Dáil Éireann debate -
Wednesday, 25 Nov 1981

Vol. 331 No. 2

Private Members' Business. - Common Agricultural Policy: Motion (Resumed).

Debate resumed on the following motion:

That Dáil Éireann calls on the Government to ensure that the fundamental principles of the Common Agricultural Policy are fully protected in the discussions on the 30th May Mandate on the EEC Budget and to take whatever steps are necessary from national and EEC resources to halt the decline in farmers' incomes and to restore confidence in the agricultural sector.

—(Deputy MacSharry.)

Mr. Power

Last night I said inflation was the farmers greatest worry. It is now 22.2 per cent. Fianna Fáil cannot be blamed for that, although they can accept some responsibility. The Coalition have added 5 per cent to inflation by direct taxation and other measures taken in the July budget. Nobody in farming can plan a future because the cost of inputs is growing faster than price increases. If we keep increasing our prices we will price our produce off the European and world markets. Last night the Minister said we had no entrée for our dairy produce into the United States or for our beef into Japan.

Instead of closing the Tuam factory in 1982 we should build up the confidence of beet growers west of the Shannon, expand our beet acreage there, and try to encourage farmers in counties which do not grow beet to take it on. The weather has been bad for the last two years but even in future good years inflation will choke initiative. We should ask ourselves why the upward trend in milk yield has not continued. Why have cattle numbers decreased? There was a big decrease from £6.17 million in 1979 to £5.82 million in 1980. I believe 1981 will see a bigger decrease, possibly 750,000 or 1 million fewer cattle, in our herds. That is the saddest feature of all. It is very sad to think that in 1980 we have fewer cattle than we had in 1970. That is a decade gone to waste. Our breeding stocks are being sold off and the Minister has a duty to see that this trend is arrested. In the short time he has been in office I have not seen him make any move in this direction. It is time he gave us some idea that he realises the size of this problem.

I do not see any Government plan to increase the use of fertilisers to allow us to grow grass and to keep more cattle. Drainage should be speeded up to provide more arable land. We now hear of a dispute between our live exports and cattle supplies for factories. I believe a little live export helps keep prices right. Farmers will remember the prices they got from the factories because they were at their mercy when Mr. Clinton was Minister.

We should be able to build up our herds to supply the factories and live export demands. The real future for our processing industry lies in processing at home. I want to remind the Minister that the constituency he and I represent has 1,000 people employed in the meat processing industry and that one-sixth of all cattle slaughtered in this country are slaughtered in Kildare. This is an area where the Minister should remove any curbs on the expansion of our beef processing industry. I suggest that an adjustment in the refunds for exporting boned-in beef to European third countries would help and enable the factories to compete on more equal terms with live exporters. This would increase employment in our boning halls. Instead of employing 1,000 people as at present — the majority are only sending out carcase meat and some of it into intervention — we could improve our processing industry fivefold. We could easily have 5,000 people employed in this industry and even more if we followed this to the end with vac-packed or cooked meats.

Schemes will have to be introduced to encourage farmers to put cows in-calf and rear young stock to build up our herds. It is very hard to expect people to increase the use of fertiliser if they have not some confidence in the future. We cannot blame them for marching to highlight their plight. Last week it appeared the Minister had no answer to this long-term problem. The big protest started and this week answers are beginning to surface. Perhaps it is only a coincidence but it appears that if you shout loudly enough you will get answers.

We have read and heard more of suggested help in the media than we were told about in this House. Perhaps the Minister of State will be in a position to tell us more. Grain growing farmers told me of the difficulties they are in. The tillage industry is in the doldrums. It should have potential. There must be a future for growing vegetables. Horticulture has a lot to offer. The Minister knows the new Kildare co-op which has been established to sell our potatoes. This is an initiative.

We should encourage diversification in agriculture. Can we give these people any hope of a guaranteed price for their produce? We know we are good at growing vegetables but can we sell them? Can we process them and put them on the European market? I see a future in this respect in cutaway bogs and in areas which become depressed when there is no future for them in the energy field. Their future should lie in growing and processing vegetables.

I would like to discuss the problem of development farmers, people who borrowed to improve their methods of farming or bought extra land to make their holdings viable. Some years ago all agricultural advice told the farmer to borrow and increase his cow numbers. The agricultural instructor would say 40 cows were not enough; the herd should be increased to 80; that the farmer should knock down the old byres, get a new silage layout and get slatted floors in the milking parlours. He was told the banks would be very co-operative. When the farmer went to the bank and asked for a loan of £30,000 he was told to borrow £40,000. A farmer nearly wanted a wheelbarrow to take home the money that was showered on him. I realise nobody put a gun to his head and forced him to take this money, but the advice from all sides was to go ahead. These people are now in trouble and need help.

The people who are in trouble are the farmers who were prepared to work. They did not bury their talents in the ground. The satisfied farmer sat back and left well enough alone. It has always been the dissatisfied farmer who changed the course of history and made an impact. It is the dissatisfied farmers who brought Irish agriculture into the twentieth century. I hope the Minister will have news of an interest subsidy which will help the 100,000 farmers who are in trouble today. I also hope the guidelines will not be too stringent. We heard there would be a limit of £50,000 and it has been suggested that it might be £100,000. Will the acreage stop at 200 acres? Will a farmer get an interest subsidy on a loan only if he is buying extra land to make his holding viable? What about the farmer who wants to buy a farm for a son who stayed at home and worked the family farm? These are questions to which I would like to hear answers tonight.

During the last election there was a promise about the removal of rates. We progressively adopted a policy of removing rates from agricultural holdings and there was a promise given by the incoming Government that they would adopt an understanding attitude and that local authorities would have an understanding attitude. So far no proper directive has been issued to the local authorities and the Minister for the Environment and the Minister for Agriculture should get together and tell the people what they mean by "understanding attitude". Some rate collectors are not inclined to believe that inability to pay is a proper excuse, it is not enough for them. They have suggested to some farmers that they sell off some of their land. If this is the policy it is sad to reflect that the day of the battering ram is not finished in Ireland.

