Dáil Éireann debate -
Wednesday, 26 Oct 1983

Vol. 345 No. 4

Adjournment Debate. - Milk Super-Levy.

Mr. H. Byrne

I thank the Chair for giving me an opportunity to raise this very important issue. I intend to divide my 20 minutes between Deputy Kitt and myself.

The proposal to impose a super-levy on milk within the EEC is potentially the most dangerous proposal for Irish agriculture in the history of this State. The present proposal has directly arisen from instructions given to the Commission by the European Council at Stuttgart which was attended by the Taoiseach and the Minister for Foreign Affairs last June, and is greatly at variance with the statement made by the Taoiseach in the Dáil and reported at column 2687, Volume 343 of the Official Report of 22 June 1983:

The Minister and I, with gratifying support from colleagues, were successful in preventing damage to Irish interest in the Common Agricultural Policy. In fact, a comparison between the proposal circulating recently on that subject and the conclusions of the Stuttgart Council will show a really remarkable degree of understanding and support for the basic principles of that policy....

He went on to say that the outcome of that particular meeting was strikingly positive and that the impulse towards the maintenance and development of the Community and its policy was strengthened.

In the past month the Minister, Deputy Deasy, said that only two countries within the EEC were supporting Ireland's case, but at the weekend he said he had no support whatever. The Taoiseach's statement of 22 June and the statements made by the Minister in early October and over last weekend are certainly not consistent. First, the Taoiseach said he was successful in preventing damage to the Irish interests with gratifying support from colleagues; now the Minister says he has no support whatever. Who is telling the truth?

The Government's handling of this whole affair has been haphazard, unco-ordinated, a complete shambles and, to say the least of it, misleading. Let us examine the whole issue of the levy, how it will affect Ireland and why the Government must adopt a stance of total rejection of the proposal.

Part of the European Commission's plan for reform of the Common Agricultural Policy is the proposed introduction of a super-levy or a tax on milk production. This tax, according to the Commission, would mean that milk producers would have to pay for the entire cost of disposing of milk surplus above a given quantity. The super-levy would be additional to the co-responsibility levy of 2 per cent on milk production introduced in 1977. This new tax would apply at a rate of 75 per cent on all production over 101 per cent of the 1981 figure. It is estimated that the overall effect of the super-levy, if introduced, would be to reduce the gross national product in Ireland by at least 1 per cent and the cost of the super-levy to Ireland would be £146 million in the first year. In effect, the super-levy would be nothing more than the imposition of a quota on Irish milk production which would mean a complete blockage in the expansion of our dairy sector.

Let us not forget that Ireland has one of the most undeveloped dairy sectors in the Community, and is the one most dependent on the milk sector. Over 53 per cent of Irish farm families are dependent on milk production; the EEC average for farm holdings with dairy cows is 35 per cent. Over 85 per cent of Irish dairy farmers have less than 30 cows, compared with 46 per cent in the Netherlands or 35 per cent in the United Kingdom. A most important statistic to remember is that 80 per cent of all beef produced in Ireland comes from the dairy herd.

On the employment situation, it is estimated that the super-levy, if it were to be introduced, would put 14 per cent to 15 per cent of Irish milk producers out of existence with serious consequences for employment. In 1960 there were 390,000 full-time farmers in Ireland; in 1970 there were 283,000; in 1980 there were 220,000. The figures for 1982 are not yet released, but Deputies can be sure they are considerably lower than the 1980 figure. In Ireland 18.9 per cent of the entire work force are employed on the land; the Community average is 8.2 per cent. 26 per cent of those employed in agriculture in Ireland are under 25 years of age. There are 11,000 people employed in the dairy processing industries, while 6,000 people are employed in beef processing. There are thousands of Irish men and women employed in the food processing industries and in agri-related businesses. In a nutshell, up to 45 per cent of our entire work force are employed in agriculture, either directly or indirectly.

