Dáil Éireann debate -
Wednesday, 27 Apr 1988

Vol. 379 No. 10

Private Members' Business. - Beef Cow Numbers: Motion (Resumed).

The following motion was moved by Deputy J. O'Keeffe on 26 April 1988:

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.

Debate resumed on amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"recognising the emerging crisis facing the beef industry, urges the Government to (i) increase the stock relief from 110 per cent to 150 per cent for additional beef cows retained, (ii) extend the Business Expansion Scheme to cover beef cow enterprises and (iii) to increase the off-farm income limit to qualify for headage payments in the disadvantaged areas."

—(Deputy McCoy.)

Mr. Farrelly

The measures proposed in the discussion document introduced by our Front Bench spokesman should be taken on board because the Minister and his officials put together proposals and failed on three different occasions. The Minister announced this week that because of the owners of the processing plants not being prepared to come forward with finance for his proposals he was not prepared to go ahead with his latest scheme. The Minister informed us that there was no crisis in the industry and no need for real progress to be made in securing a scheme such as the scheme we propose. If there is no crisis in the industry, why did he propose the scheme in the first place? Why did a member of his own party, Deputy Leonard, speaking last night at a meeting of 550 farmers, say that there was a crisis in the beef industry? He said that something positive needed to be done quickly to rectify the situation. The Minister must be convinced. He does not believe that there is a crisis in the beef industry. In that case we shall have a very tough job on our hands over the next number of months in convincing him of the reality.

He mentioned the reduced numbers of cow slaughterings over the past year. We must accept that this happened for two reasons. The first was the effect of the milk super-levy proposals introduced by Brussels and the second was the result of the financial institutions looking for repayment of moneys. That rot started way back in a Government of which present Minister for Agriculture was a member, but he left that Government and ran to Europe. When that Government came into office, the inflation rate rose to 21 per cent, with interest rates almost as high. The Minister has mentioned the importance of the inflation rate being now under control and the climate being right for the further production of beef cows, but did not give any credit to the Government that brought the rate of inflation under control. He said on a number of occasions, from the Opposition side of the House, that the inflation rate was not important, that it did not mean anything. Now we have Government Ministers, one after the other, saying that the most important way to bring improvements in the economy is to bring down the inflation rate. That is from a Government who spent four and a half years telling us that it did not mean anything.

I would like to see the calf subsidy which is now available to dairy producers being transferred. I do not believe, in the present climate, that there is any need for it. The administration of that scheme is costing almost as much as the subsidy is worth. That subsidy should be transferred into the suckler cow area. Without a shadow of doubt, the off-farm income should not be granted to anybody who is not in dairying, or produces less than 30,000 gallons of milk. They should be eligible for the maximum grants of 70 per cent or whatever which can be obtained from Brussels when the application is properly made and the western package brought into being. This is the main area in which a large number of these animals will be produced, but the scheme needs to be extended.

It grieves me to inform the House that the Ministers did not appear at any of the meetings over the last ten days held by the farming organisations to highlight the seriousness of the position because the western package forms were not available so farmers could not apply for grants. Deputy Leonard, single-handed attended a meeting last night of the farmers from the north-east, but Ministers seemingly turn up only as fair weather friends when they have good news to announce. I am not including the Minister of State present in the House in those remarks but certainly senior Ministers in the Cabinet are not prepared to attend any function or meeting of any organised group unless they have some good news, even though the particular benefit they are announcing might not even have been applied for. That was quite evident in Cootehill last night. County Cavan has two senior Ministers, neither or whom turned up to listen to the views of the people. Shame on both of them.

A large number of us in this House accept that there is a crisis in this area and that action needs to be taken. What will be the harm if the Minister takes on board a number, if not all, of the proposals from our spokesman's document? It will be nothing new to all of the Ministers to take on proposals produced by this side of the House because that is what they have been doing for the last 12 or 13 months. To ensure the introduction of speedy action under a new plan is the way forward in this area. There are quite substantial grants available.

I stated last night — and it is no harm to repeat — that when we talk about a beef mountain, the European people are telling us that it is only a molehill, that because of action taken over the last number of years this problem has been very quickly solved.