As a former Minister for Fisheries I am aware of the big upset it is to any country's economy when third country imports are allowed into the Community. The Minister has to contend with imports of dairy products from New Zealand and cheap animal feed. He must try to reduce these and it is his duty to see that the term "Community preference" is not just an empty phrase. I have not stressed these matters tonight because it is the popular thing to do. I know that there is a big problem. The farmers have decided that after representations at all levels they must march from all over Ireland to Dublin next Friday to highlight the drop in their income, and their incomes have dropped by 6 per cent. Income from farming from 1979 to 1980 dropped by £48 million while non-agricultural incomes increased in the same period by 25 per cent. Farmers will come in bigger numbers than the turnout in Newtownards on Monday last, not as a third force but as the primary producers of Ireland. They have no fault to find with social welfare recipients or industrial workers who can give themselves increases of 18 per cent, 22 per cent or 25 per cent each year. They realise that they need that, but they cannot afford to have a drop in their income or their incomes lowered each year. They feel they must bring home those facts to the Minister. They have a genuine complaint and I wonder if the Minister realises that. Does the Minister know that the average earnings in industry in 1979 was £96.90 and in 1980 it had increased to £113.46? In the same period the CPI for food increased by 36 points while non-food items increased by 63 points. I wonder if the Coalition realise that Irish agriculture is in such a bad mess.

In the Government amendment, which is not being moved, the term "measures being taken" was used and I hope that is an indication that, while nothing has been done up to now something will be done. Did it take a group of people starting out from the Talbot Hotel in Wexford to bring this matter home to the Government? Did it take a tractorcade coming to Dublin to get something done? Farmers I have spoken to have told me that they want a fund to help those in trouble. They want money at reasonable interest rates. The Government have not shown any competence to bring down inflation yet, but what about devaluation of the pound? The Government should tell us the pros and cons of that. I hope the motion brings home to the Minister the need to deal urgently with the despair and despondency that farmers feel. I trust the Minister will act now and play his part to give hope for a future in Irish farming.

Minister of State at the Department of Agriculture (Mr. D'Arcy)

I welcome this debate and the constructive approach to it. It is a timely debate particularly when we are starting negotiations on the mandate and on prices in Brussels. Although a Supplementary Estimate will be moved tomorrow I believe the debate on this motion will serve a useful purpose.

The motion put down by Deputy MacSharry speaks of the need to halt the decline in farmers' income and to restore confidence in the agricultural sector. Let me say at the outset that it is very much the Government's intention to have confidence restored to the sector as quickly as possible and to pursue every possible course with a view to finshing a solution to the farm income problem. Not indeed that the problem has arrived over night, as Deputy Power would give us to believe, and it is ludicrous for the Opposition to suggest that the problem is a recent one. The present crisis in the agricultural sector had been developing over the last three years. The figures are there and they speak for themselves. Since 1978 real farm incomes have fallen by approximately 50 per cent. Cattle numbers have been declining, cow numbers have fallen, sheep numbers are lower and pig numbers have also declined. Those are the rather harsh realities the Government had to face.

This compares with a situation in the mid-seventies when farm incomes increased substantially creating a new confidence throughout rural Ireland. New farm homes were being built at an unprecedented rate, new farm buildings were being erected and many farmers were embarking on major farm development plans. In the rural towns and villages there was clear evidence of this new prosperity, new shops and garages, new community centres and in a great many areas, new schools.

For the first time in our history the living standards of farmers and their families were on a par with those of the people in the town. The farmer's wife expected the same facilities and comforts as the urban housewife. There was a new enthusiasm for agricultural education and many young people saw agriculture as providing a secure and rewarding occupation for the rest of their lives. It is rather tragic that, although the Opposition now tries to show such awareness of the problems of farmers' incomes and the decline that has occurred over the last three years, they did not take the necessary steps to solve the problems which they created when they were in office. If they had shown more concern when they were in office the problems we now face would not have materialised; at any rate they would have been much less serious.

The Government fully recognise the importance of agriculture to Ireland. It goes without saying that farming and its related industries are of paramount importance in achieving economic and social progress which is desired by us all and its importance to the whole economy cannot be over-emphasised. A healthy agricultural sector stimulates the growth in other areas, particularly industries dependent on it. The Government are deeply conscious of the contribution agriculture can make in helping to bring us out of the present economic difficulties. However, they are also conscious of the fact that the resources available to them are not unlimited and that money provided for agriculture may have to be withheld from other deserving areas.

On coming to office the Government took full stock of the situation which had been allowed to develop and drew up plans not only to help alleviate this situation but to restore agriculture to the rightful place it holds in the national economy. As the Minister already indicated, a number of measures have already been introduced. Last evening he announced the introduction of a new national interest subsidy from 1 December next. The subsidy will apply to participants in the farm modernisation scheme who are not in the development category. The terms of the new subsidy will be broadly similar to those of the EEC interest subsidy scheme for development farmers. The subsidy will be at 5 per cent and will apply to borrowings for approved investment in land reclamation or drainage, farm buildings and fixed equipment, which were grant-aided under the farm modernisation scheme. The sum which will qualify for subsidy will be the amount of the approved investment by the farmer for these purposes less any grant paid by the Department of Agriculture or the outstanding capital balance of the loan, whichever is the lesser. The subsidy will apply to loans arranged between 1 January 1976 and 31 December 1980. The maximum loan eligible for a subsidy will be £50,000.

This new subsidy will be of considerable benefit to many thousands of farmers. About 70,000 farmers are in the categories covered by this provision which will therefore be available to a very sizeable section of the agricultural community.

Mr. MacSharry

About £40 apiece this year.

Mr. D'Arcy

They are the Deputy's figures, not ours.

Mr. MacSharry

Those figures are in the Supplementary Estimate which will be discussed tomorrow.

