The one area where the Government have proved most incompetent in their handling of the economy is with regard to agriculture. The Government's fiscal policies have been ruinous and have resulted in gross mismanagement. One can substantiate this accusation by some obvious and glaring examples.
Despite the Labour-Fine Gael Coalition commitment to stabilise prices, we have witnessed unprecedented price increases in the past year and especially in the last six months. At the moment inflation is running at the rate of 16 per cent per annum, placing us at the top of the EEC league. The Government may glibly say that inflation is completely outside their control in that it is imported into our open economy but, as was pointed out recently in the report of the Central Bank, a significant portion of the inflation is of domestic origin for which the Government must bear major responsibility.
This week the quarterly economic commentary of the Economic and Social Research Institute warned that real living standards are likely to fall about 3¼ per cent this year and that the balance of payments deficit will jump from the figure of £86 million last year to £275 million in 1974. The commentary reported that half of this record deficit is due directly to increased oil prices and to reduced cattle prices. I shall refer to the latter item again.
A good barometer of the economic well-being of any country is the state of the construction industry, and here the situation is dismal. The commentary of the Economic and Social Research Institute predicts that the number of houses to be completed this year will be lower than in 1973, despite the many assurances of the Minister for Local Government. Rumours are rife that up to 7,500 construction workers will be laid off after August. Figures released recently indicate that building costs rose by 11 per cent in the first six months of the year, and in the last 18 months— the period in office of the Government—costs have jumped by an astronomical 44 per cent, equivalent to the rise over the five years to 1971 when Fianna Fáil were in office.
We must seriously consider the distinct possibility of a collapse in the Irish construction industry, and it is in this context that the public must judge the refusal this week by the Government to give income tax relief to building societies.
I now come to agriculture which I will examine in some detail in my capacity as Opposition spokesman and I make these comments in the knowledge that the Minister for Agriculture and Fisheries, Deputy Clinton, according to newspaper reports, is on a holiday information visit to Denmark at the present time.
As an introduction to the examination of the current economic status of Irish agriculture I should like to reemphasise that the state of agriculture is a very relevant barometer of the Irish economy. This relationship stems from the fact that overall our total agriculture is the single biggest industry in this country. Twenty-five per cent of our population are directly engaged in farming, fishing or forestry and if we include those working in agriculture-based industries such as food processing, agricultural marketing and agricultural service industries, the total agricultural employment is in the order of 45 per cent. Within Irish manufacturing industry the food and drink sector is both the single biggest industrial grouping and the leading export performer. Likewise, because agriculture-based industry processes indigenously produced raw materials it has a much greater multiplier effect in the Irish economy compared with foreign owned industry. Hence its economic well-being is of added importance and transcends purely economic statistics.
In emphasising the critical importance of the role of agriculture in the Irish economy I should like to remind this House that the single most compelling reason why this country voted overwhelmingly to join the EEC was the anticipated advantages for our agriculture. The existence of the Community's common agricultural policy was considered to provide the two essential dynamics for an unprecedented expansion in our agricultural industry, namely, first, remunerative prices for our agricultural produce and, secondly, guaranteed market access. No longer was the development of Irish agriculture to be tied to the British cheap food policy, and in anticipation of the outstanding advantages to be derived from EEC membership commentators referred to it in terms of a bonanza for Irish agriculture.
With this brief background let us now examine how Irish agriculture has fared during the past seven months, which can be regarded as the period being considered in this Adjournment debate. A simple diagnosis forces one to realise that Irish agriculture is currently experiencing the worst crisis it has faced in many years. In the context of heavy investments at all stages of agriculture and especially at farm level and record increases in livestock numbers, Irish agriculture today is certainly in the doldrums and looks as if it is facing economic disaster. The crisis facing Irish agriculture is strikingly evidenced by data on Irish farm incomes.
In 1972 Irish farm incomes increased spectacularly by 38 per cent while they exhibited an elevation of similar magnitude in 1973 of 32 per cent. This, of course, we have already heard here today from the Taoiseach but he forgot to give us the estimated figure for 1974 or perhaps he was not advised of this by those in a position to advise him. I might tell him that his Minister for Agriculture and Fisheries, Mr. Clinton, has agreed that farm incomes will decrease by 10 per cent in 1974. Obviously, this is a major disaster.
