That a sum not exceeding £140,041,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1980, for the salaries and expenses of the Office of the Minister for Agriculture, including certain services administered by that Office, and for payment of certain subsidies and sundry grants-in-aid.
The formal motion for the Estimate for Lands will be put at the end of the debate but the debate itself will cover both Estimates.
Notes on the main activities of my Department, both Agriculture and the Land Commission, have already been circulated to Deputies. Before dealing with detailed aspects of the Agriculture Estimate I should like to make a few general observations on the current situation in agriculture and the important role of agriculture in the economy.
Agricultural output in 1979 was worth £1,750 million at farm gate value. This represents an increase of about 9 per cent over 1978. However, most of the increase was accounted for by higher prices for farm products, and the volume of gross output showed only a slight rise. At the same time there was a significant increase in costs, particularly energy, feeding stuffs and other major inputs. The difficult weather conditions last year, particularly the long winter, had an impact on the volume of inputs which rose quite sharply. It was this sharp growth in farmers' cost which was largely responsible for the decline in farmers' incomes during the year.
But we should put last year's outturn in perspective. By 1979 total farm income in current terms had risen to more than four times its 1970 level. In real terms farm income per head has grown by 70 per cent—equivalent to an annual growth rate of 6 per cent. This compares favourably with growth in the nonagricultural sector.
Agriculture contributes nearly 18 per cent of our total national income, 37 per cent of total earnings from exports and directly employs nearly 20 per cent of the working population. In volume terms gross agricultural output has increased during the period 1970-79 by more than 36 per cent which is well in line with the expansion that we projected at the time of joining the EEC. Indeed, during the seventies the growth in our agricultural production has been the highest in Western Europe. According to official FAO statistics, agricultural production in Ireland has grown at twice the rate in France, Denmark, the UK or in Europe as a whole. This should be borne in mind by those who are constantly criticising the performance of Irish agriculture.
Of course, there is still much to be done but we should recognise the great advance that has been made already by Irish farmers. There is great potential for further expansion, particularly through more efficient use of our grasslands. Irish producers can compete successfully with producers in other Member States of the EEC in both livestock and crop production. In the past decade very substantial capital investment has been made in new equipment, buildings, extra livestock and in land improvements. New methods and new technology have been adapted to Irish conditions by our farmers. These developments have been reflected in the growth in output which has already taken place, but there is still much scope for further progress and our agriculture is still far from realising its full potential.
Progress in the primary agricultural sector has also been reflected in the development of the agricultural-based industries. Gross output in the main agricultural processing industries is estimated to have reached nearly £2,300 million in 1979. This is nearly double the level of only three years earlier and represents a large proportion of Ireland's total manufacturing output. The most important of these agricultural-based industries are the milk processing sector which in 1979 had a gross output of almost £850 million and employed some 9,000 people, and the cattle and sheep processing sector which had an output of over £600 million and employed more than 5,500 people.
The total employment in the main agricultural processing industries in 1979 is estimated at more than 25,000.
It is against this background of an industry growing in economic strength and with considerable expansion in its own resources that the Estimates for 1980 were framed.
Turning to the Agriculture Estimate itself, the gross sum required is £7 million up on the amount provided in 1979. The main increases occur under salaries and wages, the disease eradication programme and the farm modernisation scheme. Extra money is also being provided for agricultural research, education and advisory services. Receipts are estimated to rise by almost £15 million over last year's provision. The main increases here are in contributions from the EEC for accelerated eradication of bovine diseases and for the farm modernisation scheme. Farmers, too, are contributing towards the cost of eradicating bovine diseases.
The gross estimate of £193 million and the net estimate of £140 million represent only part of the picture in regard to expenditure in connection with agriculture. These figures exclude most of the money handled by my Department in respect of EEC agricultural operations. As is well known, Irish farmers have fared well from EEC membership. The Community have provided opportunities far above anything we experienced previously and through hard work and skill our farmers have made considerable use of those opportunities, with resulting benefits not only for the farmers themselves but also for the entire national economy. Last year, in direct payments for the various agricultural operations the EEC paid £396 million to this country.
All this, of course, means that my Department, as the Community's intervention agency, is involved in a range of market support activities far in excess of what it was undertaking prior to 1973. It means also that the figures in the Estimates do not show the full magnitude of the moneys being handled by the Department. For instance, last year total money handled by the Department on behalf of the Community in relation to the £396 million agricultural support already mentioned, amounted to some £623 million. These transactions related to the payment of refunds, MCAs and other aids and premia as well as to the purchase and sales of intervention products, especially beef and to the collection of MCAs and other agricultural charges. By any standards, these sums constitute high finance.