Mr. D'Arcy

We never stated the figure in the Supplementary Estimate. The money will be paid to the people who qualify.

Mr. MacSharry

The Minister of State will see in the morning.

Mr. D'Arcy

When, in addition, the special aid measures being negotiated with the banks are introduced it will be seen that the Government have made a major contribution towards solving the difficulties arising for farmers who invested in the development of their enterprises during buoyant years.

Deputy MacSharry made reference yesterday to a statement I made in relation to the July budget. At that time I stated that the scheme would be available by 1 September. I would point out to Deputy MacSharry that it was announced in or around 16 September, so we are talking about a fortnight's delay only. The hold-up was not on my side; it was occasioned by the negotiations in Brussels. As the Deputy knows from experience, these things must be cleared in Brussels. Deputy MacSharry said also that Deputy Michael Smith had had previous negotiations with the banks and financial institutions. I should like to make it quite clear, without taking anything from what Deputy Michael Smith had done at that time, that——

Acting Chairman (Mr. Noonan,

Limerick West): Perhaps the Minister would address his remarks through the Chair.

Mr. D'Arcy

——there were no files available to me when I came into the office as far as any negotiations were concerned. That is not to say that Deputy Michael Smith did not do a job on them, and I would be the last person to take that from him.

Mr. MacSharry

Why is the Minister not being honest?

Mr. D'Arcy

During those negotiations I would point out that it was essential that we had a proper lending policy to accompany these 5 per cent interest subsidies. That is why negotiations were taken up with the financial institutions. It is important to place on the record of this House the agreement reached with the financial institutions at the time. I should like to read them out one by one. Where a number of loans are involved and eligible for subsidy there should be amalgamation and restructuring into one long-term loan — this to do away with the situation in which there were a lot of scrappy short-term loans — and then the repayment of all loans eligible for subsidy up to a 16-year period with a one-year moratorium. It is essential that the banks extend their ten-year period to 16 and absolutely essential that a one-year moratorium be available as a breathing space for most farmers.

Unfortunately, what happened over the years was that a lot of farmers took out short-term loans. That was very bad planning. It was agreed also that all surcharges and penalties on repayments should be removed forthwith. That was very important. God knows the problem was bad enough without adding surcharges and penalties of from 2 to 6 per cent. Furthermore, agreement was reached that all qualifying loans should carry normal interest rates, which is also important. Those are the negotiations which will apply to the 5 per cent EEC scheme and apply also to the national 5 per cent scheme. There are so many schemes in existence now people are inclined to become confused between them. As soon as all of these schemes have been worked out and finalised it is essential that their terms be put in writing and explained thoroughly.

Further measures are in the course of preparation and will be introduced as soon as possible. In a very short period of time expenditure on agriculture is being increased by over £70 million at a time when there have been cutbacks in practically every other sector. This underlines the commitment of the Government, their concern to assist farmers and to restore the necessary confidence to the sector.

The measures already taken and the measures to be taken in the future will help to halt the decline in the economy at large and in the farming sector in particular. Our major concern is that the agricultural industry should once again be allowed to play an important role in the Irish economy.

I am particularly concerned at the downward trend in the national breeding herd. Maintaining and increasing cow numbers is essential to the whole future development of the agricultural industry. It is important to our dairy sector and is essential also to our cattle and beef sector. When one remembers that cattle and milk account for approximately 70 per cent of our total agricultural production the importance of the breeding herd becomes immediately apparent. I am particularly concerned therefore to learn that in certain parts of the country farmers are selling off their breeding stock. I would urge them to think twice before they proceed on this course. I can vouch that it is the Government's intention to do everything possible to correct the downward trend and to promote the expansion so necessary to the development of the whole agricultural sector.

I have said before, and reiterate, that central to the whole of our economy is our national herd. It has come to my notice within the past fortnight that we are exporting in-calf heifers to some foreign lands. Unfortunately, some of our meat factories are also slaughtering in-calf heifers. This constitutes a retrograde step. We as a Government fully realise the importance of the national herd to our economy.

I announced last week the new European Investment Bank loan which will apply to farmers at an interest rate as low as 6 per cent. Moreover, it carries a fixed interest rate for the first two years of 6 per cent, for the next two years of 9 per cent and for the last ten years a fixed rate of 14 per cent.

Deputy Power asked if I could go somewhat further. As a former Minister he knows perfectly well that there is a certain distance one must travel before making announcements. However, I can say that further measures are being taken in regard to the promises made by the Fine Gael Party prior to the last election.

Apart from the actions which the Government have taken, or plan to take, as part of their programme for the development of the agricultural sector, the Government will of course be looking to Brussels to help in whatever way it can in the present difficult suituation. No effort will be spared in negotiations on the agricultural prices package for the coming year. We will be ensuring that the best possible deal will be obtained for Irish agriculture. These discussions have, in fact, already started and the position of Irish farming has been made known loud and clear. Although farm incomes have fallen badly in recent years I would urge farmers not to become disillusioned with the common agricultural policy. It has been particularly good to the Irish farmer in the past. I am convinced that within the framework of that policy we can negotiate a deal which will get agriculture on the road to recovery.

Deputy MacSharry spoke last evening of the efforts being made in the context of the mandate debate to have the principles of the CAP modified and changed. I can assure him that the present Government will not be prepared to accept any such changes and we have and will continue to point out that the objectives of the CAP are enshrined in the treaty and must be pursued. The priority consideration as far as we are concerned is the income crisis and we are demanding that account be taken of this fact and action be taken to alleviate the situation.

