That Dáil Éireann recognises the crisis facing the beef industry, notes the Fine Gael proposals for a resolution of the problem and calls for the introduction and implementation of a comprehensive programme to achieve the necessary increase in beef cow numbers.
The major crisis in agriculture is that facing the beef industry which arises because of a shortage of supply. The crisis is one which has huge post-farm implications and, therefore, a solution is essential not just in the interests of farming but in the interest of the economy. The Minister for Agriculture and Food has finally admitted what has been known for months past, that his scheme for maintaining the national beef cow herd has no hope for implementation. Apart from the difficulties of securing acceptance of the scheme it could have been criticised as being a totally insufficient response to the problem. In any event, it has now been consigned to the dustbin and is no longer relevant to the debate. However, it must be said that the pathetic posturing of the Minister in Limerick yesterday attempting to blame the meat industry, and all and sundry, for his own failures did not add anything to the debate.
What is needed now is a comprehensive action plan which will apply over the next four years. The target should be to increase beef cow numbers to 750,000 by 1992, an increase of almost 300,000 on the June 1987 figures. I have on behalf of Fine Gael circulated proposals for a 20-point action plan to achieve that target. Implementation of that programme will result in at least 1,000 additional jobs being created in the meat industry, extra beef exports of £200 million per year and viability for 20,000 to 30,000 farm families. Correspondingly, failure to act will result in thousands of farmers and many meat plants being forced out of business and many jobs lost. Indeed, many meat plants are operating on a three-day-week, or less. In addition our exports will suffer as will our balance of payments. The utterly defeatist attitude of the Minister is not acceptable to us. This is an issue on which defeat cannot be accepted. The consequences are too serious not just for our farmers but for the country as a whole.
I am asking the House to recognise that the beef industry is facing a crisis. The introduction of the meat quota, and its reduction in the last two years, has major implications for our beef industry through reducing dairy cow numbers and, thereby, calf supplies for the beef herd. Over recent years cow numbers have fallen by almost 100,000. The effect of that is that the supply of calves going to the market has fallen sharply. An obvious consequence of that, which can be seen at marts around the country, is that calf prices are booming and squeezing the margins from beef production. Indeed, the increase in calf and store cattle prices puts into question whether many farmers can afford to remain in beef production.
I reckon that about 90,000 farmers are involved in cattle production and the future viability of many of their operations must be in question. Even more serious is the prospect of a further cut-back in dairy cow numbers. I have read a variety of papers on this and listened to speeches from various experts from AFT, ACOT and elsewhere and the general consensus is that there will be a reduction of another 200,000 dairy cows over the next four years. That, on top of our existing problems, will exacerbate the difficulties being faced by farmers. It confirms my view that there is a crisis in the beef industry.
If we look at another aspect of the same industry we will see that there has been massive investment in beef processing in recent years. Between 1983 and 1986 the IDA approved grants of £20 million towards capital investment of about £90 million in that sector. In 1987 we had the announcement of IDA support for the investment programme of our largest beef processing company, Goodman International, which projected investment of £140 million over the next five years. The IDA have projected an extra 1,000 jobs in beef processing but there is a condition. They say that the jobs are there if there is not a reduction in cattle numbers, and that is the reason why I am focusing on that aspect of the problem tonight.
The implications of a continuing drop in numbers in the national cow herd are obvious. On the other hand, because the pattern of falling numbers is not unique to this country a major opportunity is presented to us. If we examine the figures in the EC — the only figure I had access to related to the Ten; Spain and Portugal only joined recently — we find that there was a drop between 1984 and 1987 of 2.6 million, or 10 per cent of what might be called the international herd. In this year alone the EC self-sufficiency ratio for beef is expected to be 100 per cent as compared to 110 per cent in 1984. I accept that there are still intervention stocks but it is expected that they will be significantly reduced, if not eliminated, over the next couple of years. We now have an attractive prospect of market opportunity opening up for our meat exporters in the context of the EC market coming into balance and the prospect of under-supply in a few years' time.