The benefit in exports of having 300,000 extra suckling cows in this country will in no uncertain terms have two very important results. The processing plants that the IDA and the Government have welcomed and grant-aided, with which aid I totally agree, will be able to provide jobs and the money spent will result in animals for processing. That is most important. With regard to the off-farm area, the maximum amount of grants from Europe for this scheme must be obtained. If this is done in the very immediate future, even though the Minister may take a number of the points from our proposals, by 1989 we will have a worth-while scheme, taking into consideration the large number of farmers who have gone out of milk production but are willing and able to take on a new scheme to produce more beef cows and beef. That is the road we must take. If the junior Minister for Horticulture can emphasise to a senior Minister that there is a crisis in this area and do nothing else, then we will have done an excellent job. I thank the Chair for the opportunity to speak on this debate.

Minister of State at the Department of Agriculture and Food (Mr. Kirk)

I propose to share my time with Deputy Leonard.

This debate is coming at a very opportune time. Everybody with any interest in the future of agriculture in this country must know that it is essential that cow numbers be kept at a high level in order to maintain supplies for the beef processing industry.

Everybody will agree that we must have an increase in beef cow numbers and the evidence we have to date shows that farmers are reacting to the signals coming to them from the market and that numbers of beef cows are, in fact, on the increase. For that reason I would not agree with Deputy O'Keeffe that there is a crisis facing the beef industry but I agree that his document and this debate will serve to bring home more strongly to the country generally and especially to those with an interest in the beef industry that the rate of increase in beef cow numbers must continue.

People on Deputy O'Keeffe's side of the House and on the Government side are all agreed about the need for the increase in beef cow numbers. The difference between us is that Deputy O'Keeffe's paper proposes that the increase be brought about by the payment of more and bigger grants. First of all, these grants are not possible if the Government are to maintain, and they will maintain, their financial policy which has as its objective putting the economy on an even keel. Secondly, even if the national financial situation was not a major problem we would have difficulties with the European Commission were we to introduce everything that Deputy O'Keeffe is proposing.

Mr. J. O'Keeffe

There is no cost to the taxpayer in my proposals.

Mr. Kirk

Even if both national money and European permission were readily forthcoming, because of the developments I have just referred to in the market place for cattle we would undoubtedly be paying out large sums of money in respect of increased cow numbers which would come about anyhow through the normal market reactions.

Farmers have a major concern as regards increasing beef cow numbers. Other interests in the country have or should have the same concern but it is very regrettable that some time ago when the Minister for Agriculture and Food tried to persuade these other interests that they should give firm commitments in regard to expansion in beef numbers, he did not get the kind of reaction he had hoped for. My colleague, Deputy Michael O'Kennedy, expressed his concern at this lack of reaction when he spoke here last night.

As regards the reactions which farmers are showing to cattle prices, it is notable that recent cow slaughterings were down very substantially — a total of 50,000 in six months — compared with the previous year. Cattle prices are at a very high level and this spring the prices for calves have been remarkable. Lat year the signs from the market place were already making themselves felt because in 1987 the level of the beef cow herd was at its highest since 1980.

In order to complement this increasing pressure from the market place for more cows, ACOT have their special suckling campaign for 1988 in full operation. It is very important to stress the points made by the director of ACOT when their campaign was launched on 1 March. He said that for the first time ever — this was brought to the attention of the House last night by the Minister for Agriculture and Food but it is well worth stressing again — that suckling was now competitive with other cattle systems in the non-disadvantaged areas and would become more competitive over the coming years. The director also said that in the disadvantaged areas where subsidies are higher, suckling is now unquestionably the most profitable system and is capable of leaving a profit of at least £50 per acre greater than other cattle systems.

Furthermore, ACOT are laying particular stress on the advantage of using continental bulls. This is of special importance in order to improve beef quality. In the past year the efforts of ACOT resulted in an increase in the use of continental bulls for the suckler herd. The increase went from 44 per cent to 53 per cent. The objective of ACOT is to secure that increase to 70 per cent which, if achieved, will indeed be a very good thing.

I would like now to come to some of the particular proposals made by Deputy O'Keeffe in his document. These include a £100 subsidy on pregnant heifers — presumably on the lines of the calved heifer scheme — and also in the disadvantaged areas the removal of the off-farm income limits, raising the payment limits from 35 to 45 livestock units and from 28 to 42 beef cows, and increasing the forage area limit. I do not wish to comment in detail on any of these proposals other than the first one mentioned, lest by doing so I prejudice negotiations that will be undertaken with the EC later this year in relation to these schemes.

