We have brought this motion before the House in order to highlight the grave situation of the beef industry. Cattle numbers have declined by 2,400 head to 240,000 head in the year ending in June 1980. I am reliably informed that when the figures for January 1981 are published they will show that numbers are down by as much as 400,000-400,000 of a drop in one year. If this happens, it will amount to one of the largest ever annual drops in cattle numbers on record. In the 15 years up to the accession to Government of the present administration in June 1977, the cow herd which is a part of our total cattle herd, was increasing at an average annual rate over that 15-year period of two per cent per year. It was increasing throughout that 15-year period. Since the present Government came into office, the cow herd has been static. In 1980 we have seen large scale slaughtering of cows by farmers who have to slaughter these animals in order to obtain an income to pay their bills and to pay for the upkeep of their families. I fear that we are seeing the start of an actual decline in the cow herd and, for a country so dependent on agriculture and on livestock this is an event of unprecedented seriousness for the economy. It will immediately translate itself into lost jobs, for instance, in the meat factories. As a result of the decline in cattle numbers, it is estimated that the number of cattle being supplied to Irish meat factories in 1981 will be down by approximately 300,000 head on the amounts supplied to meat factories this year.
It is further estimated that every 250 head of cattle provided to a factory provides one job in that factory. Therefore, it is obvious that if there is a decline of 300,000 in the number of cattle supplied to factories next year, as I think all the trends indicate will be the case, it will immediately jeopardise 1,200 jobs in Irish meat factories. It reaches into the heart of our cities; it is something which affects everyone, not just the farmers. There is no greater evidence of the interdependence between town and country, of the need for people in all parts of the country to realise the importance of agriculture, than the consequences which will flow from this decline in our cattle herd which is already taking place. This drop in supply will also have a serious adverse effect on our balance of payments. Obviously it will result in reduced exports of beef and will gravely worsen our balance of trade, create problems for our currency and for our ability as an economy to import goods, whether consumer or investment goods for further production. Our ability to purchase abroad, over the entire economy, will be damaged if there is, as I believe is inevitable, a decline in beef exports in 1981. There is evidence in the form of reduced cattle numbers before our very eyes in the fields of this country at this very moment. It is for this reason — and admittedly the action we are proposing is belated — that we are seeking the restoration of intervention for heifers. It is only one of a series of measures which are necessary to combat this extremely serious situation. I shall be adverting to others in the course of my contribution.
It is worth recollecting, as Deputies on this side of the House have done — and, indeed, as the Minister has admitted — that the withdrawal of intervention for heifers was a voluntary act on the part of the present Government in 1978. Now, having voluntarily withdrawn this, the Government are finding themselves unable to reverse the position and restore intervention. Despite the fact that Belgium, the Netherlands, Luxembourg, Denmark and the United Kingdom provide the protection of heifer intervention for their beef producers at this very moment and in full compliance with EEC rules, we are not able to do what they are now doing. Yet we are supposed to be in a common market with Belgium, the Netherlands, Luxembourg, Denmark and the United Kingdom who are supplying the support to their farmers which we are not supplying to ours. Indeed, it is no coincidence that in all of these countries the price obtained by farmers for beef is much higher than it is here. The foolishness of the withdrawal of intervention for heifers here in 1978 is self-evident.
Our motion also seeks to underline the importance of intervention in general. Ireland's position in support of the principle of intervention as part of the common agricultural policy was gravely weakened by the Government's voluntary decision in 1978 to withdraw an entire category of intervention, namely intervention for heifers, in this country. This Fine Gael motion now seeks to undo the damage which that measure did, by providing an opportunity for the Dáil to reaffirm its conviction that intervention is essential for the operation of the common agricultural policy.
I shall deal now with some of the points made by the Minister here yesterday evening. He said that we could not now reintroduce intervention for heifers without EEC consent because the Commission of the Community would have to set a coefficient for the buying-in price. Why can the Minister not go ahead and use the equivalent coefficient already in use in this island — in Northern Ireland, which is operating as part of the United Kingdom?
Why can he not use the coefficients being used in the five other countries which have intervention for heifers at this very moment? Why is it necessary to obtain the consent of the European Community for this? Is it not possible for him to operate this matter himself? He will claim, of course, that the objection is being made by the Community that it could not find the money. The amount of money involved on providing intervention for heifers would be a negligible amount and would pale into insignificance in comparison with the benefits conferred by having the safeguard of intervention available to our farmers for what is, as Deputy Hegarty pointed out, 50 per cent of our cattle trade, because 50 per cent of all cattle born in this country are heifers.
