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Dáil Éireann debate -
Tuesday, 21 May 1985

Vol. 358 No. 8

EC Agricultural Price Settlement, 1985-86: Statements.

I have received notice from the Minister for Agriculture that he proposes to make a statement under Standing Order 38.

I should like to inform the House of the outcome of the recent negotiations in the Council of Agriculture Minister on farm prices and related matters for 1985-86.

This year the price negotiations were particularly long and difficult, but eventually agreement was reached on 16 May. I would, of course, have preferred an earlier result but no one will deny that a good result in May is better than a poor one in March. The outcome represents a gain of some £50 million to the Irish farm sector arising from improvements over the 1984-85 situation or a gain of about £70 million if we include improvements in the Council decisions as compared with what the Commission had originally proposed.

In the milk sector the Council agreed to allocate 58,000 tonnes to Ireland for super-levy purposes in 1984-85 and 1985-86 so that our total quantity for each of those years is based on the final figure for our milk deliveries in the year 1983 instead of the provisional figure used in March 1984. While this represents an acceptance of the justice of our case, it is also a recognition of the special position of milk production in our economy. It removes the uncertainty that has been affecting our milk producers and processors, and establishes an important and compelling precedent for the three remaining years of the super-levy system. In the case of other member states there will be a reduction of one million tonnes, or about 1 per cent, in their allocation for 1985-86, as was provided for in the Council agreement of March 1984. I might add that this extra one million tonnes of a reduction is in addition to the 6 per cent, 7 per cent, 8 per cent or 9 per cent reduction which various countries had to endure in the last marketing year whereas we got an increase of 4.6 per cent. As regards the years beyond 1985-86, I made it clear in a statement to the Council that Ireland's rights concerning the arrangements made last year remain intact. The overall effect of the super-levy is now being felt throughout the EC as a whole and the reduction in milk deliveries should help to strengthen the market. The stocks of skim milk powder in intervention have in fact already been reduced significantly and a similar reduction in the large quantity of butter in intervention would help greatly to improve the overall situation for the future.

Another feature of the Council agreement in connection with the super-levy in that the option of making transfers within a region and from one region to another is to be continued for the 1985-86 marketing year. In addition, any super-levy due will henceforth be payable annually instead of quarterly. Both of these provisions are quite useful to us. Later in the year the Commission is to make proposals for a Community premium for the cessation of milk production but it is intended that any quotas bought up should not be reallocated.

The milk equivalent of the intervention support has been increased by 1.5 per cent while the co-responsibility levy has been reduced from 3 per cent to 2 per cent with effect from 1 April, the rate in disadvantaged areas continuing to be ½ per cent lower. These changes together with a reduction from 120 days to 90 days in the period for payment for intervention purchases of butter are equivalent to a milk price increase of about 3p per gallon. The increase in the support for milk is composed of an increase in the intervention price of skim milk powder offset by a reduction in the intervention price of butter. Because of this latter reduction, the abolition of the FEOGA element of the consumer subsidy on butter represents an increase of only just over 2p per lb in the retail price of butter.

Turning now to the beef sector, the calf premium has been extended for a further year at a rate of about £6.75 per head as compared with £9.75 last year. I would, of course, have preferred an unchanged rate but, as the Commission had not proposed the retention of the premium and as several member states were opposed to it, the eventual outcome was quite satisfactory and represents a benefit of about £12 million to farmers. The council also agreed to continue the United Kingdom variable premium for a further year. Irish cattle and beef exported to the UK qualify for this premium and, in fact, the benefit to our meat exporters last year was some £11 million. The alignment of beef intervention prices for the various qualities in the Community classification grid is to continue, and this means an increase of approximately 1 per cent in our intervention support prices.

In the case of sheepmeat, the Commission has committed itself to dealing before 1 October with the problem caused on the French market by supplies of ewemeat from Britain. The supplies have been upsetting the market for some considerable time and the Commission's commitment to deal with the distortion is welcome. The marketing year for sheepmeat will in future be on a calendar year basis, and a 1 per cent price increase is to apply from next January.