At a time when Irish agriculture is facing economic ruin let us ask what action the Government have taken. First, they have decided that this year was an opportune time to put income tax on farmers. Worse still, not alone were farmers to be taxed on their incomes but they were to be doubly taxed through a tax on income and rates on their land as well. The Fianna Fáil Opposition appreciating the financial problems facing farmers and the inequity of double taxation, were in favour, are in favour, of only one form of taxation. That can come about, as was made known right through the night last night, through the derating of land for farmers liable to income tax. Alas, we now know the action the Government took on this particular proposal of ours.
Secondly, this Government have been severely remiss in not protecting the interests of Irish agriculture at EEC level. For example, the Government have not introduced various producer subsidies which other Member Governments have brought in to support their own farmers. Most critically, however, this Government have been guilty of dereliction of duty in not taking speedier and more aggressive steps to remove the monetary compensatory amounts levied on Irish exports of agricultural products caused by the common agricultural policy.
The existence of this 15 per cent punitive levy is the single major cause of the depressed prices for Irish cattle and meat exports. The only solution to the monetary compensatory amounts problem is the introduction of a green £ through the changing reference rate between the Irish £ and the unit of account. Indeed, the initiative for introducing the green £ has come, not from the Government, but from those involved in farming and indeed from my party, the Fianna Fáil Party. I might ask what grudging steps have the Coalition Government taken to introduce the green £. The topic was raised at last week's beef package meeting of the Council of Ministers but consideration of the green £ was postponed to mid-September. This stalling tactic by the EEC is poor consolation to the Irish farmers and the Irish livestock and meat industry. I have no option but to accuse the Government of both indecision and poor tactics as regards expediting the introduction of the green £.
It is a fact that the Agricultural Commissioner, M. Lardinois, told Irish farming representatives some months ago that there should be no problem in getting EEC clearance for the Irish green £. Furthermore, did not Italy introduce the green lira to reduce the monetary compensatory payments? Thus, the precedent is already there, and if other countries like Italy, France and the United Kingdom can take steps to protect their agricultural industries, many people are asking why cannot Ireland follow suit.
I submit that the Irish Government of the day should also take unilateral action to safeguard Irish agriculture. In particular, an immediate and essential step is the introduction of the green £ but because of the Government's non-commitment to and their tardiness in this matter we now have a situation that the leader of one of the farming organisations very recently has been forced to call for a three-man Government ministerial team to lobby support from among EEC Governments for Ireland's green £. This raises the question who is running Irish agriculture at the moment. Because of their inaction and because they are reacting to external advice rather than initiating action themselves one can rightly say that this Government are not directing the development of Irish agriculture. However, this unfortunate state of affairs is, I suppose, not surprising when one examines the composition of the present Government, an urban-based, city dominated Cabinet, and even if the Minister for Agriculture and Fisheries, Deputy Clinton, were a formidable advocate of the problems of Irish agriculture, it is now recognised and accepted by practically everyone involved in the industry that he would receive little support from his Cabinet colleagues. It is, indeed, unfortunate that the Minister, Mr. Clinton, is a poor defender of the interests of Irish agriculture both at Cabinet level and at EEC ministerial level. I should like to say in fairness to him, even in his absence, that I believe he is certainly trying his best. I believe that he is working as hard as he can. to try to better the lot of the farmer. Unfortunately, for the farmer and for the nation as a whole he is not being successful in his efforts. As well as a lack of commitment on the part of the present Dublin-oriented Cabinet to Irish agriculture there is also the problem of a lack of funds to underwrite any special subsidies for Irish farmers. The national coffers I am afraid, have been fully exhausted by the grandiose schemes of the Labour left. Indeed even if the Minister could persuade the Cabinet to subsidise problem sectors of Irish agriculture—and he cannot—there is no money to do so.
While the dramatic about-turn in Irish farm incomes from a 32 per cent increase to a 10 per cent decrease, of which our Taoiseach is still not aware or if he is he is making sure to omit it, is a major debilitating influence on Irish agriculture. It is intertwined with a second consideration, namely our representation at EEC level. This inter-relationship is due to the existence of the monetary compensatory amounts and I have already criticised the Government for ineffectual action in this matter. However, if we broaden this topic one can also castigate this Government for poor representation at EEC level. Considering that our Minister for Agriculture and Fisheries is doing his best, and unsuccessfully, this representation that we have at EEC level is not good enough as it is not protecting Irish agriculture properly. I have quoted examples of the green pound and the non-deviation from EEC regulations even though this was necessary for selfprotection and has already been enacted by other EEC countries.