It is true to say that the Commission's report on the mandate and its later guidelines for the future development of the CAP have certain negative undertones. This is despite the fact that in recent years there have been improvements in the budgetary situation. These improvements have been brought about not by eroding the principles of the CAP but by careful market management and through improved prices on world markets where the Community, as a major exporter, can itself exercise a major influence. I see no reason to give way to despondency either because the Community is closer than it was to the limit on its overall resources or because it has increased its degree of self-sufficiency in farm products. The present budgetary limit must sooner or later be changed if the Community is to survive. Europe's food will continue to be needed, both in Europe and elsewhere. Indeed it is not long since there was a shortage of sugar and the CAP proved its value to Community consumers. We need not look too far to find food shortages at present. And I do not have in mind the less-developed areas of Africa. There are food shortages in Eastern Europe. The Community should be glad that it has ample supplies of food and Community leaders should think very carefully before they make any changes in the common agricultural policy that would seriously damage food production.

A major deficiency in the mandate report is its failure to give adequate recognition to the income difficulties farmers are experiencing. Over the past few years real farm incomes have fallen throughout the Community and the problem is particularly acute in this country. The basic problem facing the CAP is not one of budget resources or market balance, rather it is the question of how to ensure decent living standards for the farming population. The Community has that responsibility under Article 39 of the Rome Treaty. The Government will continue to insist that the commitment be honoured, in the short term as well as in the long term.

Suggestions for changes in the market systems for individual products are made in the mandate report. There is in particular the idea that the degree of support should be degressive beyond certain target quantities of production. It is important that the Community should not impose a permanent strait-jacket on its farm production. Ad hoc remedies for particular market problems have been found and have worked in the past; that general approach could be used again where and when needed. The Government will accept no arrangement which would deny Irish agriculture the opportunity to prosper and develop. It will, therefore, continue to be totally opposed to any milk levy based on a farmer's additional production. For a country whose agriculture depends heavily on milk production and where milk productivity is still well below the Community average, the long-term effects of the so-called super levy could be disastrous. The idea that a producer moving from, say, 600 to 700 gallons per cow should pay a heavy tax while one producing steadily at over 1,000 gallons should not, strikes me as a monstrous inequity.

It would not be fair to say that the mandate report completely ignores farm incomes. Direct income subsidies are suggested but they would apply only to the smaller Community farmers and they would be only partially financed by the Community. That suggestion, to my mind, amounts to divesting the Community of its responsibilities. It would put the more prosperous member states in a better position than others, to support their own farmers. Even if such actions were to be fully funded by the Community, I would still have objections. It is better that farmers should gain their income primarily from the market rather than through direct aids of one kind or another, and I think most farming organisations would agree with that.

There is a further aspect of the mandate report that is particularly objectionable from an agricultural viewpoint. This is a point raised specifically by Deputy MacSharry last evening. It is the suggestion that compensatory payments to the United Kingdom might be met from reductions in the advances to other member states from FEOGA, the agricultural fund. To me, that suggestion would involve a gross contravention of the principle of financial solidarity, one of the basic principles of the common agricultural policy. The Government are totally opposed to the idea; so also are some other member states. Perhaps we have heard the last of this suggestion — if not, Ireland will have no hesitation in standing out against it. If some relief has to be provided to any member state, it should ge provided openly and directly — and not through a flagrant breach of a basic Community principle.

Discussions of the mandate report have been going on intensively since last July. One point that has emerged is that some member states favour a fixed limit on FEOGA expenditure. To me, that is like cutting off the patient's feet so as to make him fit the bed. Community agricultural policy is not static. It has to deal with constantly changing situations both inside and outside the Community. It needs further development and improvement. The CAP cannot and should not be kept within a fixed budgetary limit. Policy decisions on agriculture as well as the day-to-day management of the markets can themselves contain whatever degree of prudence is appropriate and necessary. But the budget must fit the policy, not the other way round. It is plain to me and to many other states that the attempt to curb the expenditure of the CAP is an indirect way of stopping the flow of finances to the agricultural community within the Community itself. It is clear from what I have said above that there are many aspects to the CAP; we have prices, incomes, co-responsibility, cost of the CAP, etc. All these different aspects are being considered in both the context of the mandate and the Commission guidelines for the future development of agriculture. There are member states who are anxious to see major adjustments to the CAP. They want to see the principles changed and the support mechanisms altered. The different interests have been making their views known. The Irish Government has been making its views known very clearly and insisting on a deal which will enable Irish agriculture to regain confidence in the Community and develop from the present serious situation it finds itself in. It has been made quite clear that we will not accept any deal or any proposals which undermine the CAP and we will be pointing out the obligation set out in the Treaty to ensure that farmers receive a fair standard of living. On the national front as I have said, the Government have already taken certain measures and will be taking further measures. I know that the farmers themselves are already doing everything possible to expand output and productivity and I am convinced that together we will be able to get out of the current difficulties and restore development in Irish agriculture which will benefit not only the farming Community but the whole Irish economy. In the time available to me I would like to answer some of the arguments put up by the Opposition. We are in office five months and the present Opposition must bear the responsibility for the very serious difficulties with which farmers are faced. It has been suggested that but for the march to the Talbot Hotel in Wexford no measures would be taken. Let me point out exactly what measures are being taken. We have the EEC interest subsidy of 5 per cent in operation and payments will be made in the next two to three weeks. Yesterday the Minister for Agriculture announced a 5 per cent national interest subsidy and this will benefit many farmers. If a farmer has borrowings he will qualify under that scheme, but it is impossible to assess at this stage the number of people who will qualify. I am sure Deputy Smith will agree with me because I understand he has done some research into that situation.

Mr. Smith

I thought the Minister was denying that.

Mr. D'Arcy

I am not denying anything. I am just stating that when I took office there were no files available to me. I do not wish to take from anything Deputy Smith did. In addition we have the tax-based lending which is being negotiated at the moment and is no secret. The IFA and farmer organisations met the banks yesterday for discussions and there are reports in the papers today. This is a very complex issue and a very difficult one and this is the work of the present Government. Let nobody fool themselves that these schemes can be got into operation at the drop of a hat. We saw that they were necessary and initiated them. The tax-based lending scheme is an addition to what was already promised. We found it necessary to supplement the other two schemes.