I should now like to deal with some of the main agricultural products.
The cattle industry had a mixed year in 1979. On the whole, prices held up well, subject, of course, to the usual seasonal variations, but beef exporters were unable to achieve their full potential because cattle numbers have not kept pace with the increased slaughtering capacity. Factory throughput, at 1,175,000, head was slightly down on 1978 while live exports fell from their 1978 high level to 310,000, a figure more in line with the trend over several years. The overall result was a limited build-up in stocks, which will be reflected in higher disposals in the current year.
There is, of course, considerable scope for the expansion of cattle production. We have the grassland resources to carry much greater numbers of cattle without great difficulty. A number of new measures in the pipeline should help to improve confidence in beef production and encourage expansion of the breeding herd. The suckler cow scheme—which forms part of the proposed 1980 Community price package—should be of considerable help in expanding the suckler cow herd, which has been declining for many years. When finally agreed this scheme will provide payment of £13 per cow in respect of all cows in herds which are not supplying milk to a creamery. Then, in the case of the west, there will be aid for a calf-to-beef scheme as part of the west of Ireland package. This aid will be in the form of interest on a loan amounting to about £150 per year over a two-year period in respect of each calf born or purchased at the beginning of the first year, provided that the animal is maintained on the farm and finished off as beef at the age of two to two-and-a-half years.
Confidence will also be improved by the introduction next month of the beef carcase classification scheme. Producers selling direct to factories will be able to see how their cattle were classified and their factory cheques should reflect the results of their investment in quality production. This will encourage them to give more attention to producing the right kind of animal for the most profitable markets.
More than any other element in the agricultural sector of our economy, beef is an export-oriented industry. We export up to 85 per cent of our production and the prosperity of the entire industry is, therefore, very much dependent on export market conditions and on how we market our beef abroad. The new statutory CBF is now implementing an aggressive export promotion policy, and I am confident that if our meat exporters avail of the market opportunities, the benefits of this will become apparent in the next year or two.
While cattle disposals in 1980 can be expected to be up on 1979, the maintenance of this trend requires an expansion in the breeding herd. The new measures I have mentioned should help to bring about such an expansion and enable the Irish beef industry to move closer to the realisation of its full potential.
At the same time, my Department will, of course, be continuing the various measures for the improvement of the quality of both beef and dairy breeds. In order to raise further the genetic merit of our cattle, imports of semen of high-quality bulls, including Hereford semen from Canada, were made last year. In addition about 130 top-class continental-type breeding cattle, mainly French Charolais, were imported. An expanded progeny test programme was also operated and lists of approved progeny tested bulls are published annually. The increasing usage of continental-type bulls has emphasised the importance of easy calving and bulls are now assessed for this quality.
On the dairy side, the Friesian breed accounts for over 60 per cent of all inseminations. The breed is also the main source of calves for the national beef herd, and it is estimated that at present up to 80 per cent of all cattle disposals are Friesians or Friesian crosses. Accordingly, it is important to ensure that our dairy cows produce calves suitable for the beef herd as well as being efficient in milk production.
As regards the licensing of bulls, an EEC directive provides that approval of pure-bred bulls for breeding will be governed by common Community standards. This may entail the dismantling of our existing national bull licensing rules for those bulls. The directive does not, however, provide for the control of non pure-bred bulls and the question of what control, if any, should be exercised in respect of those bulls is at present being considered. I have consulted with the Cattle Advisory Committee which keeps all aspects of cattle breeding policy under review, and I will take full account of their views. In the meantime, as already announced, I have decided to continue the existing licensing system, for this year.
In 1979, creamery milk production increased from 860 million gallons to 886 million gallons and producers received an average price of about 53p per gallon as against 52p per gallon in 1978. It was not an easy year for the Dairy industry. The rate of increase in output slowed down somewhat and EEC support price increases were minimal. Despite this, however, the value of dairy produce exports reached a record level and intervention was used to a very limited extent, with only about 9,000 tonnes of skimmed milk powder and 3,000 tonnes of butter being sold into intervention. This satisfactory outcome again indicated the important role being played by Bord Bainne as an effective and progressive central marketing body.
