Vol. 349 No. 4
I have received a time-table for this evening and I propose to make it a rule of the House with the consent of the Houses: 7-7.10 Deputy Fitzsimons; 7.10-7.40 the Minister for Finance; 7.40-8 Deputy Flynn; 8-8.10 Deputy E. O'Keeffe; 8.10-8.15 Minister of State at the Department of Agriculture, Deputy Hegarty, and 8.15-8.30 Deputy MacSharry.
Agreed.
The EEC proposal to impose a super-levy on milk is probably potentially the most dangerous proposal for agriculture in the history of this State. The Government's handling of this situation has been appallingly inept, extremely nervous, totally lacking in confidence, haphazard and a total shambles. The problem is that the super-levy was not taken seriously enough by the Taoiseach and the Government from the beginning.
When my colleagues, Deputy MacSharry and Deputy Lenihan, were Ministers for Agriculture, they fought this issue and ensured that it was withdrawn. It was because of the conviction and negotiating skills of those two men that the problem of the super-levy did not arise in their time. This time last year the super-levy began to raise its head. That was the time for the Government and the Minister for Agriculture to act. That was the time for the Taoiseach, the Minister for Foreign Affairs, the Minister for Finance and the Minister for Agriculture to go out shooting with all guns to the heads of state and say that this super-levy was not on for Ireland because the country could not afford it. Alas, it was left until as late as last November for the Taoiseach and the Government to act. There is no doubt that the Taoiseach moved too late. The balloon had already taken flight and there was nobody in the Government capable of bursting it. They should have acted this time last year and said to their fellow heads of state that Ireland has a genuine case. However, this Government, through ineptitude, failed to point out this fact. Our EEC partners are not convinced that we are a special case. They must be made aware that all the farming organisations, the Irish Congress of Trade Unions and the people are opposed to this super-levy. This is a national question jeopardising not alone the agricultural industry but the economy. All are unanimous in their total rejection of this proposal.
Let us not forget that Ireland has been one of the most under-developed dairy sectors in the Community and is the country most dependent on the milk sector. Over 53 per cent of Irish farm families are dependent on milk production. The EEC average farm holding with dairy cows is 35 per cent. Over 85 per cent of Irish dairy farmers have fewer than 30 cows compared with 46 per cent in the Netherlands and 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. These facts point out that because of the structure of the Irish dairy industry, it is the small dairy farmer who will be hit most and who will find it very difficult to survive under this super-levy. Employment in the agricultural industry will be affected in a disastrous way.
It is estimated that if the super-levy were introduced it would put 14 per cent to 15 per cent of our milk producers out of business 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 1983 have not yet been released but Deputies can be assured that they will be considerably below the 1980 figures.
In Ireland 18.9 per cent of the entire workforce are employed on the land; the Community average is 8.2 per cent. In Ireland 26 per cent of those employed in agriculture are under 25 years of age. There are 11,000 people employed in the dairy processing industry while 6,000 people are employed in the beef processing industry. There are thousands of Irish men and women employed in the food processing industry and agriculturerelated business. In a nutshell, up to 45 per cent of our entire workforce are employed either directly or indirectly in agriculture.
It is important to point out that our dairy farmers face very unfair competition. The importation of feedstuffs into the EEC creates difficulties for our farmers. No less than 10 million tonnes are unnecessarily imported into the Community. These are used as dairy feed and this in turn is responsible for producing an extra 20 million tonnes of milk. Our dairy farmer has to compete with EEC farmers because our feedstuffs are much more expensive than the cheap goods imported into the Community.
When we talk about imports we must take into account the New Zealand situation in relation to Britain. Britain got concessions from her European partners to import products under special arrangements from New Zealand and other former colonies. The New Zealand share of the British butter market has risen from 25 per cent in 1974 to 34 per cent in 1983. Who is affected most by this? The Irish dairy farmer who traditionally had Britain as his biggest market. Now, because of the importation of New Zealand butter our market is being affected, as is the livelihood of our dairy farmers, their families and employees.
We had a very strong case to present to Europe but this Government failed to present it. They are trying to close the door when the horse has bolted. Negotiations are going on this week but we still have not convinced our partners in Europe that we should be treated as a special case. Our dairy farmers are not as sophisticated as the average EEC dairy farmer. This Government should, and will, stand indicted by the electorate when the opportunity presents itself.
I have been struck by a feature of this debate in that much of what has been said simply restates the case the Government have been making for many months in the context of these negotiations. Opposition speakers have spoken about the importance of the dairy sector to our economy, about its contribution to GNP, about our difficulties in the past and about comparisions between ourselves and other EEC countries. All of these points have been brought into play and pressed; all of them have in one way or another been brought home to our partners in the Community. Members of the Opposition need have no doubt that all these features of our situation and more have been properly brought home to our partners.
We are involved in a very difficult negotiation. It covers a number of things outside the dairy sector but I have not had a great deal of evidence to show that Members of the Opposition are in any way conscious of that or of the wider issues. We have had to undertake this difficult negotiation against a background where there had already been acceptance at Community level of the idea of production thresholds, the idea of a limitation on the amount of milk that could be produced in the Community.
I should like to give some of the history because it is very instructive and puts the present negotiations in context. It has been largely ignored by Members opposite. In 1980 in the farm price agreement the Council agreed that if milk deliveries increased by more than 1.5 per cent an additional levy would be imposed. That provision is enshrined in Regulation No. 1364 of 5 June 1980. Article 2, paragraph 3, of that regulation makes the point and states:
If, by comparing the quantity sold during the 1980 calendar year with that sold during the 1979 calendar year, it is established that the quantity of milk sold by Community producers in the form of milk and certain milk products has increased by 1.5 per cent or more, an additional levy shall be fixed for the 1981-82 milk year in accordance with rules to be determined, so as to cover the costs incurred by the Community for the disposal of the additional quantities of the milk.