I can reply to the first proposal, however, because a measure somewhat akin to it which was proposed to the EC in the context of the extension of the disadvantaged areas has been disallowed already by the EC Commission. Their objection was that the measure was geared specifically to intensifying production and, as a direct aid to production it could not be accepted. It is very clear that they would raise the same objection to the Deputy's proposal for a £100 subsidy on pregnant heifers and would shoot it down for the same reason. Accordingly, we do not propose to pursue an unrealistic policy option that has no hope of success.

We have asked the EC, in the light of the decision taken at the February Council meeting, to increase our recoupment rate under the disadvantaged areas schemes from 50 per cent to 75 per cent. When we achieve an increased recoupment rate we will be in a position to exploit many options under those schemes that are now closed to us because of lack of Exchequer resources. We shall be making every effort to secure the highest possible recoupment rate as early as possible. If we succeed, we can then consider other options along with those put forward by the Deputy, for improvements in the disadvantaged areas schemes. The EC will not automatically grant us the increased recoupment rate we have asked for. It will have to be fought and negotiated for in competition with other EC member states who are also seeking increased funding. It will be a struggle but we will pursue it with all the vigour needed to ensure maximum success.

On the grant schemes which apply throughout the country including the disadvantaged areas, the Deputy has made three proposals — that the suckler cow premium should be increased to £60 outside the disadvantaged areas, that the calf premium be confined to beef herds at £15 a head and that dairy farmers with a milk quota of less than 30,000 gallons should be eligible for both beef cow grants in the disadvantaged areas and the suckler cow premium in all areas.

In addressing these three suggestions, I would like to make one point, namely, that unlike the Deputy who can make any proposal he fancies in Opposition in the knowledge that he will not be called on to implement it, I have to deal with reality. Like the Deputy, I would dearly like to increase the suckler cow premium to £60. I have to recognise, however, that it is already fixed at 45 ECU in this country and fully-financed by the EC whereas in the other member states a premium of only 25 ECU is financed by the EC. Neither can we ignore the real Community position about the calf premium. To continue that premium at all, beyond 1988, would require a Commission proposal that is not so far forth-coming. It is not realistic for us to seek to pay a suckler premium to dairy farmers while other member states cannot do so. We already have advantages in that our suckler cow premium is higher than anyone else's and in that we are paid both calf premium and special beef premium while other member states only have one or the other. Reality dictates that we do not push too far too fast for too much lest we endanger what we already have. We shall certainly seek improvements in the scheme but we must have regard to the basic ground rules. Within the confines of what is possible and practical, the Deputy's comments will be borne in mind.

Research now being undertaken in AFT and elsewhere on herd expansion——

Mr. Sheehan

You are closing the door when the herd has bolted.

Mr. Kirk

——for instance by developing effective and low cost calf twinning techniques is very relevant. Research of this type by its nature is time-consuming and I understand that twinning techniques will not be ready for widespread use for some years to come. Although the research cannot be hurried, it can be encouraged. We have asked to have it put at the top of the priority list.

Imports of calves from the UK under strict veterinary conditions have recently been authorised but of course preference is to be given to cattle from our own herd. Calf mortality is however an important obstacle to that process and the Deputy was right to refer to it in his document. There is a considerable opportunity to increase the survival rate of calves through improved management practices. The success of the brucellosis eradication campaign is frequently overlooked and tends nowadays to be taken almost for granted. The elimination of that disease has had an enormous impact in raising the percentage of calves born into the national herd. Nevertheless, although we have virtually eliminated losses through brucellosis and abortions, calf deaths shortly after birth are still more numerous than they should be.

The management improvements promoted by the advisory services and encouraged by the higher prices for calves should further reduce calf mortality especially in the post-natal period up to six months. A reduction of .5 per cent in post-natal mortality now running at 6 per cent could contribute some 10,000 extra calves to the national herd each year. Governments can provide and this Government have provided the favourable economic environment in which expansion can take place but only the private sector, farmers, processors and financial institutions can provide a response. They will I am sure be able to see their own medium and long-term gains by reacting positively. In doing so they will also be acting in the national interest.

I have mentioned the various constraints to which the Government are subject but I regard the growth of our beef cattle herd as a highly important objective and we will use all realistic opportunities open to us at national and Community level to encourage such growth.

