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Minister Creed's address at ASA Annual Conference, Kilashee House, Naas, 07 September 2018

Theme: From Consumer Trust to Trade Wars, the Challenge for Agri-Food

INTRODUCTION

  • I am sure that you have enjoyed interesting discussions today, and I am grateful for this opportunity to give you my perspective on the challenges and opportunities facing the Irish agri-food sector. As per the theme of this year’s conference, these challenges do, indeed, range from gaining and maintaining consumer trust, all the way to ensuring that the global trading system continues to function in a fair and efficient manner.        
  • I am also delighted that Ted Mc Kinney, the USDA Undersecretary for Trade and Foreign Agricultural Affairs, accepted the invitation to come here today and give the keynote address, and allow us to consider further the US perspective on these issues.
  • When it comes to challenges, perhaps the biggest one facing Irish agriculture, and the Irish economy more generally, is Brexit. Related to that is the broader – and increasingly volatile - international trading environment, while of course the shape of the Common Agricultural Policy post-2020 will provide the framework within which these challenges will be addressed. My comments will be focused on these key areas, while also addressing the important role of food safety and sustainability.

INTERNATIONAL TRADE

Agri-food sector in Ireland

  • I think it is important first of all to note the ongoing and vital contribution that the agri-food sector makes to the Irish economy – and particularly the rural economy – as well as the important role that the international trading environment plays in sustaining this contribution. 
  • The sector accounted for 7.8% of Modified Gross National Income and 7.9% of employment in 2017.
  • It employs 173,000 people – including those involved in primary production and processing, and in the food and beverages sector.
  • It is very heavily export-oriented - total Irish agri-food exports came to almost €13.6 billion in 2017, which represents just over 11% of total Irish goods exports. It also represents an increase of 74% compared to 2009.
  • These figures include growth in exports to the UK of over 40%, and to the rest of the EU of over 68%.
  • However, the most significant growth took place to non-EU destinations. These exports increased by more than 160% over the period, driven by growth in exports to Asia of 280%, and to the Americas of over 150%.
  • We will continue to focus strongly on these markets given the priority that has been attached to them in the context of Food Wise 2025, and particularly against the backdrop of the uncertainty created by the decision of the UK to leave the EU, to which I will return shortly.

Key role of food safety and sustainability

  • It is also important to note that the remarkable success of our food exports in recent years is based heavily on the credibility of our food safety and animal diseases control and regulatory systems, and on our efforts to advance and prove our sustainability credentials.
  • Ireland has excellent food safety, animal health and traceability systems, which are regarded as world-class.  We have gained equivalency with the USDA for our beef controls, and this year we were also approved to export frozen boneless beef to China.  

Sustainability

  • Our beef and dairy products are known worldwide for sustainability and high standards of animal welfare.  Ireland’s climate, combined with careful management, gives us some of the most extensive grasslands in Europe.  Our grass-fed cattle are a key selling point in developing markets with third countries.
  • We recognise that we must do much more on the environmental sustainability of our food: in relation to climate change, water quality and biodiversity. We share these challenges with all other food producers globally, but we start from a relatively strong position of having relatively low green house gas emissions per unit of output, and good water quality.
  • Globally, food producers face a challenge to assure consumers that food is produced sustainably, and we in Ireland aspire to be seen as among the most sustainable food producers in the world.
  • We are investing heavily in agri-environment measures at farm level (over €1.5 billion in our major agri-environmental measures under the Rural development Programme 2014-2020).
  • We are contributing to Government planning on climate change mitigation and adaptation under the specific policy for the agriculture and land use sector of an “approach to carbon neutrality that does not compromise sustainable food production.”
  • We are also investing heavily in research around key sustainability themes to ensure that we have the best technology (both hard and soft) available to us in this quest.
  • Our industry is stepping up through Origin Green. Led by Bord Bia, Ireland’s food promotion agency, it brings together our entire food industry - from farmers to food producers, retailers to foodservice operators - with the common goal of sustainable food production.
  • All of our sustainability efforts are underpinned by and contribute to the quality of our produce - but it is more than just this.
  • It is about being able to prove it, and about being best in class in terms of the safety of our farming and processing methods, the sustainability of our systems, and our ability to verify these criteria objectively and credibly. This is vitally important in satisfying consumers both in Ireland and across the world, and most especially in growing markets such as those in Asia.
  • This has also, for example, made us a global leader in targeted nutrition products, infant formula and food ingredients, as well as producing more traditional dairy, meat and seafood commodities and beverages.