Because of the many variable factors involved—and the recent dry spell has not helped matters—it is not possible to give a realistic forecast of milk production in 1980 but it looks as if there will be another modest increase. It seems evident now that, in the light of the milk surplus situation in the EEC, the era of significant milk price increases is over and that future increases in milk suppliers' incomes will have to come from more efficient production generally, including higher yields per cow based on improved husbandry and better land use. In an era of limited price increases there will be growing pressure on producers, but I am confident of the ability of Irish producers to withstand such a situation as well as, if not better than, producers in other member states. In order to get the best possible returns we must intensify efforts to diversify production. Developing the processing capacity necessary for diversification will naturally take time and considerable investment but aid from the IDA is available under the normal conditions for this type of investment.
Despite a gradual but sustained improvement in the international market for dairy products, the surplus problems and especially the budget difficulties are likely to make the years ahead somewhat more difficult than the seventies. I am satisfied, however, that our industry, which has a sound production base, a well-organised and efficient processing sector and a marketing arm as good as any other in the Community, will meet the challenge. The Government will, of course, continue to do what it can to help. Since January last, the State guarantee for Bord Bainne's borrowings has been raised from £40 million to £90 million. Also, I have received a promise from the EEC Commission that they are prepared to consider on a case by case basis the provision of Community aid for diversified cheese production in Ireland. Further diversification of our product range is vital to the future development of the industry and cheese is the crucial element in this. But we must get away from an overdue dependence on cheddar and the promise of Community aid for diversified cheese production is a distinct encouragement in this regard.
In the dairy sector, our concern is not confined to the farmers alone. There is provision in the Estimate to help everyone in the country who drinks milk or eats butter. The consumer subsidy on mild for human consumption is being continued at about 1½p per pint. The estimated cost of this in 1980 is £11.7 million, payable out of Subhead E.1. That subhead also includes £9.8 million to meet the cost of the Exchequer contribution to the consumer subsidy for butter. That subsidy is currently close to 27p per lb of which 11.8p is payable by the Exchequer and the balance by FEOGA.
Turning now to other products, the sheep industry remained buoyant during the past year, Access for Irish Lamb to the French market continued to ensure satisfactory returns to producers of export quality lamb. Indeed, according as our producers became more familiar with the requirements of the French market, a higher percentage of lambs delivered for slaughter met the quality requirements. Some mountain lamb producers, however, have not gained full advantage from the improved market situation. In my view, the problems of these producers can best be resolved by the adoption of improved feeding and management practices. I have, therefore, asked the advisory services in the counties concerned to pay particular attention to the educational and advisory needs of the mountain producers. To help these producers and to maintain their confidence in sheep production, I re-introduced the mountain lamb extension scheme early this year. CBF are looking at this whole question, with a view to resuming exports of sheep and sheep-meat to the Mediterranean countries.
The negotiations for a common organisation of the market for sheepmeat in the Community have been very protracted but there are grounds for believing that a solution may shortly be arrived at. A satisfactory market organisation should provide sheep producers with a more stable market and increase confidence in a sector where there is plenty of scope for growth.
Pig production continued to expand in 1979. Output for the year was nearly 2.3 million pigs, representing an increase of over 12 per cent on 1978. There is now far greater stability in the pig industry, as a result of the trend to large-scale units. We have top-class breeds capable of high performance and many of our producers are among the most efficient in the Community. Those factors augur well for the long-term.
Recently pig producers have been going through a difficult time. Tight credit, high interest rates and rising fuel and labour costs are testing even the most efficient. At the same time, returns for our exports have suffered because of the weak UK market and our own fragmented selling. On this latter aspect, I must express my keen disappointment at the attitude of some people in the industry. We account for a very small proportion of the UK market, yet we weaken our position further by selling some of our small supplies outside the centralised arrangements of the Pigs and Bacon Commission. I still believe that efficient centralised exporting is best for the industry as a whole and that the short-term gain is far from being the most rewarding in the long term. Our quality bacon is on a par with the best available, and our marketing arrangements should assure us prices that will reflect this.
The output of the poultry and eggs industry showed a slight increase in 1979, mainly because of some expansion in boiler production. In 1980 production of eggs and poultry is not expected to change significantly. As we can no longer exclude imports of poultry from some Continental member states on animal health grounds, there may be increased competition from imports. Any such imports to date have been relatively small and, given the advantage of proximity to the market, it should be possible for Irish producers and processors to compete successfully with the Continental suppliers.