Mr. Leonard

I am glad to have this opportunity of being able to make a contribution on this Private Members' motion. It is important to realise, as the Minister has said, that the problems in regard to cattle numbers are a direct result of the quota system. There is no doubt that beef producers were dependent over the years on calves from the national herd. This may have been a blessing in disguise because many of those calves were not suitable for beef production. What is significant at present is that beef producers are putting the emphasis on quality and on breeding and in my own constituency this week I watched officers of the Department grading cattle in a meat plant and they could not over-emphasise the importance of breeding.

It is very satisfying to note that the number of cow slaughterings has been reduced and is continuing to fall. Along with this people are now trying to ensure that they produce a better quality animal. What is disappointing is that a number of people have failed to take part in the scheme and this is regrettable as it was in their own interest to do so. Many plant operators have done very nicely over the past couple of years and it is regrettable that they did not make the contributions which they should have made.

The Minister in his document outlined the measures which are going to be taken to achieve the maximum results in beef production. In this context I think ACOT are in a favourable position and I wish to compliment them for the emphasis they have put on ensuring that individual members of their staff specialise in certain sectors. In Monaghan, despite a few having opted for early retirement they still had an adequate number to ensure that people could specialise in sheep production, pig production and in pollution control. ACOT are playing their part in this area. The CEO at a County Committee of Agriculture meeting last week outlined the number of meetings which they intend to hold with interested persons on those areas of production and the problem of pollution, which is the most serious problem we face at present.

We are discussing this matter at a time when cattle and calf prices are buoyant. They have now hit a level which they have never reached before. One could now receive between £300 and £400 for a bull calf two or three weeks old and between £50 and £70 less for a heifer calf. Despite the fact that there is a large amount of beef in intervention we have a terrific trade with British supermarkets and they cannot obtain enough supplies. In this context I cannot over-emphasise the importance of having as many meat plants as possible in the country——

Mr. Sheehan

White elephants.

Mr. Leonard

These white elephants provide jobs. If that is the only problem which they cause I would like to see more of them. I notice at present that people can obtain a price of £1.14 per pound for beef and this is a direct result of the scarcity of beef at present.

There is one point which should be made in regard to farmers who have small milk quotas. Over the last number of years they have seen a small percentage reduction in their quotas. As a result of people producing a better quality cow there has been an increase in milk yields. I know of small farmers who have a milk quota of less than 20,000 gallons who have too many cows at present. It would be of great benefit to these small farmers if they were to be allowed receive cattle headage grants rather than having to dispose of the cattle some of which are of good quality. They could then use the less heavy milkers in suckling. This is worth examining.

At present a generous grant is available for suckling. In the severely handicapped areas this can amount to £148.60 for a cow in calf and £129.60 in the less severely handicapped areas. This is a good base for which to move. I have no doubt that in years to come this will prove to be a sufficient incentive for people to develop in this particular field. There is no doubt that in the immediate future we cannot expect anything but a quota system for milk. We are limited so far as the sheep market is concerned. A large number of our farmers will be dependent more and more on store and beef cattle for a livelihood. Beef cattle production has many advantages especially in areas where there is fragmentation of land or where farmers take land on lease or on a conacre system. It is an accepted fact that single or double suckling of calves or the rearing of beef cows was not profitable. The result was that this area declined at a rapid pace. The tables have now turned and the incentives are there.

In addition to the incentives in the disadvantaged, severely handicapped and less severely handicapped areas, measures were announced recently, following the February summit, such as the reintroduction of the western package. It is important that the small farmers and the cattle producers use to the fullest possible extent, housing accommodation for cattle. In some places over 50 per cent of the stock is out-wintered. That is a ridiculous situation and one which must erode any profit that could be made from winter feeding. It should be the ambition of every farmer to house all his animals during the winter months, thereby resting the land and allowing for earlier growth in the spring. People would get a greater return from feeding their cattle during those months.

A couple of thousand people have availed of the cessation scheme and that will mean new blood in the production of beef and cattle. Many of those people have very good quality stock and they will ensure that they make a success of cattle suckling. Many jobs can be provided in this area. As is the case in my constituency, it is one of the main sources of labour in a number of respects. The most recent CBF report indicated the amount of downstream processing. A substantial number of jobs are being created in the area of value added products. Beef is being exported on the hoof. There is a turkey plant about a mile from where I live and a few years ago the birds were packed in plastic bags, boxed and sent off while only a small number of people worked in the plant. By using turkey meat as a base for processing the employment at that plant has increased to about 300. It became an attractive proposition for one of the biggest operators in the country who took it over and it is now a very profitable plant. That is what we should work towards in the downstream processing of meat because there are great opportunities in that area.

