I move:
That Dáil Éireann calls on the Government (a) to seek immediately those changes in EEC Directives 159 and 160 which are necessary to permit the survival of the smaller farmers of Ireland; and (b) to introduce a scheme of financial assistance for those farmers who have been forced to sell young cattle at totally uneconomic prices, or who are trying to hold their cattle, or both, and immediately introduce a floor price for all young cattle.
I welcome the opportunity to have this discussion on what must be considered very important aspects of the agricultural scene. It is a pity this discussion is confined to three hours because I know many Members would like to participate in the debate, particularly those who represent rural constituencies.
This is a very fair motion. It would not be too difficult to forecast the speech of the Minister for Agriculture and Fisheries having regard to the amendment in his name. However, I understand I have the right to reply at the end of the debate tomorrow evening.
At a time when other sectors of the community are receiving substantial salary increases it is now evident to everybody that farmers have suffered a massive drop in their incomes. The average family farm income has dropped by over 20 per cent. While some farmers in milk and grain production may have maintained their income level it is obvious that many producers of small cattle have had their incomes cut by more than half. Of course it is, as usual, the small farmer who has suffered most. Even if most of the money intended for the beef farmers has ended up in the pockets of people for whom it was not intended those farmers have had some kind of guaranteed price. On the other hand, the calf and store producer has had no floor price whatever. The Minister said this could not be done for practical reasons despite the disastrously low price of small cattle.
Perhaps the same effort that was put into bringing the farmers within the tax net could now be put into helping smaller farmers to survive. Farmers feel frustrated by the lack of Government action and the failure, for the most part, of the EEC aids to reach them. This is demonstrated by the protests we have seen around the country. The following measures might be taken.
The various EEC schemes, particularly the disadvantaged area scheme, should be implemented immediately. At this critical stage the promise of a scheme in the future is useless to farmers who are desperately short of money. In the 1974 budget the Government were able to introduce a scheme for taxing farmers and to implement it practically overnight. Can they not show the same speed and effort at present in helping the farmers who have suffered most? In the present crisis farmers have had to use any cash they had to feed their stocks. Because of this sales of non-nitrogenous fertilisers have fallen to a fraction of sales in previous years. This almost guarantees another farming crisis in the coming year or at least a substantial reduction in stock, both disastrous from the national viewpoint. The Government's refusal to introduce a fertiliser subsidy is incomprehensible. Any funds used in such a scheme could not be employed more productively or profitably. This is so important and the time is so short we should implement it immediately and not go running to the EEC for permission to do so. We can do it if we have the will to do it.
The Government have been asked to set up a scheme to pass part of the slaughter premium to the store producer. Beef farmers have already indicated that they are willing to pass half the slaughter premium back to the store producer. The Minister said that such a scheme is not feasible but that the disadvantaged area scheme should help those farmers. I am glad the Minister is here because I would like him to comment on the thousands of farmers outside such areas. Perhaps the Minister can tell them where they are to get the money to pay their bills. The feed voucher scheme of subsidised loans is, to my mind and to the minds of many, totally inadequate. The £500 loan with limited subsidies is too small and for too short a period in present circumstances. It is no secret that the payment of these will fall due just when farmers will be faced with a backlog of other bills. I would suggest that there should be a moratorium of at least a year on those loans to enable farmers to get back on their feet. The recent increases in the Agricultural Credit Corporation interest rates could hardly have come at a more inopportune time.
The enormous interest rates paid by Irish farmers put them at a serious disadvantage as compared with their European counterparts. Increases in the cost of borrowing could and should have been delayed for at least six to 12 months. The whole question of monetary compensatory amounts should be thoroughly examined. Because of those payments Irish farmers have suffered needless hardship. The monetary compensatory amounts have been the main cause of the world beef problem reaching crisis proportions here and while this is being rectified some immediate action must be taken to readjust the green £. The belated revaluation taken last year has already been partially eroded. Farmers were promised at that time that further action would be taken in the following months to maintain the value of their exports. They now demand that this should happen. It seems from the present negotiations that Brussels is trying to back out of this in some way. I would ask the Minister to ensure that our farmers get a fair deal in this regard.
