Vol. 347 No. 10
I move:
That Dáil Éireann approves the following Order in draft:
State Guarantees Act, 1954 (Amendment of Schedule) (No. 2) Order, 1983,
a copy of which was laid in draft before the Dáil on the 10th day of November, 1983.
The draft order proposes that the Pigs and Bacon Commission Ltd., be included in the Schedule to the Act in respect of a sum of £500,000.
On a point of order, we have absolutely no documentation whatever about this. Is there any piece of paper we can have before us?
It is being distributed.
The Pigs and Bacon Commission Ltd., are a private company set up by bacon curers and pig producers to take over the role of centralised marketing of pigmeat handled previously by the semi-State body, the Pigs and Bacon Commission (PBC). The new company have been trading since 1 August, 1983.
The semi-State Pigs and Bacon Commission were established in their present form in 1961. However, in May, 1981, the Supreme Court ruled against the PBC in a case where the commission had sued for non-payment of statutory levies. Following that decision talks were held with the industry which resulted in the Government agreeing to take responsibility for a sizeable deficit which existed in the PBC accounts. This deficit had been building up for a number of years while the case about the levies was going through the courts. The industry in turn agreed to pay the running costs of the PBC from 5 April 1982 and to form a new private centralised exporting company financed entirely by the industry. From 5 April 1982 to August 1983 the PBC continued to operate under this arrangement, with all costs being met by the industry. The actual transfer of trading operations to PBC Ltd., a private company, took place on 1 August 1983.
A central marketing agency for pigmeat is indispensable if the industry is to survive on export markets. Compared to the major pigmeat exporting countries our presence on world markets is small. In such circumstances it would not make any sense for individual exporters in this country to compete against each other on the same markets. A single marketing organisation can do this job much more economically and more effectively. It helps to ensure uniform standards of quality and presentation, cuts marketing costs, and provides a single focal point for overseas customers. A good example of the value of centralised marketing can be illustrated by our success in recent years in selling pigmeat to Japan. We might never have got into this highly competitive market in the first place but for the fact that we had a centralised agency handling the product. Pork exports to Japan, inlcuding export refunds, reached a record level of £32 million in 1983.
I am glad that the new company, who were set up with the close co-operation of both curers and producers, are continuing the work of the old body in our traditional markets and are also determined to maintain our position on the valuable Japanese market. I have no doubt that PBC Ltd. will also continue where the semi-State PBC left off in seeking out new markets for pigmeat. I am aware that there has been good liaison and co-operation between the Pigs and Bacon Commission and Córas Tráchtála Teoranta in the past in identifying potential markets. I am sure that this same spirit of co-operation will continue in the future.
The pigmeat industry makes a significant contribution to the national economy accounting for 8 per cent of gross agricultural output at a value of around £170 million per year. Over 4,000 people are employed in the pigmeat processing industry alone and annual exports are worth around £70 million. These figures do not take account of other related activities which are strongly supported through pig production, in particular the growing and production of feeding-stuffs.
But to return to the business in hand. The semi-State PBC had, for some years, enjoyed a letter of sanction under the Pigs and Bacon Acts which enabled them to borrow from the banks for working capital. In recent times the level of borrowings on foot of this facility had been £500,000. It would not be open to me under these Acts to give a similar letter of sanction to PBC Ltd. since they are a private company; hence the need for the measure now before the House. The draft order provides for a guarantee by the Minister for Finance for borrowings of up to £500,000 by PBC Ltd. It is not the intention that this guarantee should be provided indefinitely. I would expect the PBC Ltd., within a reasonable period of years, to build up a capital base of their own.
I commend the draft order to the House.