Let me further point out that people who qualify under the EEC scheme and under the national scheme will also qualify in regard to the tax-based lending scheme. This is something that is not understood and many farmers are holding back and not applying under the other schemes. But as there is a recoupment under the EEC scheme in particular the Department of Finance will insist that, first of all, assessments be made under that scheme before any moneys can be paid out under either of the other two schemes.

There is quite an amount of misunderstanding about the special loans scheme from the European Investment Bank that I announced. People believe that we only got £2.5 million. That is not correct. The amount signed for on that day was £2.5 million but as the money is required applications can be made and the money will be forthcoming. There will be other schemes available.

An Leas-Cheann Comhairle

The Minister of State has until 7.43 p.m.

Mr. D'Arcy

That is three minutes. Fianna Fáil did nothing but allowed the situation to deteriorate.

Mr. Power

The Minister is saying everything is being done. Nothing has been done.

Mr. D'Arcy

Fianna Fáil allowed the situation to deteriorate and they should be ashamed. Deputy Smith should be ashamed since he comes from a good agricultural county himself.

(Interruptions.)

Mr. D'Arcy

It is a very worrying factor at the moment. I welcome the march. It may be of assistance to us in Europe and also at home. It is not the first time that there was a march and it is most unlikely that it will be the last.

Another worrying point is the question of inputs into agriculture. People are saying that farmers should cut down on inputs. Let me state, as a practicising farmer, that this is the area where a great number of farmers may dig their own graves. Let us look at the sales situation; tractor sales are down 60 per cent; farm machinery sales are down 50 per cent; farm building materials are down 60 per cent; compound feedstuffs are down 15 per cent; cattle feedstuffs are down 22 per cent; fertilisers are down 15 to 25 per cent and lime is down 50 per cent. This is a serious trend.

I am prepared to accept that certain cutbacks are necessary, but under no circumstances should there be any cutbacks in fertilisers, lime and feedingstuffs. That would be false economy. If the stock are there, they should be fed and if the land is there, it should be fertilised. This is vital, on the one hand to our whole economy and, on the other, to the farmer. They must not allow the fertility of their farms to run down. In the last ten years, in particular, the fertility of our soil has been built up and in order to retain that buildup, it is essential that a high level of fertilisation be used. Mr. MacSharry made a point which I would also like to deal with.

An Leas-Cheann Comhairle

The Minister of State will have to deal with that point in a minute and a half.

Mr. D'Arcy

It is well to have a minute and a half.

Mr. Power

The Minister will play a blinder.

Mr. D'Arcy

The question was brought up about pressure from the Opposition. I have never noticed any pressure from the Opposition.

Mr. Keegan

The Minister must have been deaf.

Mr. D'Arcy;

This is the first Opposition attempt, as far as this House is concerned, to bring to our notice the serious situation. We fully recognised the seriousness of the situation and said that we would take no action unless it was brought to our notice. It was not brought to our notice. I am glad that the Opposition are adopting a low profile in this debate.

Mr. Power

The Government are the people who are adopting a low profile. They withdrew their amendment.

Mr. D'Arcy

There was no need for the amendment. There was a serious neglect of the entire agricultural industry over a three-year period. The Opposition are now asking us to carry the can for that. We are four months in office and we have taken more measures than the previous Government did in four years.

Mr. Keegan

That is a right joke.

An Leas-Cheann Comhairle

The Minister will have to conclude now, please.

Mr. D'Arcy

This Government fully realise the very difficult situation facing the farming community. We are prepared to take the measures promised in the election campaign. That is the only road through. We will supplement those measures, where necessary.

An Leas-Cheann Comhairle

Deputy Hyland. I understand that Deputy Hyland has agreed to conclude at 8.10 p.m., to allow Deputy Sherlock five minutes.

Mr. Hyland

In my first contribution in the House, I am pleased to have the opportunity of speaking on the agricultural industry, to the extent that it was my livelihood before I came here and, indeed, I may have to return to it in the future. I want to acknowledge its kindness to me and the support which I have received from my colleagues in the industry who husband the country's greatest national resource, both in their own interest and in the national interest. We owe a very deep debt of gratitude to our farmers for their hard work in difficult times, sometimes with very little reward.

As a product of that great tradition — perhaps an unworthy one — I hope that my membership of this House will help to further the cause of this important sector of the community and that the industry will again prosper, so that our idealistic young farmers, graduating through the ranks of Macra na Feirme, will be given the opportunity of earning a decent living and contributing to our overall prosperity.

In the brief time available to me in this debate, I will speak, not as a farmer but as a member of this House, with the responsibility of developing agriculture as an essential part of our overall economic development. In fact, part of our present difficulties in agriculture are due to our failure to treat the industry as an essential part of national development. This is a great pity, because the agricultural industry is the base from which all other developments should evolve. I have particularly in mind the scope and opportunity for developing a successful food processing industry. This is an area which has been totally neglected and reflects very poorly on our capacity for organisation and management. When one thinks of the vast amounts of vegetables imported daily into this country and the opportunities for processing the products of our beef industry, is it any wonder that we have failed to tackle in a realistic way the problems of unemployment?

We must get away from the concept that agriculture is for farmers and of benefit only to farmers. The farmers are the people who have the skills and expertise to operate the industry. The State has the responsibility to create the economic climate in which that industry can operate and expand. The State must also devise and implement policies to exploit these resources, in the national interests.

In the present situation, it is the farmers, and not the farms, that are being exploited. I do not know of any sector more willing to respond to the challenge of developing and expanding than the Irish farmer. Since our entry into the EEC, our farmers have responded to the incentives to modernise the industry and some of our top farmers are, indeed, the most progressive in Europe today.

The agricultural advisory services have also responded to the challenge and assisted farmers in the preparation of development plans for the individual development of the various farm units. It is ironic that, because farmers responded to that challenge and because they had the courage to borrow to put the plans into operation, they now find themselves in serious financial difficulties. It is a shame that, in isolated cases, the agricultural advisory services are being made the scapegoats for some farmers in difficulties, when the reality of the situation is that the plans drawn up by the agricultural instructors were soundly based and costed at a time when inflation and interest rates were within the scope of the individual farmers.