The failure of the EEC to introduce a sheep policy is a scandal and seems to contradict the whole idea of a community. We have been told by M. Lardinois that he is awaiting the outcome of the British referendum. This is a ridiculous excuse and if carried to its logical conclusion would ensure that no decisions were ever taken in the EEC. It seems more likely that some member countries are well suited by the absence of such a policy and are using pressure to maintain it that way. It is the responsibility of the Minister for Agriculture and Fisheries to see that a policy is introduced without delay for a trade which is so vital to many of our farmers. Our biggest market for mutton and lamb is France but this outlet can be closed down overnight. In those circumstances farmers and factories cannot plan their production. The result of this is unsatisfactory prices and it prevents the expansion we would like to see in our sheep numbers.
There is a view abroad that most members of the Government have no idea of the hardships which are being experienced by small farmers at present. I say this without any wish to provoke any kind of political narkiness. This was confirmed when we read statements not long ago by members of Fine Gael that no sector of the community could look forward to a more prosperous 1975 than the farming community. If the Minister wishes I can give him the source of this statement in my reply. Farmers would like to see some worthwhile initiative from the Government to rescue those people engaged in farming who, through no fault of their own but by following the advice of members of the Coalition parties, now find themselves in financial ruin.
As it stands the farm modernisation scheme militates against the survival of smaller farmers, many of whom are regarded as being in the transitional category which is more clearly understood as the small farming group. The present classification into the three categories, commercial, development and transitional farmers, is based on comparable income levels. For instance, many farmers in the western, north-western and south western counties are classed as transitional because of the physical disadvantage of the small size of farms. Consequently they receive lower subsidised loans or grants than the development farmers and they do not get any guidance premiums. Therefore, with the passage of time their position will become even worse than that of the development farmers.
There is one hope, namely, if the scheme for disadvantaged areas is implemented immediately. In that event, headage payments would be due on cattle and sheep and these would raise the income of the farmers concerned for the purpose of income assessment under the farm modernisation scheme. This would improve their chances of being classed as development farmers and of further improving the added benefits that apply to development farmers. In addition, both transitional and development farmers would get higher interest subsidies and loans because they were in disadvantaged areas. It is essential that this scheme be introduced immediately and I urge the Minister to do his utmost to get it into operation as quickly as possible.
Another point that could be made in relation to Directive No. 159 is that the comparable income levels should be introduced to allow more transitional farmers into the development category. The net income level of £1,800 per labour unit each year applied in 1974. This level is to be increased in 1975 to £1,875, in 1976 to £1,950, in 1977 to £2,025, in 1978 to £2,100 and in 1979 to £2,200.
The increases are projected on the basis of expected increases in inflation and wages in the non-farming sector. The problem in the Irish situation is that farm incomes in general have suffered in the past year much more than the non-farming sector. Secondly incomes in the Dublin area are well above the rest of the country. These raise the average non-farming income substantially and make it more difficult for the transitional or small farmer to qualify for development status. Comparable income levels which exclude Dublin City would be more realistic in provincial areas, and certainly in the western, north-western and south-western areas.
Directive No. 159 will create a situation in a period of six years where all farmers will be categorised as commercial farmers. Any farmer unable to obtain the commercial status will have the option of trying to survive on his farm without grants or aids or else trying to seek a livelihood in industry. The vital question is: will farmers who leave argiculture be gainfully employed in the industrial sector? I do not think it is necessary for me to remind the House that the employment situation has been deteriorating since the Coalition took office approximately two years ago to a situation where there are more than 100,000 people unemployed. I hope this is only a temporary phenomenon and will not continue for long but it shows the futility of hoping we can absorb into industry those who are leaving agriculture.
The second point with regard to the farm modernisation scheme is that the poultry and pig production enterprises that have been so helpful in the past for the small farming community will not be eligible for any aid. It is not right that these industries should be written off in this way and I ask the Minister to try to reverse the situation if possible. The pig industry will get aid if investment is more than £4,620. In this instance the small man is left out and is not being considered. The man classified as a small farmer will exist only to 19th April, 1977. The transitional or small farmer is penalised when he reaches the age of 55 years and grants are reduced from 30 per cent to 20 per cent. Many of these farmers have young families and they should be on a par with the development category and not penalised when they reach 55 years. This is a valid point and I hope the Minister will ensure that the present provision is changed.
