I wish to place on record my appreciation of the tremendous work of An Bord Bainne since it became a farmer-owned co-operative in 1972. The fact that it has operated since then within the limitation of generating its own resources is most commendable. At various stages the State guaranteed funding. It began in 1972 with assets of between £2,500,000 to £3 million but that was insufficient and it had to borrow. Were it not for the influence, expertise and ability of a central marketing agency such as An Bord Bainne the whole dairying industry would not have developed to the extent it has developed in the past ten years. We are still far behind our trading partners in the EEC but An Bord Bainne must be commended. The other State agencies who are also involved in the marketing of Irish products are to be commended. I speak in particular of the CBF who are dealing with a vitally important aspect of Irish agriculture.
The extension of the guarantee scheme for a further six years is something all Members will support. We never seriously thought about marketing of our products until it became obvious that unless we could present a saleable product there would not be a market for it. The difficulties confronting the dairying industry at present are a matter of concern not only to farmers but to the economy generally. Much has been said about that in the debate.
I should like to draw attention to the influence of possibly one of the largest dairy co-operatives in the country which is in my constituency and to give some idea of the scale of growth of that co-operative since it was founded some years ago. In 1982 the intake was 128 million gallons of milk, a significant increase on the 1981 figure. If we were to apply a super-levy on the 1981 figure it would be totally unacceptable. It is about time the EEC considered the possibility of a super-levy having regard to the very high level of production in European countries but Ireland must be exempt from that super-levy because of our low level of productivity. In 1982 there was an increase of 13 per cent on 1981 in respect of milk intake in the Avonmore area and in the two years 1981 and 1982 there was a cumulative increase of 14 per cent. That was a significant increase. Perhaps the Greek proposal that would take account of milk production at 1983 levels is an advance but it falls far short of what is acceptable on the Irish scene.
We had a further difficulty in relation to milk production in Ireland. This is true not only of Avonmore but also of the rest of the country and is true to a lesser extent in respect of Europe. In 1982 there was a ratio of 14 to one in respect of valley periods of milk production in the Avonmore area: in other words, in the period May-June, the high peak period, farmers got 14 pints more than they got in the January period and naturally this created enormous problems. As a result of re-organisation and the maintaining of higher price levels during the winter period that ratio was reduced to six-and-a-half to one. On the other hand, Holland is able to maintain a milk production average almost the same throughout the year and that is a marked improvement on what we have achieved.
In the Avonmore area they take in an average of 350,000 gallons of milk each day and in mid-May in 1982 that had increased to 650,000 gallons per day. Avonmore claims to account for 12½ per cent of national output. The value of the performance at Avonmore and the investment by farmers in that enterprise is seen in the total value of milk which was approximately £90 million in 1982. Of that amount £15 million goes back in wages and salaries and any attempt to undermine that progress would have a disastrous effect not only on the region but also on the State. That indicates the importance of a favourable solution to the super-levy problem so far as we are concerned.
Of the £15 million going back on wages, approximately £7 million goes directly into Government coffers in PRSI and in direct taxes. Much more goes back in indirect taxes because of the level of VAT on inputs by farmers. The State will benefit to an enormous degree by any further increase in milk products. The firm in Avonmore can cope with a further 15 per cent increase in the next two years without extending the plant. In 1982 Avonmore was one of the top ten businesses in the country and that is some indication of the growth in a number of our co-operatives. I draw attention to Avonmore because I am familiar with the situation there. Some 60 per cent of the business of that organisation is concerned with milk.
Co-operatives were designed originally to help farmers to utilise their resources, to provide them with investment capital they might not have been able to acquire elsewhere. Perhaps co-operatives are moving slightly away from that original concept and one cannot blame them for doing so because they had to borrow money at high interest rates. We do not have available money at low interest for the development of our dairying industry. We have a unique position vis-à-vis our trading partners and we have difficulties in transporting our products to the major European markets. I give the example of Holland which is the size of Munster and which has a level of milk production that provides liquid milk or the various processed forms for a population of about 15 million people while we provide for a population for approximately three million. We are producing only about 4 per cent of the overall EEC milk production, yet we are experiencing serious problems.
Since we joined the EEC a number of our farmers have made profits from milk production. There are various risks involved in this industry because there is a high level of disease associated with the production of milk, either through tuberculosis or brucellosis. Happily we have made significant progress in the elimination of brucellosis but the tuberculosis problem keeps cropping up in unexpected areas and it is difficult to explain why this happens.