This was on 5 June 1980 when it was first established as Community policy that there would be limitations on overall production of milk in the Community. That was agreed to as part of the final price package of 1980.
Matters went on from there and in 1981 the Council, dealing with the overall difficulty in the milk sector, agreed that if extra costs arose due to an increase in deliveries of more than 1 per cent measures would be taken to offset those costs, for example, by way of a super-levy, by price reductions, by a progressive levy or by a partial suspension of intervention. That was expressed in a regulation of 18 May 1982 which formally established production thresholds and set 1981 production plus 0.5 per cent as being the first year of the operation of the thresholds. The Commission also indicated that year that further production would be penalised by decreased prices. That was the regulation published on 18 May 1982 following a rather interesting price negotiation. It had a couple of features which were rather new and it was the first price agreement arrived at by means of a majority vote in the Council. The regulation contains the following provision:
Each year, when the prices referred to in Article 5 (1) are fixed, the Council shall, under the same procedure, fix a guarantee threshold for milk.
That is very explicit. It means that in 1982 the principle was accepted, enshrined and further elaborated that there was to be a limit on Community milk production. In a more detailed regulation of the same date, 18 May 1982, we have the specification of what that meant for the calendar year 1982. Article 2 of Regulation No. 1184-82 states:
In calendar year 1982, the guarantee threshold referred to in Article 5b of Regulation (EEC) No. 804-68 shall be fixed at the level of the quantity of milk supplied to undertakings treating or processing milk in the calendar year 1981, increased by 0.5%.
That was a fairly formal and unambiguous acceptance and adoption of the limit to the overall production of milk in the Community.
Those are parts of history, the background to the present negotiation. It seems to be flying in the face of history and of what was done by some of the gentlemen opposite in previous years to come here and try to pretend during this debate that this history does not exist, that we should ignore those kinds of factors and expect that decisions will be made that will not take account of the fact that we have already had in operation in the Community a system of production thresholds in the dairy sector.
I did not hear during the debate any repetition of the claims made during the past couple of years that the super-levy had been killed. I remember hearing that the super-levy had been killed once and for all in 1980. I remember hearing the same thing in 1981 and I remember hearing in 1982 that the same well dead beast has once again been killed once and for all. To conduct a debate ignoring all that history seems to be not particularly helpful, more than a bit naive and not the kind of thing in which Members should engage. We are supposed to deal with realities and those are the realities behind the situation which we are in today.
It is useful to reflect on what exactly we are playing for. We are involved in an negotiation in a Community having increasing difficulties in disposing of the amount of milk produced. Not to put a tooth in it, what we are playing for in this negotiation is room for ourselves to increase our production against a background and in a market where the total amount of production that will be guaranteed and paid for by the Community is actually declining. We are negotiating in order to arrive at a point where we can continue to increase our production and the other parties to that negotiation are accepting that their production must decline, and it must necessarily decline.
To give an example of the kind of declines being talked about on the basis of the proposals as they now exist, taking only four examples, we have Denmark, Germany, The Netherlands and the United Kingdom all facing reductions in their volumes of production guaranteed under Community rules of 7 per cent to 8 per cent immediately. We will do ourselves a great service and we will have gained something very substantial if we have and continue to have headroom for expansion against that background.
What would be the alternative to all of this? I have not heard a great deal from the Opposition about the alternative, not just to the proposals which are being made now, but to a system which has been there and accepted as part of previous price packages since 1980 by the gentlemen opposite when they were in Government. The alternative is the probability of a straight cut in prices right across the board of somewhere in the region of 10 per cent.
(Limerick West): Nonsense.
Deputy Noonan thinks that is nonsense.
Order. This is a limited debate.
It is one of Deputy Noonan's great talents that he can dash off on his crusade, as he has tried to do here rather wetly in the last couple of evenings, and simply ignore the background against which he is negotiating. Deputy Noonan never even heard the word "negotiation" in this context. It is a shame to conduct a debate in that way.
(Limerick West): I am not saying it. The farmers are saying it.
What it amounts to is an attempt to fool the people, to try to make the case that nothing has changed so far as we and others are concerned since 1980, when down through the years since 1980 the gentlemen opposite — and I am not blaming them particularly — have been participants in a system which has clearly established production thresholds in the Community.
There is no limitation to date. I am a farmer.
I have sat on different sides of those negotiations. For Deputy Byrne to try to pretend that there has been no limitation is flying in the face of truth and reality of any kind.
How many cows is the Minister milking?
It shows that Deputy Byrne has not been keeping up with the factors which influence the people he says he is arguing for now.
He does not understand.
Order. This is a limited debate. Some people have ten minutes and others have five.
I do not like being disorderly and I will not take up too much time in replying to Deputy Byrne. I would hate to deprive Deputy Doyle of the pleasure of dealing with him in her own inimitable way.
She had better be quick. She will not be here after the next election.
The alternative to the kind of protests which have been building up in the Community since 1980 is a straight-forward reduction in prices of somewhere in the region of 10 per cent. In my view that would be far more damaging to our country and to our farmers than any of the schemes which have been talked about since.
There is a much wider dimension to the problem we are talking about. Before I go on to that, I want to refer to some of the cases mentioned here last night during the course of the debate. Last night Deputy Wilson talked about a particular farmer who has been developing his farm over a period of years and expanding his output. We all want to see a continuation of that. We all want to see people making progress to the limit of what is possible.