At present the comparable income limit is £1,800. This is too high and it should be reduced to £1,000 per annum. This would be more realistic when one considers the results of the farm management survey carried out by An Foras Talúntais in 1972. It showed that if the comparable income of £1,800 is taken 75 per cent of Irish farmers will be excluded from getting incentives and preferential aids under the farm modernisation scheme. We must not forget that for every £3 spent by the Exchequer on the implementation of the scheme, we benefit to the tune of only £1 from Brussels.
The documentation relating to the farm modernisation scheme is believed by many to be very complicated. It appears it should be simplified so that agricultural advisers will not spend valuable time in their offices rather than in doing the work they are trained to do, namely, to give advice regarding agricultural matters on the farm. The documentation concentrates too heavily on the financial aspects of farming. Having regard to the problem of farming and the inconsistency of the industry, it is difficult to see how figures over a period of a few years can have any relevance, never mind figures projected over a six-year period.
With regard to the small farmer, the Minister should make an immediate statement on his plans for this category as from 19th April, 1977. The Minister knows that this matter has been raised in the House on more than one occasion in the last 18 months. The time has now come when he must make a definite statement on what his intentions are. It is important, in relation to the income of £1,800, to evaluate how the non-farm sector could provide employment for people who are forced out of farming for economic reasons. With the situation where we have an unemployment figure of 100,000 and over, the prospects at the present time are far from being bright for employment outside of farming. If there is unemployment in the non-farming sector a very strong case can be made for slowing down structural changes in farming. If a man can be unemployed outside farming it certainly makes sense to retain him in farming if he is making a net contribution in that sector.
There is a need in the present disastrous economic circumstances for a holding operation in regard to structural reform. A policy should be flexible enough to permit such action in the farm modernisation scheme, whereby development farmers and those adhering to an approved plan would become commercial within a period of six years. Is it being realistic for this farmer to draw up a plan for 1980 showing how much he will produce and earn in that year? I should like to hear the Minister give a specific answer to that question. I refer him to statements made by his colleague, the Minister for Finance, in the House recently when he could not even forecast for 12 or 18 months ahead, never mind forecasting for the 1980s.
It is unrealistic to predict the financial situation in farming over a certain number of years. From the early 1960s, to the late 1960s, with consistent economic output, it would have been impossible. But in the last two years, having regard to the situation in the Irish economy, such predictions are not possible. It would be much more desirable to know the increases in cattle or pigs numbers or the number of additional acres of tillage or grain which a farmer might be able to produce than the amount of financial data which is required in the documentation relating to the farm modernisation scheme.
All aids to farmers under this scheme are based on the level of income, so the keeping of farm accounts is one of the essential requirements of this scheme. This is a welcome development. It is important for all farmers to keep accounts but all the financial data required might not be necessary. The keeping of accounts should be in relation to increases in stock, tillage and grain. The orientation should be in that direction and away from the financial requirement because, to be quite honest, Irish farmers are a little suspicious that the financial requirement will be used for taxation purposes rather than to benefit them in the long run. I know the Minister has done his best to try to allay that suspicion but it is important to realise that it is held.
The documentation will change the role of the adviser. It will reduce his role to that of an office boy because of the volume of documentation involved. I am sure the Minister realises that the implementation of the farm modernisation scheme is in a dreadful mess. The number of applications finally processed and ready to go ahead is so small in comparison with the total number of applications that it appears that even with the advisers working at full steam the best they can hope for is to process one-and-a-half applications in a week. Those of us who represent rural constituencies know that unless something dramatic is done by the Minister and his Department to provide enough staff to deal with the applications and have them processed finally, then we will be in a very bad situation and we will not have the benefits under the scheme as it stands apart from the amendments I suggest. I know the committees of agriculture have asked the Minister to consider favourably allowing them to have additional staff. Proposals for increases of 50 per cent and 100 per cent in advisory staff have been put forward. I know the cost involved and the trouble the Minister will have, but the problem is there and he has the responsibility to do something about it very quickly.