The Minister mentioned the EEC decision to disqualify forequarter beef from intervention, a decision announced very recently. This is a very serious matter not only in itself but in the precedent it establishes that the European Commission can unilaterally reduce support for agricultural prices, without consulting the Council of Ministers and outside the annual price fixing negotiations. This is a highly dangerous precedent for Ireland. Deputy Clinton, when Minister for Agriculture, resisted a similar effort by the then Commissioner Lardinois to such an extent that he obtained from the Commissioner a specific and formal assurance that such an effort would not be attempted again. This is in relation to an attempt by Commissioner Lardinois to change the coefficients for beef in such a way that, without reference to the Council of Ministers and outside the price fixing negotiations, simply by changing the coefficients he reduced the price being paid to farmers. A similar attempt is now being made again and there is no sign of a similar determination or a similar resistance being shown by the present Minister to this unprecedented and dangerous measure to that shown by Deputy Clinton in a similar situation in times of much less seriousness than we now face.
I have, so far in my contribution, criticised the failures of this Government in regard to the beef industry. I outline now the approach which Fine Gael in Government would adopt to this important industry. The lifestock sector, beef and milk, represents such a large proportion of Irish farm output that special measures to promote it are necessary. Much of our tillage sector, indeed, is producing feed for livestock and it will prosper if livestock prospers. In beef, in particular, we are producing less than our potential; we are producing the wrong type of beef and marketing it badly. Messrs. Lea and Diamond in a study done for the Agricultural Institute show that our land could carry 70 per cent more cattle than it did in 1973, which was the highest level ever reached in the history of this State. We are now carrying far less on our land than we did in 1973.
We are also achieving a very low level of output of beef for the number of cattle actually on our land. We produce 55 tonnes of beef per year for every 1,000 head of cattle on our land. This is the lowest production of actual beef per 1,000 head of cattle on the land of any EEC country. This is happening because three-quarters of Irish cattle require a third winter before they reach fat stage, whereas less than one-third of cattle require a third winter before they reach that stage, reaching fat stage after merely a second winter. They are, therefore, able to turn over more cattle, producing more beef per year for a given number of cattle on their land. Indeed, it has been estimated that we could increase our beef output here by up to 40 per cent without any increase in cattle numbers if we could just eliminate that third winter necessary for three-quarters of our cattle as against nearly one quarter in the UK, which is a country with comparable climatic conditions.
That third winter could be eliminated primarily by making more and better silage in place of the hay on which we are now relying as fodder for our third winter. Our beef is not bred for consumer trade and is often wastefully over fat when sold. It is because of that that we lose out on grading with the result that our cattle are sold at a lower price than we could otherwise obtain. That is an irony because it requires more feed to put fat on an animal's back than it does to put flesh on and yet we are producing too much fat at greater proportionate expense than we would if we were producing flesh on those animals. That arises because we are keeping our animals beyond the stage that we should.
The marketing of our beef leaves much to be desired. It has been estimated that there is a 2p per lb. discount on Irish beef on the United Kingdom market because Irish beef has a bad reputation. That clearly indicates the failing in our marketing efforts by comparison with other countries. If we could establish a good reputation and still produce the same product we could get 2p per lb. extra. There are many instances of people buying Irish beef and putting a label on it marked "Scotch beef" before selling it on the UK market. Those people get 2p per lb. more because it is accepted as Scotch beef and people have confidence in Scotch beef. That situation is unwarranted by the facts and can be overcome if we put more effort into marketing. The key to growth of production in the beef industry is the elimination of the third winter by the provision of enough good quality fodder in the first two winters so that the animals do not lose condition during those first two winters thereby being able to reach the fat stage in the third rather than the fourth summer.
A joint submission to the Minister by the Killeshandra Co-op, the IFA and the ICMSA pointed out that most of the crises which have occurred in the cattle industry here could more appropriately be described as fodder rather than cattle crises because they always arose as a result of farmers being forced to sell animals due to the lack of fodder to feed them over the winter. That led to a collapse in prices and disaster for the farming community. If we could solve that problem of providing adequate fodder in the form of silage we are well on the way to establishing our beef industry on a new solid foundation. It is ironic that the reliance on hay is highest in the areas where it is hardest to make hay, namely in the west and north west. In March last I suggested that a special grant scheme be introduced for a two-year period for farmers to transfer from hay to silage. I suggested that it could be based on a custom-built low cost silage system suitable to small farmers. Too much of the research that has been done in this field is not directly applicable to the small farm situation in the west. Such a system, promoted as the IDA promote advance factories, could mean more silage produced.