The cereals sector gave rise to particularly acute problems during these negotiations. The Commission proposal to reduce prices by 3.6 per cent was opposed strongly by Germany and this opposition was supported by me and some other Ministers. During the negotiations the Commission showed some willingness to modify its original proposal and there was also a generally favourable attitude towards reviewing the operation of the guarantee threshold so as to avoid undue disadvantages to producers in future years. Although there was some progress towards a solution, Germany found it necessary to insist on further discussion in accordance with one of the options in the Luxembourg Compromise. The matter will, therefore, be taken up again by the Council before mid-June and I am confident that the final outcome will be much more favourable to producers than the original proposal from the Commission.

Among the other decisions taken by the Council were some reductions in the support for a number of products in the fruit and vegetable sector, and some green rate changes for member states which have negative MCAs at present.

Overall, the package contains sizeable benefits for our farm sector, and must be considered a satisfactory one when viewed against the background of the Community's financial constraints and the Commission's efforts to observe budgetary neutrality as well as the difficult market conditions currently prevailing for most of our main products.

However, it is clear that in future, increases in farm incomes will have to be achieved mainly through our own efforts in improving production, processing and marketing rather than through relying heavily on the Common Agricultural Policy support mechanisms, especially intervention. While we still have some way to go to match the best of our competitors within the Community, I am confident that we can close the gap and establish real and lasting prosperity in our agricultural industry.

(Limerick West): The Minister's speech this afternoon makes very sad reading. What is missing from it and from the package is more significant than what is in it. The reduction in the calf premium is a case in point. I remember when that premium was in the region of £22 per calf. The Minister failed to do anything about the importation of New Zealand butter. The future for the grain and cereal prices is disastrous. Farmers have the seed in the ground and they have no indication of the outcome. Irrespective of the stage-managed applause the Minister got at the Fine Gael Ard-Fheis in Cork over the weekend——

Is the Deputy jealous?

(Limerick West): The fact cannot be hidden that the Minister achieved virtually nothing in the protracted EC farm negotiations.

A Deputy

That is not true.

(Limerick West): It was humiliating to watch the Minister arguing in Brussels the case for his blatant statistics error of last year. It was pathetic to watch him portray as a major victory a partial retrieval of his original mistake. It was nothing of the sort.

Shame on the Deputy.

(Limerick West): The restoration of our 4.65 per cent milk super-levy expansion level applies only to 1984-85 and to 1985-86. There is still no guarantee for the three remaining years of the super-levy.

Does the Deputy want to bet?

Not many will want to get into heifers now.

(Limerick West): Next year the Minister will have to go cap in hand to retrieve the ground he has lost. No matter how this is handled by the national handlers, the Minister's blunder of last year will go down in the history of Irish agriculture as the reason for a stalling in farm price improvements.

Shame on the Deputy.

(Limerick West): It will go down in history as the beginning of a static approach to production. We have a quota in milk production, a threatened quota in beef production and a reduction in the price of cereals. This is the beginning of the end of any increase in farm production this year. This was done by the Minister since he took office.


On a point of order, why can the Government not sit and listen? The Minister was allowed to make his speech without interruption.

I back that up.

On a point of information——

The truth hurts. We will send the Minister back to school.


The Minister wants to intervene on a point of information.

The cereals submission to which Deputy Noonan referred was made in 1981 by Fianna Fáil.


Deputy Noonan, without interruption.

I repeat it. There is such a concept as freedom of speech.

On a point of order, Deputy Wilson should withdraw the remark he made about the Minister.

(Limerick West): That is a matter for the Chair.

Surely the Minister can speak for himself.

This is a very important debate and not a laughing matter. Deputy Noonan must be allowed continue.

Allow the man to speak.

(Limerick West): I appeal to the Chair for protection, the same protection as he extended to the Minister when he was speaking.

I was not here then.

(Limerick West): I am talking about the protection afforded by the Chair.

Tell us the facts.

That day has gone.

The fact is that the Minister made a mistake.

The decision was welcomed by all farmers.