I am quite confident that we will get to our objective, but the situation we are facing is one that allows flexibility for the kind of producer Deputy Wilson talked about here last night. In very broad terms, in our dairy sector one-third of our producers are expanding, one-third are staying static and one-third are declining. When we add on to that the kind of headroom for which we are negotiating, we see that within the system there is quite a deal of leeway for those who want to expand and who can expand to continue to expand, particularly if we engineer the overall quantities at creamery level rather than at farm level. That is a factor to which Deputy Wilson did not refer last night because it did not suit the kind of case he wanted to make. It is a factor which is real and offers a margin of leeway to the kind of producer he was talking about.
I want to refer to some of the wider aspects of the negotiation which is going on. We spent quite a deal of time in the latter part of last year following a particular formula for these discussions which, in retrospect, does not seem to have worked all that well. We followed this formula of having special Council meetings where Ministers for Foreign Affairs, Agriculture and Finance of all the member states got together and thrashed out all the issues.
The first point we were determined to establish during those discussions was the fact that there is a link between all of the different aspects of the overall problems which are now on the table. There are four main problems facing us at the moment. We have the agricultural problem which is wider than the dairy sector. Our main concern is with the dairy sector. There is the problem which has come to be described as the problem of budgetary imbalances or the UK problem. There is a problem of overall budgetary discipline in the Community.
Lastly, and in my view one of the most important of the four, there is the whole problem of the level of resources available to the Community to finance the agricultural policy, the regional policy, the social policy and all the other areas. We would like to see the Community in a position to make a greater contribution to the basic aim of redistributing economic activity throughout the member states and favouring the less well off.
We have been very careful to keep on making the point that these four problems are interlinked and that there can be no question of agreement on any one part of the overall package without the overall package itself being acceptable. That is an important point which tends to get lost in a concentrated discussion of the kind we are having here on a particular part of the problem.
In my view it would make no sense at all for us to pursue single-mindedly any one aspect of the problem, whether it was the dairy sector or the budgetary imbalance or any one of them. We need overall agreement on the level of total resources to be made available to the Community. In this country and right through the Community we have seen the effects of the fact that the Community have about reached the limit of the resources available to them. Of course that is an area in which probably we would be a great deal more sensitive than some other member states because we see, perhaps more clearly than do they, the extra contribution that a financially stronger Community can make to the development of a country like ours. We need agreement on that. We have the trade-offs that we ourselves make between different pieces of the package. Of course, in a negotiation, the other partners have trade-offs they make between the different pieces of the package. I am sure it will not take any great stretch of the imagination for Deputies opposite to see that there are some other member states, for example, who would say that they will not agree to an increase in the total level of the Community's resources without getting what they would regard as a satisfactory solution on the agricultural side, to give just one example of the kinds of trade-off they make.
We have a general reserve on all of these points because we do not accept that different pieces of this overall problem should be split up and settled one by one. We have been quite deliberate in our assertion that the four must go together, that no one can be finally accepted as being solved until we have a satisfactory solution to all of them. In this kind of negotiation that is by far the best way for us to ensure that we protect our overall interests. That is the way we can best ensure that we protect our agricultural interests. It is also the way in which we can best ensure that we protect the interests we have in further developing the Community's regional policy, in ensuring that the Community's social policy continues to support the kinds of activities from which we draw substantial amounts of money through the Social Fund and from which we want to continue to draw substantial amounts.
It would do a great deal for the clarity of a debate of this kind if members of the Opposition would really sit back a little and not spend quite so much time restating the case we have been making for months in relation to agriculture but rather look at the wider problem in perspective. For example, what will happen in the Community if we do not reach agreement that the total amount of resources available to the Community should be increased? Equally what will happen if we do not get agreement to raise the VAT ceiling? We could have any agreement we like on agriculture, on the dairying sector, on the Social Fund, on the Regional Fund, but after a while we would discover it was not worth the paper on which it was written because we would not have the funds to support the policy on which we had agreed whether that was agriculture, the Regional Fund or anything else. I can assure the House that I would have no interest whatsoever in having a good paper agreement on agriculture, or any one of those other areas if I was not sure that that was backed up by the level of funding required at Community level. I have no desire whatsoever, for example, to have the kinds of regional policy prescriptions that I believe the Community should have unless I could also be sure that the money would be there to fund that policy at a level that would really make some impact on the Community, particularly at a level that would have a considerable impact on us.
This year we have already seen the difficulties that have arisen in the agricultural sector as a result of the fact that the Community is near its financial ceiling. There is no doubt that has created problems. Equally there is no doubt that if we do not reach an agreement that allows us continue to fund the Community properly those difficulties will become more and more pressing, more and more inconvenient for us as time goes on. It seems to me that that perspective has been totally missed by the Opposition in this debate.
The other parts of the problem perhaps are ones we do not really need to discuss here in such great detail although, as I said, it is a pity the Opposition have not shown somewhat more sensitivity to them. I do not believe it would do any of us in this House any good to conduct our negotiations on these various points in public. We are in the process of a very difficult negotiation, at a very difficult stage at present. Certainly I do not intend to add to the difficulties facing the Taoiseach, Minister for Agriculture or Minister for Foreign Affairs by venturing into details of what is on the table at present in a debate of this kind. But it is fairly clear from what I have said, and indeed from what the Minister for Agriculture said last evening, that throughout this discussion with our Community partners we have been very concerned, to ensure that our position was recognised, understood and appreciated by our partners in the European Community.
It is not at all an exaggeration to say that our partners in the Community know how important we believe our case in the dairying sector is to us. Equally there is no doubt that, throughout the process of negotiations, they have come to realise more and more what are the sticking points. They have come to realise more and more the reasons lying behind the negotiating stance we have adopted. They have come to appreciate — and it did not take them long to do so in the way the negotiations were conducted — that we are quite serious in our intent. They have also — and this is particularly important — fully realised the fact that we are quite serious in our intent to be involved in these negotiations in a way that will ensure the future well-being of the Community finances, and they know why. They are perfectly convinced of the fact that, while we are arguing from a position of an extremely strong, fundamental national interest on agricultural policy, on regional policy particularly, we are at the same time arguing from a position in which we take account of the fact that it is good for the Community as a whole to be able to resolve these problems and fund itself at a level we think appropriate.