Our milk production will increase and we must make the necessary provisions to market the increased production. This is where An Bord Bainne have an enormous task ahead of them. Because there is a growing surplus of milk and milk products, one can only assume that a super-levy will be imposed by the EEC but we did not create the problem and it would be extremely unfair and unjust if this levy was imposed on our farmers. The only EEC country favourable to Ireland is Greece, a relatively new member. There are eight other nationally minded countries in the EEC and unless they go back to the original concept of the Common Market there is a serious danger that the Common Market will fragment and become totally disrupted. That would have serious effects for Ireland because we have benefited from membership in the agricultural and industrial areas.
Let us compare our figures with those of Holland. I chose Holland because she is one of the major factory milk producing countries. Holland imports cheap cereal substitutes while using the mechanism of the EEC to her own advantage. We get about 700 gallons per cow, and Holland gets in excess of 1,100 gallons, and is increasing. In Ireland we feed about half a tonne of meal per cow, in Holland they feed 2½ tonnes per cow. That cheap food is being imported and converted into milk. The EEC has seriously to examine this development. While we object to this situation, at the same time it must be recognised that a super-levy is definitely needed to deal with this high level of productivity. Perhaps the cereal substitutes could be devoted to some other type of production.
Let us look at the surpluses in the EEC which have developed because of the central marketing and intervention systems. A great deal of energy is used storing that food while many millions of people are dying of starvation every day. One wonders if there is any Christianity left in western Europe. Have we adopted a purely economic survival attitude? There must be some way to dispose of these products. We have to assist Third World countries. We have to buy some of their products because only by doing this can we help them develop. If the United States were to unload her surpluses on Europe we would be engulfed in dairy products and it would take us years to recover from the recession such a move would create. It is awful to think that the present situation should have developed.
A number of people mentioned diversification. Liquid milk, cheese, butter and skimmed milk powder appear to be the main profitable products. We do not seem to have researched other areas. In my view we will have to examine very carefully and invest significantly in those areas, otherwise there will not be a market for the extra milk produced. That cannot be done on a national scale only; it must be co-ordinated on a European or universal level. There is no point in one country doing this if others ignore the rules and regulations.
In the Avonmore area cheese production is a loss-making enterprise. A greater level of milk can be utilised in the manufacture of cheese. A previous speaker mentioned that he asked for cheese in a certain hotel in west Cork and Deputy Sheehan mentioned crab and lobster cheeses. I have not gone into this question in such great detail as those Deputies, but it was interesting to hear that there are so many ways of presenting this product. When one walks around a supermarket in Waterford, Kilkenny or Dublin one can see the number of foreign cheeses available. The answer lies in diversification. We have seriously to examine agricultural imports and try to devise ways and means to counteract the present situation. This can only be done successfully if we pay attention to presentation, quality and competitiveness. We cannot stop the flow or we will undermine the Common Market. Bord Bainne, irrespective of where they get the funding, should ensure that every county contributes equally towards the diversification of milk and milk products. Admittedly this would be very desirable and it would be extremely difficult to achieve but the enormity of the problem should not deter us from attempting it.
The EEC subsidise milk for schools. I do not know how much milk these pupils drink but I believe it is a sizeable amount. I know of a few national schools I visit around 11 o'clock in the morning where there are to be seen creates of small bottles of milk all over the place, some half drunk and so on. We have entered into a new dimension in milk processing through yogurt. Most children introduced to yogurt seem to like it; it has a special flavour. It is different from drinking milk and I think they should be given an option between the two, that there should be a crate of yogurt available for those who would prefer it. The idea may not necessarily be to dispose of the milk — although perhaps that was at the back of the minds of those who promoted the scheme — but it should be remembered that it is important also from a food protein point of view. We should examine that aspect.
I do not know what is the level of milk in, say, Bailey's Cream. I suppose if alcohol could be added to milk there would be a tremendous market for it and it would be sold in most of our ale houses if we could blend it in such a way and produce it at a certain price. It has been done successfully both by Avonmore and Waterford Co-op. Bailey's Cream is an extremely palatable drink. Perhaps there has been insufficient investment in that area. Undoubtedly there is need for a marketing fund in order to get rid of much of the surplus of dairy produce.
Another area to which I have given consideration is that of milk/butter products. Recently we heard a lot about the increase in cholesterol in the human system from an intake of butter. But there has been much variation of opinion as to what does or does not cause heart disease, what does or does not increase cholestorol levels. There have been many books written on the subject, some contending that one should not eat potatoes or butter while others contradict that theory, which is having a definite effect on the marketing and consumption of butter especially on the home market. There are a lot of polysaturates on supermarket shelves manufactured in Third World countries. They are on the increase to the detriment of the sale of butter. Surely there should be some attempt made to extract fats from butter, presenting it in a different way so that at least we would be consuming a product we manufacture ourselves.