(Limerick West): We welcome this proposal. It constitutes a step in the right direction and will ensure a proper approach to the marketing of our pigmeat. Indeed it is important not only for our pigmeat industry but also for the other marketing and agricultural areas to which we will be coming in the next item on our agenda, so that there will be centralised marketing. Our approach to marketing should be placed on a proper footing, done in a businesslike fashion. There are many aspects of the whole of our pigmeat industry at present warranting examination. As the Minister correctly pointed out, it is indispensable to have this central marketing agency for pigmeat if the industry is to survive on export markets.
I was somewhat saddened by the following remarks of the Minister:
The draft order provides for a guarantee by the Minister for Finance for borrowings of up to £500,000 by PBC Limited. It is not the intention that this guarantee should be provided indefinitely. I would expect the PBC Limited, within a reasonable period of years to build up a capital base of their own.
Perhaps the Minister would clarify that when replying. Does this constitute a continuation of the present policy of this Government of downgrading the agricultural industry? There are many other areas in which funds have been guaranteed by the Minister for Finance. I do not see any reason whatever why there should not be a continuation of this guarantee for our pigmeat industry in so far as this new body are concerned.
I should bring to the attention of the Minister the disastrous situation obtaining in the whole of our pigmeat industry, particularly for farmers engaged in that industry, who have suffered severe losses in their incomes in recent months. This is a very serious situation for the future of the whole of the pigmeat industry with regard to exports and our balance of payments. I had been hoping that the Minister would avail of this opportunity to give us some indication of his and the Government's thinking on improving all of the pigmeat industry, placing it on a sound footing.
This is not a wide-ranging debate.
(Limerick West): I know that, but at the same time——
Would the Deputy make only a passing reference?
(Limerick West): I shall be guided by the Leas-Cheann Comhairle.
This is a wide-ranging topic.
(Limerick West): I was hoping that the Minister would comment on the serious state of our pigmeat and the pig industry. He says in his speech:
A central marketing agency for pigmeat is indispensable if the industry is to survive on export markets. Compared to the major pigmeat exporting countries our presence on world markets is small. In such circumstances it would not make any sense for individual exporters in this country to compete against each other on the same market.
As the Minister rightly said:
A single marketing organisation can do this job much more economically and more effectively.
In addition to what is being suggested here, the Minister should consult with his colleague, the Minister for Foreign Affairs, to seek ways in which our embassies could play a far greater role in promoting these products in the countries to which we export pigmeat. In the recent past, our exporting to Japan has been very effective and a far greater emphasis should be placed on these markets.
Does the Minister consider that the guarantee by the Minister for Finance for borrowings up to £500,000 is adequate to meet the demands of this new body, particularly the demands of more progressive marketing of our bacon products? It is also important to remember, as the Minister has correctly pointed out, that this industry employs over 4,000 and the annual exports are worth around £70 million. The Government and the Minister for Agriculture should take a deeper look into this entire industry because here is an area in which we could promote employment and furthermore, increase enormously the value of exports. The openings are there. A proper and effective marketing approach would increase pigmeat exports twofold over the next 12 months.
I want to bring to the Minister's attention the unlicensed backstreet slaughterhouses which are causing problems in the industry. I understand that he has promised to examine the position. A proper approach with regard to slaughterhouses is imperative if we are to put this valuable industry on a proper footing. The Department must be far more vigilant than at present with regard to the whole area of slaughtering and processing. The Minister must seek out new export areas because our pigmeat industry is in a very serious situation. We must have the correct mentality with regard to breeding, fattening and processing if we are to improve our marketing strategy and increase the number employed.
I welcome this motion and it will have the full support of my party.
I also welcome this motion. However, a guarantee of £500,000 will go nowhere towards servicing our pig industry.
But the Deputy knows that that is what was the industry asked for.
This industry is now at the crossroads, facing total bankruptcy.
That was what they asked for.
Is the Minister in charge of the debate? Would he let the Deputy speak?
Continue, Deputy.
We have the most efficient pigmeat industry in Europe and the Minister must be aware that in his own constituency people have been failing to get pigs killed at the local slaughterhouses because of their numbers and the closures due to the present recession.