In the last ten days our partners in the Community have come to recognise the fact that we have been making a case based on one of the fundamental principles of the Community, that is that all of the member states have to show a degree of solidarity amongst themselves and towards one another that properly reflects the spirit and letter of the Treaty of Rome. They have come to that realisation particularly in the last ten days as a result of the action the Taoiseach took, just what position he had to take and what were the motives that led our Taoiseach, on that occasion, to leave a meeting in the way he felt obliged to do. In no small measure that has been a factor which has kept the other member states in a position in which they could continue to negotiate with us because they realised that one cannot run a Community on the basis that one ignores the interests of any one of its member states. That is something every member state must recognise in the course of a discussion like this. We have recognised that throughout.
In putting forward our case it has been part of our concern to make sure that we did so in a way that afforded other member states maximum reasons for accepting the case we put forward. We have been very careful to argue our case not simply on the basis of the effects that different measures proposed would have on us, on the dairying sector and other parts of our economy, but also on the basis of the effects they would have on the overall Community. I am disappointed that the Opposition did not see fit to put this debate in anything like its proper context. I am surprised that they have overlooked the one central point in relation to the dairy industry which is that this negotiation has come about partly as a result of the acceptance from 1980 onwards that there would be limitations on the overall level of milk production at Community level. Deputy Byrne may not have understood it at the time but that is what happened.
The Minister can try his smart-aleck talk here but what about Brussels where it should have been done for the last ten years?
The Minister did not do anything but waffle.
I am not any more gentle in Brussels than I am here.
We are all agreed that this is a matter of vital national interest. A blunt instrument is being used to settle the agricultural problems in the EEC. I am disappointed that the Minister for Finance misread the intention behind our motion. It was put down to stiffen the resolve of the Government and support them in their stand against the agricultural industry being done down.
The reality is that the dairy industry contributes 9 per cent to the gross national product and is responsible for 10 per cent of the total workforce here and for 10 per cent of our exports. It is an industry with the greatest permanency as far as economic and social development is concerned. It has the same importance for us as North Sea oil has for the UK or the car and steel industry has for Germany or perhaps as the milk industry has for other jurisdictions. We want the Minister and his negotiating team to protect this industry for us.
Historically our industry could not develop at the same rate as other industries in other jurisdictions. We had a small home market and one major export market where there were low prices and this militated against our development over the years. Other states had unrestricted growth available to them. They had huge markets and price supports. In order to benefit from their growth we joined the EEC some years ago. We knew full well that traditional industry would suffer — and it has — because of the dismantling of trade barriers. However, we expected the loss in revenue to the Exchequer to be made up by agricultural gains. That is the basic reason why we joined the Community. We needed time and it was accepted by the negotiators that we would be given time to catch up and make up the leeway. It would not be equitable in EEC terms if a super-levy was applied to us at this stage. We produce 5 per cent of the Community's milk. To ask for a curtailment before we reached the average Community level would condemn us to making a pro rata saving to the Community of up to 10 per cent. That is a disproportionate burden on one member state and is contrary to the Treaty of Rome.
We charge the Government with political miscalculation as far as their negotiating strategy is concerned. It goes back to the Stuttgart meeting. That is when the marker should have been put down as far as the agricultural industry is concerned. That was not done and in Paris and Athens there was a succession of missed opportunities. In Brussels the traditional finalising procedures were turned upside down by the Minister for Agriculture as a result of his manoeuvre the previous week. It is patent nonsense for the Minister to come in and try to smother Government incompetence by attempting to include Fianna Fáil in the negotiating debacle he was responsible for two weeks ago. On two separate occasions in the last few years Fianna Fáil threw out the concept of a super-levy and that is why it was not re-entered until such time as the Coalition came to office. These wounds were self-inflicted by Fine Gael and they have to carry the can for them. The Minister misread the situation and he has been aided and abetted in that by the Minister for Finance.
We support the Government's stand to achieve a total exemption and derogation as far as the Irish industry is concerned. When the Minister for Agriculture accepted the principle of the super-levy two weeks ago, it was a complete negotiating blunder. There should not have been any movement at the meeting of the Council of Ministers for Agriculture and that would have kept the problem at the proper level. It would have forced the leaders to deal with it as a first priority and not, as it ended up, as an irritant. The Taoiseach was out-manoeuvred and abandoned ship at the summit. He forced his unfortunate and unhappy Minister for Agriculture back to use the veto on something he had agreed to in principle. This was a total loss of credibility as far as the Government's stand was concerned. It led to a hardening of the attitudes of Ministers for Agriculture throughout the EEC. Worse than that, farmers are now out on the streets of Europe. The Minister should have used the veto at the Council of Ministers for Agriculture and not one week later when the horse had bolted.
The agricultural industry is under-developed throughout Ireland but it is much more so in the west. The same case can be made for the west of Ireland within Ireland as can be made for Ireland against the EEC. The same gap exists between the yield in the west of Ireland and the rest of Ireland. There is a 200-gallon gap per cow between the cow in the west and the cow in the rest of Ireland. There is a gap of 200 gallons between the Irish national average and the European one. There is no alternative to the production of milk in the west. The land there is only suitable for growing grass and that means they can only produce milk or beef. There is no way a small farmer in the west can make a viable income from dry cattle. He needs the support of the dairy industry. It was up to 10 per cent in one area catered for by the NCF in Sligo and Mayo. When we consider that 40 per cent of suppliers to the NCF creamery are under 3,000 gallons per head and that the average is about 1,200 gallons, it must be realised that in European terms many farmers could get that from one cow. Only 2 per cent of the farmers in that catchment area have an output of more than 2,500 gallons. The west needs time to catch up with the rest of Ireland let alone with the rest of Europe.