In general it seems that the farm modernisation scheme is based on production commodities whose prices are expected to remain fairly stable. These production commodities will have a better chance of acceptance under this scheme rather than a plan based on products whose prices are likely to fluctuate a good deal. A farm plan based on milk as against one based on cattle will probably have a much better chance of being accepted for qualifying under this scheme. Since the amount of investment aid is based on the value of investment the scheme also favours a high capital intensive development as against a low capital intensive development.
Another point in relation to the farm development plan is that the farmer can only vary his investment programme to some extent. His farm operation can be varied only with the approval of the advisers. If he does not obtain this approval he will lose all future investment aid and possibly he may even have to repay past aids. The question is how departures from the plan should be treated. Where the farmer convinces the adviser that the change is desirable there is no problem, but because of price uncertainty it is desirable that a farmer be given a certain amount of flexibility to respond.
There are two main types of farmers who would qualify for development status leading to commercial farming status. First there is the 50 to 100 acre farmer with good management and intensive operation on his farm. Secondly, the bigger farmer with a large acreage who can attain the targets laid down with a much less intensive operation. In both cases you would have an increase in output, but it does not seem very fair to give the same aid to the first category of farmer who needs to work hard to achieve his output and to give preferential aid to a farmer with a very large fertile farm who has a much less intensive operation. It could be argued that the owner of a large farm might attain a commercial standard of income despite bad management and low income per acre because of the low capital charge on the land—2 per cent on 500 times the rateable valuation of land, which is about £5 or £6 per acre—while, on the other hand, a small farmer with high income per acre might find it impossible, because of the actual size of his operation.
In drawing up Directive 159 I am convinced the aim was to get the best return from labour rather than from land. In Ireland there is a pressing need to expand output in agriculture and to create employment. In Ireland land and capital are the scarce resources rather than labour, which was a scarce resource in Europe when Dr. Mansholt originally introduced the structural reforms now embodied in the farm modernisation scheme. This is a very important point. In the Irish situation it makes sense to use land and capital intensively rather than labour.
I understand between 14,000 and 15,000 farmers have applied for categorisation under the farm modernisation scheme. I appreciate the difficulties and realise it is too early yet to estimate the percentage of applications which will be approved. Taking the figures on farm income in the 1973 farm management survey of An Foras Talúntais it would appear that 35 per cent is the maximum upper limit of the number of farms which would eventually become commercial. That leaves 65 per cent of farmers on farms in the Irish Republic as transitional or small farmers on farms that will have no future or identification after April 19th, 1977. Again I would appeal to the Minister to make a statement immediately on his plans for those farmers, at least 65 per cent or perhaps 75 per cent of all those engaged in agriculture.
It is well known that the transitional farmer receives less favourable treatment than the development farmer. For instance, the transitional or small farmer, for investment in permanent buildings, would get a certificate of approval confirming that any investment in permament buildings is essential to the continuance of the present level of activity on the farm and that such buildings would be passed with structural changes in future. Also the small farmer is not entitled to a guidance premium but the development farmer is, and because he receives less favourable treatment his competitive position relative to the development farmer naturally will be worsened.
The farm modernisation scheme is very likely to make it harder for the small farmers to expand their enterprises, because development farmers receiving more aid may outbid them for such things as land and extra stock, while the transitional farmers might be in more need of land and stock in order to expand their income. They might not be able to purchase the land on the open market because they could not borrow sufficient money, as they might not be able to afford the repayments. As well as that the development farmer has priority access to land released by those availing of the new voluntary retirement scheme.
I would regretfully suggest to the Minister that he ask one of his Departmental aides to check the records of this House to see where the Minister himself denied that this was so at Question Time, admittedly at Question Time cross-fire, many months ago. Anyway he is on the record as saying that this is not so. I am satisfied that the small farmer, the transitional farmer, should have priority access to this land. As I have already mentioned, there is unemployment in the farming sector. Therefore there is a very good case indeed for retaining labour in agriculture, and if the transitional farmer is a hard-working man using his limited sources to the best advantage, it would be economically inefficient and inequitable to treat him less favourably than a person with a large fertile farm who could make development status without a high intensity of operation on his land. It would seem the small farmers will have to go their own way and do without investment grants. They must either opt for the retirement scheme, or try to eke out a living the best way they can, or try to get some unskilled employment opportunity in the industrial sector which, as I have said, is impossible at present.