International Trade - Opportunities and Challenges

  • As the world population grows and in many areas becomes more prosperous, global demand for the highest quality food will also grow.
  • The Irish agri-food sector is well-placed to satisfy this demand, and we have ambitious plans to grow the sector over the next number of years in accordance with Food Wise 2025, which projects an increase in exports of 85%, to €19 billion, by 2025.
  • There are many opportunities out there, and we need a stable international trading environment to take advantage of these.
  • As a small open economy, Ireland supports trade liberalisation. We recognise in particular the benefits of EU trade agreements with third countries which can potentially give rise to increased exports and job creation.
  • However, such agreements must be balanced, and must serve both our offensive and defensive interests. In keeping with this principle, I will continue to advocate in favour of agreements such as those reached by the EU with Japan and Canada which provide opportunities for growth, while strongly defending, for example, the interests of the Irish and European beef sector in the face of the kind of threat presented by the EU-Mercosur negotiations.
  • I think that the Irish agri food sector would also have much to gain from a balanced EU  US trade deal, and I look forward to the resumption at some stage in the near future of talks on a TTIP deal.
  • I will also continue to apply the most up-to-date market analysis provided by agencies such as Bord Bia when prioritising my Department’s activities in relation to market development, for example through Trade Missions. I have engaged in an extensive programme of Trade Missions in recent years, to destinations in Asia, North Africa, the Gulf Region and the Americas, in keeping with the strategic priorities set out in Food Wise 2025. This work will continue apace, with, for example, further missions planned to Indonesia, Malaysia and China before the end of this year.
  • I will also continue my focus on resolving market access issues wherever they arise, as evidenced by the ongoing implementation of the seven-point market access plan that I announced in 2017. This includes the establishment of a high-level market access committee within my Department, the allocation of additional resources within the Department, and the launch of an online international market access tool.

BREXIT

  • Of course the biggest trade-related challenge we face comes in the form of Brexit. I have said on many occasions that very few policy, business or financial decisions will be made over the coming months and years that will not be affected by Brexit in some way, either directly or indirectly.
  • For obvious reasons, my concerns revolve around the agri- food and fisheries sectors, where it is universally accepted that there will be significant impacts if a hard or ‘no deal’ Brexit ensues.  Many research studies, including the exercise carried out by Copenhagen Economics earlier this year, confirm this.
  • The reason Brexit will have such a negative impact on our agri-food sector is because of the highly integrated nature of trade in agri-food products between Ireland and the UK. This trade, built up over many decades, is based on a common language, a similarity of tastes, high levels of trust and confidence in each other’s processes, and the ease of access to each other’s markets.
  • This integrated trade is evidenced by the fact that the UK is Ireland’s largest export destination for agri food products, with exports valued at approximately €5.2 billion in 2017; while Ireland is the UK’s largest export destination, valued at €4.1 billion. 
  • All of this trade is facilitated by, and takes place within, an orderly, friction-free agri-food trading system, underpinned by the EU’s Customs Union and Single Market of approximately 500 million of the most affluent consumers in the world.
  • However, it is also clear that the EU’s and Ireland’s trading relationship with the UK cannot be the same if the UK leaves the Single Market and the Customs Union, and that any final arrangement outside of these structures will involve friction and additional costs along the supply chain.
  • It is clear, therefore, that the best interests of the agri-food sectors in both countries lie in a trading arrangement post-Brexit that is as close as possible to that prevailing currently. That is what Ireland wants from the negotiations, and it is also what the EU wants.
  • In the shorter term, the priority is to agree the conditions for withdrawal, including the text necessary to give legal expression to last December’s agreement that there would be no border on this island and that the Good Friday Agreement would be protected.
  • On the backstop, our position remains clear.  While our preference is for an overall EU-UK relationship that would resolve all issues, it remains essential that a backstop is agreed which provides certainty that a hard border will be avoided in any circumstances.
  • I am encouraged by the fact that formal talks between the EU and UK have recently resumed in Brussels. Both sets of negotiators are committed to intensifying talks in the coming weeks, and I believe that progress can be made, but it needs to be made quickly.
  • In the meantime, contingency planning by my Department at home is well advanced, and contingency planning across Government was the subject of a Government decision in July. While the need for such measures will depend on the outcome of the negotiations, the Government has, for example, asked departments to make the necessary preparations for customs formalities and import control and export certification requirements that may be required following a transition period.
  • My Department officials have been very active in this regard for some time, and have been working with other Departments and agencies to ensure that they are prepared to fulfil their legal obligations as efficiently as possible in any scenario. They are also continuing their close consultation with stakeholders as well as their engagement with EU counterparts with a view to mitigating the potential impacts of Brexit.

