I am calling on Deputy Allan Dukes. He has been delayed and I am giving him a few minutes.
Adjournment Debate. - EEC Farm Prices.
First, I apologise to the Chair and to the House for the slight delay in arriving and thank you for your indulgence in the matter.
The Deputy now has only 16 minutes.
I think what I have to say can be said in 16 minutes. But the ramifications of it may last a good deal longer than that.
I thank you for agreeing to allow me time this evening to examine this matter and to ask some questions to which we need answers following the arrangement that has been made in Brussels and the information that we have been given last evening and during today by the Government. I must say that the information circulated by the Government in this sheet here and in the press release today can only be said to put the best possible light on the agreement. It is probably normal that that should be the case. But in fact the figures which it contains do a great deal more than justice to the agreement that has been arrived at. It is stated in the document, and was stated by the Minister in the House on 6 May, that the value of this package in a full year to Ireland is £235 million. The Minister chose his words very carefully when he was saying that. —"the value of the package in a full year". In a hypothetical full year it might indeed come to that. But in this particular year, and even in this full marketing year, the value of the package would be considerably less than that. I would also recall that the Minister said on that occasion that the package being worked out was very attractive as far as Irish farmers were concerned. He went on to say that he had discussed it with Irish farmers and farming organisations and that it was acceptable provided it could be implemented as soon as possible. That is not the kind of reaction I have heard or indeed that kind of reaction I would have myself.
On a quick reading of the figures that have been circulated to us by the Government and on some checking with other sources I would estimate that the value of the package in this year of 1982 will amount to not more than about £120 million, that is, applying the likely effects of these price increases to roughly last year's level of output. So, in effect, the package this year will be worth just about half the figure which the Minister has put forward. Even if all of this £120 million or so worked itself into farm income — and we cannot obviously be sure of that because we are not sure yet what is going to happen to costs during this year — it would not be sufficient to maintain incomes at the already depresed levels of last year and it would not in any way contribute to an improvement of the farm income situation where we have seen over the last year a very serious reduction.
It is wrong and it does a disservice to this House and to our farming community to try to present this package as being worth more than it is, as being worth about double the possible result that it could give this year. Even if we looked at the effect of it in a full year, even if we looked at the effect of it in the 1982-83 marketing year, and taking the Minister's startling figure of £235 million, the value of the package could not possibly be more than £200 million for that full marketing year because we are not going to get the benefit of the calf subsidy, which is part of the package, until the end of that marketing year. That must cause us some serious concern. The Minister has said in the House, and has agreed in fact with the general opinion, that we need measures that will give a stimulus to expansion in our livestock sector. This calf subsidy was going to be one of those measures to which we would look for an incentive to increase numbers and it was going to be one of the measures to which we would look for a direct injection of cash into the livestock sector. We find that on the present plan the calf subsidy will apply only to calves born during the marketing year beginning on 20 May, tomorrow. For all practical purposes all our calves for this year have already been born and therefore cannot qualify for the subsidy, so we are going to get no benefit from that calf subsidy this year. That is about £32 million to £37 million which will not be available in the livestock sector this year and which was included, it appears, in the claimed value of this package.
I might add that since the total value of the package during this year, if my calculation is correct, will not exceed about £120 million, the claimed benefit of this to our balance of payments, which on the Minister's figures is £170 million, must obviously be something that cannot be reached either. I understand that in relation to the calf subsidy the implemented regulations to put it into have not yet been adopted and I would ask the Minister very seriously to go back and see if, even at this late stage, he could not, in the discussion on these implementing regulations, get some change which would mean at least that some of our crop of calves for this year could be brought into the scope of operations of this scheme. Unless we do that we will not see any appreciable injection of funds from this source into our livestock sector this year.