Although the cereals acreage in 1979 showed an increase of about 3 per cent on 1978, production did not rise correspondingly because bad weather affected yields. As a result the 1979 production of 1.7 million tonnes of grain was about the same as in the previous year. Feeding barely is now by far the largest grain crop, accounting for about two-thirds of the total cereal acreage. Each tillage farmer is, of course, quite free to make his own decision as to which crops suit his own situation, but I should like to refer to our long tradition of growing good quality spring wheat for bread-making. I would hope that this tradition will continue and that the maximum amount of Irish breadmaking wheat will be available to the flour milling industry in the future.
Production of compound feedingstuffs has been increasing for a number of years. The increase last year was particularly striking and brought total production to over 2 million tonnes. The main reason for the sharp rise in 1979 was the very severe weather in the first half of the year, which increased the demand in the cattle sector.
It is disappointing that, despite the high acreage of beet last year, adverse weather conditions kept sugar production down to about 175,000 tonnes. Nevertheless, beet growing remains one of the most profitable farm enterprises. For this reason, and also for the purpose of protecting employment and investment in the sugar industry I opposed the recent proposal of the EEC Commission to reduce the Irish quotas. These quotas will now remain at their present level for the coming season, and the longer term arrangements will be considered later in the year.
As part of the programme of public service reform, the Government decided that primary responsibility for Comhlucht Siúicre Éireann should be transferred from the Department of Finance to the Department of Agriculture. The transfer was effected last February. The Sugar Company continue with their programme of modernising the sugar factories so as to achieve the highest levels of efficiency and thus provide the best possible returns to beet producers. Two aspects of the programme are of particular importance—firstly, the shortening of the beet campaign with a view to minimising beet losses and, secondly, the achievement of more efficient sugar extraction processes. The company have to compete for export markets against the highly developed modern industries of some of the other European member states and indeed has to ensure also that its position on the home market is safeguarded. This requires the highest possible levels of efficiency and enterprise and so the programme of continuing improvement of the sugar industry in all its aspects is of the utmost importance.
The area under horticultural crops in 1979 was about the same as in 1978. Growers experienced difficulties arising from market pressures and particularly from the escalating cost of energy although the latter, of course, is not solely an Irish phenomenon and affects our competitors also. I have recently appointed a horticultural development group representative of all sectors of the horticultural industry to examine and make recommendations for the further development of the industry, with particular reference to the potential for creating new jobs and for establishing young people in commercial production. I look forward to receiving in due course the group's suggestions as to how the industry might be improved.
Financial aid continues to be available for horticulture under the Farm Modernisation Scheme and under schemes for the promotion of better marketing and for the formation of producer groups. A few such groups have already been approved for assistance. I hope to see others established as they have a significant role to play in improving the marketing of horticulture produce.
This season both the supply and price of ware potatoes have been generally satisfactory. While prices have tended to drop in recent weeks, good quality ware is still in demand at reasonable prices. With the implementation of the Community's plant health Directive from 1 May potatoes can now be imported from certain countries whose plant health position meets specified conditions. This has meant that new potatoes may be available to consumers somewhat earlier than normal. Irish new potatoes are, however, likely to be available in quantity shortly, and present indications as to the state of the crop are encouraging. While exports of seed potatoes this season were down somewhat on the previous year, higher prices meant that returns to growers were generally satisfactory.
During the past year a number of the outstanding issues concerning the proposed common organisation of the market for potatoes were settled. It is anticipated that the remaining issues will be resolved shortly and the Council of Ministers recently indicated their determination to decide on a common market organisation by the end of the year.
A major element in our livestock policy is the eradication of bovine diseases. A sum of £24.4 million is being provided under Subheads C2, C3 and C5 for the eradication of bovine tuberculosis and brucellosis. This represents an increase of more than £8 million on the amount provided for these measures last year, the increase being due mainly to an intensification of the brucellosis eradication programme.
The 1978-79 round of TB testing showed a welcome drop in the incidence figures to roughly half those of the 1977 round. The round now ending is showing a further significant reduction. I expect that the acceleration measures—in particular the 30 day pre-movement test—will continue to reduce the level of TB significantly. Among the other changes made recently was the introduction of the Rotterdam bovine tuberculin for general testing purposes. This tuberculin is more potent and more specific in disclosing real focuses of infection. The next couple of years will be a critical period in the fight against TB. Far from slackening our efforts, we must intensify them. It is, therefore, more essential than ever that all the interests involved—that is, herdowners, veterinary practitioners, farming organisations, marts, factories, exporters and my own Department—should keep up the all-out campaign to ensure that this disease which has plagued us for so long is quickly conquered. This is the only way to safeguard our valuable export trade in cattle, beef and dairy products. The latest extension of the full-scale compulsory brucellosis eradication programme was to County Cork in August last. Full-scale eradication is now operating in 16 countries. The compulsory brucellosis testing of all herds was also introduced last year in the remaining counties of the south east where full-scale clearance measures do not yet apply.
