I move: "That the Bill be now read a Second Time."
Dairy Produce (Miscellaneous Provisions) (Amendment) Bill, 1979: Second Stage.
This Bill provides for the amendment and extension of certain provisions of section 6 of the Dairy Produce (Miscellaneous Provisions) Act, 1973, relating to the guarantee which, with the consent of the Minister for Finance, I may give in respect of loans obtained by An Bord Bainne Co-operative Limited.
The board were established by the Irish dairy industry in 1972 on the dissolution of the semi-State body An Bord Bainne. Their essential purpose is the purchase and centralised marketing of dairy products produced by their members. Due to the seasonality of the production of milk and dairy products and the fact that sales by the board are affected on a fairly even pattern throughout the year they must borrow heavily to enable them to purchase their members' production during the peak production period. The board's assets are not as yet sufficient to enable them to borrow to the very substantial extent necessary and it was to assist the board in borrowing that the State guarantee was provided by the 1973 Act and enlarged and extended in 1976 and 1977.
The initial State guarantee in 1973 provided coverage for borrowings by the board up to a maximum at any time of £20 million. This figure was increased to £40 million in 1976. The purpose of the Bill before you is to increase the level of the guarantee to £90 million and extend its application for a further period of four years to 31 December 1983. The additional four years will give the board a reasonable period to build up their own resources further so that it will become less necessary for them to rely on the State guarantee for backing for a proportion of their borrowings.
The dairy industry is the backbone of much of our agricultural industry. Its continued expansion is of immense importance for the whole economic and social development of the country. For the industry to prosper we must aim at maximum efficiency in processing and marketing. Centralised marketing has a major role to play in this by enabling us to develop and exploit markets in a planned and economical way and earning a respected position for Irish dairy products.
The years since we joined the Community have been ones of spectacular success for the dairy industry. Milk output has risen by over 40 per cent; the volume of milk produced for manufacturing purposes increased by over 50 per cent. The value of the milk intake of manufacturing concerns has increased by about 400 per cent in the same period. Marketing this extra production has been a major task. It has been accomplished with considerable success and with only minimal sales to intervention. That is an indication of the successful role played by Bord Bainne and centralised marketing up to now. I believe that their role will be of even greater importance in the future.
The dairy industry is facing somewhat more troubled times. We face a period of continued price restraint. More importantly we face proposals from Brussels aimed at restricting increases in milk production and at reducing the cost for the Community budget of support for milk sector. These will be the subject of negotiations by the Council of Ministers in the months to come. While undoubtedly some adjustments to the Community's milk policy will be made, my aim will be to ensure that at the end of the day we will reach decisions which will be satisfactory for the Irish dairy industry.
Our dairy industry can face the future with confidence. But in the circumstances of the future, efficiency in production, processing and marketing will be of even greater importance than in the past. Bord Bainne's role in centrally marketing the bulk of our exports of dairy products will, therefore, continue to be of crucial importance. In 1972 the value of our dairy exports amounted to £50 million. In 1978 revenue from these exports exceeded £450 million. The ability of the board to obtain the finance necessary for their operations as easily and economically as possible is of vital importance. For the present the board need the continuance of the State guarantee for a reasonable portion of their borrowings if they are to continue to play their role as the central marketing agency in the best and most efficient way. Hence, my proposal to extend the guarantee for four years with an increased maximum of £90 million.
In addition to its main purpose of enlarging and extending the guarantee, the Bill will also provide two further amendments to the 1973 Act. Section 4 covers the types of transactions in respect of which borrowings may be guaranteed. Previously only loans for the acquisition of dairy products were covered. This has proved somewhat inflexible and I feel that we should eliminate this arbitrary distinction between loans for the acquisition of dairy produce and loans for the closely linked activities of storage, transportation and insurance of these products. Accordingly in section 4 I propose that loans for all four operations be covered. In regard to section 4 I wish to advise Deputies that I intend to move an amendment to this section on Committee Stage. I have recently been advised that such an amendment is necessary to remove any doubt that the State guarantee also covers borrowings by the board in currencies other than that of the State. This requires an amendment to section 4 of this Bill to clarify the position.
The existence of the State guarantee has enabled An Bord Bainne Co-operative Limited to obtain adequate borrowing facilities to meet their requirements. No claims have been made under the State guarantee and no question of expenditure by the Exchequer has arisen up to now or is likely to arise in the future. I commend this Bill to the House.
The Minister of State has been somewhat graceless in failing to acknowledge the fact that two-thirds of the Bill consists of measures which were urged upon him less than two years ago when a Bill with a similar title was before the House. On that occasion he failed to introduce those measures despite urgings on Second Stage and Committee Stage from this side of the House. Had those points been referred to on Committee Stage there might be a reason for an argument by the Minister that he did not have sufficient notice of them but the measures now contained in the Bill were made from the Opposition benches on Second Stage. Some time elapsed between that Stage and Committee Stage and had the Minister taken this House seriously he could have drawn up amendments, based on those points, and incorporated them in the Bill. He refused to do that and now, two years later, he must take up the time of the House to introduce measures which could be law had the Minister accepted the advice offered to him by the Opposition. One of the matters I am referring to is the length of duration of the guarantee. The Minister, when we are discussing this matter in October 1977, refused to extend the guarantee in the Act of 1977 beyond the end of 1979. Less than two years later he has to introduce another Bill to extend that guarantee still further.
I am glad to say that, on this occasion at least, he is extending it a little further than the mere 18 months it was extended on that occasion. What I have just said relates to section 3 of this Bill. Section 4 was also urged on the Minister from this side of the House on the last occasion and amendments circulated to remedy that point and the one under section 3, urging that the terms of the principal Act allowing the Board to spend money only on the acquisition of milk products were too narrowly drawn and that such matters as transportation, insurance and storage, were not covered. The Minister failed to accept that case. He now comes into the House and, with no acknowledgment of the arguments made on the previous occasion, incorporates those very points rejected by him just over two years ago. It is a good thing for a Minister to change his mind but he should acknowledge the source of the argument which led him to change it. That the Minister did not do this on this occasion is uncharacteristic of him.
The Minister's speech was, to put it mildly, full of platitudes. He spoke of the proposals from Brussels aimed at restricting increases in milk production—in my view, the most regressive and anti-Community proposals for many years to come from the Commission on any subject. These proposals in relation to the restriction of milk production are totally foreign to the concept of the Treaty of Rome, which is concerned with the achievement of comparative advantage and of rationality in production. These proposals will restrict any movement in milk production from those countries which have a competitive advantage to those with less of a competitive advantage. It will freeze the existing situation. All the Minister could say in his speech was "We will aim to ensure that, at the end of the day, we will reach decisions which will be satisfactory to the Irish dairy industry". Not even a veiled hint of a threat of a veto in relation to those proposals. I intend to demonstrate, from a national point of view and from the point of view of the European Community, that the EEC proposals are well worthy of a veto from an Irish Minister.
One should, perhaps, contrast that with the negotiating style of the British Government at present. They are standing up for their national interests. They are not expressing mild hopes that, perhaps, in the end, things will work out satisfactorily. They are making it quite clear that they want a satisfactory solution and will use every means at their disposal to get it. That is, apparently, not the attitude of our Minister. The dairy industry is of vital concern to this entire community—let it not be thought that it is a matter of concern solely to the farming community. We depend for a very substantial proportion of our exports on the dairy industry. If dairy exports were removed from the balance of payments, we would not last very long; we would be up in the international bankruptcy court. Without dairy exports and other agricultural exports, this country would be in a situation of almost total bankruptcy.
Furthermore, we rely, to a very significant degree, for jobs on the dairy industry. Not only are many thousands of people employed in the various plants engaged in the processing of dairy products, but dairying is a type of farming suitable to, and in many cases the only option of, a man with a small acreage. If dairying were not there to provide an income for those small farmers, they could not turn to anything else and would have to leave the land. If they left the land, our unemployment statistics which are at present amongst the worst in Europe, would be far worse than they are and there would be severe competition on the labour market for school leavers from small farmers forced off the land because the only line of production open to them, dairying, was no longer profitable.
That should be clearly recognised by everybody; both urban and rural Ireland should realise that if the dairying industry falls, the entire country will suffer. I am afraid the urban community at present do not realise the extent of their inter-dependence with the rural community. People of our towns think they are insulated from the results of a recession in Irish agriculture because they are not living near a field where cattle are being raised for beef or milk or the furrow is being tilled. They should realise that if agriculture goes into a decline there will be a flight from the land, less spending by farmers, and a balance of payments crisis. These three phenomena will have an immediate bearing on everybody here. We must defend the interests of Irish agriculture in Brussels, at the peril of our economic prosperity.
I come, against that background, to the present proposals from Brussels, which are that, in 1980, a 3 per cent levy be paid on milk from any creamery which produces more than 99 per cent of what it produced in 1979. Not only if there is an increase, but if the dairy producer does not succeed in decreasing by more than 1 per cent of this year's yield, he will definitely face a 3 per cent levy on his production. That is particularly bad for us, because we have only recently joined the EEC. We have not been benefiting for as long as Germany, France, Holland, or these other countries who have been benefiting from the high prices which have gone with being members of the Community. We have had only four to five years in which to modernise our production and increase our yields, so we are starting from a low base, whereas these other countries are starting from a high base; they have already achieved high levels of production. Any system which penalises any increase will fall more severely on us than on any of the other Community countries. Our production has been increasing far faster than that of any of the other countries and we shall have to pay proportionately much more of the levy.
I shall indicate the predicted increase in production for 1979 in each of the Community countries and we shall see who will be paying more of the levy. Belgium and Luxembourg were predicted to have a decline of 1.2 per cent, Denmark an increase of 2.8 per cent, France 0.8 per cent, Germany 0.9 per cent, Italy 1.1 per cent, The Netherlands 1.6 per cent, the UK 3.3 per cent and Ireland 7.6 per cent. It was predicted, at the beginning of this year, that the rate of increase in dairying production would be faster in Ireland in that year than in any other country of the world. Clearly, a levy which discriminates against a country increasing its production will fall more heavily on Ireland—which is, incidentally, the poorest country in the existing community—than on any other country. Furthermore, it will bear most heavily on Ireland which has the lowest level of production per cow in the Community and which has the least measure of technical advance.