I appeal to Deputies to please allow Deputy Noonan continue.

It is a ball frame that the Minister needs.

(Limerick West): This one blunder on the part of the Minister, one which tops a series of inept performances by him in Brussels, has meant the loss to Ireland of its negotiating muscle this year and this will be the position also in 1986. I repeat that there is now a stall in farm price improvement and also in increased production. Our dairy farmers will not thank the Minister for the size of the milk price increase. The two main farming organisations, the IFA and the ICMSA, have not left the Minister in any doubt in this regard. The price increase will not compensate the producers for inflation.

Inflation is not anywhere near 20 per cent.

(Limerick West): Will Deputy Farrelly please allow me continue?


For the last time, I am asking Deputies to please allow Deputy Noonan to continue.

(Limerick West): The dairy farmers will not thank the Minister for the price increase because it will not compensate them even for inflation.

They have thanked him already.

(Limerick West): The increase is at the level of 1.5 per cent while inflation, at a minimum, is 6 per cent.

It was 23 per cent when Fianna Fáil were in Government.

(Limerick West): Therefore, there is a net loss to the farmers.

The Deputy is suffering from loss of memory.

(Limerick West): In addition, much of the benefit of the increase has been lost already due to the delay in finalising the farm price package. The loss amounts to almost £4 million. Cereal growers, too, will be affected seriously. The exceptionally high yields of last year are unlikely to be repeated while the prices have been cut dramatically in Brussels.

There has been no decision yet in that regard.

(Limerick West): Farmers are debarred from becoming involved in milk production due to the quota restrictions and at a time when there is a reduction in beef prices their scope for any alternative enterprise is limited. Therefore, they will have to contend with lower standards of living at a time when some of them are already in financial difficulties with the banks. Beef producers, many of whom suffered badly in the spring when prices dropped dramatically, will suffer more throughout the year as a result of the price freeze agreed by the Minister in Brussels.

The prices dropped after Deputy Haughey returned from Libya.

(Limerick West): Regarding beef prices, it is not good enough for the Minister — as he did here during the Estimate debate on May 10 — to wash his hands of responsibilty for the spring price situation. He was able to persuade the Commission to introduce corrective measures in April but why could he not have done so earlier before the market reached crisis point? If beef producers or any other producers in the farming sector cannot look to their Minister for Agriculture for order in the market, to whom may they turn?

The Opposition.

(Limerick West): That is the most accurate utterance from the Deputy today.

And he is blushing.


We are glad to note that Deputy L'Estrange has returned.

Once more, I appeal for order.

(Limerick West): Our farmers will draw their own conclusions about a Minister who claims credit where there is no credit due and who, like Pilate, washes his hands when the responsibility is his.

Powerful imagery.

(Limerick West): It is not necessary for me to remind the farmers that the package brought back from Brussels will depress farm incomes this year, whether in the milk, beef or cereals sectors. In the circumstances there is a severe onus on the Government to control inflation and in addition there is a serious onus on everyone involved in agriculture — the Government, the Department, the producers and the processors — to increase the efficiency of the farmer producers. This does not involve the continuing withdrawal of support to the industry, a practice that has been the hallmark of this Government's approach since their return to Office. About £200 million has been withdrawn from agriculture.

In conclusion, I wish to draw the attention of the House to an assurance given by the Minister to his party in Cork at the weekend. That is, an assurance that efforts to introduce an EC beef quota system would be resisted. I seem to recall a similar assurance at a similar gathering a year ago when the Minister said in relation to the milk that an inch would not be given but eventually he gave a mile.

And the land tax is to follow all of this.

It is a comedy of errors.