The only scapegoats in this entire operation are the farmers themselves. They are in an almost irretrievable situation. They are drifting in a sea of raging inflation and are calling to the only people who can help them — the Government and the European Parliament — to come to their rescue. I appeal to the Minister here tonight not to stand idly on the shore because at this stage the farmers are suffering from exhaustion. Some are already becoming submerged in the sea of inflation and I appeal to the Minister to put out his hand even at this late stage to help them ashore. Their plight is not of their making; they are the victims of the malignant consuming disease of inflation from which other sectors — and I do not object to this — have been immunised. In the case of the farmers we must provide the cure and take whatever precautions are necessary to ensure that the disease does not occur again.

Farmers do not want subsidies or assistance in the usual meaning of these terms. All they want is the creation of an economic climate in which the industry can prosper. If we create that climate, the farmers will do the rest. In so doing they will generate economic activity from which the entire economy will benefit. In this, my first speech in this House, I would urge the economic planners to get back to the drawing board and to recommit themselves and the nation to the basic economic fact that our greatest material resource is still the land. There is tremendous scope for its development and such development would provide jobs for our other great resource, the thousands of boys and girls who are desperately seeking jobs and who have very few prospects in the present economic recession.

The very appearance of this motion on the Order Paper is our recognition of the plight of individual farmers and of the agricultural industry. When a new Government come into office it is only fair to expect the Opposition to give them sufficient time to become established. Adopting a constructive approach, Fianna Fáil allowed this Government to do so and we were hopeful that the new Minister for Agriculture would come to grips with the serious situation. We waited for action, but it was not until this motion was tabled that there was activity within the Department. Perhaps we should have tabled the motion a month earlier. The necessity to do so is an indication of the failure of the Government to recognise during the past few months that a crisis exists in agriculture. It is also a recognition of their failure to bring forward positive proposals to meet the short-term needs of farmers who are now under such severe pressure. It is only since this motion was tabled or, to be a little more generous, within the past six or eight weeks that the Minister has awakened from his day dreams. No doubt he was assisted in that awakening by his back benchers and by the Minister of State, Deputy D'Arcy. I served on the General Council of Committees of Agriculture with him and always recognised his sincerity as a man working in the best interests of farmers. Government back-benchers must be increasingly aware of the extent of the crisis and the disillusionment of the farming community. Even farmers who support the Minister's party are extremely critical of the lack of action.

Our spokesman on Agriculture, Deputy MacSharry, referred last night to a speech made some months ago by the Minister for Agriculture at the Strokestown agricultural show. In the course of that speech the Minister said that, given the present situation in a section of public finances, it was not open to the Government directly to compensate farmers for the drop in income which they had experienced in the last two years. He stated that the cost of direct compensation was greatly in excess of any expenditure which the Government were likely to be able to undertake. No doubt these would continue to be the views of the Minister and the Government were it not for the farm revolt, which is now obvious, and this motion which we have tabled in an effort to make the Government take the necessary action. Before the last general election the farmers were led to believe that if they assisted in getting Fianna Fáil out of office everything would be rosy. They even believed that the present Minister was some kind of messiah, a saviour of the industry. Regretfully his approach to the management of his Department is a replica of the Government's approach to the economy in general — a cold, harsh monetarist policy, putting bookkeeping before people.

As far as agriculture is concerned, it will be nothing short of a disgrace if the people who kept the economy going through the years are discarded before the need to keep balanced accounts. It is frightening that in a few months we are again talking about rescue measures for agriculture, a far cry from the chants and demands from other organised sectors to tax the farmer. Another harsh reality is that in the case of the majority of Irish farmers, family incomes are below those of workers in the agricultural service industry and other sources of employment. For administrators at national and European levels to allow this situation to develop is nothing short of a disgrace. It is a case of putting the cart before the horse, a policy that will lead to the collapse of the industry. In its wake many thousands of jobs will be lost.

The root cause of the present crisis in agriculture has been diagnosed by various people, politicians and economists, and the one point on which we are all agreed is that inflation is one of the major factors. It has caused input costs to erode profit margins leading to a decline in farming incomes of 60 per cent in three years. I do not think that any other sector in the economy would tolerate such a drop in incomes. That is why farmers must be described as being extremely tolerant. They have always been tolerant but they now find themselves on the roads heading for this city to express disapproval of the Minister's handling of agricultural problems. I agree with the Minister that perhaps it is not any harm from the European view point that they are expressing their disapproval in this way, It is not any harm anyway, because the Minister and the Government have been forced to embark on a course of endeavouring to provide some assistance to try to get farming out of recession. We thank the Minister for that because it is a welcome move. We will appreciate anything the Minister can do to help and he will have the full backing and encouragement of every member of Fianna Fáil in his endeavour to save farm incomes in the briefest possible time.

I do not think that can be achieved or that inflation can be controlled in the short-term, much as we should like to see it, because Government policy is heading in the opposite direction mainly as a result of the July budget. Inflation has been increased by 5 per cent and all immediate indicators show that if the Government continue to pursue their present economic policies inflation will be increased by 8 per cent early in 1982. So the prospect of restoring farm incomes is not on in the short-term.

All of this is happening under a Government who put forward as their main objective the control of inflation. In the House and during the election campaign they were extremely critical of the rate of inflation which they said Fianna Fáil allowed to develop. They are now appreciating the realities of running the country, of handling the economy, and I ask the Government and the Minister here tonight why it is that they are not able to keep the promise they made during the election that they would control inflation. Why have they introduced policies which are continuing to increase inflation? We will not have an opportunity to hear the Minister replying to that question.