This proposal is contrary to the provisions of the Treaty of Rome, Article 39 (1) (a) of which says:
1. The objectives of the common agricultural policy shall be:
(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum ultilisation of the factors of production, in particular labour;
This levy, in my view, is contrary to the provisions of Article 39 of that treaty, because it will work against rationality in production. There is no way by which production can be distributed from the less efficient areas of the Community to the more efficient ones unless there is a possibility that one country or one creamery can increase its level of production and another country or creamery can reduce its level of production. What this levy means is that any area that can increase production no matter how efficient it may be or how good its comparative advantage in terms of efficiency over other parts of the Community will pay an extra levy. If you are already producing at a high level, no matter how badly based your production may be or how dependent you may be on imports or how little a contribution you may be making to the welfare of the Community; no matter how little you depend on milk production as a means of livelihood and of preserving a rural population, you can stay at that high level so long as you do not increase it. If you are already at a very low level and need the production very badly to preserve a rural population, you may not increase it. In other words, this levy will congeal the pattern of milk production in the EEC and will prevent a redistribution of production from the less efficient to the more efficient which, in my view, is essential to the principles contained in Article 39 and essential to the whole idea of a common market which is that there should be such a redistribution. We are efficient by any Community standard as regards milk production and this levy means we may not increase production and may not take over where the other countries are falling off.
I believe that the way to eliminate the existing milk surplus in the Community is to seek a reduction in production of milk by the Community countries which do not need to be in milk as the sole means of preserving their rural populations but have other alternatives. The present situation is that the vast bulk of milk in the Community is being produced by countries like Germany which do not need to be in milk. Germany produces approximately five times as much milk products as we do and produces them in a part of the Community where farmers have very many other options as regards employment that they could take up. There is no shortage of employment in the Ruhr, in central Germany, no need for people to be engaged in milk production. They could easily move to industrial jobs which are available. There are so many industrial jobs available in Germany that they have to import labour from Turkey and other associates of the Community. Yet they are the people who are being preserved in milk production by discriminatory measures which are to their benefit and not to ours.
I shall give two examples of such measures which are assisting the continuous production of surplus milk in the industrial heartland of Europe. First, there is the situation regarding MCA's where in relation to the purchase of input, because of the fact that MCAs have been adjusted for years past on a political rather than on a strictly economic basis, German farmers are being over-compensated through the MCA system for the upward valuations of the German mark. They are getting concentrates at prices lower than the just price of those concentrates because of the way the MCA system has worked in relation to the mark.
The second form of discrimination is that these dairy producers are producing that milk not from grass, from an indigenous native product, but on the basis of imported concentrates, particularly soya, and tapioca or manioc products which are being imported at a mere 3 per cent tariff with no variable levy. It is not subject to the same levy as wheat. The Germans have access to the large port of Rotterdam particularly and extensive handling facilities and because these concentrates bear such a low level of tariff they can import them into the Community and can compete unfairly with us because we do not have access to soya at that price. We can import it but our handling facilities do not enable us to import it in the bulk or quantity that is possible for German producers.
I believe the milk mountain could be eliminated overnight if one were to apply the same levy to imported soya and manioc as is applied—and should apply—to imported wheat from outside the Community. Soya and manioc are the same as wheat; they are products which can be substituted for wheat and it is merely an anomaly in the GATT negotiations that they do not bear the same levy as wheat. If the Irish Government were to obtain a situation where these imports bore the same tariff as wheat, production of surplus milk in central Europe would be eliminated and surplus production overall in the Community—because of the size of the production in that area—would be eliminated altogether.
Irish farmers, and particularly milk producers, are facing this very difficult competitive situation because of unfair advantages that I have outlined and about which the Irish Government seem to be doing nothing. In fact they are themselves taking measures to depress confidence in the milk industry. It has been calculated that taking all the levies being imposed on milk the total cost of the levies now amount to about £18 for every cow in this country. There is the Government's 2 per cent levy which takes 1p per gallon; the disease levy taking .5 per gallon; the dairy inspection levy which takes .1p per gallon; the Agricultural Institute levy which takes .05p per gallon; the Bord Bainne levy taking .5p per gallon and we are now to have an EEC levy which will take perhaps another 1p or 1.5p per gallon. This accumulation of levies is being borne by this country and it is totally contrary, in my view, to the national interest and it is being facilitated by our own Government in a policy which as I have indicated is completely against our national interest.
Even from the point of view of the common agricultural policy I believe that the interests of the Community lie in milk production being concentrated in Ireland because the idea of the common agricultural policy is to ensure that Europe will be self-sufficient in food so that in the event of war breaking out or international instability arising and the trade routes by which Europe is now fed being closed, we would have sufficient indigenous products within Europe's boundaries to feed the European population. The idea apparently enshrined in this levy is that the production pattern of milk in the Community should be congealed. Milk is being produced in very large quantities, not in Ireland where we do not rely on imported soya and where the vast bulk of our milk is produced from our own grass. That form of production is being penalised and a form of production in the centre of Europe which is based on imported soya and imported manioc is being encouraged to remain. In my view, this is completely contrary to the whole idea of the common agricultural policy. In the event of a war or if the Atlantic or other trade routes were to be closed, the German farmers would not be able to get their manioc or their soya and would not be able to produce a single gallon of milk. Irish milk production which would have been depressed by this levy would not be able to pick up the slack overnight.
Bearing in mind the whole ideology of the common agricultural policy, from the Community's point of view, the sensible thing to do is not to concentrate milk in parts of the Community where it relies on imports to keep it going but to base it in areas in the Community where resources are available and which will continue to be available in the event of war breaking out. That is not the policy being pursued by Commissioner Gundelach.
I do not understand the attitude of the British Government at the present time. That Government pride themselves on being the most anti-Soviet government in Europe, the government most concerned with defending the native interests of Europe against any aggression from the East. Yet Britain is the very country which is insisting on dismantling the common agricultural policy which ensures continued supplies of domestically produced food, which would be immune from any attempt at encirclement by the Russians or anyone else, and would be immune from any closure of the Suez Canal as a result of instability in the Middle East. They are also the very people who insist that we should continue to feed ourselves with dairy products brought all the way from New Zealand over the single, longest, trade route in the world, which could be cut at almost any point in the event of war. The Russians know that. Anybody who wishes to dominate Europe knows that. If we in Europe make ourselves vulnerable to imported ingredients for the production of food, we are putting ourselves in a strategically vulnerable situation in any international conflict and weakening our existing bargaining position. If anybody dealing with Europe on the international stage realised that Europe had enough food to feed itself, no matter what happened, that it did not depend on soya from America or on milk products from New Zealand, then Europe could not be pushed about in any negotiations.
I wish that people realise in all their hurry—and it is a justifiable hurry—to make Europe self-sufficient in energy, that before one has the capacity to use energy one must have enough food to live. If Europe does not make itself self-sufficient in food, there is not much point talking about becoming self-sufficient in energy. It is worth putting this milk surplus situation into the proper context by pointing out that the European Community are insisting that we should have 100 days' stocks of oil as a guarantee against a situation which I have described where supplies from outside the Community would not be available. Yet, the surplus of milk products in the Community, which everybody is creating such a fuss about, is only 60 days' supply. The Community are trying to get rid of a surplus of only 60 days' supply in the food area while insisting on a surplus of 100 days' supply in the energy area.
Both energy and food are necessary but I argue that food is more necessary than energy. Our ancestors got on with very little energy but they needed food. One can alter one's life style to reduce one's dependence on energy but one cannot alter one's life style to reduce one's dependence on food. No matter what happens one needs food. The policy being pursued by Britain and the EEC Commission, which is designed to make us more dependent on imported food and on imported ingredients for the production of food, is contrary to the strategic interests which Britain and the Community are seeking to protect. This should be condemned very strongly by Ireland as a short-sighted policy from Europe's point of view.
In Ireland we had a very disappointing year so far as milk production is concerned. The original estimates which I read out were issued sometime in March. At the beginning of 1979 Bord Bainne expected that there would be a 10 per cent increase in milk production. On present estimates it looks as if milk production will increase by about 3 per cent. Constantly throughout 1979 predictions as to the amount of milk that would be produced have been scaled down more and more.
That has a number of consequences. It means that farmers have less income and less money to spend. It also means that creameries are working well below capacity while still having to pay their overheads. They are making far less money per gallon of milk sold on a lesser production than they would be on a larger production because the fixed overheads still have to be paid. I understand there are some creameries in very serious trouble this year because they have not been getting enough milk. If they lent money to farmers, the farmers have not been able to repay them because of the credit squeeze. As a result some creameries are in very serious difficulties. This is an industry we should be depending on to expand rather than to contract.
Today the Minister made a statement chastising the farmers yet again for their lack of confidence. I am surprised that he should be chastising anyone for their lack of confidence because it is his job to generate confidence.
I would like to ask the Minister for Agriculture what he has done in the last ten months to generate confidence in the agricultural industry. Can he point to a single initiative he has taken in the past ten months to generate confidence in agriculture? He has done nothing; all he has done is condemn all around him, complain bitterly about other people, apparently forgetting that he is the Minister for Agriculture. It would be fine if he were on these benches, or indeed on those benches over there as a backbencher, when he would certainly be justified in complaining about other people. Unfortunately perhaps that is what most Deputies do, because Deputies do not have much power to do anything, and spend a lot of their time complaining about what other people are doing. Perhaps it is not very pleasant to have to listen to and perhaps it is somewhat irrelevant to a lot of what goes on when in the course of debates in this House all of us are complaining about what other people are doing, but it is understandable. But when the one man in the country who is in a position of power to do something about it does nothing but complain about other people, then we have reached a situation in which there is something radically wrong. I say quite clearly that the Minister for Agriculture, whatever his merits and demerits—and I have no doubt he is well intentioned—is simply not doing his job. It is no use for him to be blaming farming spokesmen for the lack of confidence in the agricultural industry. Perhaps the farming spokesmen are to blame to some extent—that is an arguable point—but not one that comes very easily from the Minister's lips because he is the man who should be doing something to counteract it, and he has done nothing.
I should like to drawn attention to a few other points in the structure of our dairying industry which I believe are matters for some concern. I am not at all happy that we have been placing the right emphasis on the type of product in which we are persisting in milk. For instance, I have figures from a major creamery in the south showing that in 1974 24 per cent of their product was converted into cheese and that in 1979 only 12 per cent was converted into cheese. As far as the country as a whole is concerned, the increase in butter production in this country in 1979, over the years 1974-1976, was 36 per cent, as against an increase in cheese of only 23 per cent. That pattern of increased emphasis on butter and reduced emphasis on cheese is one which is going contrary to what the market is demanding. The best way of putting that in context is to quote from the Thirty-Second Report of the Joint Committee on the Secondary Legislation of the European Communities on the Situation in the Milk Sector under the heading of Consumption in Paragraph 3 which reads as follows:
Butter consumption in the Community is decreasing in the long term. The annual consumption per head has fallen from 7 kg. in 1968 to 6.5 in 1976. Cheese consumption on the other hand is steadily increasing. The consumption per head was 8.7 kg. in 1968 and 10.7 in 1976....