When you are a spokesman in Opposition — we all use Opposition to our best advantage——

Mr. Connaughton

You certainly did.

Mr. Leonard

I admit I did.

Mr. J. O'Keeffe

Has the Deputy a few hints for me?

Mr. Leonard

The party in power may discount all the arguments put forward by the Opposition but those arguments provide the incentive for bringing forward one's own policy. A very positive approach has been taken by the Department of Agriculture in the last 12 months in the sensitive areas and in areas where we saw the danger signals. One of those areas is beef production. There is no doubt that the Government have come to grips with this matter. It was hoped that the banks and the meat plants would have provided the money that is needed in this area but I am confident that the Minister will introduce a scheme which will fill the bill. As I have said earlier, no credit is due to those people who stand to gain the most and who have gained the most in the last number of years.

I hope that, with the reintroduction of the western package, the calf to beef system will be considered closely. It was in existence in the period 1981 to 1987 but it was so restrictive at that time that there was only a £1.68 million take-up out of a total of £58 million. I hope that when the Minister and the civil servants examine the proposals on the revised scheme which will be put before the Commission, they will lay great emphasis on the calf to beef scheme. There should be a programme in operation so that producers would be in a position to go to the meat plants, fight for their rights and supply the product on a continual basis. Until such a system comes into operation the meat plants will be operated on a stop-go basis and the producers will be in a position to buy when the prices are low and move out when they are high. There is a basis for a sound meat industry which would provide many jobs and give the economy a great boost.

Mr. Sheehan

Wishful thinking.

Acting Chairman (Mr. S. Walsh)

I am calling Deputy Martin Gibbons. Opposition speakers have 30 minutes.

Mr. J. O'Keeffe

The Opposition have four speakers and have agreed to divide the 30 minutes starting with Deputy Gibbons, then Deputy Sheehan, Deputy Naughten and Deputy Connaughton in that order.

Acting Chairman

Thank you, Deputy O'Keeffe. I will then call the Minister, Deputy Walsh.

Mr. Gibbons

I welcome this opportunity of speaking on what I consider to be a most important issue. This area has been neglected by both the present Government over the past year and by the last Government. It is unfortunate that we have let our national herd drop to its present number. One thing this debate has achieved is that it has highlighted the magnitude of the problem the industry is facing.

I consider that this industry is in crisis not only because of the shortage of the most vital raw material but also at the slaughtering end where we rely heavily for job creation. If we are serious about this problem, radical steps must be taken. I do not share the optimism expressed by the Ministers last night and tonight when they spoke about the favourable economic climate resulting in a spin-off to the beef industry. It has to be recognised that cattle numbers are still at a very undesirable level. It is important that we behave responsibly and do what we can to solve this problem.

The facts are very simple. Between 1984 to 1987 our dairy cow numbers have dropped by 115,000, and it is projected that between 1988 and 1992 they will continue to drop by an additional 240,000. Given the modest increase in the beef cow herd this year, that figure is insignificant. The beef cow herd is still only half what it was in 1978 and that is very worrying, resulting in fewer calves being available. In 1978 we were exporting calves and in 1988 we are talking about importing calves. I am very concerned about that because there is a danger of importing the wrong kind of calf. We should be concentrating on quality but there is a danger that we would get other countries' leftovers.

This time last year we had a major announcement about the Goodman group and the Government investment. Now, after one year, I wonder if the Government consider they got good value for their investment. If that money were available today it should be invested in increasing our national herd. Our meat factories at present are working at a third of their capacity. I question the wisdom of putting money into factories we do not really require. In my opintion, this money should have been invested in our basic raw material.

Dairy farmers have no choice but to diversify and they are going into beef production. That is resulting in a shortage of cattle for the traditional beef farmer. He will have to find some other way of keeping his stock numbers up, and I am not sure that problem will be easily overcome.

It is generally accepted that the incentives and the ACOT campaign are not effective. We have a long way to go yet. If we are to correct this crisis of supply the Minister has to realise that this problem is on-going and will have to be solved at a cost. I do not share Deputy Jim O'Keeffe's view that such incentives can be provided at no cost to the Exchequer. It has to be done at a cost. It has to be realised that if we come up with a formula to encourage farmers to increase our national herd not only will the primary producer benefit but the country as a whole will be far better off.

