I move:
That Dáil Éireann regrets the Government's decision to withdraw intervention for heifers, requests its reintroduction and affirms the importance of avoiding any weakening of the solid foundation provided for Irish agriculture by the intervention system.
The present Government decided three years ago to withdraw from the facility of intervention for heifers. This decision was an entirely voluntary act. No one within the EEC or within this country was pressurising the Government. But the Government went ahead. In doing so the Government were not only doing immediate damage to the beef industry which has been clearly demonstrated by a continuing decline in herds since then but indicating a lack of resolve on their part to protect the basic principle of intervention. Let me quote from a statement that I made at that time at Allenwood, County Kildare:
As has been pointed out already the abandonment of intervention for heifers just does not make sense. But even more worrying than its effect on the cattle trade, is the implication it gives of the Government's approach to the Common Agricultural Policy of the EEC. If Ireland is prepared voluntarily to abandon intervention for one of our major products, it will find it hard to defend it at European level for other products. And make no mistake about it intervention is in need of defence. The most telling impression I got from my talks earlier this year with the Minister responsible for Agriculture in Northern Ireland, was of implacable British hostility to the whole idea of intervention. Nor is this hostility confined either to Britain or to the parties of the left. Intervention, the whole notion of a floor price for farmers for which we voted in the EEC, referendum, is under attack. And the Irish Government shows definite signs of caving in before battle is even joined.
It is that decision to withdraw intervention at a crucial time which has contributed to some of the difficultues that we are now facing at EEC level. We showed a lack of resolve to defend the intervention system at a time when we could afford to do so and we are now facing acute difficulties in trying to reverse that situation and undo the damage that was done at that time.
The words in this motion, which is very modestly worded, "regrets the Government's decision to withdraw intervention for heifers" are being rejected by the Minister. He seeks to delete those words. In other words, he indicates that he does not regret the decision of the Government at that time even though he and the Government were forced in more recent times to seek to reintroduce intervention for heifers. He does not regret the decision even though he has had to go so far as publicly reversing it. This seems to be an odd statement by the Minister. I can appreciate his loyalty in wishing to defend the decision of a colleague in government earlier but it seems to indicate a lack of realisation of the true import of what happened at that time.
The position now is that in the face of the continuing decline in farm incomes and the grave difficulties faced by the farming community in recent weeks they have decided that they would seek to reintroduce intervention for farmers. This shows that they recognise the lack of wisdom in their original decision. Having voluntarily withdrawn intervention they now find that it is legally impossible to reintroduce it. If ever there was evidence of the foolishness of this decision it is shown by the fact that they are not now able to undo the bad work they originally did because they find that the EEC will be able to prevent them from doing so by failing to make the necessary orders to fix the appropriate co-efficient which would set the price per kilo which would be paid for heifer beef. The Government must continue to seek the reintroduction of intervention for heifers. In bringing this motion we are seeking an assurance from the Minister that he will not be satisfied with the measures that have been adopted already. Previously only 50 per cent of steers, that is, cattle other than heifers, could be admitted to intervention but as of a very recent date it is now possible for 100 per cent of steers to be admitted. I grant that this is an improvement in the position but we must insist that intervention should cover heifers as well because the voluntary withdrawal from it was a bad thing. I must point out that intervention for heifers is available in the UK, Belgium, Denmark and the Netherlands. The idea of intervention is to provide a floor under the market for farmers. In my view there is a far greater need for intervention for heifers in Ireland than is the case in any of the other countries which have intervention for heifers. The prices obtaining for cattle in other countries as against the prices obtaining here clearly show that cattle prices paid by factories to farmers are lower here than in the other countries which have the protection of intervention for heifers. The prices for the week ending 8 November 1980 in terms of European currency units per 100 kilograms show that whereas the price in Ireland was 103, in other words the lowest price obtaining anywhere in the EEC, the price in Belgium, which has intervention for heifers, was 139; the price in Luxembourg, which has intervention for heifers, was 139; the price in the Netherlands, which has intervention for heifers, was 119; the price in Denmark, which is in a similar position, was 121, and the price in the UK was 106. I am not saying that the intervention explains the entire difference in the prices. There are many other factors which this House must give attention to. But the fact that the country with the lowest prices for cattle voluntarily withdraws a protection which supports the market price of cattle in the EEC is something which we must very much regret.
Having made that point I now draw the attention of the House to the very serious situation that obtains in the cattle trade. We have had a continuous decline in cattle numbers here since 1975. In 1975 there were something like 700,000 head of cattle and there are now only about 470,000 head. In other words, our herd has been almost halved in that period. The latest figures, which are for the June census, show no abatement in the rate of decline in cattle numbers in this country.