There was a further contradiction in the recent budget in that section 84 money will be restricted. The Minister must use his good offices with the Minister for Finance to have this proposal rescinded. We cannot compete in the export market if we do not get finance at a low interest rate under that section. This is one of our most efficient farming commodities, which we have developed over the years to a fine art. We can compare favourably with any country in the western world on pig production, feed efficiencies and number of piglets born per sow. We are give a pittance as a guarantee at a crucial time.
The Minister should be magnanimous enough in his support of the bacon industry to make money from the Exchequer available for promotional purposes to carry us through this very difficult period. He has admitted that 4,000 jobs are concerned, but there is no sincerity on the part of the Government in supporting this fine industry.
Beef prices have increased by over 40 per cent within one year and bacon prices have dropped by 20 per cent. These are the statistics to prove my point. I am totally disillusioned. All our counterparts in France and the other European countries have been receiving State aid by finding ways and means around the EEC system in promotions and low interest loans and these are the areas which we must examine. We cannot afford to let this industry go on its knees, otherwise we shall see 50 per cent or more going out of production, if they are not already being forced out by the bank manager or the Agricultural Credit Corporation.
A contribution has been made to the dairy industry by its by-products being taken up.
Deputy, might I remind you, as I reminded Deputy Noonan, that I shall allow a passing reference but you have been referring to the matter for some time. Perhaps you would come back to the guarantee and the Bill, please.
I am satisfied that this guarantee is only a token. That proposal has been before the Minister for some time, at a time when the industry was viable. Long and hard negotiations took place, because there was a reluctance on the part of the Government to give that guarantee.
None whatsoever.
Why the delay? This new body, as we know has taken over from the old Pigs and Bacon Commission.
That was negotiated four months ago.
It is very important that the Minister should make more aid available for industry which will be viable in the years ahead when the recession eases.
I am disappointed that the debate has been curtailed, because the Minister raised many national issues in his brief speech. I am also disappointed that when he was speaking about national figures for output he did not give figures for the numbers of people involved in the pig industry. He gave a figure for those employed in the processing industry but I think that other figures would show that there is a decline in the numbers of producers as well as those employed in the industry. If this is allowed to continue, the industry will be wiped out. Incentives must be given to the producers because of the high cost of inputs, otherwise they will not survive because at present they are on the bread-line. I hope that some time in the future we will have more time to debate this matter.
I ask the Minister to have an in-depth look at the production and marketing of pigmeat. Producers are in serious trouble because of changes in the market products abroad. The Minister said that exports to Japan were valued at £32 million and in a speech on the Estimate for Agriculture in 1983 he said:
The market for pigmeat has been difficult for some time past and market returns to pigmeat producers have been declining since the latter part of 1982. Prices have now stabilised but they are still at a low level. In response to the poor market situation, which was worsened by an outbreak of foot and mouth disease in Denmark in January, the EEC Commission introduced aids for the private storage of pigmeat with effect from 1 February. As a result of strong pressures from Ireland, export refunds on the "Japanese" type pork cuts were also increased. These measures are going some way towards relieving the present market situation.
The Minister should be looking for alternative markets because there have been great changes over the last few years. Traditionally it was the farmyard enterprise which was the most remunerative for small farmers, especially in Cavan, Monaghan, Cork and Kerry who were the biggest pig producers with fairly substantial units. There are over 4,000 people employed in this industry and these numbers could be increased.
A Strategy for the Development of the Agricultural Processing Industry in Ireland in June 1982 indicated that value-added products in the pigmeat industry could be improved. Last year we imported 6,400 tons of bacon and pork. It was suggested that we could develop salami, German sausage, patés and other processed pigmeat products. The Minister should ensure that we stabilise our markets and he must also examine feed prices——
I am sorry, you are branching into another area.
The Minister should have an in-depth look at the pig industry, especially inputs in feed prices, and see what can be done about imports of cereals. The industry has been a major source of revenue and employment for our people. It is the best way to use our grain and I ask him again to look at the industry more closely.
