09 Mar 2016
PHIL HOGAN SPEECH AT LAUNCH OF GLANBIA “MILKFLEX” FUND – 09 MARCHBrussels Daily
Highlights from the Speech below – Read speech in full here
This is an important day, not only in Ireland but also from a European point of view. Let me provide you with a bit of background to explain why this is the case.
Last year, I read a report commissioned by IBEC on behalf of the Food and Drink industry in Ireland.
The conclusion of the report was that Irish prepared consumer food companies face a prohibitive funding environment which undermines their ability to achieve growth and scale.
The take-away message from the report was that in February 2015, the cost of credit in Ireland remained well above that in other competitor eurozone countries.
A differential of 170 basis points exists between the rate paid by the prepared consumer food industry in Ireland compared to the European mainland.
This meant that in many cases, Irish companies, including those with detailed business plans for expansion, had to scale back their ambition. This meant significant amounts of potential new jobs were being lost.
The report reinforced to me the political need to address these issues at European level. Today’s launch therefore represents a much-needed and very welcome step on the journey to finding a solution.
From my perspective, the job is not finished, and I will only be satisfied when the European Investment Bank is fully on board with the concept of financial instruments tailored to the EU agri-food sector.
This will make a huge difference to farmers and agri-businesses throughout Europe, and it should mean that Ireland will be in a position to secure EU interest rates for Irish farmers, Irish SMEs and Irish agribusiness.
What you’re launching here today will have real significance at European level. It will send out the message that the sector can’t wait any longer for smart and tailored financial instruments. These developments need to happen now.
I have made this a priority from day one of my appointment as Commissioner. And with the current climate of price volatility in a number of sectors, the need is even starker.
As you know better than most, since 2007 volatility and major price swings have been an ongoing feature of the dairy market.
EU price volatility has moved much closer to that of the world market in recent years. This is a natural consequence of connecting our European agriculture system to the global market.
Having a more market-oriented CAP is necessary if we are to safeguard our safe, high-quality European agriculture for the coming decades.
But it does bring a greater element of risk. And farmers are feeling the pressure at the moment. I have been consistent in stating that the Commission remains strongly in favour of the producer. Without the producer, there is no product. And without good quality products that are sustainably produced, we will not have rural jobs.
This is recognised at the very highest levels of the EU.
We will take whatever steps we believe can ease the pressure on farmers today. But that is only one part of the equation: we are also planning for the future. And this is where the vital importance of financial instruments comes into play.
I have placed a huge degree of political priority on this, because I believe it is one of the strongest and most decisive steps we can take to give our farmers and agri-businesses the confidence and stability to invest and innovate.
We need to future-proof our agri-food sectors against price volatility while supporting our farmers in the here and now. At next week’s European Council of Agriculture Ministers, I will be making a strong case that we need further action on financial instruments.
I wecome Ireland’s submission to the Council calling for “EU level responses to volatility issues in the future such as more price transparency…as well as the use of financial instruments specifically designed to take account of the cash flow impact of downward price cycles in commodity markets”.