There was a great scare created recently about antibiotic residue in milk which gave rise to an almost immediate 12 per cent reduction in sales of milk to urban areas from the Avonmore Creamery. That scare was initiated at a certain seminar. I do not think it was properly researched on a national scale. Perhaps there are cowboys who would over-use antibiotics, disposing of them into various milk outlets. But there is very accurate, day-to-day monitoring of the level of antibiotic residues in milk coming into the Avonmore area and if the milk is found to have a content of antibiotics over and above an acceptable level that milk is put aside. Even in the manufacture of cheese it will show up. The cheese will not ferment if it has a high level of antibiotic residue. The people who create such scares should think about the damage done. If there is found to be an abuse of the use of antibiotics, by all means it should be counteracted but we should be careful before creating such scares. Indeed the question might well be posed: was the creation of such a scare an attempt to get a monopoly of the dispensing of antibiotics from the farming point of view pushing up the price so that people in a certain marketing agency would control its dispensing? I am not sure. Perhaps the Minister would have that matter investigated. The whole area of milk is vital to our economy.
I might reiterate my views with regard to a super-levy as far as Ireland is concerned and reassure the Minister of support for his approach which has been exceptionally eloquent, authoritative and useful as far as this nation is concerned. While some Members of the Opposition would like to think that the Minister's contribution to agriculture and to his portfolio is less that they would contribute in similar circumstances, I might remind them that his rating amongst the farming community is higher than it was during many of their Minister's terms in office. It must be remembered that he is serving in a very difficult period. He may well be faced with finding the most difficult solutions that have faced any Minister for Agriculture in the history of this State. Nonetheless he is capable of the job and I extend him my full support. I am confident that, when the final negotiations are over, he will have achieved for us that to which we are entitled. Indeed there is a measure of justice associated with our position.
I said, and I did not develop the point, that we are in a unique position. I should like to think that we would be given a subsidy for the export of our products to Europe where there are the major urban growth centres and all the milk producing areas adjacent to them. But they do not have our problems. Our exports must cross the most difficult section of the channel from Rosslare to Le Havre at difficult times of the year, which is extremely costly. Therefore, we should be seeking a transport subsidy that might be utilised to lessen the impact of any attempt at imposing levies so far as milk productivity here is concerned. Whether or not a derogation of four years would be to our total advantage is questionable — certainly it would be advantageous — but if it can be achieved that would be a significant step. Nevertheless we should examine the levels of milk production and endeavour to equate them taking into account our unique geographic position. If the Common Market is to survive, if it is to advance the concepts on which it was founded originally — which were to help and support the less well-off nations — then surely we come into that category. Under no circumstances can we accept a situation that would in any way diminish our level of profitability in agriculture.
Another matter detrimental to the development of agriculture is the high level of prevailing irregular interest rates. In Germany, Holland and other European countries there are low interest rates obtaining. We have introduced interest subsidies and rescue packages for our farmers who over-borrowed. They have been successful to a point in that the Government of the day allowed the banks to control those interest rates. But the banks have crucified farmers who borrowed, invested, on advice. Interest rates have risen and certain farmers have been crucified as a result. Even those whose farms are still viable are being discouraged and being asked to sell land. Surely we cannot tolerate that in the case of those who have always worked on the land and know no other way of life. Some banks have been reasonable, but others unreasonable in their approach to farmers. There is a long-term investment in farming to the advantage of the economy. If a farm's viability is assured a subsidy should be given in the nature of low interest rates, having regard to the level of added value to be derived by the economy.
Inflation has been a major bone of contention, but happily we are taking steps to reduce it. Unless we can keep down the level of inflation, we cannot compete with our European neighbours.
Last year, food imports amounted to £700 million to £800 million. We have the CBF and Bord Bainne and we are now talking about a central potato marketing board, for which money has been provided in the current budget. It is so vital that Bord Bainne adopt the correct approach, otherwise we cannot survive in the dairy area of agriculture. The dairy industry is going through an extremely difficult period at present. There will not be confidence in that industry until a favourable solution, or at least an indication towards that aim, is found.
We are becoming too reliant on interventions. With all the surpluses and the cost to the taxpayers, whether to the European Fund or to the Common Agricultural Policy, the stage will be reached when that level of subsidisation cannot be maintained. In the past, surpluses were reduced because of devastating wars, but I certainly do not wish that situation to arise again.
There are jobs in agriculture, provided that the proper research is made. However, there do not appear to be the numbers of jobs anticipated when we entered the Common Market.
I applaud the efforts made by Bord Bainne to date. Without their expertise, we would not have achieved the present productivity in the dairying industry. However, much more remains to be done. I also applaud Bord Bainne because they are working within their own wealth growth. They are not depending on the State, even though the State guarantees them. They are able to operate within the growth of their own assets and borrow on that basis. There is a long, difficult road ahead for the dairying industry and under no circumstances should we accept the super-levy. If the Minister fights the EEC on that proposal, he will have the support of all.