At the very same time Ireland, in so far as production is concerned, is going in the opposite direction: instead of producing more cheese to meet the demand in the market place we are producing more butter to meet a reduced demand. Lest it be thought that everybody is doing this—because of the nature of the intervention system—I should point out that, as far as the Community as a whole is concerned, there has not been this tendency which has existed in Ireland of placing increased emphasis on butter and less on cheese. In North-West Europe as a whole there has been about an even increase overall in butter and cheese production over the same period. Cheese production has not increased any faster than butter production in Europe as a whole; rather at more or less the same rate. Therefore, although it is not meeting fully the market demand, at least it is not going wrong, whereas the Irish pattern of production is moving in the wrong direction. I know this is probably due to intervention being available for butter and skim milk powder, and not being available for cheese. If that is so, then it must be clearly identified that the intervention system is not, to that degree, working in our interests. I would point out further that cheese is 30 per cent better as far as employment content is concerned, as a form of use of milk; 30 per cent more jobs are created in producing cheese than in the production of butter. Also as a product cheese is less of a consumer of energy than is butter, and certainly much less a consumer of energy than the production of skim milk powder which is a very high energy-intensive user.
I believe measures must be taken to expand cheese production and increase the proportion of our total product which is going into cheese because that is where our long-term future lies from the point of view of reduced costs, increased employment and increased consumer demand. On the other hand butter is the type of produce where one faces increased costs and reduced consumer demand. I believe milk production affords the right future for a very substantial number of our farmers. Although it may be the case that farmers' confidence is taking a beating this year, the fact is that, on the basis of published figures, milk is still substantially more profitable for the average farmer than any alternative form of production and is likely to remain so in the foreseeable future. I appreciate that people might wish to make a case against taxation or some other measures adopted by the Government and, in so doing, they might over-dramatise the effect of the tax. But the fact is most farmers will continue to make a reasonable living from milk production; they should remain in milk production and should not be cajoled out of it by anybody. That is the message I believe the Minister should be hammering across to the farming community instead of the sniping in which he seems to be engaging at present. What also needs to be borne in mind is the fact that if the bigger farmer gets out of milk production, leaving only the small man in production, it will have a serious effect also and do damage to the smaller farmers as well, because a very large part of the milk being used in our creameries comes from medium-sized farmers and some larger farmers. If that milk is withdrawn the economics of the milk processing plants will be very adversely affected and, consequently, the overall price that can be paid by those plants to the farmers who remain in milk production will be reduced by virtue of those people getting out of production.
Therefore, it is up to the Government to try and maintain our levels of production, to maintain all intensive and good farmers in the dairying industry. However, I believe there are very heavy social and psychological pressures on many farmers not to stay in milk production. Indeed many of these social and psychological pressures may be equal in force to those arising from pure economic circumstances because increasingly people are not prepared to work seven days a week on their own beyond the sort of social hours other people expect. We must find some way of ensuring that farmers in milk production are allowed to lead the sort of life that the rest of the community have come to expect and to see as their right. The development of relief milking services is essential and should be assisted by the Government. I am glad to know that the Irish ICOS are taking the initiative in this matter at the moment. The Government should give financial aid towards the establishment of relief milking services because it is only in that way that the farmers will be kept in milk production.
From inquiries and discussions I have had with dairy farmers, particularly in the south, I note that there is a massive labour shortage on dairy farms. There are opportunities for many young people to work as full-time employees or as relief milkers on dairy farms but the farmers cannot get the staff although they are prepared to pay good wages. There is something very wrong when we have such a high level of unemployment and still there is a shortage of men on dairy farms. The farmers are prepared to pay a good wage for this very hard job, and I do not justify the payment of less than a good wage, yet the farmers cannot get men. The problem seems to be in the training area where an adequate number of dairy men are not being trained. There are no facilities for the training of farm workers. The entire emphasis is on training people to become farmers or farm managers and there is no training at all for farm workers. It is no wonder that there is a shortage of people to work on dairy farms. That shortage of men forces many people who cannot get off for even one day out of seven, to turn to other less profitable lines of production in order to have some sort of social life. The Government should take steps to do something about this as was promised in their election manifesto.
We are facing one of the biggest challenges we have ever faced in the defence of our national interests, in the negotiations which will take place on the Commission proposals in relation to milk production. If this proposal, and the principle it enshrines, is accepted it will put an end to the development of Irish farms. It will say, in effect, that the EEC do not want improved efficiency in agriculture but simply want to keep the people in Germany, who are already producing uneconomically, in production and that they do not care about the people in Ireland and in other countries who have no option but to produce in dairying. It is up to the Minister to pull up his socks, to get out from behind his desk and stop whining at other people and do his own job. It is up to the Taoiseach to make it quite clear at the Summit which will take place in the very near future, when Mrs. Thatcher is thumping the table about British contributions to the budget, that this proposal to impose a levy which discriminates against Ireland and other countries in the course of development, will be resisted to the ultimate by Ireland, even to the extent of exercising a veto. If the Taoiseach and the Minister for Agriculture fail to take that option and are satisfied with the weak-kneed approach which was evident from the opening speech of the Minister of State, not only Irish farmers but history will pass a very severe judgment on them.
The previous speaker gave a very long and learned discourse on the provisions of the Bill and on the many matters pertaining to the dairying industry. I welcome the Bill in so far as it provides the necessary money for Bord Bainne to continue what they have been doing. On behalf of myself and the Labour Party I pay tribute to An Bord Bainne for the work they have done over the years in selling our dairy produce and in not putting large amounts into intervention. An Bord Bainne have done a magnificent job since their foundation and the change-over to a Bord Bainne Co-operative to sell our produce was one of the most successful ventures in relation to semi-State bodies. We owe An Bord Bainne a great debt having regard to the way they have sold our products within the EEC and outside it. The agricultural industry is our main industry and it must expand and increase production in the interests of society. The dairying industry gives a huge amount of employment and to maintain that employment we must not become dependent on intervention but we must provide money for the board to promote and sell our products.
The Minister referred to the fact that the dairying industry is facing somewhat more troubled times. That has become very apparent. The Labour Party have supported at all levels the continuation of the expansion of the common agricultural policy. We voted against a reduction in the money provided in the budget for the development of the CAP because it was the right thing to do in the interests of the nation. We may have arguments about how EEC money is distributed here but we believe that it is in the interests of the people that the money be brought in. We can argue about the distribution afterwards. My party have consistently voted against proposals which adversely affect our greatest national interest and our agricultural exports.
We have dramatically increased our milk production since we entered the EEC but we now seem to be at the stage where others within the Community are saying that we cannot continue to increase our milk production as we have been doing. If we are restricted in that manner it will be a very serious blow to our economic future.
This is one area where we have shown our capacity to increase our production. It is our best area, despite what I might say about any levies introduced by this Government. Our greatest chance of expansion lies in the dairy industry. If the Community, for other reasons, want to cut back or limit us to last year's production we should not accept that criterion. If they put on levies after our normal production of last year that is what they mean to do: limit us to last year's production. This is an area where we have the capacity to increase production. Dairy farmers and the industry in general will overcome any difficulties. I would support any measures the Government intend to take to ensure that production in this vital industry is not inhibited in any way.
This is an area where other countries have reached their full potential. We have not, and we can expand in a serious way in the future. It will be more discriminatory against us than against our competitors in the European market. Some countries have to use imported feed-stuffs in the production of milk but we can use our grass. The British stand seems to be, regardless of whether there is a Conservative or Labour Government, that they want cheap food at all costs. They are grumbling about their contribution to the capital budget in order to pay for the CAP. If the CAP is downgraded or the amount to be spent lessened there will be no benefit to this country from our entry into the Community. The only benefit came to the agricultural sector. I say that deliberately despite what we may hear about depressed areas and so on. The regional fund was just a farce; nothing really concrete ever came from it. I might disagree with everybody on how the benefits might be redistributed when we get them but we should get them first and then we can argue about it.
The Government should take a positive stand at all meetings in the EEC and, if necessary to preserve the continued expansion of our dairy industry, they should use the veto. The dairy industry is the most important industry as far as rural Ireland is concerned. It is essential to keep open the lanes of expansion in coming years because of the numbers employed and the number of small farmers managing to survive with the dairy industry.
An Bord Bainne must have the necessary finance to sell our products. We can face up to the EEC critics and say that what they had to pay for the amount of dairy products we put into intervention was very small compared with some of the countries who would now argue, because the majority of their people are engaged in industry, that the agricultural policy should be downgraded. Bord Bainne succeeded in selling practically all our dairy products. That is in their favour. If there is a big loss in intervention it is not our dairy industry that caused it. It would be unjust and unfair of the EEC to do anything to limit the amount of production we feel we can achieve in the dairy industry.
I welcome the Bill and any measure taken to strengthen Bord Bainne. They have established a world-wide reputation for their capacity to market dairy products effectively, professionally and at remunerative prices in a very difficult market situation. They have improved their position in the EEC and relative to the UK market where, in 1972, 84 per cent of their products went to the UK market, last year this was 38 per cent. They exported 65,000 tons of butter or 60 per cent of their output to third country markets.
It is unfair of the Commission to threaten to penalise milk production where we have demonstrated our ability to find markets outside Europe. We are very good consumers of dairy products. We consume more butter and liquid milk per head of population than any other country in Europe. In fact, we consume four times more of these two products. We need to improve and increase our consumption of cheese and, as Deputy Bruton said, we should be manufacturing more of it. It is surprising that we import such a large amount of food products. If one goes into a supermarket it is disappointing to find the amount of dairy products that are imported, in particular different types of cheese. There is no reason why these products could not be manufactured at home. I urge Bord Bainne to put more effort into market research and find out what individual products are imported and then try to have them manufactured at home. We have the skill and capacity to do so.
As regards the spending of the co-responsibility levy we see in the Sunday newspapers and magazines very flashy advertisements about the consumption of more dairy products. In particular they urge people to consume more milk and butter when we already have such a very high consumption rate. If some of that money went into market research to try to reduce the amount of imports—something like £385 million worth of food was imported last year—it would be much better. I would urge Bord Bainne to do something about that.
The dairy industry is really the lifeline of the small farmer. There is no comparison between it and other farming activity. This has been known for many years. Various studies have been done by An Foras Talúntais and other bodies and these have demonstrated that the return per acre from dairying is substantially better and more consistent than that from any other farming activity.
If there is one reason why the vast bulk of the farming community voted for membership of the EEC it was to get a market for our agricultural products and in particular our dairy products. It is little wonder then, that there is some amazement and some lack of confidence when proposals are put forward by the Commission to restrict aid to dairying. No Irish Government should allow these proposals to be implemented. They should be vetoed or stopped at all costs for the good of the total agricultural population.