I would remind the Minister that he has some very good arguments to use in doing this, as he had during the negotiations of the whole package because agricultural spending in the European Community this year is running below budgeted levels. Whatever is going on in terms of the United Kingdom budget contributions, there will be some leeway in the farm spending already budgeted for, and the Minister should try to profit from that when it comes to talking about implementing regulations for the calf subsidy. It will be very disappointing if, even at this stage, an attempt is not made to secure some benefits from this situation.
I come now to the other aspect of our livestock expansion programme which causes me some worry. It is stated in the document the Government circulated that under the calf heifer scheme grant aid amounting to £70 will be paid by the Irish Exchequer this year and for the two following years. What is the real situation here? I had reports this morning that the calf heifer scheme was not agreed as part of the package, that it is a scheme which could be agreed only with unanimity in the Council, not because of the United Kingdom budget problem but because it is a scheme which needs sanction under Article 93 of the Treaty and therefore must be agreed unanimously. I heard that the matter was not raised in the Council until after the British Minister and his Minister of State left the meeting and therefore it was not possible to get unanimous agreement. If that is the case I would be very worried because it means that instead of having the three-year programme from 6 May, which the Minister claims, we do not have any more than a one-year agreement. The Minister knows as well as I how important it is that we have a longer term programme. I have been negotiating for a four-year programme with EEC funding. If it is true that the heifer scheme was not part of the agreement finally reached, because there had to be unanimous agreement, I want to know when the Minister is going back to get this agreed because we need the assurance that we will have a multiannual livestock development programme. I would like the Minister to tell us exactly what the position is in this respect.
As far as milk is concerned, we all agree that the changes in the co-responsibility levy are welcome but we would all wish to see it go further. We wish to see it disappear entirely. Within the limits of the agreement — and those limits are fairly tight and unsatisfactory — I am glad to see there has been some relief, particularly for the smaller farmers and for farmers in disadvantaged areas. This will provide some small encouragement to them because there will be a little extra for them in developing their productivity and increasing production.
For the cereal sector, an increase of 8½ per cent falls way below what is required even to maintain margins. This sector has taken a hammering over the last couple of years, both as a result of the price situation and the weather. This sector needed an increase of more than that magnitude this year even to maintain margins which are under very severe pressure and which are resulting in a situation where the kind of progress we made in recent years in developing productivity by switching over to new varieties is very much at risk.
I note in the agreement that progress has been made in relation to refunds for beef exports. I am glad the Minister was able to follow through on the commitment I extracted from the Commission at the beginning of this year and that we now have a relative improvement in the refunds for boneless beef exports as against refunds for live cattle. These rates are all increased, but there has been a relative extra improvement for boneless beef and I am glad to note that in relation to hindquarters we will now have the same total amount of refunds available on boneless hindquarters as there had been up to now on the bone-in article. That is a very substantial improvement and I hope our beef exporters will take full advantage of it because it is one of the areas which had been most the subject of complaint over the last couple of years. I hope this progress will enable them to compete more effectively on the market and to make progress in market penetration for boneless beef in third countries, which is something we all want to see because we all want an improvement in employment in our meat factories where there have been very serious losses in recent years.
Apparently there has been no change in the British MCAs. What happened is that the rate of MCA remains the same but now that the prices have been increased by the margin agreed here, in money terms the MCA will increase somewhat, and will continue to be a distorting element in the market. We had a number of difficulties in the beef and other sectors, but particularly in the beef sector, and we now find ourselves in a position where competition from Northern Ireland for that, and a number of other reasons, are creating problems for our exporters. It is regrettable that we did not have a measure of progress in this area. I do not see any reason why we should continue to agree that the United Kingdom can opt out of the same kind of procedures that apply to all other member states. In a number of other cases we have had changes in their MCA rates to eliminate gradually this cause of distortion in the market. That is an unsatisfactory aspect of this agreement which we must pursue energetically in the future.