Agriculture accounts for 14.2 per cent of our gross national product. This compares with 1.9 per cent in Germany, 2.1 per cent in the United Kingdom and 3.7 per cent in the Netherlands. Milk production accounts for 33 per cent of gross agricultural output and 4.5 per cent of the Irish gross national product, and dairy herds account for 80 per cent of our total cattle breeding herd. Milk output is six-and-a-half times more important to the Irish economy than in the overall economies of the member states. I make these points to prove that Ireland is a very special case. Milk and beef output is 7½ per cent more important to Ireland than to the overall economies of the member states. It accounts for 9.61 per cent of GNP in Ireland, .79 in Germany, .8 in the United Kingdom and 1.4 in the Netherlands.

Ireland's average milk yield of 680 gallons compares with yields of 1,001 gallons in the Netherlands, 1,040 gallons in Germany and 962 gallons in the United Kingdom. Ireland's share of total EEC milk production is 4 per cent compared with 24.2 per cent in France, 23 per cent in Germany and 15 per cent in the United Kingdom. Germany, Holland and the United Kingdom accounted for 50.3 per cent of the total EEC production in 1981. The Netherlands and Germany account for 70 per cent of total imports of cereal substitutes while Ireland, France, Italy and Denmark account for 55 per cent of total agricultural production. They import only 12 per cent of all cereal substitutes, and twice the total forage acreage is imported from outside the Community to boost artificial milk yields.

It is estimated that 20 million tonnes of animal feeding stuffs are unnecesarily imported into the Community and that 10 million tonnes are used as dairy feeding which, in turn, is responsible for producing an extra 20 million tonnes of milk. New Zealand's share of the United Kingdom butter market has risen from 25 per cent in 1974 to 34 per cent in 1983. This affects Ireland and Denmark whose traditional market is the United Kingdom. I was interested recently to hear that the Minister intends to force a situation in which New Zealand's share will drop significantly. The Minister must also take into consideration the 10 million tonnes of feed imported from outside the EEC and used for the dairying industry.

Quite obviously Ireland's case is genuinely a special one. Our partners in the EEC must be told in no uncertain terms of the special nature of the matter in relation to Ireland. They must be convinced that, as far as Ireland is concerned, this is a national question and not a sectional interest one. They must be made aware that all farmer organisations and the Irish Congress of Trade Unions are unanimous in their total rejection of this proposal.

Fianna Fáil have been consistent in their stance in relation to any such proposal. Deputy Ray MacSharry, as Minister for Agriculture, succeeded in keeping a similar proposal at bay in 1979. This latest proposal was put before us in June, shortly after the Taoiseach told us he had prevented any attack on our interests. I wonder did he attend that meeting at all? We in Fianna Fáil have indicated our full support for the Government for a total rejection of the super-levy. We say again that we support the Government in anything positive they do. But we must know where the Government stand on this issue. Are they prepared to stand alone against this proposal? The weeks ahead will be a true test of their patriotism. I say let Ireland be first and if the Minister does not intend to do this then he should, as in a code of sport with which I am not terribly familiar, apply for a transfer. I might ask the Minister also if he noticed over the weekend that in the Taoiseach's address to the Fine Gael Ard-Fheis little attention was paid to the Minister's Department whereas he went on at length about other Ministers and Ministries. This battle can be won only by men of conviction who are prepared to show that they are better Irishmen than Europeans.

The Government have failed miserably to put a strong case for Ireland to the member states. This was clearly indicated to me in a letter written by Mr. John Taylor, MEP, in answer to a request for support from Wexford County Committee of Agriculture when he stated categorically that the United Kingdom would not subscribe to anything less than the super-levy. Obviously no attempt had been made to educate Mr. Taylor as to Ireland's special case.

I say this evening that it is not too late for the Taoiseach and Minister for Agriculture to undertake a tour of European capitals to convince their respective counterparts of Ireland's situation and to plead for support. In itself such a tour would demonstrate the conviction of our Government, if they harbour such convictions. It would also direct attention to the cause. Such a tour was engaged in prior to our accession to the EEC. This issue is of similar importance.