It has been pointed out on numerous occasions that dairying is not confined to farming; it has much wider implications. Taking into account the fact that we have a strong and progressive dairying industry, income is obtained right down to the peninsulas and the rural parts of Ireland. Indeed, in west Cork the recent census of population showed that for the first time in many years apart from two of the most isolated peninsulas there was an increase in population in all other parts of the county. This is due in no small way to the progress of and the developments in the dairy industry there, particularly in the processing end of it. West Cork has pioneered a development there from which the rest of the dairy industry could take an example. They have not continued with the old system of converting milk into butter and then, in latter years, converting skim milk into powder of any old type that could be put into a bag and an effort made to find a market for it. In Carbery Milk Products in Ballineen they get the milk. There is, say, a rough average of 12 per cent solids in this milk and they will tailor-make products for which there is a market; they will convert the solids of that milk into any kind of product for which they can find a remunerative market.
That is the attitude that should be adopted, to manufacture dairy products for markets rather than to manufacture them because one knows the technology. In fact they have extended the value of milk products and dairy products to the production of alcohol and it is important that we have this pioneering development, which is the first of its sort in the world, initiated in Ireland. I hope that with energy problems and so on and the possible usage of alcohol for energy, this development will have greater significance. This is where the industry should be going. If we go along these lines to find out what the market wants and tailor-make products to suit the market rather than producing the old traditional products it would be a much better approach.
The EEC are greatly to blame for its own problems because they are encouraging producers to produce the products which they least want and which are causing the mountains of butter and milk powder. Surely they could show some initiative and say that they will encourage product investigation, product development and that they will encourage the use of dairy products in some other way rather than using a system of intervention for products which are no longer of any great importance and find their way into animal uses and so on. The EEC think up various schemes—they have done so over the last few years—to try to limit production but in most cases they end up in a complete shambles and sometimes they find themselves trying to get rid of unwanted products at a very poor price in any market they can find. We are told that there is an over-supply of dairy products in the Community; it is about 15 to 17 per cent. We are not told what the individual products are in over-supply. If we reduced the whole thing by 17 per cent there would be a shortage of individual products so there is an onus on the Commission to give far more details as to the products which are in fact in short supply.
The Irish dairy industry is developing and that is another very good reason why it should be allowed to continue to do so. We are contributing roughly only 5 per cent to the whole EEC market in comparison with 25 per cent by France and Germany and some of the other countries. Our average herd size is only 14 cows; our average yield is about 650 gallons which, again, is one of the lowest yields in Europe. We have a long way to go. We should be encouraged to improve performance and improve yields and generally improve the efficiency of the dairy industry rather than be told that if farmers put in milking parlours or refrigerator systems and so on to improve quality they will be in danger of getting no grant aid for it. The farming community are in some dilemma at the moment in that they do not know exactly how they stand for the years ahead. At the same time they have to plan and are told they have to plan if they want to get any kind of grant aid. The Commission should be the first people to give some indication of how the market place is going to be over at least five years to give some reasonable opportunity to the producers to know where they are going and what to invest in.
This year has been a difficult one in farming. The increases were about 3 to 4 per cent lower this year than last year. That is about average for Europe. In the north of Ireland they have a yield of about 50 per cent higher than we have. There is no reason why we should not have the same kind of yield but, more than that, in the Six Counties they have a ratio of summer milk production to winter milk production of about two to one whereas in the Twenty-six Counties the ratio is about 15 to one so that for a large part of the year processes are left with equipment which is idle and with personnel generally doing painting-up jobs and being held on for the summer season. In other words it is a seasonal industry. But there is no reason why the season could not at least be extended at both ends.
The dairy industry and producers generally should be encouraged to commence calving earlier. Something like 30 per cent of calvings take place after I April. If this was brought forward by about two months it would yield another 50 million gallons and be of considerable importance to the economy and the whole industry. The same thing could apply at the back end of the season where the milk season could be extended. Less variation in supply between summer and winter would help in the economy of the whole dairy industry. There are problems in that you cannot make certain products at certain times of the year. Early lactation milk and late lactation milk have their own chemical variations, and that will not allow border production of certain products. This is a restriction on the industry.
Another improvement that could be made in the economy of the whole industry would be to improve especially the protein content of milk. The Netherlands processing industry in particular is far more economic than ours because they can get a higher output of production for each gallon of their milk than we can for each gallon of ours. The solids, in particular protein, are lower in Irish milk than in Dutch milk. There is no reason why we could not improve our situation in that.
In Ireland the farmers are getting about 84.5 per cent of the EEC target price for milk and it should be higher. The farming community are entitled to get a higher percentage of the target price into their cheque books than they are getting at present. If some of the steps that I have suggested were taken the position would improve.
Our dairy industry suffers from a few other handicaps. The calf mortality rate is about one quarter of a million head per year, and these animals are a vital part of the whole dairy industry. That rate could be reduced substantially, although of course there will always be a certain percentage mortality rate. If it were reduced it would allow a greater margin for people who are in the dairy industry.
I was glad to read that the managing director of Bord Bainne at a recent engagement spoke with confidence of the dairying industry and said to the dairy farmers and the producers, "If you can produce the milk we can sell it". That is the kind of line that we should be getting from many more people interested in the industry. There is nothing to be gained by complaining about the situation. We should do something to remedy it on a more constructive line. I will try to indicate some areas where we can improve our production——
It is the man who could say that a year ago who should be here.
Deputy Bruton does not agree with that line.
If he would listen to Deputy Walsh he might be a better Minister than he is.
If all the people in the House would listen to Deputy Walsh we would be obeying the rules.
I have almost completed the comments that I have to make. I see a tremendous future for the dairying industry. Bord Bainne are to be complimented and congratulated for the way they have done their job. They are a credit to the nation, an example to the other EEC countries and certainly are not putting more of a load on the dairy products situation in Europe. They are saying to the farming community what needs to be said to them. They are saying, "Produce more milk, it is a good farming line to be in. If you can produce it we can sell it".
I welcome the opportunity of coming here today at this very opportune time to discuss this Dairy Produce (Miscellaneous Provisions) (Amendment) Bill, 1979. I am sorry that the Minister for Agriculture is not here to listen to the debate because, while I cast no reflection on the Minister of State, we are perfectly well aware that he will not be at the Cabinet meetings and he will not be making representations to the EEC, nor in his own Department will he be making the decisions as far as our milk producers are concerned.
From time to time we all need a little pep-up, so to speak, in a debate such as this. The present Minister for Agriculture has gone off course, and there will be serious repercussions, not in the years ahead but next year. It is a great pity that he is not here today to hear the messages whether he likes them or not. They could be of some assistance to him.
I come to the Bill which is before the House today. Bord Bainne are a semi-State institution who have carried out a very important function in the marketing of our agricultural products. They must be described as one of the successful semi-State organisations and their important function can never be overestimated. They are the board responsible for the marketing outside this country of our entire dairy production which at an amount in the region of £450 million must be described as a fair percentage of our entire exports. Bord Bainne have carried out this very important function excellently over the years. We must praise their staff and their officials. It is vital to the nation that we have properly organised selling of our agricultural production which amounts to approximately £1,100 million this year. We must ensure first that there is a steady market and then that we have some type of guarantee of the price to be paid for the products of our farms. We have to consider the processors. Down the years Bord Bainne have assured them of sufficient margins of profit so that they can be in a healthy financial position to cope with any growth of the industry. They must be in a position to plan in advance for that growth. Milk is a very perishable commodity and arrangements for its processing cannot be made overnight.
A steady market is important to the producers, the processors and to the nation. Down the years Bord Bainne have given to all of them a vital service for which we must all be grateful and which is on a par with any service provided by any semi-State institution in the country. At this stage of the debate it is only right that we should have a look into the future and ask ourselves what is going to happen to our milk producers. Whatever happens will have an impact on our employment situation, and this is important. It will have an impact also on our balance of payments. Any extra production of milk will increase employment. Extra production of milk to the extent of 15,000-20,000 gallons can create an extra job on the production side of the industry. As far as exports are concerned such extra production will be an added benefit to our balance of payments. Both of these areas are important for the progress and growth of our nation.
The foundation on which agriculture in this country is based has been and still is its cow herds and their importance can never be over-stressed. They provide our entire beef production. We do not import any calves, weanlings or yearlings. We must all realise the importance of our beef exports whether live or carcase. Here I disagree completely with the Minister. We are an agriculture exporting country. Exports of calves, beef on the hoof and carcase beef are vital for our economy and there should be no interference from the EEC or the Department of Agriculture.
We will stay on dairy produce.
Dairying is very relevant to beef. We should have properly organised marketing. It is a disgrace the amount of profit the meat processors are demanding. They are damaging the beef industry.
The Deputy will get another opportunity to deal with that matter. We will stay on dairy production.
I would now like to refer to the price freeze from the EEC. As far as milk production is concerned we have had a price freeze in 1979 of approximately 14 per cent and it is reasonable to assume that the price freeze for 1980 will be in the region of 12 per cent. When the Minister speaks of a price freeze what is the duration of it? Is he satisfied that the margin of profit over the past year has been in the region of 25 per cent? I do not believe that such margins were available nor were they available in the previous year. Despite this the Minister agrees with the EEC proposal that there has to be a price freeze. We have German farmers producing milk almost entirely from cereals. They are the people who are demanding a price freeze and are creating a surplus on the market. They are the people who will benefit from a surplus because they are starting from a very strong base, unlike us.
Irish farmers during the past seven years have borrowed heavily to increase milk production. The Germans have not done this but their farmers will get the same conditions as we will. When we entered the EEC we had one thing in mind, the benefits we would get from agriculture. We must question the policy of the EEC particularly as far as milk production is concerned. The British are pounding the table and importing butter and cheese from New Zealand and getting away with it. They could reverse the conditions from their time of entry to suit their trade. Those conditions are creating the milk mountain in butter, cheese and milk powder. It is the German farmers and the English Government who are creating the conditions.
The British are determined to tear down the CAP for their own benefits. This will have serious repercussions for us. There was an expected growth of 10 per cent this year but we are now talking in terms of 3 per cent. I was told today that farmers now believe this will be in the region of 1 per cent or 2 per cent. Production compared with this time last year is down approximately 10 per cent. The reasons for this are quite clear, lack of confidence on the one hand and uncertainty on the other.
We must criticise the Government for introducing a levy on milk. We had four levies in one year. This represents 10 per cent of the actual profit and is the reason for the lack of confidence in the industry at the moment. What power has the Minister for Agriculture in the Cabinet as far as agriculture is concerned? The Government will have no problem next year in achieving a reduction in milk production of 3 per cent, which the EEC are asking for. The reduction has started already and will continue. The season of milk production has been increased year by year and people were prepared to produce milk the whole year round, but that has stopped because people are not prepared to feed concentrates to cows at the present cost.