Directive 160 provides annuities for people willing to retire from farming. This would apply to farms under 45 acres, so that the average amount of land made available for this scheme would be a maximum of about 25,000 acres. This is wrong. This would give only a marginal amount of land for structural change. Under Directive 160 land owners who have let their land may not be eligible under the retirement scheme, that is, if they have been letting their land within two years previous to the introduction of this scheme. If a transitional farmer has to get additional land in order to be categorised, he can only get additional land by either borrowing or getting it from the Land Commission, and it will be more difficult for them because land which is bought will impose an additional financial burden on the small farmer.
In summary, in trying to improve the farmer's welfare, I would submit that there is a very great need for flexibility in the existing farm modernisation scheme. Stringent adhesion to the six-year plan with the financial data required is unrealistic in farming conditions of uncertainty and inconsistency. Farmers who wish to achieve development categorisations by acquiring additional land with borrowed capital have to generate a higher income per acre to cover the higher capital allowance for such land, because there is higher capital output on land which is bought in as additional land. This would make it very difficult for those who try to make a living from farming on a small acreage to qualify under the scheme.
The structural measures specified under the scheme are unsuited to Irish conditions due to the scarcity of our farm employment and due to the high unemployment situation in industry. Structural changes are economically forcing people off the land into the industrial sector where we already have this fantastic number unemployed. This is economic suicide for our country. A holding operation here is imperative, because there is a lack of non-farming opportunities for unskilled and semi-skilled people leaving the land. It would be well for the Minister to take into account that at least 65 and possibly 75 per cent are estimated to be in the small farmer category under the present terms of this scheme.
The lack of alternative employment for transitional farmers, the higher capital charges on land obtained from the Land Commission, or by borrowing, and the exclusion from the retirement scheme of those who had ceased to work on their farms, will limit the scope for adjustment within the farm area. Under Directive 159, in the Irish dimension, investment aid is dependent on being able to obtain a comparable income, whereas the ability to manage the farm is a more appropriate criterion if agricultural production and exports are to expand. Given the scarcity of capital and the chronic unemployment situation in the industrial sector, it is undesirable to substitute capital for labour in farming at this time.
A holding operation is imperative until the EEC come up with an effective regional policy. Structural changes should be brought into being immediately, because the present policy is unsuited to Irish conditions, and under any circumstances the Irish Government should seek EEC approval for modification of this farm modernisation scheme. In particular, the granting of aids and incentives on the basis of rate of return on capital resources of the farm rather than what the capacity of the farm is to generate comparable income would allow greater support for an intensive farmer with a few cattle at the expense of the larger farmer, the gentleman farmer, who has large cattle resources. If EEC aid is conditional on structural changes, it should be based on criteria which would take account of the obtainable earned income outside of farming, because the average farmer who is economically forced off his farm is not able to earn the average income in the industrial sector; he is normally unskilled or at best semi-skilled, and this comparable income should be based on the obtainable earned income.
As regards the dividing of the country into various regions where some are more fertile than others and some have greater disadvantages than others, I believe the disadvantaged areas scheme, which held out great hope for many small farmers, should be got off the ground immediately, because, the morale of the farmer, particularly in the west, the south-west and the northwest, is at the lowest level it has been for many years. During the course of this debate the Minister will hear genuine comments from members of this party on the situation in the west. I know the Minister is an extremely busy man but it would be worth his while to go down to the west and meet the people there and discuss with them their problems and see how they and their families are affected. Things are at such a low ebb that it is difficult to imagine that even the implementation of the disadvantaged area scheme as quickly as possible will get them back on any sort of decent level. The Minister and his colleagues should see how things are for themselves. Our contributions to this debate will not be for the purpose of gaining some political advantage but rather for the purpose of urging the Minister and the Government to do their best for people who badly need help.