I wish to thank Deputies who have contributed to the debate but I am very disappointed and surprised that so few Deputies spoke here this morning.
(Limerick West): What about Deputies on the Minister's side of the House?
I was not apportioning blame in any area, I was just speaking generally.
The Minister tried to stop everybody from speaking, he kept interrupting.
That is not correct, when I interrupted Deputy O'Keeffe I, in turn, was interrupted by the prospective Euro candidate for Connacht-Ulster.
The Minister to continue, without interruption.
The Minister should get a few more notes from his staff because he is not able to reply himself, he knows nothing about agriculture.
With such intemperate language it is very difficult to have an organised debate. I was saying I was disappointed and surprised that so few Deputies took part in this debate because there is and has been a very serious crisis in the pig industry for a considerable time past. It is a matter of grave concern to my Department and myself and to pig producers everywhere. Predictions are that there will be an improvement in the next couple of months. The pig industry, by its very nature, is cyclical and we have ups and downs, year in year out. However, on this occasion the depression in the industry lasted much longer than usual.
Having said that, we must recognise that the problem is not confined to Ireland. The same problem has affected the whole pig industry in Europe. Especially within the EEC the whole pig industry has been in a state of depression over the past nine or ten months. It is difficult to pinpoint the exact reasons. Obviously over-supply of bacon and pork has been one of the contributory factors. There has also been consumer resistance to the purchase of bacon and pork. We have had this resistance more markedly in the beef industry, but we have also had it to a considerable degree in the bacon and pork industry. There has been a drop in domestic consumption and EEC consumption. That is another major contributory factor.
A number of speakers alluded to a problem which has caused financial difficulty for a number of our pig producers, that is, the high cost of feedingstuffs. Some speakers would like to give the impression that the Government could subsidise the cost of feedingstuffs. That is not the case. Under EEC laws we are not allowed to provide national aids. Therefore we are unable to assist in that regard. The high cost of feedingstuffs is due primarily to a very poor cereal harvest in the USA and also on the mainland of Europe. Coupled with that we have had the effect of the strong dollar. This has led to a very steep increase in the cost of feedingstuffs. We hope this will improve in the next couple of months.
We got a significant degree of assistance from the EEC at my instigation last month at the council meeting. We got aid for private storage which certainly helps the pigmeat market and is appreciated by the producers. It should continue to help in the recovery which we are hoping will come about in the next couple of months. The EEC have been of considerable assistance also in the provision of generous export refunds. That enables us to export pigmeat to Japan on a substantial scale.
As I said in my opening statement, we exported £32 million worth of pigmeat to Japan in 1983. That was a significant breakthrough in the market. There were contributory factors which may not arise this year. Danish exports of bacon to Japan were affected by outbreaks of disease on the continent and specifically in Denmark. In normal circumstances the Danes have the lion's share of the Japanese market, which is considerable in size. We got a significant portion of it last year, and we are trying might and main through the Pigs and Bacon Commission to maintain a significant share of that market.
Deputy Noonan advocated that the Department of Foreign Affairs and our diplomatic missions abroad should play a more active part in promoting industry in this sector. I could not agree more with him. That is something I have been saying for years. With regard to our pigmeat business our Embassy in Japan have been especially helpful over the past couple of years. They realise the significance of this potential market. They have been very co-operative and a certain amount of credit is due to them as well as to the personnel of the Pigs and Bacon Commission.
Somebody asked why we did not give more support to the Pigs and Bacon Commission. We were asked for £500,000. That was granted. It has taken about four months for this legislation to come before the House, but that money was given expeditiously after a request from the board. There was no problem at all. There was no hassle over it. It was given with goodwill and very speedily. They have expressed their gratitude. People who have asserted that we delayed this payment are quite incorrect.