Let me repeat that this is a national issue, one which has attracted the concern of everybody, of farming organisations, of trade unions, all of whom are opposed to the proposed milk levy. The nation is looking to the Government for leadership. Leadership is about attracting support, being decisive and, above all, being consistent and effective.

Mr. Kitt

I should like to join Deputy H. Byrne in calling on the Government to reject categorically these proposals for a super-levy. Deputy Byrne referred to the European Council meeting at Stuttgart last June. I might point out that, after that Council meeting, the Taoiseach and Minister for Foreign affairs appeared to subscribe to the conclusions of that Summit which gave the EEC Commission the authority to put forward proposals for the super-levy on milk. As a result of that, the confidence of farmers in their judgment and their negotiating ability must have been considerably shaken. I recall that in London, after the EEC Summit of November, 1981, the Taoiseach, Deputy FitzGerald, said that the super-levy was dead. Now we find it is very much alive and we hope the Government will fight strenuously to oppose it. What has really infuriated Irish farmers is the basic unfairness of these proposals. We are talking about a situation in which Ireland produces no more than 4½ per cent of the Community's milk supplies. On top of that our dairy farmers receive a price for their milk which is far below European standards. I note that the June publication of An Foras Talúntais states very clearly that the figures for percentage of target price achieved show that Ireland is well behind her EEC partners. The House can imagine how disastrous it would be to have a super-levy imposed on milk in this country while we lag behind our partners.

Certainly it would be most unfair that such a proposal would come forward at a time when there is such unemployment here, and which would add further to the unemployment problem through the loss of thousands of jobs. There is also the fact that the super-levy on milk will cost Ireland £146 million in one year. When one considers the total Commission package probably one is talking of a figure closer to £200 million. We are concerned that such proposals be fought strenuously by our Government. It must be remembered that the average yield per cow in this country is far behind the European average or that of the Netherlands where the average yield is 1,000 gallons. All these points should be put very strongly to our partners, as we have already called on the Taoiseach to do today. If such proposals were implemented it would constitute complete departure from the terms under which we joined the EEC.

I am somewhat disappointed also that the case of the western farmer has not been made more strongly by the Government. It must be remembered that our smaller farmers in the west were advised to go into dairying. They invested quite an amount of money in dairying and it will be seen that they have increased their production. I have figures here showing that, in the province of Connacht, the production will have risen by 12 per cent since 1981, which is not far behind the national average. We must take into consideration also that much of that area is classified as being severely handicapped by the EEC. Yet we have had encouraging results there with regard to milk production. This levy of 70p on the gallon would have a drastic effect on farmers there.

The Government must communicate clearly to our EEC partners that we will not allow a vital national interest to be damaged and that we shall have no hesitation in using the veto should it come to that point. I hope this issue of national importance will be fought by the Government, that there will be no compromise and that they will state unequivocally that we are against these proposals.

Minister for Agriculture (Mr. Deasy)

First of all, let me say I am pleased that the debate has been orderly and reasonable. This is a time when we must be completely responsible in Ireland, because we are facing up to a very important debate, probably the most important national issue facing us since our EEC accession.

Therefore, hysteria or point scoring or opportunism in any form would be highly detrimental to our case in Europe. I reject out of hand allegations that these negotiations are not being carried out with the utmost care and skill. In the past three months there has been a definite appreciation throughout the EEC of Ireland's special case, that it will have to be taken and treated as special, quite separate from the position of the nine other countries. However, the support our negotiators have had from the trade unions and the various bodies representing industry and commerce here, has been most reassuring. It has helped us considerably. At all levels we have got the message home in Europe that the milk super-levy proposal is not acceptable to us in any form.

I am confident that we will evade the harsh measures proposed by the Commission in regard to the milk super-levy. It is very important that we be guarded in what we say at all times because we are facing two further months of negotiation. They will be extremely critical and we want unanimity at home if we are to do the maximum good for the country in Europe. By and large our people have responded in a very responsible manner.