I would like to make a few suggestions. The Minister will have to consider higher stock relief. Even though this has probably been ruled out, I think we will have to reconsider it. There will have to be new Euro-currency loans for the traditional beef producer. At EC level the Minister should negotiate increased suckler premiums and higher headage payments having regard to EC funding. Such EC schemes should accommodate the lowland farmers who have never been facilitated.

When farmers do not have many options open to them because of the super-levy and the crisis in cereals, there was never a more opportune time than now to encourage farmers to get into breeding quality cattle that would be ideally suited to our beef industry. If we do not avail of this opportunity, the only thing we can expect is that we will be back here next year discussing the same topic, and in the meantime we will have further closures.

Mr. Sheehan

I am pleased to have an opportunity to speak on this very important motion. I warn the Minister that unless radical action is taken there will be a crisis in our beef industry. Where will the beef barons get the cattle to fill the new factories they have been talking about over the past few months? Unless something radical is done to build up our cattle population, we will soon have the most expensive white elephants in the form of beef factories in Europe and there will be fewer rather than more jobs in the meat factories as a result.

For some time the IDA have been busy pumping millions of pounds into bricks and mortar, with promises of more to come. Nobody seems to have taken much notice of the fact that the backbone of our farming industry, the cattle herds, are in serious decline. There seems to be no shortage of cash when it comes to building meat factories. We heard our Ministers talking loudly about what those new factories could produce. It is ironic that nowhere near the same level of funding can be found to increase the raw material — that is, our breeding herd — needed to keep these factories going.

The latest CSO figures show that we have fewer cattle now than we had before we joined the EC. This is a sad indictment of the treatment agriculture got from successive Governments since we joined the EC. There are now 1.53 million cows in our dairy herd, the smallest since 1976. The beef breeding herd is not showing any dramatic signs of an increase and the national beef cow herd of 457,000 cows is not a strong enough base to facilitate the kind of expansion being talked about by our beef barons — Larry Goodman, Pascal Phelan and Sher Rafique.

To make matters worse, both ACOT and the Department of Agriculture and Food agree that there could be upwards of 300,000 fewer calves coming from the dairy herd for the beef industry by 1990. This is an alarming figure for any Minister for Agriculture and Food to stand over. Because of the present EC constraints on milk production we see this dramatic reduction in calves for beef production. That scenario should be worrying enough to make even the most optimistic beef barons cautious.

The scheme announced earlier this year by the Minister for Agriculture and Food to try to build up cow numbers, and now abandoned, was a considerably watered down version of the plan originally proposed last July by the Minister, Deputy O'Kennedy. The intention was to provide a subsidy of £12 million, to be financed by the meat industry, farmers and the banks, to retain more than 150,000 cows over the next two years. However, the Minister's decision to abandon that scheme will result in a loss of beef exports of approximately £450 million per annum.

The matter is now so serious that it is time the IDA reviewed their policy of grant-aiding bricks and mortar. They should see what they can do to bring about a parallel increase in cattle numbers here. It is ridiculous that the IDA found it possible to give individual meat groups four times more grant-aid than the total national subsidy for expanding our breeding herd at farm level. Surely that amounts to disgraceful action by any Minister for Agriculture in western Europe. In my view it is a classic case of putting the cart before the horse.

Mr. J. Walsh

The Deputy has named the wrong animals; he should stick to the cows.

Mr. Sheehan

I should like to tell the Minister of State that there will be no need for him if the Government continue along this road. They are doing everything possible to kill our beef industry. I should like to ask the Minister of State, who represents the Minister for Agriculture and Food tonight, what is the point of building new beef plants? A few months ago when the Minister was holding talks with Larry Goodman we were told he was going to transform the beef industry but with what? Was it the Minister's view that he would transform that industry with bricks and mortar and nothing more? In my view we have reached the stage where we will have to import the raw material from England if we are to keep our meat factories going.

What is the point of building new plants for the processing of beef and capable of catering for a big increase in the national herd if it is declining? Despite all the huffing and puffing of the Minister for Agriculture and Food, and his Minister of State, Deputy Joe Walsh, their scheme to increase beef cow numbers by 130,000 over the next two years is stillborn. That should not mean that the development of our suckling herd should be written off by our national planners. We badly need more breeding cows. The meat factories and the farmers should work together in an effort to extend our breeding herd through once-calved heifers, through tax concessions and the expansion of the suckler cow scheme on part-time farms.