I would point out to the House that cattle exports — whether they be in the form, as is mostly the case, of slaughtered animals or, to a decreasing extent, live animals — form a very major component of our exports. If we did not have the cattle exports we have at present our balance of payments situation would be in a far worse state. We could not afford, for instance, the terms of the national understanding now being paid. We could not afford our present standard of living. We could not afford the present imports both of consumer goods and investment goods. These imports can come in and can be bought with Irish pounds only because we have exports, a very large proportion of which are provided by cattle. In my view cattle exports are of benefit to the entire economy. By bringing in foreign currency they afford us the capacity to buy goods which are of immediate benefit to people who live miles from a farm, people who have no connection with agriculture. These people benefit directly in the goods they are able to make in shops because we have had in the past a strong cattle export business.
As well as discussing specifically this provision of intervention, this motion provides us with an opportunity to focus attention on the importance of this cattle trade, on the fact that cattle numbers have been in a consistent state of decline since 1975, on the fact that it is predicted that cattle slaughterings, and hence exports, will fall by about 16 per cent next year. There has been an improvement in cattle exports this year. The Minister may seek to pretend that this is a healthy sign and shows that we are doing quite well. In fact, it is quite the opposite, because what is happening this year is that farmers, who were so badly in need of cash simply to meet their normal living expenses, the cost of educating and feeding their families, are being forced to sell cattle for beef in order to get an immediate cash return. These are cattle which they would not in normal circumstances, and indeed should not in any circumstances, be selling. They are selling cows which should be used for breeding further animals for beef in order to get cash. The result is that they are reducing the herds they have and their capacity to earn money in the future, because they are selling light animals which should be fattened to a higher level so that they can obtain a higher price both for themselves and for the country.
All of these animals are being sold now. The result is an artificial increase in the number of animals being slaughtered and exported at the expense of our long term future. I hope the Minister will not seek to take any consolation from the purely temporary and, in my view, inherently destructive improvement in the position this year because it is based on what is known as de-stocking — to use a metaphor, they are selling seed potatoes for feed when they should be retained for next year's harvest. That is what is happening in the cattle trade at present and is something of which this House needs to take a very serious view.
The Minister may like to put the view across that this phenomenon of the declining cattle herd, which of course will seriously affect our exports in the next two, three and four years, is something that is common to all European countries. My information is that this is not the case, that whereas it is predicted that cattle slaughterings and exports this year will be down in this country the prediction is that for the other countries of the EEC there will be increased cattle and beef output. Therefore Ireland is suffering a far worse decline and our situation is worse than that obtaining in any of the other member countries of the EEC. This is something that we have not discussed sufficiently in this House and is something also that we have not drawn sufficently to the attention of the people who are not members of the farming community.
The decline in incomes of the farming community is something which will have a very grave effect in the long term as well as in the short term. In the short term we can see it taking the form of bankruptcies and redundancies among people who are engaged in the supply of goods to agriculture, problems in ancillary industries and in rural towns, where shopkeepers are not getting as much income as they would normally. In the longer term we will see this decline taking the form of a grave worsening of our balance of payments situation, because without agricultural exports this country could not and will not survive. I hope that we in this House in this debate — and I hope this applies with equal validity to the Minister and to his colleagues as it does to this side of the House — will be able to get it across to people in urban Ireland how serious is this situation, how much this decline in agriculture, in particular the decline in potential agricultural exports, affects every man, woman and child here. We must have the political support of urban as well as rural constituencies for the necessary remedial action, which will cost money, to restore the position of the farming community and to give them the incentive and confidence to continue to invest in increased production so that we can provide an assured future for our economy.
I am aware that there will be serious problems encountered even in maintaining the existing level of intervention next year. This year there was a proposal, which was successfully postponed, to suspend intervention for cattle entirely between the months of April and August. I believe this proposal will be made again in the context of the arrangements for agriculture in 1981. It is important that we in this House be resolved to resist this proposal, to resist any attempt to undermine intervention either for cattle or in general. It is for that reason I believe the wording of our motion is particularly important in that it affirms the importance of avoiding any weakening of the solid foundation provided for Irish agriculture by the intervention system. I believe that without the intervention system the common agricultural policy would not really provide the type of assurance for which it was designed. Without that floor under the market the other arrangements would be of little effect and would probably be circumnavigated by those who wish to avoid them.
The impression may be given by those who oppose intervention that the Community is seeking to provide a narrow, protective shield around its own farmers, that in fact its agriculture is being unduly favoured by such arrangements. The reverse is the case. In fact, the Community imports far more than it exports. The Community is the highest importer in the world of agricultural produce. Others may argue that the CAP and the intervention system have contributed to high food prices. That is not a sustainable argument either, because since the CAP was introduced food prices in the Community increased by less than almost any other category of purchase goods by households.