The results from the round of brucellosis testing which is just ending in the free clearance areas show an encouraging reduction in the number of infected herds as compared with the previous round. As in the case of TB, however, much still remains to be done over the next couple of years. Neverthless, I believe that probably for the first time we can begin to be optimistic about total eradication of brucellosis in those areas.
Progress has also been satisfactory in the pre-intensive counties. The great majority of the herds there have been tested and a considerable number of reactors have already been removed. I should like to express my appreciation of the valuable help given by the co-operative societies as well as by the Farming organisations and by the veterinary profession in the operation of the campaign in those areas. I am at present considering how best to proceed to the next stage of the eradication programme there. The best course may well be to extend full compulsory eradication measures to this entire area in one move as early as possible, rather than do so on a piecemeal basis over the next few years. I have asked the Animal Health Council for their views on this and when I have got them I will be taking a final decision. It is important that we should keep up the momentum towards total eradication that has been built up in the last two years. The enthusiasm and co-operation on the part of farmers and their organisations that has become so evident in that time must not be dissipated. Instead we must build on it and push ahead with all speed.
The general progress being made on the brucellosis front has led me also to set up a voluntary register of officially brucellosis-free herds. This is the highest status of herd recognised under EEC regulations and herds of that status enjoy the advantage in that they can be exported more freely than others. The conditions for registration are pretty strict but there should, neverthless, be many farmers capable of attaining officially brucellosis-free status and I hope that they will seek to do so.
While there is no doubt at all about the very positive attitude of the general body of farmers and of most other interests in relation to disease, it is unfortunately still the case that we have a minority who persist in abusing the regulations. We must all be vigilant and ruthless in pursuit of those people who have no regard for the damage they can cause to others and to the farming industry generally.
Once again provision is being made at Subhead C5 for payment to the Hardship Fund out of which money, additional to normal compensation grants, can be paid to persons whose herds are seriously depleted as a result of outbreaks of bovine tuberculosis and brucellosis.
As I told the Animal Health Council recently, we appear to have eliminated bovine leukosis from the national herd. All tests of suspect herds in recent months have been clear. We are continuing to test these herds and to maintain restrictions on movement out of them until we are certain that each one is completely safe from further infection. However, at this stage we can look forward to the possibility that restrictions on some of the herds at least can be lifted in the near future.
Almost six million cattle were dressed for warbles in the second successive national compulsory eradication campaign last Autumn. The wholehearted support given to the campaign by the vast majority of those involved is reflected in a significant reduction in the number of warbled animals being found during the early months of this year.
Present indications from the farm organisations are that they accept that it will be necessary to have another compulsory scheme this year. My Department will co-operate fully with them in this. Again, this is an area of animal health where a final onslaught and scrupulous care to ensure that things are done properly and at the right time could produce dramatic results.
Another disease to which I should like to refer is rabies. With the spread of rabies westwards across the continent of Europe there is an increasing risk that this horrible disease may reach this country through a smuggled dog or cat or other animal. All the air and shipping companies, harbour authorities, travel agencies, home and continental yachting clubs and so on have been alerted to the danger of an illegal importation. Continuing publicity in the press, on radio and on television will emphasise the risk to human and animal health that could arise from any evasion of my Department's import requirements.
There has been some publicity about a new disease known as Contagious Equine Metritis. This venereal disease of horses continues to be a hazard to the Irish horse breeding industry, especially the bloodstock section. The Irish Liaison Committee on Equine Diseases, with the full support of my Department, has been organising voluntary co-operation of those involved in the horse breeding industry to prevent the outbreak and spread of the disease. My Department's Veterinary Research Laboratory and a number of other approved laboratories are engaged in the examination of specimens for CEM. I hope that horse owners and stud managers will avail themselves of the services provided for the control of the disease and co-operate wholeheartedly in its rapid eradication.
Turning to the investment levels in farm production, as Deputies are aware, the farm modernisation scheme is now the framework for State aid for on-farm investment. Apart from field drainage in the western counties, to which I shall refer later, the scheme covers virtually every type of capital investment by the farmer—land improvement, farm buildings, farm roadways, farm water supplies and so on. Up to the present, over 90,000 farmers have participated in the scheme. This rate of participation is itself indicative of the increased willingness displayed by farmers during the last five or six years to undertake investment in the development of their farms. In that period the scheme has generated an enormous expansion in on-farm investment. This is most welcome as the investment must be raising efficiency and helping to increase output and farm incomes. From its introduction in 1974 to the end of 1979, total investment under the scheme has been on the order of £300 million. During that period, grant aid from the Exchequer and EEC funds has amounted to £100 million.