We must then examine our circumstances: will we be in a position to exploit this potential? My basic contention, one accepted by most people with an interest in this area, is that we will not be in a position to exploit this potential despite our massive investment in processing facilities and so on unless our meat plants can get sufficient supplies. The position was summed up at one seminar by one respected individual in the trade when he referred to the prospect of a herd of meat-processing white elephants around the country. That is the danger if insufficient supplies are not available.
It is against that background of market opportunity, spare capacity on our farms and in our factories — I mentioned those on a three day week and so on — that a serious commitment must be given to increasing cow numbers rapidly. The Minister has been in office for well over a year. I understand from his public statements that he accepts the facts underlying the basis of my concern. On the other hand, he has failed utterly to introduce and implement a policy to cope with the problem. That failure has led to this debate here this evening. Apart from the Minister, I accept that there is need for an acceptance on the part of all with an interest in this area that this constitutes the major national priority within the agricultural sector and is one of the top national economic priorities of all sectors.
I carried out a fair amount of examination of this issue in recent months. Before circulating my proposals some weeks ago I had come to the conclusion that no single policy instrument would be sufficient to achieve the overall objective if we are talking about a targeted increase of 300,000 extra beef cows. The only way that target can be achieved will be by a combination of measures covering grants, tax incentives, financing arrangements and measures to improve on-farm efficiency and profit margins for those involved in the business. At the end of the day it will be so difficult to achieve that target that every possible method should be deployed to bring about the necessary increase in cattle numbers. That is the strength of my conviction about the depth of the crisis, the need for action and the possibility, the golden opportunity, that awaits us if we do take such action and can bring about the necessary increase from the point of view of supply.
If one examines the grant structure at present one will see it is clear that the grants provided for beef cows largely represent social payments. This is due mainly to the fact that this system of farming is predominant in disadvantaged areas and on poorer farms outside disadvantaged areas. Because of the over-riding need to increase cattle numbers, public policy toward beef cow numbers must take on a much clearer economic focus. Thus, the various restrictions attaching to the grants schemes, by and large, are no longer justified. In examining the position obtaining one must understand that there is another problem to be faced, that is the funding difficulty of those involved in beef cow enterprises, particularly in their early stages. I also accept that there is a low borrowing capacity on the part of many farmers.
I want to touch now on the principal proposals contained in my 20-point programme. I am putting them before the House for serious consideration, as forming the basis for an action plan to be implemented now. I have already presented them to my party. Were we in Government I would be pushing for their immediate implementation. My outlook is that the position is so serious I must put them to the House, seek the views of Members, asking that they be implemented immediately. If the Minister has alternative proposals to achieve the same result I will be quite prepared to debate them. The following are my proposals: (1), I am talking about a subsidy of £100 to be paid on pregnant heifers in the beef herd kept for the purpose of increasing the herd. Because of the difficulties encountered by those involved in the beef area some such arrangement is necessary, one which would involve a down payment rather than the prospect of some return in the distant future.
(2), I contend that the existing grant levels for beef cows, within disadvantaged areas, should be maintained. I believe strongly that the restrictions on receipt of grants in relation to off-farm income — affecting the cattle headage and beef cow schemes and the restrictions in regard to full time farmers, affecting the suckler cow premium schemes — should be removed.
(3), I propose that the existing restrictions concerning grants payable per farm and per forage acre — another restriction — should be modified, that the current limit of 30 livestock units for headage payments in the more severely handicapped areas should be increased to 45 livestock units. I am not proposing the introduction of that provision carte blanche. I suggest that it should be increased provided the increase relates to beef cows. I propose that the current limit of 28 beef cows should be increased to 42 under the provisions of the beef cow scheme in the less severely handicapped areas and, correspondingly, the maximum payments per forage acre adjusted to £45.72 in severely handicapped areas and £42.73 in less severely handicapped areas.
(4), I propose that there be a review of the EC beef policy later this year. The Minister is in a very strong position to seek an increase in the EC-funded suckler cow premium scheme, at present standing at £36.80. Fully argued I believe there would be a possibility of having that sum increased to at least £60 to be applicable outside disadvantaged areas.