The Government will not have long to wait to see the result of their policies as far as agriculture is concerned. We are losing the battle at home and we are losing it in Europe. If the present conditions continue over a lengthy period, I have no doubt that there will not be any problem with regard to the milk mountain as far as we are concerned. The German, French and English farmers have started from a higher base than our farmers have. They will be able to withstand the pressures, the increased cost of production and the increased cost of money until the mountains are gone and they will be back on the market again. If we diversify to such an extent that we reduce cow numbers to a very significant degree there will be serious repercussions across our whole economy. I ask the Minister to ensure that, when he is preparing to accept quotas from the EEC, we at least be given the increased costs of production for the quota that is 1 per cent less than the 1979 production. The Minister and the Government should stand up to pressure from the British. Any interference with the common agricultural policy would be detrimental to our economy.
It was interesting to hear the Minister's comments reported on the 1.30 news bulletin today. I should like to know the Minister's definition of "big farmers". He stated that if the big farmers do not utilise their land they should lease it to the small farmers and they would utilise it. What is he talking about? He seems to be out of touch with the situation. The big farmers and the small farmers are stretched to the limit trying to get production out of their land. I cannot understand the Minister's statement. He spoke of more efficiency on our farms. The only way to increase milk production is to pay an economic price for it.
It is well known that the two biggest milk processing factories shelved their expansion plans because they could see that the policies of the Government and of the EEC would be detrimental to milk production. Deputy Bruton said that a reduction in production would increase their overheads. Who will pay for the increase in their overheads? According to a report in this morning'sIrish Independent the milk processors are going to ask for an extra 2p per gallon and the EEC are talking in terms of 3p per gallon for the co-responsibility levy. With all the levies and the uncertainty, how in God's name can our farmers be expected to increase milk production?
I am a milk producer and I will not increase my production in the present circumstances. I say to the Minister of State that if we are prepared to accept quotas from the EEC we should get the increased costs of production for these quotas. When the situation improves we can then increase production. As our cow herd forms the basis of our milk and beef production, any further growth in agriculture depends on the growth of this herd. The only way to encourage expansion and increase efficiency is to pay an economic price for the goods produced.
It gives me pleasure to support this Bill because we have begun to appreciate the marketing efficiency and the aggressive efforts of An Bord Bainne in selling our dairy products. We are glad to have the opportunity of paying tribute to their work and of taking a general look at what is happening in the dairy industry.
There has been some criticism of the Minister for Agriculture because he has not been able to take the debate. I am sure that Opposition Deputies appreciate the importance of taking this Bill now, if only to highlight the attitude of the EEC in relation to dairying.
I was in Brussels five or six weeks ago and I met some members of the Commission. Most of us were alarmed by the attitude of officials in the Commission towards agriculture. Seven of the nine members states are interested in some way in agriculture, but we are different from the other member states. The British Prime Minister is trying to wreck the common agricultural policy. I have no doubt that she has some oblique assistance from the German Chancellor, Herr Schmidt. This debate gives us the opportunity to highlight the problems relating to the reluctance of the British Government to continue to pay their contribution to the budget. We should all support the Government in their determination to fight our opponents. We should stress the importance of agriculture to our economy. More than 60 per cent of our population depend on agriculture for their livelihood. I am not sure that those who are not directly employed in agriculture appreciate that our 16 million acres of farm land is our greatest resource and will never be a wasting asset. It is capable of producing more each year. The fact that this is not understood weakens the hand of the Government in the present battle. It is important that farmers know where they are going. The uncertainty in relation to the Commission's proposals for dealing with surpluses leads farmers to believe that their future in dairying will not be rosy.
While there are difficulties which have to be surmounted it is agreed on all sides that the only real future for the vast bulk of our farmers, and particularly medium and small sized farmers, is in dairying and must be in dairying. Every Irish Government and every Irish Minister for Agriculture must indicate to the farmers that that is the position. So far as we are concerned it will be a continuing position.
This week we see the start of a Summit Conference which has some elements in it which are positively dangerous for us. If the British Prime Minister succeeds in her efforts to reduce her contribution to the EEC budget, she will be striking at the lifeline of the common agricultural policy. At the same time as she wants to reduce her contribution to the budget, she enjoys from her accession to the European Community certain concessions which have contributed in turn to the problems which affect agriculture in Europe, she still imports from New Zealand. At the moment there are 350,000 tons of butter in intervention, over one-third of which has been brought into Britain from New Zealand. She conveniently forgets the advantages to her of British accession to the Community and continues to emphasise the extent to which she is over-paying. This has to be fought vigorously and we cannot afford to lose the battle with her.
The last time we had a Summit conference here the agreement to continue with New Zealand imports was sustained. We heard a lot of criticism of this Government from the other side of the House this evening but that was a fact of life which was accepted by our predecessors. The Government will have to spell out in the strongest possible terms to the visiting Heads of State the realities about any curtailment in milk production here. There is no other option open to the vast majority of our farmers.
I want to deal now with the question of the mountains of skim milk and butter which exists according to press reports emanating from Brussels and other places. I want to try to show that is not the position. Certainly it is not anything like as serious as it is alleged to be. Three years ago there were 1.2 million tons of skim milk powder in intervention. We all admit that was a surplus of very large proportions. At that time the Commission said if it were brought down to 500,000 tons that would be a tolerable level. The amount to-day is 300,000 and yet it is called a mountain and it is large enough for the British, the Germans and others to try to wreck the only policy which has been developed in Europe. This policy is operated by a considerable number of people in many parts of Europe who work seven days a week in every kind of climatic conditions to extract a living.
Most of the schemes to dispose of that surplus—and I admit they were costly—have been abandoned or scaled down. It is no longer permissible to use skim milk powder for pig and poultry feeding. The price support for the export of skim milk powder to third countries has been reduced at least twice in the past six months. There are 350,000 tons of butter in intervention. This is a little less than three times what is being brought in from New Zealand.
It is important to relate the efforts of Bord Bainne to what is happening on the European scene generally and the success they are having in disposing of the dairy products produced here as against their competitors abroad. The total amount of butter produced here is about 100,000 tons. At the moment of that there are 3,000 tons in intervention which is roughly 3 per cent. The total amount of skim milk produced here is about 130,000 tons, of which there are 3,000 tons in intervention. These figures demonstrate amply the effectiveness of Bord Bainne and the reason why they should be supported in this House in the manner proposed in this Bill.
One of the reasons why there is some uncertainty in relation to dairy farming at present is the proposed increase in the co-responsibility levy. One of the features of this levy is the manner in which it discriminates against the Irish producer. It proposes what one might call global treatment for a problem which obviously exists so far as European farmers are concerned but varies very considerably from country to country and from region to region. The fact that Irish farmers have produced up to 25 per cent of the increase in dairy products over the past five or six years means that this co-responsibility levy will operate more severely on Irish producers than on any of our competitors.
It is important that the manner in which this co-responsibility levy is devised for the future should take these elements into account if it is to operate to the advantage of the Irish producers, or at least operate in such a way as not to discriminate against them to the extent that it does.
There is the factory-type cow situation in Germany where, by the importation of such quantities of molasses and soya bean, under GATT agreements and without paying duty, the Germans are being allowed to import the ability to produce more milk but do not suffer in respect of the proposal by the Commission to deal with the surplus of milk products. It must be clear to all of us that German farmers, enjoying much greater incentives than is the case in respect of any of their Irish counterparts, must be a target in our efforts to incorporate some semblance of sense into this whole question.
By virtue of the revaluation of the Deutschemark, the price of milk in Germany is perhaps 10 or 12 per cent higher than is the case here. This indicates the advantage enjoyed by the German farmervis-á-vis his Irish counterpart. If we are to ensure that the Irish farmer will be able to continue to expand his dairying enterprises, we must continue to support the dairy co-operatives and the many other agencies which depend for their growth on the future expansion of dairying.
I should like to deal briefly with the question of the switch from too much concentration on skim milk and butter to the possibility of increasing the amount of milk diverted to cheese, frozen cream and other products. Of course, the situation of seasonality in this country in relation to the production of milk makes the situation more difficult to deal with. We have concentrated largely on grassland milk production and it has been clear from our experience, especially during the past five or six years, that this policy maximises the advantages for dairy farmers. However, if some changes must be made in regard to ensuring a better continuity of supply in the future, it is important that we are aware of these advantages and that the type of products we will produce will have reasonable prospects of marketing at levels which will compensate farmers for winter production. Since the constraints in regard to diversification are due largely to the seasonal nature of milk supply, I do not forsee any change in this situation having regard to the present price structures because, obviously, it would not pay a farmer to milk all the year round. Consequently, our farmers have concentrated largely on producing milk during the grass period.
In conclusion I emphasise again the necessity for a strong, resolute and determined effort on the part of the Government, supported not only by everybody in this House but by the people in general and by the press, in confronting the efforts being made under various guises to wreck the common agriculture policy. That fight is not a fight only for those engaged in agriculture. It is a fight for all our people and to that end we must support the Government in every way possible.
My intervention shall be brief. In common with other speakers I welcome the Bill in so far as it provides guarantees to Bord Bainne co-operatives to the extent of £90 million. So far as I know their borrowing at peak is in the region of £140 million so that they must go a good deal of the way in the absence of any guarantee. When this legislation was being prepared the requirements of the board should have been considered and the guarantee situation provided all the way.
Though there are some valid points in the Minister's speech I am confused in some respects. We are told that the dairy industry is the backbone of our agricultural industry, that its continued expansion is of immense importance in terms of the whole economic and social development of the country. I agree totally. The Minister tells us that for the industry to prosper we must aim at maximum efficiency in processing and marketing. He might have added that we must continue to expand because the one big problem in the Irish dairy field is that we are only about half way there. The Dutch and other EEC members have had many years to develop this industry and to upgrade their animals. Our production in some of the better areas is about 700 gallons per cow whereas in Holland the corresponding figure is about 1,300 gallons. As has been pointed out this operation in so far as the Dutch and the Germans, too, are concerned is artificial and is due to the free imports of massive amounts of all types of feed including sugar beet pulp, imports to which we do not have access.
Deputy Bruton made that point very well during his contribution: our Minister is not doing his job. The previous speaker said that when we were in power we more or less let the New Zealanders off the hook. That was not so. The former Minister fought hard to prevent the importation of New Zealand cheese and butter. He was successful eventually. However, the point I am making in this regard is that under a new GATT agreement, this Minister is allowing into the EEC 15,000 tons of New Zealand cheese from 1 January in return for access to the US market for European cheese. This New Zealand cheese will be cheddar and will be competing with our Irish exports of cheese which are mainly of the cheddar variety. EEC exports will be of the continental type of cheese. In other words other EEC countries will gain and Ireland will lose.
I should like to know why the Minister allows that to happen if he is serious in saying that the dairy industry is the back bone of our agricultural industry. I have heard other Deputies talk about diversification. I have been involved with a small co-operative and I know a certain amount about that subject. I am aware that diversification in any shape or form is a very expensive business. We diversified into frozen cream and cheese and I can assure the Minister that it was a long haul. Were it not for the enthusiasm of the general manager and staff of that small creamery some of their efforts would not have succeeded. What co-operation are we getting from the Minister? Without a word of protest he is allowing thousands of tons of New Zealand cheese on to the European market to compete against our produce.