We must get up to the average output in Irish terms before we can consider dealing with the European position. The farmers in the 12 western disadvantaged counties are very angry at these developments. They have kept quiet for the past few months so that a national case would stay united. Whatever percentage is achieved for this country in the final negotiations when they come about, the west will have to be given total exemption from the levy anyway. The farmers in the west feel hoodwinked by the Minister and the Government so far and the Minister's speech of last night really must have made the European case for imposing a super-levy. It is just set the platform for the eventual sell-out that will take place in the next couple of weeks. The same Minister at his last Ard-Fheis told the farmers that there would be a total derogation and that nothing less would satisfy him or the Government. There was ministerial posturing on this matter for the last number of months with conflicting evidence about growth and potential of agriculture being flouted about here and there, and it has done nothing except sow seeds of confusion in the minds of the farming community. Not so long ago in Sligo town the Minister made it clear to the farming interests in the west that he would not let the super-levy issue be settled without special treatment for the west one way or the other. He will be asked to honour that.
The only safe ground for the Minister to take, the only ground he should have taken at this stage, was a total exemption in so far as the Irish industry is concerned. If he does not take that position he is setting himself up for a milk war in Ireland after the final deal has been struck when he talks about allocations and quotas and how they will be devised and divided amongst the farming areas in this country. He is walking himself into a situation on the Irish scene that he will not be able to control subsequent to the final negotiations unless he stays in and asks for a total exemption for Irish industry. The unfortunate part about these negotiations is that what is to be decided now will last for our lifetime. Are we, particularly in the west, to accept that we will not be allowed to develop even to reach the national average in our own country? We do not accept that and we are bringing to the notice of the Minister that he is on promise to see to it that the Irish agricultural industry will be protected, in particular as far as western farmers are concerned.
I would like to draw the Minister's attention to two paragraphs in his speech last evening because they sum up the whole debacle as it has turned out. In his opening paragraph he said that what he had been looking for from the very start was an exemption for Ireland until we reached a level of development similar to that in other member states. Later on he talked about the performance between 1972 and 1983 and said that an increase of 5 per cent could be expected during that period and if we were to get 5 per cent for a few years now we would have reached what he was setting out to do as stated in the first paragraph of his speech. That is not true. Even if you give 5 per cent increase for the next four years to Irish farmers it will not, even at the end of that period with that increased development, bring us to the average that now exists in the European sense. We have an underdeveloped economy. We depend for our economic goodwill and growth on export growth, and agricultural exports are vital to our economic survival. Our economy is virtually totally dependent on the dairying industry. That is the one safe area of growth. Irrespective of the winds of recession, international or otherwise, you can surely depend on the grass growing green and cattle being reared on that grass. It is the only sure thing that the Irish economy has been based on over a lifetime, and attempts are being made to withdraw it from us now. You cannot freeze development in the way suggested by the Minister. It would be contrary to the Treaty of Rome and the basic principles as set down for free trading and regional convergence. That is the reason we joined the EEC and for that reason now we demand that the Minister stand firm by the tenets and principles of the original negotiators in joining up the EEC.
Fianna Fáil support was always with the Minister and never deserted him in this matter. Our spokesman, Deputy Noonan, stated unequivocally and unambiguously every single week since these negotiations started that the Minister could rely on a unified House here and a unified national effort to bring to the notice of the powers that be out there that he was not going to take second best or be treated as a second-class citizen in agricultural terms. He sold the pass on us, and that is what makes us angry here as are the farmers outside. He had a unified Government. He had a unified Dáil Éireann in support of this one great national issue. It must have made him feel very secure when sitting down with the Ministers for Agriculture two weeks ago. He should have used that muscle. He should have used the veto then that he threatened to use so often. He conceded the principle and subsequently he had to come back and lose his credibility and move the veto on directions from his boss.
We live in disadvantaged areas and we might as well face the fact that this levy, if implemented, would have disastrous effects not just on the dairy industry but on the whole question of production in the agricultural sense, including food processing. Nobody yet has quantified the number of people who will find themselves unemployed and the cutting back of living standards that will accrue if the Minister fails to achieve his stated aim of last year. Where will the cows be sold? Does he want them forced out on to a market and a glut created? Are we talking about heading for another 1974 which was supervised by another Coalition Government? What is happening now is an exact replica of what happened in 1973. We will have high prices for second-class animals and next year we will have a glut. Nobody will be able to buy them, and we will return to the dismal days of 1975 and 1976 which epitomised Coalition efforts in agricultural matters during that term of office.
The thrust of our motion was to stiffen the resolve of the Minister for Agriculture, to send him out there knowing full well that any steps he took he was taking on behalf of the nation with the full support of all the major parties in this country. He had a bounden duty not to sell out his countrymen and to allow us to develop in order to reach the national European average, a national standard of living at the same level as that enjoyed by the thousands of farmers who are now seeking to impose their will on him. He has our support. I am asking him to use it in the best interest of Ireland. The only way he can return from his next round of negotiations is with the information that he has held the line and succeeded in his negotiations.
I thank you, Sir, for the opportunity of speaking to this very important motion which is going to set a scene and affect the lives of many farmers and workers in the dairy industry. We have 65,000 full-time dairy farmers who are anxiously waiting and watching for the outcome of the final negotiations in Brussels this weekend. We must admit that we have surpluses but as perhaps the most undeveloped nation within the EEC we are entitled to a special concession. Our case for that concession has not been well sold by our Government or Ministers in convincing the Europeans of the seriousness of the Irish situation. We can go back to the time of our foundation as a nation when Danish agriculture was as well developed then, in the twenties, as ours is today and in that sense we have one of the strongest cases within the EEC.