The CAP, far from creating a situation where the European consumer has suffered or where the European Community has been able to create a protective situation to the detriment of other agricultural producers, has meant that food prices did not rise as in other countries. The evidence is to be seen in the high level of food imports. The Minister in standing firm, as I hope he will do, for the intervention system is defending something which from the point of view of our national interests and the interests of the Community is defensible. The results of intervention are those I have described.
A further point I should like to refer to is the gap which exists between the price obtained for cattle here as against the price obtained for cattle in other Community countries. The price in Ireland is lower than in any other member state. The average price obtaining for cattle in the EEC as a whole last week was 128 ECUs per 100 kgs. while the price obtained by Irish farmers was 103 ECUs per 100 kgs., the lowest in the Community. That gap must receive close and immediate attention. It arises because of a number of factors. One is our failure to defend intervention in full here and another is the question of transport costs. The cost of transport takes about 3½p in the £ off the price which obtains, because we have to transport to export markets while other farmers in the Community have the market on their doorstep. That does not explain the entire divergence however.
One of the fundamental reasons we are not obtaining the prices we should be obtaining is that our animals are not meeting the high classification standards being met by cattle slaughtered on the European mainland. The grades we are obtaining under our own classification scheme for our cattle do not compare favourably with the grades obtained by European cattle under their classification schemes. That is due to two major factors. One is the faulty marketing of our animals in that they are sold when they are over fat or when they are not fat enough. Secondly, we have a bad breeding policy. The evidence is that even in the last three years the classification standard of beef being slaughtered has disimproved rather than improved. That must be of serious concern to those anxious about the survival of this trade which is vitally important to us.
There has been a tendency to seek an animal which was designed primarily for milk production to the exclusion of its beef producing characteristics. Such animals do not produce calves that are suitable for beef. When such calves are slaughtered two and a half years after birth they do not produce the type of beef produced by an animal specifically bred for beef purposes. The only way we will get to a situation where we will receive European prices will be by having at least a predominant part of our beef herd bred specifically for beef. We have been moving away from that situation and we have seen a dramatic decline in the beef suckler herd. There has been a dramatic decline in the number of animals being bred specifically for beef. That explains the gap that exists in prices obtained for our beef.
The only measure being adopted by the Minister to reverse this situation is the suckler scheme announced recently. That affords a subsidy of about £13 per cow to those who put an animal in calf but it is less in money terms than a scheme which was introduced in 1968 to encourage farmers to do the same thing. The grant then was £15 but 12 years later, after dramatic inflation in between, all the Minister can offer is £13. The Minister has offered to give a further supplement of another £13 or £14, to bring the figure to about £28, where there is an increase in the herd over and above the figure of the previous year. In my view that was not the right way to deal with this matter. In fact, it will encourage further deterioration in the breeding situation. The benefit to those who increase will go to people who rush into this business and put any old animal they can find into calf by any old bull they can find. Such people will get the full subsidy, but the person who has stayed in beef suckling through the years and who has been trying to do so on the basis of a conscious and carefully designed breeding policy will only get the additional benefit in respect of the extra animals he adds to his herd. In present circumstances such a person might not be able to add a large number. Those who rush into this for the purpose of getting the additional benefit with any old type of animal will almost certainly leave it in two or three years' time.
We should have had a subsidy in the region of £60 or £70 per animal from the Minister and the EEC. That would be no more than equivalent to what the Irish Government from their own resources were able to offer in 1968 when they introduced a calf heifer subsidy scheme. The figure of £60 would be roughly equivalent to the subsidy of £15 in 1968. The Minister should, if the European Community were not prepared to do so, have gone ahead and provided such a subsidy. The French have shown that they are able to protect their farmers when the need arises. We should not be any less reluctant to do this than the French are. We have tended in this country, as far as agriculture is concerned, to play far too rigidly by the rules. We have allowed other countries to act in a fashion which is detrimental to our interests.
Those are my main points. This debate, I hope, will provide us with an opportunity of focussing on the seriousness of the decline in the cattle herd and the need for remedial measures to stem that decline. I do not claim that the matter we are dealing with here today — the provision of intervention for heifers — will on its own, if introduced tomorrow, change the situation radically. It is only part of the overall picture. However, by introducing intervention for heifers again, we will be demonstrating our firm adherence to the principle of intervention, to the principle of the common agricultural policy and, in conjunction with other measures which are necessary, some of which I have referred to, we shall be laying a foundation to restore our cattle business and cattle export trade to the position it should be in.