Measured in terms of the positive effect on the level of investment the scheme has been very successful. That does not mean that it cannot be improved. I would like to see many more farmers undertaking planned development programmes and availing more fully of the advisory services. This applies especially to those farmers in the small and medium-sized range. The proposals put forward by the EEC Commission for amendment of Directive 159 are intended to provide greater incentives for a much wider band of farmers to undertake farm development plans. These proposals are at present before the Council of Ministers and I have been pressing to have them adopted quickly.
In the past year considerable progress has been made under the Western Drainage Scheme. This scheme came into operation at the beginning of 1979 and the response has exceeded all expectations. To date over 27,000 applications have been received. In the early part of last year progress was slow, due mainly to the inclemency of the weather which made field inspection difficult. With the improvement in the weather and the augumentation of the field staff, the scheme gathered momentum and by the end of the year over 8,000 approvals had been issued. These approvals cover over 42,000 hectares and the cost is estimated at £21 million. It is expected that there will be even greater progress this year. By the end of the year, therefore, we should be well on the way towards achieving the target of 100,000 hectares.
This scheme is the first major attempt to tackle the problem of drainage in the west of Ireland and should provide the impetus for a major improvement in western agriculture. All the indications are that it will be highly successful. For this scheme and for the main farm modernisation scheme we are providing £36.5 million under Subhead M.1.
Further measures designed to improve the position of agriculture in the west of Ireland are in the pipeline. A comprehensive package of proposals has been before the Council of Ministers for some time. This covers a wide range of development measures, including infrastructural improvements such as roads, water supplies and electricity, the expansion of educational and advisory facilities, land improvement and farm development, forestry development and aids for agriculture-based industries. The EEC is to contribute about £150 million towards the cost of implementing the measures over the next 10 years, and this will be matched by a corresponding Exchequer contribution. Since I became Minister I am glad to say that my efforts seem to be meeting with some success as approval of the west of Ireland proposals was included in a compromise which was accepted recently by eight of the nine Member States. I am hopeful that final approval of the package will be forthcoming in the very near future and then work can get underway immediately on the various measures.
The compromise to which I have referred also provides for an increase in the rate of FEOGA recoupment to Ireland in respect of headage payments under the disadvantaged areas directive. At present FEOGA recoup 35 per cent of our expenditure but when the compromise is finally approved we will become entitled to 50 per cent recoupment. This improvement which applies only to Ireland and Italy is a positive indication of Community concern for the less-favoured areas of two of the weaker member states. In the Estimate now before the House, we are in fact providing as much as £21 million under subhead M.3 to help our Disadvantaged areas by means of headage payments on cattle generally, beef cows and sheep.
Incidental expenses arising out of market intervention are expected to amount to £25.3 million and this is provided under subhead M6. These expenses include the cost of storage, handling and transport as well as interest on the capital used for the purchase of the products. Intervention activities are carried out on behalf of the EEC and the expenses incurred are recouped from FEOGA in accordance with a scale of standard allowances based on average costs throughout the Community. Recoupment is estimated at £18.6 million as indicated under subhead N.19. The difference of nearly £7 million reflects the relatively high interest charges here as compared with the standard level allowed by FEOGA. My Department have to provide the capital for intervention purchases and, while the capital losses on disposal are eventually met by FEOGA, the interest allowed to us on our borrowings falls appreciably short of the actual cost of borrowing. The standard rate of interest allowed by FEOGA is 8 per cent whereas my Department are paying as much as 18¼ per cent for money at present and so there is a significant net burden on the Exchequer. This matter has been pursued with the EEC Commission over the past few years but while there is some appreciation of the inequitable result of the present arrangement, no adjustment has yet been secured.
Under subhead B.7 a sum of £5.775 million is being provided for county committees of agriculture and An Chomhairle Oiliúna Talmhaíochta. The whole position in regard to advisory, education and training services is, of course, in a state of change at the present time, and completely new organisational arrangements are in process of being introduced.