I should like to remind Deputy Joe Walsh that there are many farmers along the western seaboard and in his constituency who would love to be able to avail of the beef cow scheme if they were given an opportunity. I have no doubt they would play their part in increasing our beef cow numbers. However, red tape, bureaucracy and bungling by successive Ministers for Agriculture have hindered any efforts to tackle the problem. Unless the Minister takes immediate action to increase beef cow numbers we will in two years time have the finest and most expensive crop of white elephant meat factories in Europe.

Mr. J. Walsh

The Deputy is mixing his metaphors again.

Mr. Naughten

It is hard to follow Deputy Sheehan's contribution. I am glad to have an opportunity to support our spokesman on Agriculture and the proposals he has put forward to increase our beef cow numbers. It is frightening to think that the Minister for Agriculture and Food, who for some reason is absent from the Chamber this evening, does not accept that agriculture, and in particular our beef industry, is facing a major crisis. We are all aware of the huge amount of taxpayers' money that has been given in grants towards development of more modern processing plants but although we have great killing and processing capacity here we do not have the necessary raw material.

In my time involved in agriculture I have never seen prospects looking so bleak. As Deputy Leonard said, the dairy cow has always been the base for the beef industry but we do not have sufficient numbers any more. We have calves fetching as much as £400 and beef farmers cannot pay that amount of money for a calf, rear him into beef and hope to make money. The beef industry is about to collapse but we continue to plough money daily into meat plants. Do the Government realise what they are doing? Why do they not diversify some of the £30 million they are about to plough into the manufacturing and processing areas into improving the beef cow herd? The Government should consider paying grants to increase our beef cow numbers. On five occasions last year the Minister for Agriculture and Food went on radio and television to announce what he described as a beef cow scheme. However that scheme has been aborted. A document circulated to the members of the Committee of Public Accounts last year about this matter amounted to no more than an insult. We were told in that document that such a scheme would be introduced but what has happened to that in the meantime?

While I question the amount of money given to the meat barons I must point out that I do not have anything against those people. It is unfortunate that we do not have such men of enterprise in other areas of industry. We should not have to plough up to £30 million into the processing of meat while we neglect our breeding herd. It is regrettable that the Minister does not recognise the major problem that exists in regard to our beef cow numbers. I have no doubt, as Deputy Gibbons said, that when we raise this matter in 12 months time there will not be any improvement in the position. The Minister should recognise that he needs to take drastic action immediately to increase those numbers.

I understand we need between 250,000 and 300,000 additional beef cows. The only way we can achieve those figures is by encouraging the farming community to increase the number of in-calf heifers and to do that we must increase the amount of the grants available. The Government have a host of schemes available to them to improve beef cow numbers and many of those schemes are heavily subsidised by Brussels. The Government could extend the headage grant scheme and may the maximum amount of the headage grant.

In February 1987 the former Minister for Agriculture and Food, Deputy Deasy, submitted plans to Brussels to have all of the west of Ireland, which is now classified as disadvantaged, reclassified as severely handicapped but that was not pursued by Fianna Fáil. I do not know why that was not done because it would be in our interests to reclassify the west and give the farming community an opportunity to avail of increased headage payments. The Minister should make a decision to pay the maximum headage grant and not the minimum as at present. If the Government adopted those suggestions they would help to increase our beef cow numbers at very little cost to the Exchequer.

I should like to appeal to the Ministers of State who are in the Chamber to use their influence with the Minister for Agriculture and Food, and with the Taoiseach who appears to be running the outfit, to ensure that a scheme is devised to increase beef cow numbers. We have all heard the advertisements about the efforts to increase the beef cow herd. Those advertisements have been placed by ACOT and AFT, bodies who have had their budgets cut by 44 per cent and are about to be scrapped at a time when the budget of the Department of Agriculture and Food has been cut by only 4 per cent. This is crazy and I again ask the Minister not to allow the agricultural advisory service to be scrapped, because that is what will happen if this ACOT-AFT Bill comes in.

The Minister should also ensure that cow numbers are not reduced any further because, not alone will it have a devastating effect on farm incomes, but it will also affect employment in the meat industry. More jobs need to be created for our young people and agriculture is the motor of the economy. Unfortunately, the Government have failed ot recognise that. They seem to be obsessed with cutting back public expenditure, particularly in the capital programme, while, at the same time, ignoring agriculture which has such vital potential for employment where it is so badly needed.