I must look at the structure of the dairy industry from the processing point of view. In County Cork alone approximately 5,500 people are employed in the co-operative movement on the processing side of the business. Effectively another 3,000 people are employed on the service side. A frightening thought is that many of those jobs will be put at risk because of the lack of sincerity in what we have been hearing in the last six or seven months, that we would be seeking total derogation. That raised a certain amount of confidence in those employees as well as in the farming community.
We must consider the huge investment by Irish farmers in the last number of years in the co-operative movement throughout the length and breadth of the country. We have approximately 20 per cent over-capacity and have geared our industry towards commodity products rather than consumer items. This was what we were educated to do, because intervention was geared towards butter and skim milk, two bulk products. In later years this was joined by casein for the American market, which again is a bulk commodity. If we have now to get rid of it our over-capacity and go for consumer products it will cost a vast sum of money to build that up into the added-value area. That money will come from nowhere but the industry itself. That alone will mean a substantially decreased price for the gallon of milk for Irish producers. That is a frightening thought, when combined with the super-levy. The 1983 base year is not realistic. We should have an open-ended agreement until 1993. It is quite unfair of our European counterparts to expect anything else from us.
We must examine the reasons behind the over-supply of milk within the European Community. It is mainly brought about by the huge importation of manioc — as much as 15 million tonnes from Thailand. This must be tackled. It has gone unchallenged by our European counterparts, to the advantage of the Dutch and the Germans. That is the major over-supply area. The Netherlands and Germany account for 70 per cent of the total imports of cereal substitutes. While Ireland, France, Italy and Denmark account for 55 per cent of total agricultural production, they only import 12 per cent of all cereal substitutes. Twice the total forage acreage is imported from outside the Community to boost artificial milk yields. That is mainly in the hands of the Dutch and the Germans.
We have a mechanism under Article 28 of the GATT by which we can tackle a problem which has arisen since the founding of the Community in 1958, which is maize gluten, a by-product of maize becoming very popular within the Community and adding to the major over-supply as a substitute feed because of its way around the mechanism of that Article. We must also contend with citrus pulp and various other items which are substitutes and which must be tackled. If we are to be successful, we must renegotiate our total position in the Community at large.
The British are the main problem within the Common Market. They have been cynically referring to the Common Agricultural Policy. I quote from an economist of Lloyds Bank who said:
If the Community would stop listening to what the British say in Brussels and start listening instead to what economic experts in the city of London are saying, we would hear things like this:
1. Britain's industrial exports to the EEC have risen by £19 billion since it joined the Community. That's nearly three times the total cost to Britain of the Common Agricultural Policy during that whole period.
2. Britain's balance of trade with the EEC has steadily improved over the decade. Its exports to the EEC have risen by 3.4 per cent a year. But its imports from the EEC have risen by only 2.8 per cent a year.
3. The cost of the Common Agricultural Policy is not a significant factor in Britain's cost of living.
Proof? British food prices in real terms rose by only 3 per cent in the decade to 1981; farm prices account for only about a third of total food prices, and have risen much less than other elements in the food cost chain.
That comment is worth noting. Mrs. Thatcher is playing ducks and drakes, not alone with the Common Market but with our Government here at home. When she sneezes, we get a cough. At this stage the British Prime Minister has not even offered us the crumbs from the table.
Greece is a peripheral country, being very remote, but we are as remote, in our own way disadvantaged and not fully developed. The Greeks have received certain concessions in the area of transport subsidies for imports and exports. They have renegotiated their position. I cannot understand why we worry so much. We are one of the most influential nations because of our position in the East-West situation.
The Deputy has five minutes.
We can use our bargaining power to the fullest. We will get the concessions to which we are entitled. The farmers and the workers in our dairy societies and co-operative movement are worried. I have received many phone calls and letters from people wishing to know what we and the party are doing on their behalf, what pressure we are putting on the Government and what we can do to secure the success of the negotiations. I commit myself fully to supporting the Minister in everything he has been doing. However, we must stand up and be counted. We must be firm in our negotiations. We cannot be asking for total derogation in mid-1983 and then shifting from that policy, with a total shift during the Fine Gael Ard Fheis. I raised this matter in the House here and was contradicted. We have been consistent in our approach to the entire negotiations.
The Germans have been strongly opposed to us in recent days, but we must examine the situation in Bavaria — a section of Germany very much like our own country. Their agricultural industry has expanded at an enormous rate. The northern part of France with a climate similar to our own, has the finest dairy farms in Europe, all built and expanded at the expense of the Common Agricultural Policy and the high price of milk. Our colleagues in Northern Ireland have the advantage of the British grant system and have exceptionally high yields in cattle. They have good grassland and well managed dairy farms all because of the concessions and advantages which they have. I must admit that we are totally disadvantaged at every level of production, farm and industrial.
We are in a serious situation. If we lose this battle, we will never recover. The Minister must convince his colleagues in the Council of Ministers and the heads of Governments. Perhaps the time is right for the Taoiseach to travel to the European capitals to meet with his counterparts, explaining to them the very special position of this country, so disadvantaged and so poor, with so very few resources. Our basic resources are the grassland and the dairy herds. The dairy herds are the basis of our whole economy. Another disadvantage is that we failed to introduce here the variable premium in connection with the dead meat trade of which 60 per cent is paid by FEOGA and 40 per cent by the United Kingdom Government.
Deputy MacSharry brought us one of the greatest concessions ever received by this country — the £22 calf subsidy. We must have a hard look at our progress with regard to that subsidy, which is to the advantage of the smaller dairy farmer. Seventy per cent of our farmers produce only 30 per cent of the milk. The other 30 per cent produce 70 per cent. That is the harsh reality.
The Deputy has one minute.