Let me instance another example— the listing of disadvantaged agricultural areas by each member county to qualify for special aids. During the last Dáil session I asked two questions on this important subject. On each occasion I have been stone-walled by the pat answer that this list is being prepared. That was not a Michael Pat answer. In the period between the questions the Agricultural Commissioner M. Lardinois is on record as having accused various member countries, including Ireland, of delaying this scheme by not sending in national lists. The question must be asked and answered: why the delay in Ireland's case? Surely the Department of Agriculture and Fisheries is both sufficiently competent on and knowledgeable about those areas of our country where farming is under more severe handicaps. This is yet another area appertaining to the EEC where this Minister for Agriculture and the Government of which he is a member have been found wanting despite constant proddings from the Opposition.
Let me give other examples of poor EEC representation. The Agricultural Commissioner M. Lardinois promised that sheep and lamb would be embraced within the Common Agricultural Policy by this summer. This has not happened and the French, through their sluice gate arrangements, recently closed the lucrative French market to Irish lamb. I would like to know why the Minister has not been more aggressive in having this problem solved. The EEC farm modernisation scheme has been fully adopted by this country. I believe, without any concern for the future of our 100,000 small farmers or, as we are now told to call them by those in Brussels, our 100,000 transitional farmers. I suggest this Government were remiss in not adapting the modernisation scheme to suit situations peculiar to Ireland. In this context an embracing listing of disadvantaged areas is essential as special national subsidies and interest-free loans can be given to those areas.
This country's current negotiations for sugar beet quotas are not, I believe as aggressive as they should be. Instead of getting an increase on our A sugar quota from £150,000 to £175,000 or £180,000 it seems we may end up with a 25 per cent reduction in our current B quota of 50,000 tons. Any reduction in our sugar quota would be disastrous for the confidence of our sugar beet growers. This confidence I assure the House is already at a low ebb. Beet acreage has dropped by 20,000 acres over the past two seasons. With free inter-Community trade we are convinced that we must take every step to protect our home market and make sure it is supplied by domestic sugar rather than by imports.
Apart from EEC representation there are many internal agricultural developments which have added to the lack of confidence currently permeating the industry. While these are numerous I will select only one or two examples to make my point. We have had problems with the agricultural advisory service and county committees of agriculture, festering problems regarding promotional prospects culminating in the agricultural advisers refusing to operate the EEC farm modernisation scheme from the beginning of February to the middle of May. The grievances of the advisers and the concern of farmers have been accentuated by the action of this Government in announcing their much vaunted plans for reorganisation of the agricultural industry service. It is essential that these plans, promised by the Government since they took office, be released immediately in order to restore the confidence of both the farmer and the adviser. I should like to ask whether the delay is another case of the Minister for Agriculture being incapable of convincing his Dublin-based, city-orientated and trade union-dominated Cabinet colleagues to go along with his ideas, more critically to go along with them and to pay for them or is it a case of there being no plan actually formulated? Either way the Minister must act immediately if the effective and trustworthy working relationship between the farmer and the adviser is to be maintained in the future.
Secondly we have the very serious problem of a feed shortage this winter which many believe will reach famine proportions. While last winter was very difficult this winter portends to be a disaster for two reasons. There are at least 300,000 extra livestock on Irish farms and the new EEC slaughter agreements will result in more mature cattle being carried over the winter, adding to the feed problem. The poor spring and excessive grass consumption has resulted in less fodder conservation for next winter. One of our leading farming organisations calculated that 42 per cent more silage would be required next winter. We must state that the farming organisations rather than the Department of Agriculture and Fisheries and the Minister for Agriculture and Fisheries, representing the Government, have been much more active in alerting farmers to the potential feed crisis next winter. We all know how farmers acted when the Minister for Agriculture and Fisheries advised them to grow more cereals this year. I do not think it is any secret that the Minister's advice was not taken, unfortunately.
I should like in discussing winter feed to advise all farmers to take every step to conserve all items of feed which may be available as a by-product to their farm activities. I am thinking particularly of such items as beet tops, which can provide valuable feed by ensilage. I am also glad to know that farmers growing peas are baling or ensiling the spent vines. These vines contain a ton of dry matter per acre and should be conserved this year because of potential fodder shortage.