Up to now my Department in close co-operation with county committees of agriculture have been providing advisory, education and training services to farmers and their families. The improvement and expansion of these services has been vigorously pursued in recent years. To date 47 agricultural training centres have been opened and several others are currently under construction. The Department have encouraged this development through a special grant of £20,000 for each centre in addition to the normal State financial participation in the activities of the committees. Further aid totalling almost £400,000 from FEOGA was negotiated in the case of 18 of these centres. With the final adoption of the comprehensive western proposals, the scale of EEC grant-aid towards training facilities in the western counties will be substantially stepped up. It will in fact amount to some £4 million, covering half the cost of a further 26 centres together with the provision of 200 student places at existing residential colleges.
As from an early date these various services will become the responsibility of An Chomhairle Oiliúna Talmhaíochta. The board of An Chomhairle first met in December last and since then have been pressing ahead actively with the planning of the administration and operation of the reorganised advisory and training services. The transfer to An Chomhairle of the advisory education and training functions of my Department and of the committees of agriculture together with the appropriate staff and properties is now imminent. The reorganisation of the services on a basis designed to cater for the conditions of the eighties constitutes a major advance in the continuing work for the development and expansion of the agricultural industry. I am confident that An Chomhairle will bring immense benefits to the industry, and I am sure that Deputies of all sides will join me in wishing them every success.
Also in connection with agricultural education we are providing over £5.8 million under subhead B.1 for grants to the university colleges concerned for the faculties of general agriculture, dairy and food science and veterinary medicine. The grants include capital provisions towards the dairy and food science project at University College, Cork and the new Faculty of Agriculture Buildings at University College, Dublin. These capital works have now been completed, and so the provision shows a reduction as compared with 1979.
Following discussions between my Department and University College, Cork, a four year course leading to the conferring by the University of a degree in farm home management will commence from the beginning of the 1980-81 academic year. The degree course, which will replace the existing three-year diploma course at the Munster Institute, will be conducted partly at University College, Cork, and partly at the Munster Institute.
The amount of the grant-in-aid for An Foras Talúntais under subhead B4 is just over £9.7 million as compared with £8.85 million last year. This will enable An Foras to continue to make their significant contribution to Irish Agriculture. An Foras, of course, also receive financial contributions from the agricultural industry itself, and these constitute a practical and tangible recognition of their valuable work.
Under subheads K1 to K5 £1,447 million is being provided for international co-operation and aid programmes as compared with £1,272 million last year. In fact, when account is taken of some EEC export refunds on wheat supplied previously under the food aid convention our total expenditure under these various programmes in 1980 will be in excess of £1.6 million. A new provision this year is that for our contribution to the international fertiliser supply scheme. Under this scheme fertilisers are supplied to developing countries to enable them to grow their own crops. We propose to contribute £200,000.
The Estimate also provides for assistance to a number of State-sponsored bodies and agricultural organisations. I have already referred to the support for An Chomhairle Oiliúna Talmhaíochta and CBF. Other state-sponsored bodies covered by the Estimate are Bord na gCapall and An Chomhairle Olla, while the agricultural organisations that will be assisted include the Farm Apprenticeship Bord, the ICOS, the ICA, Macra na Feirme, Muintir na Tíre and the Federation of Bee-keeper Associations. Each of these in their own way are making a valuable contribution to the development of some part of the agricultural industry or rural life generally.
I now want to refer to the farm price increases for 1980-81. I should like to say straightaway that I fully appreciate the concern of farmers at the delay in fixing prices this year. It is, however, a hard fact of life that over the years the price fixing has become an increasingly difficult task because of the tendency for the price discussions to embrace other major issues which are usually rather contentious. This year we have the added complication of the link that has been created between the farm prices settlement and the problem of the UK contribution to the EEC budget. Now, however, there is agreement among eight of the nine member states on an outline package involving prices, anti-surplus measures, farm structures and elements of a sheepmeat policy. The UK has withheld its agreement pending a satisfactory solution to the budget contribution problem.
The package that has been agreed to by "The Eight" includes increases of 4 per cent for beef and milk and 5 per cent overall—the latter being twice what the commission originally proposed, and the anti-surplus measures included in the package are considerably different from those originally proposed. The most important change is that there will be no super levy on milk this year. Neither will there be any reduction in our sugar quotas. No agreement has yet been reached on the question of the suspension of beef intervention during the summer months, But I am continuing to oppose this in the absence of adequate safeguards to protect our beef industry.
A further major element for us in the outline package is the agreement on a set of measures for improvement of agricultural structures in the west to which I have already referred. These would mean an injection of about £300 million into the west over a ten year period, with half of that investment coming from Community funds.
