Deputy Gibbons gave notice of his intention to raise on the Adjournment the passing on to the farming community of the results of the green £ valuation revision.
Adjournment Debate: Green £ Valuation Revision.
I thank the Chair for according me the opportunity of raising this matter on the Adjournment. It is an indication of the recognition of the Chair that the question is immediate and it is of the greatest importance. I want to say immediately that the devaluation that was made in Brussels the other day by the Council of Ministers, while it was very seriously insufficient to be of any real value to Irish agriculture, was at the same time a step in the right direction.
The Minister, or his Department, at any rate, immediately and as is usual got out an instant calculation as to the benefits that would be conferred upon the farming community by this devaluation. On this occasion they came up with the figure of £17 million and it was expressed in a manner that would give the ordinary hearer to understand that this £17 million was being brought in some mysterious way from Brussels and being channelled directly into the farmers' pockets.
This is not a new Government tactic. I think the classic example of it was on the occasion of the previous devaluation of the green £ on, I think, 7th October last year when another partial devaluation, that might have been a great deal bigger if the Irish Government had wished it, was made when an 11.4 devaluation was made. The Department of Agriculture and Fisheries rushed into print immediately and announced a £50 million bonanza for farmers and within weeks we had the spectacle of farmers at the cattle markets of the country selling their cattle at prices which had not been reached for the previous 15 or 20 years, for £5 a cwt. If you had spoken to any of these farmers at the time of this £50 million bonanza I doubt if you would have been well received.
The reality is that there was no real benefit to the producers of young cattle in this country from that devaluation.
Our membership of the EEC enabled us to send a great many of our cattle into intervention and this had a beneficial effect on the guide prices for cattle. It is worth remembering that not for a very long time now has the Irish reference price for cattle borne any serious resemblance to the guide price, which is guaranteed to British producers by the mechanism of the variable premium. For many months the reference price for cattle in Ireland has been consistently the lowest throughout the Community. The beginning in the drop in the price of cattle began about 6th April, 1973. There has been an almost steady drop in cattle prices ever since. The cattle trade began to lose ground at that stage and it has been in a state of relative chaos ever since.
More recently, the Government have been contemplating the effects the devaluation of the green £ would have on certain foodstuffs in the domestic market. They have announced, very vaguely, that the consequential changes that will have to be made in the level of subsidy would be borne entirely by the farming community. I understand that the Minister, speaking on the radio today, expressed the opinion that the farmers were in the front line, as he put it, and must bear the full brunt of the increase of £2½ million—the cost of the increased food subsidies which are consequent on the change in the value of the green £—and that they must bear it alone.
I have not got time to dwell at any great length on the havoc of the past two years in the cattle trade, but I want to pinpoint as accurately as I can the fact that when the decay began and when it achieved an increasing rate of acceleration, the disintegration in the market for cattle set in and this situation still exists. During last year there was a drop of almost 500,000 in the number of cows and heifers-in-calf in this country. Figures are not available for the drop that will be recorded for the past 12 months, from June, 1974 to June, 1975, but I am sure there will be another serious drop. This would not be taking place if the cattle industry were in a good position. It is notable, also, that in the number of cattle under one year old, there is also a decrease. This is an indication of the state our cattle industry will be in in the next three or four years, no matter what we do.
While all this was going on—as everybody knows and the meat factories are openly admitting it—there was widespread profiteering in the sending of meat into intervention by the meat factories last year. No attempt was made on the part of the Irish Government to ensure that the benefits of the intervention—and they were very real—were passed on to the producers of young cattle. On the contrary, it was in the differential between the price of young cattle and the price of beef cattle that the greatest opportunity for profiteering was made. It was here that the unbridled profiteering took place to the greatest extent. It is no wonder that the large number of Irish farmers, the producers of young cattle—I would say they are more numerous than any other type of farmer—cannot afford to put fertilisers on their grassland any more, nor to pay for fertilisers for any other crops. That is why there has been such a massive drop—40 per cent—in the use of fertilisers in the current crop year. The price of fertilisers has increased by about 250 per cent. It will not be possible to maintain our already inadequate production of hay and silage unless there is an appropriate amount of fertiliser used.
Last year and the year before the amount of hay and silage produced for the maintenance of our cattle herd, which had been increasing rapidly for the previous decade, was not sufficient to carry the cattle, as they ought to have been carried and fed, during the winter. Last winter, Providentially, proved to be so mild that our inadequate supplies of winter fodder for our cattle just about got us there without any dramatic loss. During this summer there will be just as dramatic a drop in the production of silage and hay for the coming winter, for a number of reasons. One is because of the dryness of the weather, over which the Government have no control, but another reason is that fertiliser is not being used. Therefore, there must necessarily be a great shortfall in the amount of fodder available for cattle during the coming year.