(5), I propose, in relation to the calf subsidy at present standing at £77.60 and applicable to all calves born in the dairy and beef cow herds, that, subject to EC approval that subsidy should no longer apply to dairy herds but, instead, be increased by £15 per calf in beef herds.
(6), I propose that dairy farmers with a milk quota of less than 30,000 gallons should be eligible for beef cow grants; that is becoming more and more obvious. There is great potential there for expansion on small farms with limited quotas. I want to see that potential encouraged and the possibility of beef cow grants being made available to those with a quota of less than 30,000 gallons. I accept that any such scheme would have to be thought out carefully from the point of view of administration. I propose that we take the numbers of dairy cows and quotas in 1987, as a base so that cows kept in excess of that base would then qualify for the beef cow and suckler cow premiums.
(7), stock relief is an instrument which can be used to help in achieving the necessary numbers. Stock relief for additional beef cows should be increased from 110 per cent to 125 per cent. I can confirm that Fine Gael propose to table an amendment to the Finance Bill to achieve this effect.
(8), because stock relief cannot be used to create a loss, I am also proposing a further change that, for beef cows, unused stock relief should be carried forward for up to three years.
(9), in regard to stock relief, I also propose that the clawback period should be reduced from ten years at present to seven years.
(10), on the basis that it is in the long term interest of the financial institutions that as many farmers as possible remain viable, I propose that their contribution towards achieving this should be by way of the extension of the AAA rate of interest to farmers engaged in the expansion of beef cow numbers, thus reducing the existing interest rate by 2 per cent to 3 per cent.
(11), a further incentive would be the introduction of a new loans scheme which would provide for a three year interest moratorium while the beef cow enterprise is being established. I have had discussions with some of the financial institutions and I have reason to believe that they could be encouraged to introduce such a scheme.
(12), because of the need to tackle farm level constraints to development, a properly funded research and advisory service is necessary. More research is required on technical aspects of suckler systems, including nutrition levels and breeding policies. This needs to be translated into practice on farms, through the advisory service. Therefore, the drive to expand suckler cow numbers must receive an appropriate priority in the programme of the new agricultural policy. Of course there is now a further difficulty in the implementation of that proposal because of the unholy mess that has been made of the merger arrangement. However, that is a matter for another day. Despite the mess, the results from this decimation must be prepared to take as one of their priorities this whole question.
(13), in regard to housing, the figures show that up to 70 per cent of dry stock farms in the west have little or no housing for store cattle and a high proportion of the remainder have very poor facilities. It is essential that the revised western package is put in place straight away. Furthermore, existing regulations should be modified to allow low cost housing systems. Some of these have been developed in recent years by ACOT and AFT and low cost housing does not necessarily relate to poor quality. On that basis, the regulations should be modified to allow such low cost systems to qualify for grant aid.
(14), because calf mortality is still a serious problem — on about one-fifth of our farms the rate is running at 10 to 20 per cent — there must be an intensification of existing campaigns to reduce it. In particular, such a campaign obviously must be targeted at these problem farms.
(15), the IFA initiative in promoting producer groups and the application to the EC Commission that producer groups in the beef sector should be eligible for establishment aid and other support measures are worthy of the strongest support.
(16), while it does not make sense to build a beef industry based on imported raw material, some limited imports will help, in the short term, towards achieving the overall objective of increasing numbers. Obviously, such imports will have to come from herds of an approved health status and would be imported to farmers operating calf to beef systems.
Perhaps undue attention has been focused on that proposal but I do not anticipate that the numbers resulting from that approach will be enormous. However, the problem is so serious that it is one of many proposals which would help to achieve the overall objective.
(17), I want to see an effort made to overcome the constraints in the expansion of the use of once-bred heifers. The main constraints of the price discount in the carcase and the fact that the variable premium does not apply in the UK to the once-bred heifer carcase means that processors have a responsibility to explore all market opportunities for once-bred heifer meat. Even though I accept that some research has been done which has been reasonably positive, further market research in this field should be undertaken jointly by the processors, the research arm of the new agricultural authority and the CBF. The whole idea is to feed back to the producer the benefits of a better market outlet for this type of meat. We must find a way to encourage producers to breed the heifers before disposal.