As I have already said, the main obstacle preventing the adoption of this package is the problem of the UK's contribution to the EEC budget. The Council of Agriculture Ministers will be meeting again next week, and there are some expectations that final agreement on the outstanding issues can be reached.
I turn now to the Estimate for Lands which is being taken in conjunction with the Estimate for Agriculture.
The total Lands Estimate is £9,852 million, an increase of £681,000 on last year's provision. In the main, this reflects salary and wage increases under subhead A and increased contributions towards revision and reduction of annuities under subhead E. The moneys required under subhead E are in the nature of statutory commitments. In the main, they represent the taxpayers' contribution towards the service of the land purchase debt accumulated since 1923. Of the total provision of £3.8 million under this subhead almost £3.6 million will be utilised to make good deficiencies in the land bond fund arising from the halving of annuities under the Land Act, 1933.
The recent debate on the Land Bond Bill, 1980 afforded Deputies an opportunity to express their views on the present programme of the Land Commission. While I would not wish to go over the same ground again, there are certain aspects of the commission's work on which, I think some comment might be appropriate.
During the recent debate a number of Deputies expressed concern at what they alleged was a virtual close-down on acquisition. This is just not so. Over the years, there has been criticism of the Land Commission for retaining lands on hands for too long a period. The retention of lands in this fashion has meant that potential allottees were unable to get their hands on the extra acreage needed to develop their holdings and improve their incomes. The Government decided that this situation was not in the general interests of smallholders and that, accordingly, for the present the main thrust of the commission's efforts should be directed towards the more expeditious disposal of the considerable acreage of lands on hands or in the course of acquisition.
I need hardly remind Deputies that the annual Vote for Lands does not fully reflect the activities of the Land Commission in a particular year. Last year, for instance, in addition to the amount voted, a sum of £12 million in land bonds was provided to pay for acquired lands. The recent land bond legislation has given statutory authority for the creation of a further £25 million in bonds. My own view on land bonds is that they are by no means the ideal medium of payment but, at present, it is simply not practicable to provide cash of the order that would be required.
In the debate there were also some comments on the level of annuities charged on lands now being allotted by the Land Commission. I appreciate, of course, that a new annuity at present levels can be a considerable burden on a small holder. But it is also necessary to have regard to the interests of taxpayers. The annuities are fixed by reference to the price paid for the Lands and the interest rate of the relevant bonds. The purchase price of the land must be the full market value and the interest rate on the bonds must be such as will ensure that the bonds will remain at or near par for a reasonable time after their creation. These are statutory requirements. If annuities were to be reduced, the resultant deficit would have to be met by the taxpayer.
What is causing problems for some allottees is that the Land Commission are now allotting land bought at relatively high prices and paid for when interest rates also were high. For example, the annuity on land of good quality bought at £2,000 per acre and paid for in 16 per cent bonds, works out at £325 per acre. This is above the economic return that can be obtained from the land, but there is clearly a limit to the help that the taxpayers can be expected to give.
The Land Commission are now almost 100 years in existence and during that time there has been no fundmental change in their basic policy. As the House knows, the Government are giving consideration to proposals for a fresh approach to land restructuring. This is an extremely complex issue, and whatever new measures are brought into effect now will undoubtedly leave their imprint on the face of Irish agriculture for many years to come. It is, therefore, important that we get the mix right from the start. In the meantime, as I have said, the traditional operations of the Land Commission must continue, with special emphasis on the rapid disposal of acquired lands.
In this address I have covered a number of the main topics arising in regard to agricultural and land policy. No doubt, some Deputies would have wished me to deal with other topics. When replying to the debate, I shall do so in so far as that is practicable.
We are discussing here today Ireland's greatest industry, an industry which is making a huge contribution to the progress and development of the country's economy and is capable of contributing far more. Of course, there have been ups and downs, and there will be again. But the long-term trend in production has been, and continues to be, upward. In recent times there has been a growing confidence among producers after the difficulties which they faced last year, and all the indications are that the current year will bring a further increase in agricultural output. Despite the difficult economic situation and the cost-price squeeze in which farmers find themselves at present, there is considerable scope for increased productivity, particularly production achieved by more economic and more efficient methods. There is room for more planned development, where producers in consultation with their advisers work in accordance with farm plans designed specifically for their particular circumstances, designed to make the best use of their land resources, buildings and equipment, and designed to yield the best returns for their own efforts. Irish agriculture made tremendous advances in the seventies. Through the maximum utilisation of modern methods and technology at all stages of production, processing and marketing, it can make equally impressive advances in the eighties, to the benefit of all engaged in the industry.