The previous Pigs and Bacon Commission which had to be terminated cost the State a considerable amount of money. When wound up they were in deficit to the tune of £5.6 million. Some people suggested that £500,000 was a small amount of money, but the deficit of the previous commission was £5.6 million and the taxpayer had to foot the bill. Let nobody under-estimate the commitment of the Government to the pig industry. That was a sizeable amount of money which the Exchequer had to find.
Going back to the point Deputy Noonan made about the involvement of the Department of Foreign Affairs and the diplomatic corps, Deputies may have noticed that when we set up a committee consisting of four Ministers of State to help in synchronising and promoting our food industry the chairman of that committee was the Minister of State at the Department of Foreign Affairs, Deputy O'Keeffe. That is an indication of our thinking on the matter. In setting up that committee we decided that the Department of Foreign Affairs should be directly involved in promoting our food industry abroad and our food exports. We pinpointed this as a matter of considerable significance by appointing the Minister of State at the Department of Foreign Affairs as chairman of that committee.
We all know that we lag far behind other countries who engage in agriculture in a big way when it comes to lobbying abroad. I have first hand evidence of the activities of the New Zealand diplomatic corps and the Danes and the Dutch. Those three countries are probably our primary competitors. Their diplomatic effort, and especially that of the New Zealanders, is very heavily concentrated on promoting their sales of agricultural commodities abroad. This is an area where we could learn from the activities of those three countries, and New Zealand in particular.
In the next few weeks there will be a tour of western European capitals, including Dublin, by the Prime Minister of New Zealand, Mr. Muldoon, to promote his country's sales abroad of butter, lamb, or whatever. They are at it continuously. We had their Minister for Foreign Affairs here in Dublin about three months ago. Their diplomatic effort is very heavily geared towards selling agricultural produce. In setting up this committee we have given recognition to that fact.
I mentioned a figure of £70 million for our exports of pig meat in 1982. We estimate that the 1983 figure will be £85 million. That can be attributed to the Japanese market which, for the reasons outlined, was considerably improved in 1983.
Deputy Nolan expressed worry about the statement that we will expect the Pigs and Bacon Commission, a limited company, to underwrite their own borrowings eventually. That is a perfectly normal procedure. We cannot expect the taxpayer to underwrite everything. As they say in the west regarding the building sites in England, it will give them a start. We are giving them a hand and we expect them eventually to be self-sufficient and able to manage their own affairs. That is what the taxpayer and the Government would expect. We have a duty to see that people use money wisely. The Board of the Pigs and Bacon Commission were quite delighted to get this money and I believe they will become self-sufficient. We will keep the matter under review. Certainly we have no intention of pulling the rug from under them. We will watch the rate of progress.
Deputy Kitt wanted to know the numbers employed in the bacon industry. The number is in excess of 4,000 but it is difficult to assess accurately. Deputy Leonard made the point that we need to diversify. "Diversification" has become a bit of a cliché, particularly in relation to the dairying industry. Of course the Deputy is right and there is a range of products we should be able to produce. Our competitors, particularly the Dutch and the Danes, produce not just a few but hundreds of items from the same commodity. Their exhibits at international trade fairs are an eye opener. Recently I attended the Berlin Trade Fair, better known as the Green Week, and while the Irish stand was very well set up and popular with the Germans we were confined to about five products. The Dutch and the Danes had litterally hundreds of products, whole ranges of cheeses, butters, ice creams and yogurts. On the beef, lamb and bacon side they also had a huge range of products. Our range is far too limited. It is an area where we have fallen behind very badly and we should have been taking action 20 or 30 years ago.
We are trying to encourage co-operatives and other business ventures to diversify but the cost of going into new lines of production is immense. We will have to do it. There are many bacon products which we should be able to produce. Duffy's of Hacketstown are doing it to a certain degree but I have seen little else in the way of diversification. There may be others who have products which I have not seen but certainly there are areas where we lag behind our competitors.
I thank Members who contributed to the debate.