The Killeshandra Co-op have also suggested that a payment be made on the volume of silage made by farmers for an initial period of two or three years. The Minister, when he introduced a small scheme on a temporary basis for late season silage as a response to the recent fodder crisis, introduced something which should be the basis for a permanent scheme for the next two or three years to encourage the transfer from hay to silage. If that transfer takes place we will be able to produce the beef we need to obtain the prices and output we should be getting.
However, even if we improve in the manner I have suggested we must face a further problem. Beef prices in spring are often not sufficiently high to compensate farmers for the extra cost which will inevitably be involved in carrying cattle over the winter. No matter how well organised a farmer is it still costs more to carry cattle over the winter than over the summer and no degree of efficiency in silage making will get over that financial reality. As a means to counteract that situation I suggest that the Minister seek an alteration in the EEC intervention system for beef to provide a higher guaranteed price for cattle in spring. In that way farmers will be aware that they will get a higher price in spring to compensate for the higher cost to produce animals for sale in spring.
The proposal I have outlined has been resisted by the EEC because of the cost that may be involved in it but there is evidence of long-term demand for beef and an inability by many countries to produce it. The measure I have suggested would serve a useful purpose and be accepted by the EEC in the light of long-term trends in the beef industry. There is a continuing demand for animal protein in the world and beef is one way that can be provided. We will see an increase in demand for beef and if the Community is not to have a situation where beef prices go shooting through the roof because of an insufficiency of supply it will have to take measures to encourage more winter beef production. The Community will have to increase the level of output in Ireland and other member states. Therefore, it makes sense from an Irish and Community point of view to have such a differentiation in the pricing system so as to provide a higher price in the spring which would be an incentive to winter beef production.
We must start by getting more cattle. That demands immediate action. I do not believe the action taken by the Government in providing a miserly £13 under the suckler grant scheme is sufficient for most farmers. The way the Department propose to give the additional £13 is such that it will encourage bad rather than good quality animals. It will prove an added benefit to the fly-by-night operators who will go into suckling this year because of the grant but leave it next year. They will get the full grant while the person who has been in the business all along will receive it on his additional animals only and not on the entire herd. Such a person wil be penalised relative to the other operators. We must have a suckler grant of at least £80 if farmers are to get involved in the suckler business. As Deputy D'Arcy pointed out, this is an expensive operation which is full of heartbreak and pitfalls. It will be very difficult to get farmers involved in it on a professional basis without an adequate financial incentive which must take the form of a grant of that magnitude.
I am sure the case will be made by some people: why should farmers be given grants to do something that should make sense anyway? It can be argued that it would make sense to produce calves for the beef herd if there is to be, as I have said, a market for beef in the long term. Unfortunately for the individual producer making the decision, in the short term it may not make sense and, in the long run it may not even be he who will suffer if he does not make the decision, but the entire country. It will be people in meat factories, people who are relying on supplies of store cattle to fatten, who will suffer if the farmer does not make the decision to expand the suckling herd.
The Government are justified in intervening because they are providing an incentive, a grant, to one person to do something which will benefit not only himself but other people as well. It is a classic case in justification of Government interference in the form of a grant. The Government do not give grants to people to do things which will benefit themselves only. People will or should do those things anyway, if they have sense. The Government give grants to people to do things which, while they may be of benefit to the people receiving the grants, will also be of benefit to other people to a far greater extent. That is the justification for grants. There is a classic case for a grant of approximately £80 in the national interest to get the suckler business off the ground and to reverse the disastrous decline in our cattle herd to which I have already referred.
Assurance must be provided against a decline in cattle prices in the years ahead. One of the reasons why our farmers have not been achieving their potential level of output — and I have already indicated that even in 1973 at our highest level of production we could have carried 70 per cent more cattle than we did — is that farmers have not got confidence that prices will be maintained at a steady level in the years ahead. One way in which we could provide such an assurance would be to say that the headage payment scheme will be varied in years in which prices fall, to say that if prices fall the headage payment will be increased and if prices rise the headage payment will not be increased. We should vary the headage payment in such a way that, by its variation, it will provide a floor under the beef market. I have advocated this in the past. It is a sensible and intelligent way of using the headage payment scheme to do what the community want to do, namely, to provide a floor under the cattle business, and to encourage farmers to produce animals.
Another way of ensuring that slumps do not occur in the market would be to set up a market monitoring unit to foresee supply and demand problems in the beef industry and recommend evasive action in time. Such a market monitoring unit should be managed not just by the Government but by the Government in conjunction with the producers and processors of beef.
I have already indicated that existing trends show that there will be a decline of 300,000 in the number of cattle supplied to our factories next year. That prediction is based on information which is available to us, but very few people are reflecting on that information. Very few people have that information which is important to farmers making business decisions.