If next winter is more normal, it is reasonable to expect that the demands on available fodder supplies will be greater than they were last year. But available supplies are not plentiful. Any resources farmers could manage to husband in the last disastrous few years will be needed to tide them over the coming year in a period of great scarcity of fodder. It is not enough to say that farm incomes—on the Department's own admission and I would question the accuracy of this figure—dropped by 30 per cent last year, compared with incomes for the previous year. There will be no upturn in the current year either. In spite of devaluation and inflation, the amount of money, if counted in pound notes, farmers will get in reward for their work, will be a great deal less than it was two or three years ago. We have only to refer to the ordinary prices paid for cattle in marts throughout the country. There has been a very decided drop in the prices paid for cattle since this Government took office. The Minister said recently that the prices now being realised for cattle were never as high. I want to tell the Minister—and I have been in the cattle business all my life, buying and selling—that that statement is not true. Cattle were making more three years ago than they are now and every farmer knows this, whether the Government know it or not.
There will be a similar shortfall in fodder for dairy cattle. As well as that, there will be an acute situation in the co-operative milk manufacturing combines some of which were built in fairly recent years and which still have to be paid for and the service of the loans used to build these plants requires the availability of an adequate supply of milk. I do not think an adequate supply of milk will be available and it may well be that the consequent increases from the 5 per cent partial devaluation of the £ arranged in Brussels the other day may be dissipated by the co-operatives themselves of necessity in order to service their capital debt. The benefits that ought to accrue to the actual producers, to the farmers themselves, will be negatived right down the whole way. I am not blaming the co-operatives. They were right to expand their enterprises and they were right to borrow money to expand. It was reasonable for them to expect there would be an increasing supply of milk. What they had not bargained for was the disaster the whole cattle herd ran into in the last couple of years and the consequential arrest in the expansion of the milk supply business. These were absolutely vital for their financial plans.
Besides these serious problems we have the vital question—I know the Minister is aware of it, but nothing perceptible is being done about it—of disease eradication. This is a matter which will have to be tackled radically by some Government. When I say it will have to be tackled radically, I mean the whole approach will have to be changed. Farmers' mentalities and attitudes will have to change. It will not be a pleasant change and farmers are not going to like it but we will all have to face it. It will cost a great deal of money. As far as we can see, this money is not going to be available and it is generally agreed, I think, that the progress of the disease eradication programme is very unsatisfactory. Far from taking money from the moneys already voted in this House for agriculture, their needs in this particular area alone to be a very substantial increase in the amount of money available for this purpose.
Far from giving assistance to farmers in these difficult times, the only thing the Government are thinking of doing is imposing double taxation, treble taxation and quadruple taxation. This is not merely a figure of speech. We have the very serious burden of rates on agricultural land. We have always had it. It is completely unjust and bears no relation to the farmers' ability to pay. This party has always acknowledged that farmers are just as bound to meet their fair taxes as anybody else. We advocated it when we were in Government. Now, if farmers are thrifty and industrious they build up a certain amount of profit for reinvestment in their own business, as a result of the financial arrangements entered into by the present Government this profit will be taken from them. Their very right to give their property, when they so decide, to their sons or their successors, will be taxed. It may well be that the new generation of farmers who come after them will have to contend with a burden of debt round their necks simply by virtue of the fact that they inherited the land their fathers passed on to them, who, in turn, inherited it from their fathers. The whole system of farming succession will be distorted and destroyed by the present Government. This is the only positive thing they have done in that area for the principal industry of the country. the industry that makes the whole country tick. Is there any other class of people who would suffer such a very serious and admitted drop in income, while, at the same time, be required solely, as a class, to subsidise the food of the whole population? The exclusive obligation is put on farmers alone to subsidise food for the rest of the population, the population whose incomes rose by considerable amounts in the past two years.
The Deputy might now conclude his remarks.
I am just finished. What the present Government seem to be attempting to do is to create a new class of helots, a slave class, and put the farmers into that class. The indications are there. The intimations we have had from them clearly indicate their intention to put this new tax burden solely on the shoulders of farmers. That is manifestly unjust.