I find it difficult to understand how the Council of Ministers could contemplate introducing a new levy on our farmers. We produce 950 million gallons of milk annually and use approximately 250 million gallons at home. The balance is exported but the important fact is that 40 per cent of that export goes to Third Countries. That is a growing market. It should also be remembered that that milk is exported to OPEC countries and another oil-producing country, Venezuela. We have been assured by experts that that market is only in its infancy. If that is so I should like to know why the Minister does not hammer that home at the conference table. He should hammer it home that the Irish, through the initiative of Bord Bainne, have captured many lucrative markets which can be expanded. We have been told that if we continue at the present rate of export our milk production will be up by 50 per cent by 1985. There is no need for me to point out the advantages to the economy of such expansion. In fact, if we are faced with a cut-back or a holding situation inflation will take hold.
Unless the dairy industry is expanded, co-operatives will not be able to maintain their present rate of progress, pay their bills or pay for the milk. Already some of the major co-operatives are contemplating a cut-back as high as 2p per gallon in order to counter an expected cut-back in milk production. Such co-operatives are aware that because of frustration among farmers, particularly milk producers, they will change from dairy farming. If the Minister is serious about the dairy industry he should be generating confidence among the farming community. We should not complain about what Mrs. Thatcher is doing because she has her own job to do. Our job is to fight the Irish corner at EEC level. We must be concerned about the dairy industry. Our concern about that industry should be addressed to the Minister for Agriculture who has the responsibility and honour of being in charge of that industry in a State which is basically agricultural. If he falls down on his job he will pull down the country with him.
In this Bill we are concerned with the greatest section of the agricultural industry, the dairy section. Beef, grain and by-products of the sugar beet industry all hinge on the dairy section. All aspects of agriculture will suffer if the dairy industry does not succeed. Instead of making milk-and-water statements about what he will do, the Minister should be threatening to use his power of veto if the Irish dairy industry is interefered with or if there is any danger of a cut-back in that industry. Before we joined the EEC we were told by many EEC officials of how backward we were in the agricultural sector and how much help we would be given if we went in. We were given to understand that we were not fit to join. We were given many words of encouragement. We are now asking to be given an opportunity to produce an item we are climatically suited to produce. We do not want handouts for the dairy industry and we do not wish to be paid a stupid subvention to get rid of our cows. During a credit squeeze such subventions can be very attractive but it should be remembered that it takes a lifetime to build up a dairy herd. It is not possible for farmers who go out of milk production to return to it later.
It is opportune to bring this legislation before the House because it gives Members an opportunity to point out to the Minister that he will be failing in his duty if he does not succeed in convincing his European colleagues that the Irish economy depends on the expansion of the dairy industry. It is as simple as that.
Ba mhaith liomsa cúpla focal a rá san díospóireacht tábhachtach seo.
My reaction to this Bill is one of surprise and grave disappointment. While welcoming any move which will facilitate and improve the possibilities of expanding our export market for dairy products I am astonished that the Minister did not avail of the opportunity in introducing the Bill to indicate that the Government fully realise the grave crisis which is now facing the Irish dairying industry. I want to emphasise as strongly as possible that this industry is facing its most serious crisis since the sixties. Let us be honest, the creamery milk producing area of the Irish dairy industry is in dire trouble.
The Minister in his speech said that the industry is facing somewhat more troubled times and in the next paragraph that our dairy industry can face the future with confidence. There is, however, no attempt to analyse or identify the problems, and most important, no indication of what special steps the Government propose to take—at home and within the EEC—to rescue the dairy industry from its present difficulties. Both the milk producing and the processing end of the industry are being hit by an unprecedented combination of adverse factors which have arisen at home and within the EEC. At home the dairy industry, as well as all other sectors of the agricultural industry is suffering the consequences of a disastrous Government policy which has undermined the confidence of our dairy farmers and of the whole dairying industry, a confidence which had arisen over the last seven or eight years in particular.
The imposition of levies, mentioned by Deputy Bruton, has had very serious adverse repercussions. Dairy farmers are also faced with the major problem of disease eradication, particularly in the extensive dairy producing areas in the south of Ireland. They are faced with enormous financial losses and problems, particularly in the eradication of brucellosis; also, the industry is suffering from the advent of double-digit inflation. Judging by recent newspaper reports, one of which I read this very day, it seems likely that along with the various levies which the dairy farmer is now paying the co-operative societies here, faced with escalating costs and unable to make ends meet, are now proposing to impose a levy of 2p or 3p per gallon on the dairy farmers. In addition, there is the new determined attempt on the part of the EEC to restrict production by the mechanism of disincentives and the possibility of an additional levy.
As has been pointed out here, the dairy industry is the most important sector of our agricultural economy. Without a thriving dairy industry there will be no agricultural industry. We depend on the traditional pattern of farming here, on the milk producer producing cows and producing milk to go to the processing factories, producing the calves to be reared for beef or as replacements for heifers, as the case may be. I am sure that the Minister, Deputy Gibbons, and the Minister of State who is present, are aware of this. I am concerned and seriously worried—as I am sure everybody in the dairy industry is—that there was no indication whatsoever in the Minister's speech introducing this Bill that the Government propose to take any special steps to try to offset the various adverse factors which now confront the industry—the various problems at home, the imposition of levies, disease eradication, inflation, high costs and practically static milk prices which affect dairy farmers in the creamery areas. The Minister and a number of speakers adverted to the fact that the Irish dairy industry is being hit by something new. In addition to the adverse factors at home to which I have referred, it is now facing a growing and determined attempt on the part of the EEC to cut milk production within the Community—an insidious attempt to impose a global policy to restrict milk production right across the board, without taking into account the special circumstances of countries like ours where the dairying industry and milk production are such basic and integral parts of our national economy.
In the past week there have been proposals by Commissioner Gundelach which would spell disaster not merely for our dairying industry but for the entire agricultural economy. I have always tried to be constructive as well as critical and I believe we should recognise the danger signals and must combine, in our respective capacities, in an all-out effort to ensure that the Irish dairying industry will survive and prosper. I have the privilege of being a member of the European Parliament, representing probably the most important dairying region in the entire Community—the province of Munster. I am glad to say that, within the European Parliament, in the short time we have been in it, the Irish members, irrespective of party, have stood solidly and firmly together, voted together and where they had the opportunity within the committees of the Parliament, have made their voices heard. I am all in favour of that type of combined effort in which I have been taking part and will continue to take part. The 15 members of the European Parliament from this part of Ireland have stood firm in this respect. We must not lose sight of the fact that we are a real power in the EEC.
I am sure all my colleagues in the European Parliament, irrespective of party, will endorse what I say and will continue to stand firm against the new onslaught which strikes at the roots of the Irish dairy industry. However, we must recognise that the real power in the EEC is vested not in the members of the Parliament, or in the parliamentary committees, but in the Council of Ministers and in the member Governments. In the forthcoming Summit meeting and within the Council of Ministers—particularly during this time when Ireland occupies the prestigious and influential Presidency of the EEC—that will be the greatest challenge facing the Irish Government, the Taoiseach, the Minister for Foreign Affairs and, particularly, the Minister for Agriculture, to drive home loudly, clearly, and unequivocally that dairying is the most important sector of our economy. We will not accept any new regulations or any new policy which will inhibit in any way the production of milk and its processing, or which will in any way upset the normal pattern of our dairying industry or of our agriculture. This can be achieved only by a combined effort. The Taoiseach and the Government must show leadership. In our humble, limited way, within the confines of the European Parliament and its committees, my colleagues and I—and I refer to them all regardless of what interest they may represent—will stand firm on this. But the Taoiseach and the Government must show leadership, determination and ensure that there is a proper appreciation within the EEC of the unique role dairying plays in our economy.
Indeed, within the EEC there is a ridiculous situation obtaining in which, on the one hand—and Deputy Hegarty referred to this—there is the importation into the EEC of New Zealand dairy products and, on the other, exports of massive quantities of butter to Russia at minimal prices, while there are the starving millions in Cambodia and in other Third World countries. Surely it must be within the ingenuity of the heads of state, of national governments and of the EEC itself to devise a formula ensuring that these surplus dairy products are disposed of in a way that will be fair to all sides and to the better advantage of the EEC which professes to have a social commitment in addition to its economic obligations.
I have been a Member of this House since 1961. In relation to An Bord Bainne I should say I have seen the battles of the sixties of the late John Feeney who led our dairy farmers to the gates of Leinster House. I have seen various other battles take place over the years. In the seventies, as the Minister has correctly pointed out—I want to be absolutely fair and not destructively critical—giant strides have been made by way of progress and development in the dairying industry. Of course a large contribution to this has been the impact of our membership of the EEC. While recognising fully the importance of our EEC membership and its contribution to the progress made in the dairying industry we must not lose sight of the contribution of An Bord Bainne in the creation of a world brand image for our dairy products, one which is known and respected throughout the greater part of the world. It is very easy to lose sight of this fact in discussing a Bill of this kind, to fail to pay tribute and give credit where it is due. In that respect, in addition to paying tribute to the late John Feeney for his magnificent leadership of our dairy farmers during the critical sixties, I want to pay tribute also to two people whose names will always be closely associated with An Bord Bainne, Tony O'Reilly and Joe McGough. Bearing in mind the highly competitive world dairying market confronting An Bord Bainne this organisation has made a very substantial and significant contribution to the evolution, progress and development of our dairying industry.
I am fully in favour of the provisions of this Bill. I know the Minister has to make a minor amendment to section 4. I wish Bord Bainne Co-operative Limited every success in the future. We recognise the problems and challenges confronting them. They are worthy of the support of this House. I appeal again to the Taoiseach, to the Minister for Foreign Affairs and the Minister for Agriculture to ensure that, within the present campaign of the EEC and the various member countries to restrict milk production within the Community, Ireland will be granted exemption, indeed that we will be exempt also from any new European levies that might be imposed. I believe that is essential to the future development of our dairying industry, of paramount importance also to the development of our agricultural industry generally and, in the final analysis, to the whole of our economy.
This Bill affords Deputies on all sides of the House an opportunity to express clearly their views in relation to proposals for restrictions being placed on the production of dairy products and on beet in future years. Indeed there is the fear that the common agricultural policy on which we, as an agriculture producing country, relied will not be as helpful to us as it has been in the years since our accession. We are here dealing specifically with the provision of moneys to be allocated and the granting of guarantees to An Bord Bainne to continue their good work on behalf of co-operatives and indeed on behalf of the Dairy Disposal Board, which they have done for many years.