I ask the Minister to bargain hard and not to be found wanting. If it is necessary he should come back to this country without the deal because he has the Europeans where he wants them, in the palm of his hand. We can bargain on our influential position with regard to the East and the West.
The Minister, to conclude at 8.15 p.m.
Apart from a few bars across the floor, this has been a good and worthwhile debate. I have listened very carefully here tonight and for part of the last evening and the speakers on both sides have indicated quite clearly to our EEC counterparts that this is a vital issue to us as a nation. The case that has been made by the Opposition is exactly the same as that being made by the Minister for Agriculture and the Government. We believe we are entitled to this derogation; we believe our contribution to the European problem has been minimal and we argue that our contribution to the solution should be minimal.
I agree with the previous speaker that some of the countries who have caused the problem in Europe have done so through special arrangements that they were allowed to get away with, not just this year but over many years. They were allowed special arrangements in regard to feed substitutes imported from third countries and from the US.
This has been a good debate and the eyes of Europe are watching us. Everything that has been said in the House probably will be over there in a matter of minutes instead of hours. It is important in the interests of the nation — that is why we are here — and particularly of the towns and villages of Ireland that we have a satisfactory outcome. The towns and villages are depending on an expanding dairying industry. All related industries, fertilisers, transport and others, are equally depending on a thriving dairying industry that can be made better. We here can produce milk from our endemic raw material, green grass, something that most of our EEC counterparts are not doing. Our milk is produced from a natural resource which we can grow better than anybody else. We should be allowed to continue to do so. I agree with those who said that parts of this country are totally unsuited for anything else. The size of most holdings determine that if they do not get an income from dairying they will not survive. Therefore, even the lending institutions have more or less accepted that if we are to get ourselves out of our difficulties we must expand our dairying industry.
I am pleased to be here tonight to support the Government and the Minister for Agriculture. I was glad to listen to speakers across the floor. By and large they were constructive and helpful and that is as it should be on this vital issue. Those across the floor of the House who engaged in previous negotiations and understand the scene, know the difficulties facing the country. The super-levy would be of no importance in solving the problems of the EEC, least of all to us who are net beneficiaries.
The Minister is getting the support of the House. It is important for him. Nobody will be able to push an Irish newspaper under his nose over there and say, "Not everybody in the Irish Parliament supported you — some people believe you should be going down a different road". That is not so and, for goodness sake, let us keep it that way. Let us stay together. The farming organisations are behind the Minister fully. The people working in the industry are behind the Minister, as they would be behind any Minister or Government at this vital moment. We are facing a crucial few days.
In my last few moments I wish the Minister well. Let us stay with him. Let us support him and let us not resort to any sort of cheap knocking, anything that in any way might damage the case he is making. He is making a good case, he is a tough fighter, a tough operator who will not take "no" for an answer. I am sure that when this deal has been finalised everything will work out right for us. Our total milk surplus is only a drop in the ocean compared with the total surplus across the EEC.
The Minister has pointed out that on our entry to the EEC we were prepared to forego many indigenous industries, car assembly and many others, because we believed our future lay in developing agriculture. We have and always will have disadvantaged areas, but do our partners in the EEC want to give us an opportunity to make ourselves a viable economy or do they want to make the entire country a disadvantaged area? That is the case we are making and it is a good one. I wish the Minister well.
Arising from what the last speaker has said, we will support the Minister and the Government provided they pursue the terms of the resolution before the House. Unfortunately, the Minister's speech last night made a great case for the acceptance by us of the super-levy. We listened to the Minister for Finance trying to make a similar case. He also set out to blame everybody else but himself and the Government, a sure sign of failure by them. The Minister and the Government must accept full responsibility for the present position. They are the Government but they have failed to understand what is happening. They have failed to convince our EEC partners of the vital importance of the super-levy issue for our farmers and the economy. They have completely mishandled the negotiations. As far back as last June — I will refer to the Dáil Official Report for 22 June, after the Stuttgart meeting, the Taoiseach described the meeting and said he had doubts about previous heads of state meetings and their importance but, he said, "this was one of considerable significance and the outcome was strikingly positive". At column 2687 he is reported:
The Minister and I, with gratifying support from colleagues, were successful in preventing damage to Irish interests in the Common Agricultural Policy.
At column 2700 he is reported as saying:
The solemn declaration acknowledges that the problems of the less favoured agricultural regions merit special attention.
The impression was created by those statements that Ireland would not be affected. Afterwards, the Government sat back and what was the result? The most objectionable proposals affecting Ireland were put forward by the Commission. Obviously, the Government had been fooled. They panicked and the Minister for Agriculture, going to the next Council of Ministers meeting, stated, after the Commission proposals had been published, that he was nervous. They did not know what to do. The discussions continued during a period of months and the Taoiseach and his Ministers scurried around Europe seeking support for Ireland's case. On 17 December, as reported in the Dáil Official Report at column 1420, we had the Taoiseach talking about the Athens Summit:
I hoped my colleagues would understand why this remains unacceptable to us, though some seemed still to have difficulties in understanding the reality of the impact on our economy.
That in itself was an admission by the Taoiseach that he had failed to convince our partners. The Minister for Agriculture spoke on the European negotiations during a debate here on 7 November. He referred to the Greek Presidency proposals, and he is reported at column 2614 as follows:
Because of the special role of the dairy sector on this economy as a whole, and developments which have taken place in recent years, Ireland will have a guaranteed threshold corresponding to the 1983 production.
He thought he had a foothold. He was fooled again because it now appears that what was meant was that there would be a super-levy in Ireland, but from 1983 thresholds. The most important and significant statement made by any person regarding this question was made by the Minister for Agriculture. Deputy Deasy, on 17 November, as reported at column 2618 of the Official Report. He stated:
It might not have been such a bad idea if a super-levy of some description had been brought in in Europe and Britain because we might not be faced with the dreadful dilemma we have in front of us today.