I understood this debate was to be about what happened in Brussels this week and I intend to devote the limited time available to me to dealing with what happened in Brussels. I should like to put on record exactly what has been achieved in Brussels in regard to the change in the green £. The Council of Ministers have agreed to reduce the Irish and the UK green £ rates by 5 per cent as from 4th August. This has the effect of reducing Irish MCA's by 5.6 percentage points. If the position of the £ on the foreign exchange market remains as it is, the new MCA rate will be only 4.9 on 4th August. I hope, and expect, the Commission will shortly agree to reduce the MCA in the beef sector by a further 1 per cent. The Deputy will recall that at price-fixing time last spring, Commissioner Lardinois was given the discretion to reduce, by a certain percentage, the MCA's on beef where the price had been below intervention level for some time.
I approached him on this occasion, as I did before, and he has now promised to give us a further 1 per cent reduction on beef. This will bring down the MCA's on beef by a further percentage point, down to approximately 4 per cent. The result of all this will be that intervention prices in Ireland will be increased by 5.3 per cent on 4th August and the monetary charges on our agricultural exports will be substantially reduced as from that date. This is a very considerable benefit to Irish agriculture, a benefit we estimate to be worth at least £17 million in a full year. This figure has been contested by Deputy Gibbons. It has been carefully assessed and, frankly, we consider the assessment an underestimation. Of this amount, at least £12 million will accrue in the dairy sector because of increased support prices and reduced monetary charges and most of the balance arises in the beef sector due to the reduction of those charges. These figures are, if anything, conservative. As I have said, they are come to us.
I repeat this is a real gain. Some people have suggested that it is not really a benefit to the farmers. Yet, the same people have long been claiming the high level of MCA charges causes losses to farmers because of a reduction in export competitiveness. They cannot have it both ways. The Deputy has himself acknowledged that it was at least a substantial step in the right direction. I have succeeded in having these monetary charges more than halved overnight and the resulting increase in export competitiveness must now bring significant benefits to the agricultural sector. Our aim was to reduce substantially the monetary export charges. This is what I have achieved.
Another misrepresentation that has been put about is that we did not seek this change, that we simply followed in the wake of the United Kingdom request. This is completely untrue. We made contact with the Commission some weeks ago on this matter and, as I have already said, we were seeking a greater increase. Some weeks earlier still we had, in fact, made a first approach to the British in the hope that they would change their representative rate simultaneously with us, because we were well aware that, in view of the financial implications for the Community, a request for unilateral change by us would meet with very strong opposition, and that the formal proposal which is essential would not be made by the Commission.
On the other hand, simultaneous moves by Ireland and the United Kingdom would have a much better chance of success. Indeed, I may say what we did achieve was obtained only in the face of considerable opposition in Brussels. But for our very strong pressure, for instance, the change would not have applied at all in the beef sector until January next. The position is that the change which was made in our rate was sought and obtained by us. It is preposterous to suggest otherwise.
As everybody here must know, I have sought at practically every meeting of the council in recent months relief from the high level of MCA's which have applied to Irish exports.
As in all things in life, benefits come only at some cost. In the present case there is some cost by way of higher domestic prices. We estimate that if passed on in full, the change in the rate would add about 0.5 per cent to the consumer price index, but the increase over the rest of this year should not in practice be much in excess of 0.3 per cent. The Government are determined to take measures to offset any such effect on the index. The cost of doing this, we estimate, as being in the region of £2½ million in a full year. It is only reasonable that since, in the main, the agricultural sector which, of course, includes processing interests, will benefit from the green £ adjustment, it should contribute towards the cost of these measures. The Government have not as yet decided the precise form these measures should take. It would be wrong for me to speculate on what the eventual decision may be.
Regardless of what has been said by all and sundry, the fact is that I have succeeded in reducing substantially a major disability which our agricultural exports faced in trade to all destinations. We have increased guaranteed farm prices in Ireland. This combination of measures will bring significant financial benefits to Irish agriculture. The resulting impact on the consumer here will be offset by Government measures to the cost of which those who benefit from the green £ adjustment will have to make a contribution. As I have said, the MCA charges will be halved overnight. This is a benefit which should not be underestimated. Deputies on both sides of the House have been urging that relief should be obtained from the heavy burden of these charges. I have now secured that relief and I do not see how this can be opposed by any Deputy.
As regards the domestic impact here, we must accept that this is a common fight against inflation in which all of us are deeply involved. All sections are being called upon to make their contribution. We are seeking sensibly through consultation to get this co-operation. I believe we will get it, regardless of what Deputies on the opposite side of this House think and feel.