FUTURE OF CAP

  • The framework within which we frame our response to these challenges is provided by the Common Agricultural Policy, which has been the mainstay of European agricultural policy for more than 50 years.
  • We have seen the policy reinvent itself over the years, changing its priorities and focus to meet with growing market, consumer and environmental demands.

Today the policy is about:-

  • strengthening the competitiveness of the agriculture sector;
  • promoting innovation;
  • supporting jobs and growth in rural areas; and
  • seeking to combat climate change.

We are now facing into yet another reform of the CAP.  This time it’s about modernising and simplifying the policy, reducing the administrative burden for farmers and administrations.   It’s about supporting the sustainable growth of food produced within the EU.  It’s about encouraging generational renewal and attracting young people into a sector that is becoming more technologically and scientifically advanced.

In particular, it is about increasing the environmental ambition of the CAP.

Up to now, we have seen the increasing importance being placed on the role farmers have in delivering public goods.   Farmers are being told they are the custodians of the landscape.  Their actions, supported by the CAP, have contributed to:-

  • promoting biodiversity;
  • improving water-quality;
  • preserving open spaces; and
  • maintaining our traditional landscape that carries cultural significance.

The CAP post 2020 will see a greater focus on the role the CAP will have in contributing to climate change mitigation, through encouraging more sustainable farming.

We have already seen how scientific advances have helped the agriculture sector to contribute to more sustainable farming and to climate change mitigation:-

  • The Beef Data and Genomics Programme is a good example of how DNA sampling is working towards breeding more resource efficient cows, thereby lowering the intensity of Greenhouse Gas Emissions;
  • Bord Bia’s carbon navigator provides farmers the carbon footprint of their produce, and identifies ways to reduce that footprint.

Farmers will be asked to deliver more in terms of their delivery of public goods and to farm in as environmentally friendly and efficient way as is possible:- 

  • 40% of their direct payments will be based on their contribution to climate mainstreaming;
  • 30% of payments under the rural development programme must be focussed on biodiversity, the environment, and climate related measures.

The Commission recognises that a “one size fits all” approach does not work.  Their CAP post 2020 proposals gives Member States the flexibility to design measures that are best suited to our own individual circumstances and needs.  This is to be welcomed. 

We will be able to draw up our own CAP Strategic Plans, designing eco-schemes for the climate and the environment under Pillar 1, and, agri-environmental climate measures under Pillar 2.   These measures will be specifically targeted to address how best Ireland’s agricultural sector can contribute to climate change mitigation.

However, there are challenges ahead as to how we are going to achieve this.  In particular, how monitor and assess the efficiency of these eco-schemes and agri-environmental climate measures.   They will need to be targeted and under-pinned by scientific research.  At the same time, we will need to monitor outcomes to ensure they have real impact.

CLOSING REMARKS

What is really clear is that if the Irish food sector is to avail of the opportunities that present themselves over the next few years, and deal with the very significant challenges and uncertainties, we need the very best and brightest people working in the sector.

We need to innovate:

  •  to develop products that maximise the value added to raw materials;
  •  to develop processes that are lean and efficient;
  •  and to develop technologies that allow us to increase competitiveness and build our capacity to ensure that this sector plays its part in helping Ireland to meet its environmental obligations.    

Many of those on whom the sector depends to advance to the next stage of development are in this room this afternoon. It is important to use opportunity to acknowledge the critical work of the Agricultural Science Association in promoting scientific knowledge within the agricultural sector.

It is also important to say that there is much more work to do. We will all be called upon, in the face of significant challenge,  to redouble our efforts over the next few years,  to build a food sector with global reach, that maximises its contribution to Ireland’s economy, that creates high quality employment for well qualified young people and that sustains rural communities.

I look forward to working closely with you all in this endeavour.

Thank you.

ENDS