There should be general acceptance and recognition by all of us who are farmers, and by people in general who depend on a virile dairying industry, of the work carried out by An Bord Bainne and their officials. In this respect, Joe McGough, in his capacity as Executive Officer, made a major contribution. He embarked on areas hitherto untapped; he moved into Asiatic countries, expanded our markets and afforded us opportunities there for expanded production. In addition he opened up opportunities for us on the British market hitherto untapped. I do not know whether it was because he had been an outstanding officer in our Army, or his personality, his stamina, or his hard work that contributed to his acceptance in other countries but undoubtedly his organisational abilities within An Bord Bainne yielded outstanding results. At this stage must we accept that the outstanding work done by this man and by An Bord Bainne is to be written off? Must we in our Parliament accept silently a restriction on our production in future years?
The proposals will be discussed by the Council of Ministers at the December meeting in Brussels. We should strengthen the Minister for Agriculture in resisting any attempt to have us accept a reduced production. There is a feeling abroad at the moment that the Minister is showing some indifference to the dairying industry because he seems to be accepting a multitude of taxes on dairy farmers. Perhaps the fact that he is residing in an area which is not a major dairying area has influenced the Minister. There is great disappointment in the dairying counties that the Minister has not shown firm resistance to the taxes imposed on dairying men and that he is not more forthcoming in resisting EEC proposals to restrict dairy production. Perhaps the Minister is restraining himself and will show his true form at a later stage and will firmly support the dairy farmers. If the Minister does not support them, there are people who are prepared to picket the summit meeting in Dublin; they are prepared to resist the British Prime Minister who is not a friend of the CAP and other members of the European Community. Some people will go as far as to drive a high yielding cow through the corridors of Brussels in a show of resistance to unnatural restrictions.
In relation to my county, if we are limited in dairy production, a milk plant which the Goldenvale Co-operative Creamery have promised us will not be erected and the growth and expansion in production which has been obvious in that country due in part to the encouragement given by the Dairy Disposals Board will come to a stop. Will all the modern milking parlours and the other improvements be looked on as museum pieces by tourists in the years ahead? It seems that the confidence which has been built up will be shattered. There are many rumblings which indicate that dairying will not be profitable in the future. If too many people lose confidence, no one will be interested in building up dairy herds because they will not see any future in it. A good dairy herd is not built up overnight, it takes long tedious years, a lot of careful husbandry, a good selection of suitable stock and so on.
If people, especially in the western counties, get out of a traditional way of life we could face a very serious situation. The hinterland and our towns depend to a large degree on having a viable dairy industry maintained. If the dairy herds are reduced, purchases will be reduced. There is a huge input of machinery and so on into farming. If the dairy herds are reduced there will be reprecussions right through the economy.
We know of Britain's attitude to a cheap food policy. When they negotiated entry into the EEC they made sure that New Zealand would import dairy produce well into the eighties. It is possible that after 1980 the British will import from New Zealand. Funny things can happen within the EEC. We saw how the French succeeded in getting their own way. There is not a lot of firmness in supporting the members of the EEC when it comes to having certain products marketed within the EEC.
It has been said time and again that the employment potential in the dairy industry is high. We cannot afford to reduce our labour force on the land at a time of recession when there are not too many job opportunities. We should all unite to resist a policy of reducing output. I agree that the Minister should use his power to veto any proposals involving cuts in dairy production. Our economy depends on increased production. Last week we increased the borrowing powers of the ACC from £350 million to £600 million so that the ACC can channel that money into different productive schemes in farming. What is the point of increasing our credit to farmers and why should farmers expand and increase productivity if they cannot get a stable market? These questions must be answered. We are regarded as being underdeveloped and we depend very much on the social policy of the EEC and on the regional policies of the EEC. We hope for the expansion of these policies so as to help the less fortunate areas.
The Dairy Disposals Board was not a co-operative but was something similar and in the early stages they did not demand much in the way of share capital from the dairy farmers. But any man who invests in his products and sells his milk is investing a lot of money in any co-op or Dairy Disposals Board creamery. I remember a manager that I knew well who imported ship-loads of fertiliser to ensure that the fertility of the soil in the areas I am speaking about was built up. That whole area was transformed into green, fertile land. Those who contributed towards that result would look on what is happening now as being retrogressive. A nation must have a name to develop; it must have high targets. With costs mounting at present, with inflation soaring, how can a person make ends meet other than by increasing production? When encouragement is not there people cannot be expected to go into debt on their work.
I welcome this support of An Bord Bainne because I recognise, as will those who depend on dairying, the major role they have played in establishing a firm market for our dairy products. By going into the EEC and into Asiatic countries they have established a foothold and encouraged the citizens of those countries to acquire a taste for our products. That gives us greater scope in marketing. We want to maintain those markets and our people want to produce for them. The Government have the backing of the House in any efforts they make in this regard. The nation does not expect them to accept anything other than scope for our people in a small island to expand so as to allow our people and their children to live better in a land where too long they have been denied too much.
In supporting this Bill which is so essential to An Bord Bainne we must be conscious of the fantastic contribution they have made to the nation as a whole. This was the first body that gave international importance to the name of an Irish product. The trade name "Kerrygold" is known perhaps in every household in Europe and this could not have been done without the expertise of An Bord Bainne who certainly rose to the occasion magnificiently and gave the Irish farmer an opportunity to compete successfully with the world's best. Through this agency Irish produce is selling on world markets in competition with the very finest products anywhere. The spinoff from this production at home affects everybody. Technology invented here is benefiting not only ourselves but very many other people who would not otherwise be able to avail of the opportunities they have at present. In engineering, design, architecture and even in accountancy specialised systems which have arisen in this industry are now used worldwide. In the Middle East, I believe that Irish technology is transforming considerable areas of that sparsely populated and sparsely watered land. Apparently, Irish technology is beating the climate and giving the people there proteins they would not otherwise have.
Bord Bainne's great opportunity came with our EEC entry. How many people remember the few years before we went into the EEC when every citizen of this country was subsidising butter sales in England, when Irish butter was selling there cheaper than in the home market? How many people want to see that happen again? With our entry to EEC and the application of a common agricultural policy we were able to raise our standard of living and comfortably pay the prices necessary to give a return to producers of dairy produce. We do not want to return to the day when we had to pay people to buy our agricultural produce.
Next week Mrs. Thatcher is coming to Dublin. She is howling about £1,000 million. That seems to me a totally hypocritical cry when you think of the £1,000 million thrown into the North of Ireland without a murmur every year. Yet she cries about £1,000 million going to Europe. The question must be asked: is this ruthless lady coming to Dublin to put the Irish paddy in his place again? If that is her attitude we must answer her loudly and clearly by saying that our dairy industry is not a toy to be played with just to give third-world produce to the English industrialists.
Bord Bainne did not contribute one iota to the mountains that are supposed to exist of surplus agricultural produce in Europe. The Irish farmer has been able to produce a quality product which is in demand everywhere. If we handle the situation as it should be handled—with efficiency—next week, I have no doubt that our farmers will continue to have that advantage. This Bill is to be recommended and should pass with the approbation of all sides.
I am sure that at this time of evening the Minister would prefer to go to his tea. This is a simple, straightforward Bill which one would expect to pass through the House with perhaps very little comment. But apparently the Minister himself felt that it was a suitable occasion to say something about the dairying industry generally and he opened the debate in that way. It is a Bill that I think Members on all sides of the House are very happy to support. I was very pleased that the discussion on the Bill expanded to take the whole dairying industry into consideration.
Why do we want to support this? We want to support it because the organisation concerned, Bord Bainne, are deserving of support and because of the remarkable performance they put up for the dairy industry since their establishment in 1972, and before that under a different name. What does this do for Bord Bainne? It is increasing the guarantee. It will cost the country nothing. I know there was always a certain resistence to increasing this guarantee. I could never fully understand why because increasing the guarantee is only an indication of the confidence the Government of the day have in the dairy industry. If the Government are not confident it is hard to expect farmers to be confident. To increase the guarantee is one way of showing confidence and it does not cost the Government anything. It enables Bord Bainne, with State backing, to get money at the right price and when they want it.
Everybody knows that we have seasonal production and that certain products have to remain in storage for some time to mature. When I was Minister I remember doing a tour of some of the co-ops in the south. I was amazed to find, about this time of the year, in one co-op alone products worth £7 million and £8 million in another. This gives some idea of the dimension we are talking about. At the peak even at that time, Bord Bainne required in excess of £100 million to meet their commitments and to be able to buy the products from the various co-ops and societies throughout the country.
In these circumstances there should not be any hesitation in giving them the accommodation they require. There was a good thought about the resistance to increasing the guarantee. There was concern that this was a co-op which should be getting more independent with every year that passed and that the producers should not have to go to the Government every so often with their hats in their hands saying, "We cannot get money without you". We asked them to put a percentage into the kitty each year—a small percentage when we have regard to some of the levies the milk industry are carrying at the present time—to enable them to build up a fund over the years and to be independent of the Government or any other organisation by being able to carry their own production and buying responsibilities.
That was a good thing to do and I hope the dairy industry and the producers will be able to continue building up this fund to enable them to do their own financing.
That is not to say that the Department in any way are providing money for finance because they are not. They are simply giving them a guarantee. With a State guarantee money can be raised on much better terms than can be arranged with the organisation's own ability to produce collateral. I was amazed to learn that credit institutions were not prepared to accept products as collateral, probably because the products could be moved overnight in large quantities.
Bord Bainne's performance over the years was exceptional. They succeeded in marketing the bulk of their product rather than putting it into intervention as some of the most powerful member states in Europe did and were thus responsible for the mountains of products in storage here, there and everywhere and about which there is so much of an outcry. Since we entered the Community there has always been opposition to milk production. This opposition came from a certain quarter and is coming in a more intensive way from the same quarter at present. I am never terribly alarmed about what the Commission produce and the kind of proposals they put before the Council of Ministers. I have enough faith in the Council of Ministers to resist a lot of these proposals. Invariably it is a bargaining stance put up by the Commission. I would hate to think it was anything more serious than that.
The milk powder position has corrected itself. That is something that can happen very suddenly. I saw the day when we had something like 500,000 tons in intervention. Within a few months we reached a point where we did not have enough milk powder to meet the requirements for food aid. At present I would not be surprised if we were in the same position in relation to milk powder. As I said, the position can change very suddenly.
There is a loud cry about stocks of butter in Europe. It is well known that of all the fats consumed in the Community, butter represents only 23 per cent. In those circumstances it is very difficult for a commissioner seriously to make the case that there is over-production. We are howling about over-production and surpluses of every important product the farmers produce. This is a lamentable situation because what we are saying to the farmers is that they should make the least use of their natural resources. We are telling people to cut down on production at a time when half the world are dying of starvation. That is hard to believe, but it is a fact.
Here we have a more or less prosperous part of the world not prepared to play their part. If we took a broader and longer term view we would tell the European producers to produce as much as they can because we have to do something for the starving people of the world. If charity alone is not the motive we should know that in the longer term this will come back to us in rewards. First, these people have to be fed and, secondly, they have to be taught how to use their own resources. Eventually they will become quite strong.
