fertility. We must encourage farming communities to improve their production in order to gain from the market. There is a vast difference to be noted between efficient dairy farmers and those who are less efficient but on similar types of holdings. There is a significant difference between good and bad farming. This holds as much for disadvantaged areas as for the fertile fields of east Cork. It is a case of ensuring that everybody can maximise the potential of their holding whatever the challenges and restrictions. Supports are available by means of disadvantaged area payments and through schemes such as AEOS and REPS. We must not lose sight of the fact that for many farmers there is always more to learn about improving the efficiency of their holdings. This could result in a more sustainable and exciting growth story in the agri-sector.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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If I may ask a brief supplementary question.

Michael Kitt (Galway East, Fianna Fail)
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Sorry, Deputy, we are over time.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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I am only encroaching on my own time for the next question. I have another seven minutes.

Michael Kitt (Galway East, Fianna Fail)
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That is for the next question.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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The last thing we want to do is to suspend the House.

Michael Kitt (Galway East, Fianna Fail)
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We will not suspend the House. The Deputy may proceed.

Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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While our part of the country may not be as efficient at producing milk as in south Leinster and Munster, when a comparison is made on a European scale we are very efficient in producing milk in our region. With regard to the peripheral areas of this country, can some form of a mechanism be put in place to bring the processes together? It would mean bringing together those involved in the industry to see where the bottlenecks exist and what steps could be taken. My fear is that post the quota regime, the big processors in the southern half of the country will speed ahead - the best of luck to them - and dramatically increase capacity but the region I represent will be pushed out of the industry altogether. We do not want to see this happen.

Simon Coveney (Cork South Central, Fine Gael)
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I do not want to see that happening either. I believe we will see dramatic expansion in south Leinster and Munster although there are parts of Munster that have similar challenges to parts of Connacht. It is important not to label entire regions as being either productive or non-productive. It is very much a patchwork quilt.

If we are to meet the targets laid out in the Food Harvest document expansion is required in the west, north-west and midlands and in parts of Munster. The expansion in the latter may not be quite as dramatic but it is required. There is already much talk within the processing sector, four years away from consolidation, as well as an examination of ways in which we can get more efficiency into the processing sector. This is not only about trying to get efficiency at farm level. We need to ask ourselves whether we have the right model in terms of the number of processors in place, where they are geographically and whether we can encourage consolidation in that sector in a sustainable way. Ultimately, these processors are all privately owned and run and are not controlled by the State. We talk to them and will continue to do so even more as part of the implementation group within Food Harvest. Some of the processors are represented on that group.

We also talk to the Irish Dairy Board on a regular basis regarding its views on the matter. I assure the Deputy there is no shortage of consultation.