There are two problems worrying agriculture. There is the short-term remedy needed to tide over farmers who have heavy borrowings. I have not had time to examine in detail to what extent the new interest subsidy will be of direct benefit to farmers. I doubt if it will produce the measure of relief which farmers need who find themselves in that position. The other aspect, which I believe to be of greater importance, concerns farmers who have not to repay heavy borrowing. I refer to the vast majority of small farmers whose incomes have been declining steadily due to escalating inflation being encouraged by the Government. The only answer to their problems is a realistic policy of price increases for all agricultural produce to enable farmers, like every other sector, to be compensated for inflation.

Last night in the House Deputy MacSharry forcefully made the case that the Taoiseach should go immediately to Europe to make a special case for assistance to Irish farmers. I join with him in asking the Taoiseach to do that, not only in the interests of farmers but of the nation.

I am sorry time does not allow me to develop a number of other points. There is need for a long-term commitment to the development of agriculture, a plan which would not be interfered with by changes of Government or anything of that nature, a financial plan to ensure we will not have the peaks and the troughs in agriculture which have been bedevilling the industry for years. Under the agricultural leadership of Deputies MacSharry and Smith there was a total commitment to the development of that industry.

Over the past few years when agriculture was in trouble, regardless of their political views, the farmers of Ireland realised that as Minister for Agriculture, Deputy MacSharry, more than any other Minister in the history of the State, was available at all times to meet them and to discuss their problems and, more important, to negotiate on their behalf within the European Community. I want to put it on the record of the House that, regardless of their political views, the vast majority of farmers recognised him as an honest Minister, a committed Minister, a man who got the best possible deal for Irish farmers in extremely difficult conditions.

I hope what I have said has been objective. I have endeavoured to be sincere in my comments on the absolute necessity to develop agriculture. As somebody said in an earlier debate, I am glad to have got over my first hurdle as a Member of this House.

Mr. MacSharry

The Deputy did well.

An Leas-Cheann Comhairle

The Chair wishes to congratulate the Deputy on his fine maiden speech.

Mr. Sherlock

Funds for the common agricultural policy have been flowing into Ireland by the hundreds of millions. This money has gone into private pockets. One would have expected it to be used to increase the volume of productivity from the land.

The national cattle herd is now smaller than it was when we first joined the EEC. Cattle sales rose from £104 million in 1969 to £599 million in 1979. Cattle have been sold on the hoof to North America, and the activities of a cattle baron called Purcell are mainly the reason for this situation.

Some members of this House sold cattle to this man and in so doing helped to put over 2,000 workers in the meat processing industry on the dole. Cattle were exported on the hoof to North America with the aid of EEC money intended to subsidise food for poor countries. The misuse of this fund has caused the national cattle herd to be run down below its 1972 level.

If one takes a figure of 100 in 1970 as the volume of agricultural production, in 1980 the figure was only 127. In money terms it is another matter. The 1970 figure in net value of agricultural production is £262.2 million. The 1980 value of net agricultural production is £1,163 million.

The 1970 real value of 100p was 28p only in 1980. When one examines the big jump in cash returns and measures this against the small increase in output, it is clear that a great deal of money was going into private pockets which should have been used to increase productivity from the land. This is happening at a time when workers are being asked to reduce their standard of living.

The numbers in the national cattle herd, on which a thriving export market in processed meat should depend, giving thousands of badly needed industrial jobs, have fallen considerably. The numbers in the national cattle herd were down from 5,956,000 in 1970, to 5,826,000 in 1980. When the figures for this year come out, it will be discovered that the numbers will have fallen to a considerably lower figure.

Farmers are now looking for a Government grant of £90 million to rebuild the national herd. This will have to come out of the taxpayer's money. The national cattle herd will have to be rebuilt. Farmers cannot afford to borrow from the banks and pay their high interest rates, so the taxpayer will have to find the money. The taxpayer will also have to find at least another £10 million to support the 2,000 meat processing workers selling cattle for export on the hoof has put on the dole. The threat of further unemployment is haunting workers in other meat processing factories.

What is the workers' record for increases in productivity when measured against the 1970 figure of 100 and a 1980 figure of 127 for agriculture? Using a 1970 figure of 100 in all cases the increase in productivity in the food industry was to a figure of 142; in metals and engineering to 165; in chemicals to 305; in drink and tobacco to 157; in non-metallic mineral products to 184; in paper and printing to 116; and in textiles to 129. In almost all cases, and in face of rising unemployment, people on a wage or salary have registered a substantial increase in productivity. Surely they are entitled to ask what has happened to the hundreds of millions of EEC money which poured into private pockets.

It is a fact that about 70 per cent of the total EEC budget goes to subsidise agricultural prices. This has not led to a substantial increase in productivity from the land, or to lower food prices in the shops. The fact that 70 per cent of the EEC budget goes to subsidise agriculture means that much less is left for the social and regional funds. Together, in fact, they get only 8 per cent of the total EEC budget.

It is also a fact that we have a huge import bill for food which we could very well grow ourselves. The hundreds of millions we pay out for our food imports is responsible in part for our present serious economic plight. Surely we should be able to produce more cheaply close to the home market than it is possible to produce, ship half way around the world and sell to undercut us on the home market. How can we expect to sell on the international market when we cannot even hold the home market?

An Leas-Cheann Comhairle

The Deputy's limited time ended two minutes ago.

Mr. Sherlock

Professor Patrick Conningham of the Agricultural Institute has told us that our pastures could carry 50 per cent more dairy cows and 100 per cent more beef cows. Surely this is a scandal. In most of Europe they market a 16-month old beast. We think we are doing well with a 24-month or a 22-month beast.

An Leas-Cheann Comhairle

Tá an t-am istigh. Deputy Michael Smith to conclude.

Mr. Sherlock

If we are to spend hundreds of millions either of our own money or EEC money, let us be sure that we get an efficient food industry for the money spent. Let us modernise production from the land so that our people can have food prices which allow them to put good food on the table.