How can a Minister who says it might not be a bad idea to have a super-levy conduct negotiations on our behalf against such a proposal?
As the Minister implies, everybody is to blame except his Government and himself but it is no harm to remind the House, and the Minister, of the damage he and his Government have done to agriculture at home by their own actions. They abolished the plan left by a Fianna Fáil Government, they abolished the farm modernisation scheme, abolished a number of subsidies, suspended the farm retirement scheme and reduced expenditure on drainage. Most of those schemes were supported by EEC resources.
What about the ground rents?
They have displayed complete disregard for our major industry, agriculture, and reduced the national Exchequer support for our main industry. How can the Government be serious about seeking assistance in Europe when they by their own actions have done so much damage to agriculture? A few weeks ago the Minister agreed to the implementation of the super-levy with 1981 thresholds without any real protection for our farmers. The Minister for Agriculture was quite happy to scurry away and, as he said, send the political question regarding Ireland to the heads of state. I should like to tell the Minister that this was not only a political question, it was very much an agricultural and economic one for Ireland. A major tactical error was made by the Minister for Agriculture. At that Agricultural Council meeting the impression was created — one cannot blame other agriculture Ministers for being under that impression — that we would accept a super-levy but with some unspecified modifications for Ireland. Not only did the Minister agree to the implementation of a super-levy on that day but he also allowed many other important benefits to slip away from Irish agriculture, including the calf subsidy.
It is obvious that the Minister, and the Government, failed to present our case to the Commission or the other member states. All along they have dithered. On the motion before the House they were not sure on Monday what they should do. On that day they deleted all our wording about a complete derogation for Ireland and decided to ask the House to support the efforts made by the Government to secure a satisfactory result. However, on Tuesday they had second thoughts and accepted our wording. That is an indication of the grave confusion on behalf of the Government, or members of it, in relation to this important question. In his speech the Minister displayed a further lack of knowledge and confusion about the issue. That Minister, and the Minister for Finance tonight, made much play about a sentence in the speech delivered last night which stated that the concept of production controls from which the super-levy system derives was brought in — they forgot about the matter then and somebody in the Department put in in brackets 1980 — and was formalised in 1982.
I should like to remind the Minister, the Government and the House, that it was not a concept that was being discussed in 1980 or 1981. It was a firm Commission proposal for a super-levy and not any airy fairy idea, some abstract idea or mental expression but a firm proposal by the Commission supported by the other member states in 1980 and 1981. If the Minister, and the Government, are not able to succeed where we did they should not try to turn the blame on somebody else.
Why did Fianna Fáil not nip this in the bud? If such matters are not nipped in the bud they can be dangerous.
Deputy MacSharry should be allowed to continue without interruption.
I have listened carefully to the points made by the two Ministers and to the regulations read by the Minister for Finance. In those conclusions in 1980 and 1981 the super-levy was a firm proposal and any other mention of levies was in relation to the co-responsibility levy which was in existence for some years before. Obviously, even at this late stage neither the Minister for Agriculture nor the Minister for Finance can understand the difference between the co-responsibility levy and the super-levy as is proposed. That is the type of confusion that has the country and our farmers in the state they are in.
We have consistently said that we cannot, and will not, accept a super-levy on milk production here until our farmers get an opportunity to reach the levels of production that obtain in other member states. Why is the Minister for Agriculture, and the Government, not pursuing, even at this late stage, although it might not have been agreed up to now in negotiations — it was not agreed in my time — the question of the importation of New Zealand butter, imported cereals or tax on vegetable oils and fats?
The Deputy did not do much about those either.
The reason the Government will not do anything about New Zealand butter is because there is no way the British government will have it. Therefore, the Government will not force them. The reason the Government will not do anything about cheap imported cereals is because the British, Dutch and German governments say they will not have it. The reason why the tax on vegetables, oils and fats will not be implemented is because the British, German and Dutch governments will not have it. Why hit the weakest country in the Community in its most important sector?
We joined the Community as equal partners and we are entitled to fair play. The three items I have mentioned contribute far more than if we doubled our production of milk here in the next five years. I am sure everybody will agree that the Government have not been consistent in their negotiations so far. After Stuttgart they displayed confidence. The Minister for Agriculture at a meeting of the Council of Ministers for Agriculture accepted the super-levy without any real protection for Ireland. They rejected 10 per cent at Athens, accepted 5 per cent in Brussels and used the veto last week. How in the name of goodness can anybody in Europe know what the Irish position is when the Irish Government do not know? I hope that after tonight, with the support of the House, that the Government, and our European Community partners, will be fully aware of what the Irish position is, a full derogation for Irish farmers. With the view of the Irish Parliament unanimously behind them we expect that the Government will secure just that. Nothing else will do. The veto is a blunt and ultimate weapon for us. Now that it has been used it should secure the maximum benefit which is full derogation. Nothing else will do. Relief on a one year basis is not enough. If that is all they succeed in getting we can be sure that the dairy industry will stagnate and create permanent damage for our farmers and our economy.
Is the motion, as amended, agreed?
Read it out please.
I have put the motion and it is not customary to read it out.
We would like to hear it.
The motion, as agreed, is:
That Dáil Éireann solemnly declares that the imposition of the proposed super-levy on Irish milk producers is a matter affecting Ireland's vital national interest and calls on the European Commission to submit a proposal to the Agricultural Council granting an exemption for Ireland from the super-levy for the natural increase in Irish milk production until average European standards are reached and supports the efforts being made by the Government to ensure a satisfactory result for Ireland in the current EEC negotiations in relation to milk.
In accordance with the rules of the House I must put Vote No. 28, Environment (Revised Estimates) to the House.