I ask the Minister to ensure that once the agreement has been made and that we have a range of increases, inadequate as they are, he takes the necessary measures to ensure that these increases are fully reflected in the prices farmers receive for their produce. In that respect an increase of 0.64p per gallon for processing costs in the dairying sector is far below the level required to allow our dairy processors to pass on the full increase in milk prices to our milk producers. This is an area where squeezes have been in effect for the last few years and I am afraid that because of the meagre allowance for increased processing costs, the actual amount passed back to farmers in terms of the increase in the ex-farm prices for their products will not be up even to the level we have in this agreement. I also ask the Minister to make sure that provision is made for an increase in the farm price of liquid milk straightaway. There is no reason for delaying because this matter should be handled simultaneously with the increases in the creamery milk prices, and I ask the Minister to ensure that that is done.
While I am glad agreement has been reached, this matter has dragged on for far too long and I am bound to point out that it is a good deal less than we started to negotiate for. It is not going to bring our farming community back into a position of growth in real income. There may not be an overall growth in real incomes in the economy this year, but there is no other sector of the economy which in 1981 was dealing with a real income level that was half what it was in 1978. To that extent this is a most unsatisfactory arrangement. I call upon the Minister and his colleagues in Government to ensure that the other side of the equation, which is what happens to our own domestic inflation, is brought under control rapidly so that from that quarter we may expect some relief for our hard-pressed farmers.
First of all, the Deputy should be well aware that the farm price package about which we are talking and which will be implemented from tomorrow, would not have been possible were it not for the initiative taken by our Government and other Community Governments in deciding that the blocking mechanism being used to frustrate and prevent farm prices from coming into effect would have to be defeated. The important aspect is that in recent weeks we were faced with the prospect of no farm package and no farm price increase for months ahead if the Community stood by——
Stood idly by.
——and let this blocking mechanism continue without challenge. It was eventually decided, by reluctant agreement amongst seven member countries of the Community, to invoke the basic legal protection of the regulations of the Treaty of Rome to implement Community policies — in this case the common agricultural policy price fixation — by way of a qualified majority vote. In the interests of Community solidarity and consensus, which has always been the Community approach, that decision was reached only after much agonising thought and persuasion. At the end of the day, the total blocking abuse by the United Kingdom Government of the Luxembourg Formula and of the veto provision was seen to lead to a legal vacuum and a complete breakdown in the implementation of Community policies. For that reason, reluctantly, we decided, on the evening before last in Brussels, that yesterday we would have a qualified majority vote for the first time ever in the implementation of the farm prices. I am glad that we played a part in making that decision. It is an important decision with many implications, but the alternative was that Irish farmers would be without their increase, possibly for months ahead. There was absolutely no sign that the blocking mechanism which involved the abuse of the Luxembourg Formula would be removed.
I would much prefer, in Community decisions in relation to agriculture and other areas, that there should be unanimity and, indeed, the whole Community system is built on a unanimous and consensus approach, but in this case Ireland was fully justified, with six other Community partners, in achieving the requisite 45 votes which amounted to a qualified majority, to ensure that we implemented the farm package this year for the Community as a whole, which was and is of decided benefit to the Irish farmer.
Make no mistake about it, I agree that there has been a diminution in the overall benefit by reason of the delay in implementation. I am pointing out, however, that if we did not go along with the decision to have this matter implemented in a qualified majority vote manner, the delay would have been far longer and the losses far greater. The £235 million which we have estimated on an annualised basis would have been of benefit to the Irish agricultural sector, but that has to be diminished somewhat by reason of the six weeks' delay in seeking to achieve a consensus. If we had followed the logic of the British and, indeed, the Danish and the Greek position, we would have spent the months ahead without any increase or any of the benefits of the package. These are the facts of the matter. The seven countries involved, I must emphasise, constituted the minimum to pass this matter by way of a qualified majority vote.