Mr. Smith

I thank all the Deputies who contributed to the debate. The absence of many people from the Government and the left wing of the Government was noticeable. If their absence from this debate is an indication of their interest——

Mr. O.J. Flanagan

On a point of order——

An Leas-Cheann Comhairle

There can be no point of order when there is only 15 minutes remaining.

Mr. O.J. Flanagan

Is it in order for Deputy Smith to refer to the absence of Deputies from the debate?

An Leas-Cheann Comhairle

He is perfectly entitled to do that. The Deputy is out of order.

Mr. Smith

If we are to interpret their interest in the plight of Irish farmers and Irish agriculture in general from their attendance for this debate we will find that there is ample reason why we should be faced with a farming revolt. The fact that last night the Minister for Agriculture withdrew the Government amendment is tantamount to an admission that nothing has been done by them during their period in office. It is also asking the House not to endorse the measures he claimed were introduced. Fianna Fáil put down this motion because we were anxious to highlight the major difficulties which beset agriculture. We are not trying to claim that all these difficulties started overnight.

I wish to take this opportunity to congratulate Deputy D'Arcy on his appointment and I sincerely hope that his tenure in office will be at least as long as mine. He came into office with the Minister for Agriculture, Deputy Dukes, and they were heralded as a team which, together with Deputy Nealon, would create a better future for agriculture. I am not trying to single out individuals for blame but Deputy D'Arcy must be aware of the depth of frustration and anger, because it is one thing to have the answers, to problems but it is another to veer from where you claimed the answers were. It was a case of three wise men on the road to the East who accidentally ran into the Taoiseach who, after an injection from him reduced the suggested pay norm from 9 per cent to 6 per cent and who in turn met a hurricane of protest from the workers who faced rampant inflation which was caused by the Government when they were put into office. We had a U-turn, the first of many. Deputy D'Arcy said we could not afford last year's national wage agreement. We were told the Fianna Fáil Government were not doing anything with the problem and that the Opposition had all the answers.

It is remarkable in the course of the Minister's speech that he left out only one paragraph, which I will now read:

The real solution to the farm income problem is to break the spiral of inflation. This the Government sees as its main priority. But this cannot be controlled overnight. We must ease the pressure on farmers, especially as regards the cost of inputs if the industry is to get on its feet again. This is a major aim of the Government and anything that can be done to control inflation will be done.

An Leas-Cheann Comhairle

What is the Deputy quoting from?

Mr. Smith

I am quoting from a supplied script. I have read a paragraph which the Minister of State saw fit not to read.

Mr. D'Arcy

If I omitted a paragraph it was by mistake.

Mr. Smith

It is remarkable that that is the only paragraph the Minister decided to leave out. I also have the Fine Gael manifesto on agriculture. According to that, farmers' wives will have cheques for £9.60 hanging from their pockets. There will also be a payment of £100 for additional in-calf heifers. Where has that gone? Is it true the Minister is running into difficulties in Brussels in relation to that?

Mr. D'Arcy

No.

Mr. Smith

We must build up the national herd. Why, in all the schemes which the Minister has announced, is there nothing that will inject encouragement into agriculture to increase the national herd? The Minister also announced he was going to expand the national breeding herd by giving a 5 per cent subsidy. We have heard nothing about that.

Mr. D'Arcy

It was announced last week, the Deputy must not have been listening.

Mr. Smith

We had a special interest subsidy promised for young farmers. We were promised reclamation in the western counties which would qualify for a grant of 70 per cent. The Minister was also going to include ploughing, cultivation, fertilisers, stone picking and reseeding.

Mr. D'Arcy

We had to clean up the mess first.

An Leas-Cheann Comhairle

The Minister of State will have to keep quiet.

Mr. Smith

We have probably heard the last of many of these schemes. Farmers are in revolt because all these promises have come to nothing. The Minister is not even paying farm modernisation grants——

Mr. D'Arcy

Because the Deputy made no provision for it.

Mr. Smith

If it requires a supplementary estimate, we will pass it and allow the Minister to pay these grants. There have been times in the last couple of months when I felt we had no Minister for Agriculture but two Ministers for Finance. I am not sure whether it is hostility or a lack of comprehension as to the real value of agriculture, but the Department of Finance seem to continually look at agriculture to see where they can effect savings. It is time to quantify what it means to the economy and an addition of £300,000 to our national herd could make a great difference to our balance of payments. If the pace of development in agriculture which was there up to the end of the seventies could be reactivated, it is possible that some of the financial difficulties with which we are faced at present could be overcome. I would like the people in the Department of Finance and the present Minister, who seems to be a ruthless monetarist, to look seriously at the prospects in that sector of the economy.

I agree with the fine and honest contribution made by Deputy Hyland. He said he might have to return to farming sometime. On the basis of his performance here and in his own constituency, if he does return it will be his choice.

Deputy D'Arcy mentioned there were no files on the efforts made by the previous Government with regard to farm borrowing difficulties. That is blatantly untrue. One of the schemes the Government are now announcing was completed by the former Minister for Agriculture, Deputy MacSharry, the other was announced at the latter end of May. It depended on getting agreement from the banks on their contributions towards a solution to the problem. We said on many occasions that the banks had a responsibility for the people who were in financial difficulties and that they had a role to play. When a solution was found the State would have to make a contribution which would inevitably help the banks. As I said, we wanted to ensure that the banks would play their part in arriving at a solution but we are now out of office and we have not seen very much progress in this area.

I am sorry I have not the time to deal with other matters which were raised in this debate but I might have an opportunity to deal with them in tomorrow's debate on the Supplementary Estimates. I am glad the House has agreed to this motion without putting it to the vote. We will be anxiously watching developments during the next few months and we will put down this motion again if the need arises.

An Leas-Cheann Comhairle

Is the motion agreed?

Mr. MacSharry

I hope the Government know what they are agreeing to and we expect to see action in the near future.

Mr. D'Arcy

We know what we are agreeing to.

Mr. Power

The young farmers are on their way.

Question put and agreed to.

(Interruptions.)