To be crying continuously about surpluses of milk, pig meat, wine and even grain in some instances, is very rough on the people who produce these products. Many of them are not in a position to change to other products because the land they farm, and even their climate, does not enable them to switch overnight.
The present proposals are simply savage and if accepted by the Council of Ministers would cause extreme hardship to a very large number of producers throughout the Community. There is no possibility that the Council of Ministers will accept these proposals. One member state is having an undue influence on the thinking of a number of people in the Community and they say the great sinner in the Community is the common agricultural policy, and particularly the milk sector. That propaganda, to some extent, seems to be succeeding. It appalls me to think that our Minister for Agriculture is accepting this as reasonable, that there is an undoubted surplus in the milk sector and that something serious must be done about it. That is not a proper stance for a negotiator on behalf of the Irish people. If the Minister, before he goes to Europe, says publicly that the least we can expect is an increase in the levy of 1½ per cent he is beaten before he departs. He is also beaten before he goes if he puts on a levy of 2 per cent and leaves it there for one year. That is an indication that the industry can stand that sort of tax. There are many people who are paying this tax but who would not be paying it if the assessment was fair. It is an across-the-board tax.
To my great surprise the Commissioner responsible is advocating an across-the-board levy, regardless of the size of the farm. I thought he would be reasonable in his proposals and that family-sized farms would be exempted. I would be prepared to accept that type of arrangement if family-sized farms, according to my concept of such holdings, were exempt from the proposed set of levies. There is no doubt that the amount of factory-type farming that exists in the various sectors is substantial. The situation exists where three-quarters of the milk is being produced by one-quarter of the producers. This is being done by soya and imported feed from Third Countries. No serious examination has taken place as to how this can be corrected. We looked for an easy administrative scheme, a scheme under which we could grab in money with some other organisation doing the collecting. Any fool could think of such a scheme but it is a different matter to mitigate the hardship done. It is a different thing to rectify the situation once people decide to get out of milk production, dispose of the equipment and stock.
If the proper resistance is put up this will never get through. Our milk sector is going through a serious situation bearing in mind the fact that producers are getting less for milk than they did a year ago. I do not know of any other product that has gone down in price to that extent; everything else is going up. However, there are a lot of people who say that those who produce milk must be hit on the head because they are the big sinners. Those people feel that something must be done to destroy such producers. The proposals that have been put forward are sufficient to destroy those producers but I have enough faith in the Council of Ministers to believe that they will not accept this. The greatest resistance should be coming from an Irish Minister. I regret that that resistance is not coming from him. The Minister does not help his own negotiating power when he admits before he goes to Europe that he is beaten and accepts that his Government should put on a levy.
Deputy Bruton referred to the change in the production line. He was talking about the balance of the different products being produced and the switch from cheese to butter. That switch is regrettable because the processing of milk into cheese always involved employing the greatest number of people. We have all heard of the howl about the surplus of butter in the Community. It would be better if we were not included among the offenders. I am aware that up to mid-1975 no butter was put into intervention and that the small consignment of milk powder put into intervention was, subsequently, purchased back by Bord Bainne. For that long period we did not offend. I am aware that the position has deteriorated, particularly in relation to butter. That should be looked at and an effort made to convince the processors that they should try to switch back to cheese. I am aware that there was a question of a licence having to issue for new cheese producers here, but I do not think there is any resistance to new licences provided there is evidence that those involved have the milk and capability of producing a creditable cheese product.
I agree with the Minister when he stated that the dairying industry was the backbone of much of our agricultural industry and that its continued expansion was of immense importance for the whole economic and social development of our country. Nothing could be more true than that. Approximately 65 per cent of our people live on holdings of 50 acres or under. Some of it is fair land but a lot of it is unsuitable for tillage. The only way those people can obtain an acceptable standard of living is by continuing in milk production and, where possible, expanding. We should forget about the problems of Europe and resist in the strongest possible way any attack on milk producers, particularly family-sized producers. No other Community country has this problem to the same extent as we have. We have land that is unsuitable for anything else and we have farms of such a size that do not enable farmers to earn an acceptable standard of living at anything else. It is accepted in Europe that we have the lowest standard of living in the Community and the highest percentage unemployed. If such people are put out of farming they must join the dole queues because they have nowhere else to go. Nobody else would make our case strongly and it should be remembered that our case is an exceptional one. We negotiated an exceptional position in the Treaty of Accession—I am referring to Protocol 30. In that we got recognition of the fact that we had the lowest standard of living and the highest percentage of people unemployed, but we also got an undertaking that the institutions of the Community would be fully utilised to align the living standards of our people with those of the rest of the Community. While we got substantial benefits since we joined our relative position has disimproved.
In those circumstances where we do not have the same opportunity to develop industrially like other countries we should not have any inhibitions in looking for something special. We should almost demand something special because that is the way we negotiated. It amazes me to hear an Irish Minister saying that instead of it being an advantage to hold the Presidency he felt inhibited when holding that office. I have yet to see a Minister being inhibited when chairman of the Council of Ministers. All Ministers during that period—I was no exception—look for and get something exceptional for their country. I cannot understand this attitude at all. If the Minister wants me to name the exceptional things I can name them. It is a recognised thing in Europe that in the year that a country holds the Presidency there are special concessions made; they carry a heavy load and a heavy responsibility during that year and it is a prize year, so to speak, for the member state that has it. But to say that one feels inhibited is the craziest idea that I ever heard. That is being over-reasonable in Europe and totally unreasonable at home. That is an unfortunate attitude and I hope it will not continue.
I hope that when it comes to the point the negotiations will be good, hard and long negotiations if necessary. These proposals are emerging somewhat earlier than previously; at least they are receiving publicity well in advance and it has quite a connection with the complaint that is being made by the United Kingdom about the exceptional contribution they are making to the Community. The two things are being tied together and there is no relevance whatsoever. If the United Kingdom is paying more than its share at present—and that has yet to be proved—it is the job of experts and accountants to decide if that is so and if they are it should be rectified. But it is an independent thing and it should in no way be connected with the share that the common agricultural policy is taking out of the total budget and the total budget is, in my view, impossibly small. If Europe is going to have any serious impact on its problems an upper limit of 1 per cent will go nowhere; this year it is 0.8 of 1 per cent and next year it is expected to be .80 per cent and the year after the 1 per cent will be exhausted and all the member states put their hands up in holy horror if anybody says that this should be increased when they are taking 50 per cent of the GNP of their own countries from the budget; that is going up all the time and there is nobody complaining too much about it.
I am back on the fringe of things in Europe and I hear an immense amount of rubbish talked. Things are being linked that should not be linked, but I know that it is the old game that is played and played hard; whatever leverage one has, one holds on to it until the eleventh hour. This is regarded by the UK negotiators as leverage; they press and will not agree and say it is the common agricultural policy that is putting up prices for the British consumer in a most unreasonable way. I hope that any possible resistance that can be put up will be put up by all negotiators in Europe. All I can say is that I always felt that we were pretty good negotiators and I hope we will continue to be good negotiators.
To get back to the request before the House which is to increase the guarantees from £40 million to £90 million for Bord Bainne, this is something that all of us are happy to support. The performance of this organisation over the years has been a very satisfactory one and if the other member states made as great an effort to market their products as we have made to market ours rather than shoving them into intervention stores there would not be as big a howl as there is today about the cost of the common agricultural policy because, as all of us know, the big offenders are the big industrial, well-developed countries. They are the people who have problems in intervention. They are the people that ought to be ashamed of themselves; they are the people that ought to be bearing the burden and not howling about the cost of the common agricultural policy.
All of us want to see the dairying industry here grow and expand and prosper because people who work seven days a week and who work perhaps 70 to 80 hours at least a week really deserve to get a reward for it. There is a lot to be said for the suggestion that these people be relieved of some of the tax expectations, at least for the two days over and above, for the unsocial hours they are compelled to work, because we yet have to get a cow that is prepared to hold the milk from 5 o'clock on a Friday evening until Monday morning; the milking simply must be done. The only way that this country can lift itself up by its own shoestrings is by giving the people in rural Ireland an opportunity to grow and to get sufficient income to give the rest of the people in the towns and villages throughout Ireland some of it when they make it.
First of all I would like to thank all of the Deputies who have contributed to the debate this afternoon. They went further than the scope of the Bill, but nevertheless it was important that we had this debate on the dairy industry. It shows the importance of the industry to Deputies on both sides of the House and I agree with many of the points they have made.
I will try, in the few moments I have, to answer some of the questions that have been raised by the speakers on the opposite side. On the question of not giving sufficient extension in 1977 which was raised by Deputy Bruton, the position is that the limit of the guarantee was increased.
The Minister can continue tomorrow if he wishes.
I agree but I am trying to tailor my reply to finish at 7 o'clock. I can go on tomorrow if the Deputies want me to.
The position is that the limit of the guarantee was increased to £40 million in 1976 and the duration extended in 1977 for two years. The present proposal is of course the result of the experience gained from the extension and is tailored to what is regarded as appropriate for Bord Bainne for the foreseeable future. A lot of criticism has been made of the Brussels proposal. Of course we know that these proposals are very serious as far as the dairying industry is concerned. But I want to emphasise that these are merely proposals as yet because negotiations have not begun. That is why they were not dealt with in more detail today. All that was said was that our aim is to protect the long-term interests of the Irish dairying industry, and we will certainly do that to the best of our ability. I know that the Minister, in all his negotiations in Brussels and elsewhere, is dedicated to that principle.
I agree with the Deputies on the importance of dairying. This has been repeatedly emphasised recently by the Minister who has clearly laid it on the line that dairying is the best option for most Irish farmers. There was never any question about that. I agree that the production expansion has applied more to butter and skim powder up to now and this is understandable of course, given the nature of the guarantee through intervention. This, I feel, will change and already skim production is being partly replaced by casein and other products. Again on the overall production, milk production increased less than expected last year largely due to the weather. But the Irish increase at over 3 per cent this year would still be at the top of the EEC league. Speakers have also criticised the imports from New Zealand. In connection with that I would like to say that the 1975 summit which was presided over by the former Taoiseach, Mr. Cosgrave, agreed in principle to continued access for New Zealand butter after 1977; otherwise their butter entitlement would have ended then. The details of this arrangement, to apply up to the end of 1980, was agreed by the Council of Ministers in 1976 and again our representative on the Council of Ministers at that time was the former Minister, Deputy Clinton, who has just spoken. All I would say to the speakers who have expressed concern here this evening and talked about the Minister flexing his muscles and so on is that it is a wonder they did not flex their muscles at that time when their own Minister and Taoiseach were involved in this arrangement.
It depends on the farmer's income.
They allowed an import quota of 120,000 tons per year to continue in Britain. That was the result of the agreement at that time and that will continue up to 1980.