I will make a few points in reply to the two Deputies who have spoken. Deputy Byrne quoted me as having said last week that we did not have any support whatever in Europe. I did not say that. I said that all the other EEC members, in some form or another, have accepted the principle of the super-levy. Initially, some of them did not: they had counter-proposals but after considerable negotiation their counter-proposals were not accepted. By and large there is acceptance of the super-levy by the other nine. Some of them would even go further: they would go for a direct price reduction, a considerable one, which would even be worse because some of them do not think the milk super-levy goes far enough. Some of them were even thinking of a variation of the co-responsibility levy. However, that proposal was put forward in a halfhearted, lukewarm manner. They have almost given up that argument without too much of a fight.

We are on our own in our outright opposition to the Commission's proposals on milk. We have said it is not acceptable, that they can forget about it, from the Irish point of view. Notwithstanding, it would be wrong to say we have not got support. I think the majority of the member states have a clear understanding of our predicament. A majority of them feel we have a special case.

The super-levy is one of a number of proposals made by the Commission for changes in the CAP. Negotiations on various proposals have been going on at official and ministerial level since last August. It is the current aim of the Presidency to reach a decision at the European Council meeting in Athens in December. I am more hopeful now than I was two weeks ago that there will be a decision in December because, though it may not have any great significance to Ireland, a major decision was arrived at in Luxembourg last week when the price support system for Mediterranean produce, involving fruit, vegetables and olive oil, was agreed on.

People will ask what the blazes that has to do with Ireland. Perhaps it has very little significance directly but that had been one of the great impasses involving the accession of Spain and Portugal to the Community. The French and the Italians were very concerned about a decision on a regime in regard to this produce as there is in regard to milk, beef and cereals, before the accession of Spain and Portugal who have very high efficiency, particularly the Spaniards, in the growth and marketing of Mediterranean products.

That agreement leaves the way clear for the member states to concentrate on the Commission proposals on milk in particular. It also leaves the way clear, if agreement can be reached on milk, for general agreement on an increase in regard to own resources in the Community from 1 per cent of VAT receipts to 1.4 per cent. That is a very crucial matter because as we all know the Community has run out of money. Therefore, it is quite likely that we will have a speedier solution of the milk problem than was thought a few weeks ago.

Here I come to a very significant point. Comparisons have been made between the previous milk super-levy proposals and the present one. It is not possible to make such a comparison because on the previous occasion the Community was not on the verge of bankruptcy. At that time the proposals slipped into obscurity. This time there is a definite financial crisis in the Community. We all know that something will have to be done about surplus production of milk. What we here are saying is that the countries who created the problem should be the countries who should suffer the consequences. That has been our argument from the beginning and we intend to maintain it.

There is a need for a cutback on milk production but it should have been done years ago. Now it is like closing the stable door when the horse has bolted. If corrective measures had been taken at the proper time we would not now be faced with this dreadful situation in the Community. It has been apparent for years that the increased importation of cereal substitutes would promote factory-type farming, resulting in huge surpluses of milk. That is what has happened and that is why we have this enormous problem today.

I do not want to go into very great detail because tomorrow I will be making a speech on the matter during the economic debate. Deputy Kitt raised an important question. I have not made a separate argument for farmers in the west of Ireland, for a very significant reason. Milk is too important to our economy as a whole and therefore we cannot differentiate between small, medium and large producers, no matter which part of the country they come from. This is a matter which affects our whole economy and I want to ensure that we will get a settlement based on our total milk production. I do not want to be taken up wrongly when I say that. I sympathise with the plight of our small farmers throughout Ireland, but particularly those in the west, but I am taking the entire milk problem and I do not want to see any division, any breaking of ranks. I do not want to have people suggesting that we should differentiate between the small and large producers. It is too important a matter for the country. We want an exemption from the super-levy for all our milk, not just portion of it.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Thursday, 27 October 1983.