The schoolboy tactics being displayed here indicate a lack of interest in the agriculture industry. We have not had serious statements on agriculture though the statements may have been serious in regard to what happened in Brussels because it is the type of haggling that went on but which really had no connection with the agriculture industry as distinct from the individual prosperity of farmers. There have been some small gains for some sections of the farming community but there has been a loss to consumers in terms of the increased prices that will result from the deal. Each year there has been similar haggling about prices, similar complaints when more was not achieved and satisfaction on the part of some in respect of what they achieved in other areas. What has happened will not make any serious impact on our policy in the area of the farming and food industries. There is a common agricultural food prices policy in the EC but the Community do not have a common pay policy, so not everyone can afford to buy the food. The crucial problem of the cereal prices was deferred because of the German willingness to use the veto. It should be remembered that people who are prepared to lecture Ireland about our responsibility as Europeans in various other fields are not shy about using the veto when their interests are involved. Our Ministers should be more prepared to protect our interests in the same manner.

The CAP has functioned up to now as a mechanism to save farmers from market forces but the practical result has been to create unsaleable surpluses of agricultural produce, to maintain high prices for consumers and to obstruct the rational development of production on the land, leading to an enormous increase in the import of food and so on. The Workers' Party are not calling for the abolition of CAP but for a drastic reform of the policy, which should have the effect of guaranteeing a standard of living for people on the land comparable to that of industrial workers while at the same time organising the production of food on a rational basis which would guarantee cheaper food to the European consumer. We have always maintained that farm incomes should be based on increased and efficient production rather than on increased food prices.

It is time we faced up to the fact that when we entered the EC and became full members in 1973 the number employed in the food industry was 58,900. Ten years later the number of people employed in the food industry was 42,300, a drop of 16,600. The December 1983 herd enumeration showed that numbers of incalf heifers and young female cattle were at their lowest levels since our entry to the EC. Despite the massive investment in agriculture over the last decade the total cattle herd in 1983 was smaller than that in 1973. The spectacle of the Taoiseach and the Minister for Agriculture fighting in Brussels over the past year or so for our right to produce more, while at the same time presiding over the decline of our production base, shows the depths of unreality to which our agricultural policy, if we have any, has descended.

Despite the fact that hundreds of millions of pounds have been poured into the industry from both Government sources and the CAP we have a dismal level of productivity, a declining number of jobs and a smaller return to the community in general from this sector in taxes, rates or investment. The big farmers of the IFA and the cattle exporters are only interested in lubricating the wheels of the Brussels gravy train and getting what they can in profits for themselves from the public purse. Many of them have not shown the slightest interest in achieving the maximum use of our valuable land resource. Those employed in the food industry whether in meat plants, co-ops or other agricultural based industries should call for a coherent, planned policy for agriculture. This is vital if the potential of the food industry is to be realised, if we are to create jobs in the industry and if we are to maintain any credibility either at home or in the EC. What is needed is a serious policy for the planned development of agriculture and the food industry. It should include any measures necessary to ensure the fullest use of our land, to produce the raw material required in terms of quality and quantity and to promote the production of value-added goods through co-ordinated State marketing.

In that connection I welcome the new emphasis by the IDA on the food processing industry. Where does the Minister and the Department stand on this? The Minister will probably be seen to have done a reasonably good job in the EC in the haggling that went on over the six days and nights, but this yearly haggling has nothing to do with the planned development of agriculture or the food industry. What has the Minister done in the EC or elsewhere with regard to the planned development of new products? From my understanding of replies to questions last week it is obvious that there is no new thinking in the Department by the Minister or by the civil servants in regard to the need for new products or new developments in the agricultural area to compensate for the enormous problems facing CAP and the beef, dairy and cereal industries over the next few years. It has become obvious that in the Department they are merely picking up whatever crumbs of policy or ideas that fall from the EC table. The Minister should produce a White Paper on land policy, land structure, agricultural production, agricultural policy, the future of the EC and so on in the coming year so that we could have a major debate.

This party has been portrayed by both Fianna Fáil and Fine Gael propagandists as being anti-farmer simply because we have consistently called for tax equity and for farmers who are within the tax bracket to pay their taxes. The supposedly pro-farmer parties have in the life of the State driven 200,000 farmers off the land and out of the country. From 380,000 holdings at the foundation of the State we are down to 150,000. The Workers' Party policy would see increased production of saleable products and an increased income to farmers as well as an increase in the number of jobs in the food industry. We would welcome some new policy from the Minister over the next few months.