The United Kingdom Government were engaged in a blocking mechanism by seeking to make a linkage between the agricultural price fixation and the budget refund which is a totally different matter. On that basis we, the French, the Italians and the Germans, who have made statements already to this effect, agree that the veto decision still remains but is not to be abused by bringing in extraneous matters which bear no relationship to the matter before the Council. A separate matter from a separate Council was sought to be introduced by the United Kingdom to paralyse the decision-making of the Agricultural Council, which is required under the regulations of the Treaty of Rome to bring in its annual price fixation. Our argument, and that of the other six Community countries which supported us, is absolutely impeccable. Had we not made the decision and had we followed the point of view of——
On a point of order——
There is no point of order, Deputy.
——would the Minister please answer the questions raised?
Please, Deputy, the Minister is replying. There is no point of order.
He is not telling us anything.
He has said that ten times over.
Had we not followed that point of view, and the point of view——
The Minister, without interruption.
He is making his own contribution and he does not need any help from the Opposition bench. Deputy L'Estrange was silent for four years when he had an opportunity to contribute.
The Taoiseach told the Minister off fairly quickly about.
The Minister to reply, without interruption.
(Interruptions.)
Please allow the Minister to reply, Deputy L'Estrange.
For four years the Deputy had not a word to say.
If we had not adopted that policy——
This is scandalous.
——along with our other Community partners, there would be no farm package in existence at the moment.
The Minister has said that five times.
Having said that, I want to copperfasten that point.
It is now copperfastened.
Please talk about the issues concerned.
That is the important point of this matter with which we are dealing. The issue about which I am speaking is the fundamental issue of all. There would have been no farm package in existence but for that political decision which we took. In regard to calves, the calf premium scheme will mean a transfer from the Community to Ireland of £37 million and a £22 grant for each heifer after six months' rearing ——
Calf.
Calf. The Minister said heifer.
—— Born after tomorrow, each heifer. Sorry, each calf.
It could be a heifer-calf.
Each calf, is that quite clear?
Not for this year, for next year.
A £37 million transfer from the start of the marketing year, that is from tomorrow, until the end of the marketing year.
That will not be paid for until next year.
The Minister has one minute.
What is involved there is £37 million transferred over, Deputy Dukes is well aware of this, meaning £22 per dropped calf after six months' rearing. Is that quite clear? On top of that we have a national aid of £70 per in-calf heifer. Deputy Dukes started off this scheme on a subsidy-interest basis. It has now been translated into a grant basis over the next three years.
This is real money for the farmer.
So that instead of just limiting it — I am not making any political point, but just trying to give information to the House. Instead of being a subsidy on interest, it is on a grant basis for next year and the following year. We are committed to do that over a three-year period.
Is that agreed to?
That is agreed to. I want to emphasise that that is a matter outside the package itself. It is minuted as a unanimous decision. It is rather like the beef matter to which I would like briefly to refer, which is also outside the package but is of enormous benefit. While one is out in Brussels in negotiations like this, as Deputy Dukes is aware, one does a lot of marginal negotiating which is helpful. This in-calf heifer grant is not included in the package but is a separate matter which has been agreed to.
The Minister presented it as part of the package.
Of course.
Minister, it is now 9 o'clock.
It is not part of the farm package, but the in-calf heifer grant has been agreed separately and the other matters also included in the document, which I gave for the benefit of the House, concerning the beef aspect which is of great importance. We now have, for the first time, an equalisation in boned-out beef, as well as carcase beef. There is complete equalisation of refunds in respect of each of these areas. There is also a rise in the level, when compared with livestock exports. There is a differential advantage in favour of carcase beef and boned-out beef both of which will be at the same level. Like the in-calf heifer grant, they are separate matters not included in the package, but were negotiated at the same time. I hope that that is understood. They were included in the document which was presented.
I congratulate the Minister on talking for ten minutes and not saying one single word about the effect of all this on the farmers.
The Dáil adjourned at 9.02 p.m. until 11.30 a.m. on Thursday, 20 May 1982.