I will now try to review very briefly the current state of various commodity areas. As an introduction one can generalise and state that all agricultural commodity areas are suffering the effect of high production costs, an increase of 19 per cent this year, which is due to the greatly increased costs of essential farm inputs such as fertilisers, seeds, feeding stuffs, agro-chemicals, fuels and so on. In many instances, especially in the case of fertilisers, the higher prices were associated with low availability. Fertilisers are expected to increase by 25 per cent next month and all forms of nitrigin are expected to be scarce next year as they were this year.
General inflation, as mentioned earlier, is running at 16 per cent. This inflation hits agriculture through increased labour costs, higher prices for agricultural machinery, farm buildings and the like. The lack of confidence by Irish farmers is supported by a fall off in purchases of new agricultural machinery. The reduced price for farm outputs and the unfortunate decrease in the price of farm products results from over-supplied and depressed markets and in the context of more extensive inputs have resulted in a 10 per cent drop in farm income for 1974.
Let us briefly examine some of the more important commodity areas of Irish agriculture. One need only look at the pigs and poultry industries to honestly admit that these commodities took a very severe beating in recent months due to highly inflated feed costs and also due to the action of the present Government in decontrolling the price of feeding stuffs in an effort to try and win support during the Monaghan by-election of last November. While feeding stuffs are now cheaper pig numbers have decreased and many small pig units have gone out of business but I do not think it is any concern of the present Minister for Agriculture and Fisheries or his Dublin-based Cabinet colleagues how many of them have been put out of business. The Minister must take full responsibility for this crisis in confidence in the pig industry as he unwisely advised farmers to get out of pigs. This was contrary to the advice offered at the time by the Pigs and Bacon Commission and I believe it will possibly lead to a shortage of Irish pig meat later on this year.
In the cattle and beef area it is unfortunate for this country that the EEC beef market became over-supplied and a severe strain was placed on the intervention storage of frozen beef. Eventually the beef intervention system collapsed because there was a shortage of cold storage and also there were the continued imports into the European Economic Community from third countries. Under these pressures it is little wonder that the intervention arrangements broke down as it was ludicrous for the EEC and us, as a member, to permit imports in the face of an internal surplus. In this context the cessation of all imports announced in last week's beef package is to be welcomed but I believe it is a question of too little too late.
I recommend the extension of the temporary import stoppage beyond 31st October, which is the deadline, if market stability has not been achieved by that time. While the EEC slaughter premiums have introduced some temporary relief to the fall in cattle prices it is only a temporary solution as it postpones the problem only through distorting normal seasonal patterns. Furthermore, winter storage of cattle will be compounded by the critical feed situation predicted for this winter, as I already mentioned. The EEC slaughter premiums are to my mind a material subsidy and represent an attack on the intervention system and hence on the common agricultural policy itself. This is very critical for Ireland. Ireland must be vigilant in preventing any dilution of the Common Agricultural Policy through a return to a system of national price supports on a permanent basis. However, the main factor of reducing the price of Irish cattle and beef is the existence of the monetary compensatory amounts. These must be removed as soon as possible through the introduction of the green pound.
While dairying has been the shining star of Irish agricultural commodities there are problems here also. Instead of the expected 10 per cent increase in milk production it is still 5 per cent behind last year's figure of 600,000,000 gallons and, believe me, the milk is not being given to the calves at 20p a gallon as the Parliamentary Secretary to the Minister for Agriculture and Fisheries would like us to believe. As a result of this increase not materialising there is a loss of surplus processing capacity in the dairy industry. While milk prices are up on last years the dairy farmer incomes have also suffered from the reduced prices they got for their calves and also the reduced prices they are getting for their culled cows. Even the dairy farmers have had their confidence eroded and their total incomes reduced. The monetary compensatory charge, as applied to dairy exports, represent a levy of £30 per ton on skimmed milk powder.
Contrary to expectations, the grain acreage has not increased. This is especially true of feeding grain. As I have already stated sugar beet acreage is also down for this year by 9,000 acres to a very undesirable figure of 65,000 acres. I am convinced that Irish agriculture is going through a major crisis because of a 12 per cent fall in farm incomes. This reduction is due to 19 per cent higher production costs mainly due to more expensive imports, general inflation in the economy of 16 per cent and lower prices for outputs due to poor EEC market management. This crisis of confidence is accentuated by the inability of this Government to tackle the root causes of the various problems currently plaguing Irish argiculture.