(18), while I do not see short term benefits resulting from the excellent research into twinning which has been undertaken in our universities and research institutes, in the medium term such research will help in the overall solution. Accordingly, the importance of this research should be reflected in the allocation of the national science and technology budget and the processing industry should contribute to this national effort on a greater scale by linkages and funding with the universities and research institutes.
(19), processors have a major role to play, specifically those in receipt of substantial grant aid. They must undertake commitments in terms of increasing national added value and in respect of undertaking measures to increase the supply of cattle.
(20), conditions should be laid down and there should be an annual review of the progress made towards achieving targets and respecting the conditions agreed under the grant aid arrangements. There should also be a clawback in the event of failure to achieve targets.
That is an outline of my main policy proposals. There are also possibilities under the business expansion scheme and my policy document emphasised the need for rapid progress in the eradication of bovine TB which has been a continuing major cost to the livestock industry. It was the basis for the first policy document I produced last year in the area of agriculture and I am glad that the Minister is making a move in that regard at long last.
If my proposals are implemented, I anticipate that we can achieve the necessary target increase of 300,000 beef cows over the next four years at no additional cost to the Exchequer. I accept that, in some instances, the proposals require the approval of the EC Commission. Clearly, in the light of the acceptance — it was written into the Single European Act — of the need for cohesion and of the importance of the industry to our economy, we have an exceptionally strong case for securing such acceptance by the Commission.
In regard to the question of cost, a reallocation of the calf premium would cover the additional cost of doubling the subsidy for calves in the beef herd as well as the subsidy for pregnant heifers.
The increase in EC recoupment from 50 per cent to 70 per cent would enable the other measures to be implemented without any difficulty or any additional charge to the Exchequer. In considering this, it is also very important that we look at the overall benefits to be derived by the economy and the Exchequer. It is very clear that there are huge benefits to be achieved from having an additional 300,000 beef cows.
I mentioned earlier the importance to farmers involved in beef production of the achievement of such a target which would substantially improve and make a vital contribution to maintaining the viability of 20,000 to 30,000 farmers in this country. Then we can look at the effect on our balance of payments and exports. I also dealt with this in my policy document and I said that it would result in increased exports which would amount to £200 million. There is also the question of jobs. More jobs will be lost in the meat sector, people will be laid off or put on a three-day week and this trend will continue unless the supply is there. On the other hand, if we can achieve increases in supply of the order I have mentioned I have no doubt that we can achieve the additional 1,000 jobs in the meat processing sector projected by the IDA. The results would probably be even better because the target I have set is higher than that talked about in the IDA document, therefore, the 1,000 extra jobs would be an absolute minimum.
It has been estimated that the Exchequer inflow from additional spending associated with this sector, agriculture and food imports, represents about 25 per cent of the value of these exports. I have not heard that figure contradicted in any way. If we are talking about an increase in exports of the order of £200 million from this sector and if the figures in that study are correct, the direct return to the Exchequer would be of the order of £50 million a year.
As we stand it is clear that much valuable time has been lost. I am presenting my proposals to the Dáil as the basis for a comprehensive plan to be implemented immediately. As I mentioned, if the Minister has alternative proposals to offer let us also debate those. As I have said also, it is now time to recognise that the crisis is there and for us to insist on the introduction and implementation of a programme to resolve that crisis. It is clear that such a programme cannot just focus on one plain or one policy instrument; it has to be broad and comprehensive. Only in that way will we achieve the kind of increase in numbers that clearly is needed.
I am not sure at this stage whether, with the collapse of the Minister's own plans, he is prepared to take on board my proposals completely. For the purposes of the debate I will be glad to hear what he has to say. If he has alternative proposals I will be glad to discuss those in my reply to this debate, but clearly we need action now. I am asking that all parties in this House recognise that the crisis is there and be prepared to debate the proposals I have put forward or any additional proposals which may arise in the debate and that, arising out of this, we will have agreement in this House on the need for the introduction and implementation of a comprehensive programme to achieve the necessary increase in beef cow numbers.