I appeal to the Minister to take this opportunity to put an immediate package in place which will increase livestock numbers, thereby creating jobs in the meat industry which are so badly needed.

Mr. Connaughton

I wish to thank Deputy Gibbons and my own colleagues for allowing me a few minutes to speak on this most important motion. There have been many contributions to this debate and I do not intend to go over the same ground. However, when we talk about a national issue we really mean it as far as the beef cow scheme is concerned.

This is not another begging bowl exercise although it might be seen in that light by other sectors of the community. They will see the farmers, again with the béal bocht, looking for more grants. We are not talking about grants but about the raw material for an industry which is the most important in the whole agri-sector. The planning process for the future of the beef business is wrong. I welcome the fact that our processing facilities will be as modern as any of our competitors' throughout the world; anything else would not be good enough. However, we must be able to produce the raw material to fully utilise the new processing centres and that is where the Government and the Minister have gone wrong.

I severely castigate the Minister for Agriculture and Food for believing that the meat industry and the banks would help the agricultural community. Neither group, particularly the meat industry, helped anyone when it was needed. In the mid-seventies, when there was a surplus, people were down on their knees trying to get cattle into the factories and we then saw the true nature of the beef barons. It was a very short-sighted policy.

When the Minister started negotiations with the interested groups, he knew in his heart that they would not work. He had a more devious reason for announcing the scheme four or five times and that has not been mentioned since yesterday evening. He knew that the Minister for Finance and the Government would not put any money into the scheme so the only way he could keep the agricultural community at bay was to keep announcing a scheme that he knew in his heart would not work, until he got to the Estimates at the end of this year. If I was a betting man, I would bet that the Minister will try to come up with a programme of some description at the end of this year. However, he has lost two valuable years to try to redress the problem. As I said, the meat industry will not help. It is a short-sighted policy but they will not help now when they never did so. There is a way, of course, of making them help and I am surprised that the Minister and the Government have not seen fit to take such a course.

When I talk about taxpayers' money, I am talking about money provided by the Exchequer and Brussels. From a sum of £140 million, taxpayers either here or in Europe will contribute about £90 million. It was bad politics and planning by those in agriculture, led by the Minister, not to ensure that a part of that money went towards providing the raw material.

There is no point in expecting the Irish taxpayer — I say this as a farmer — to go on funding this, and that is why great attention should be paid to Deputy Jim O'Keeffe's proposals. For obvious reasons, neither the Minister nor the two Ministers of State will accept his arguments. They should carefully examine those proposals, which are very simple. His scheme is not new but the presentation is new and most timely. An opportunity should be given to the people who have the greatest capacity to produce calves. I was a member of a Government that made £11 million available for the beef cow grant in the disadvantaged areas a few years ago. There was an increase but it was not enough. The central point in the Fine Gael document is that you open up an opportunity to the people with huge farms not just to send milk to the creamery, which they would obviously have to do anyway, but to be eligible for a beef cow grant to ensure that the cows are not lost to the industry. One does not have to be an economist to see the sense in that.

I am sure Deputy O'Keeffe will go into this matter in greater detail. Perhaps it will be done through tax relief but, most important of all, there should be a linkage with Europe. A deal can be hammered out. I am not impressed by the facade of the Minister announcing every second day at a public meeting down the country that this new beef cow scheme will come into being. It was even heralded in the agricultural press. While that was going on, the fundamental work that should be done between here and Brussels was neglected. We have lost the best part of two years and the occasion now presents itself to do a particularly good job on the fundamental aspect of the agricultural community as far as the beef sector is concerned. Every farmer in Ireland should be involved in the production of beef calves so that we will have plenty of raw materials to give everybody a job over the next couple of years.

Minister of State at the Department of Agriculture and Food (Mr. J. Walsh)

One thing we are all agreed on in this debate is that increased cattle numbers are desirable. We have the basic resources and the capacity to maintain a herd far in excess of present numbers. We could double our beef herd with our grass, climate and natural advantages for producing cattle which are not available to other countries. We have a marketing and processing sector which has made huge strides in recent years. Deputy Connaughton referred back to the seventies when we had a surplus of cattle and people returned from the mart with more cattle than they had going to the mart or were left waiting outside factories because the factories did not want to facilitate them. Certainly there is a tremendous improvement in processing and in marketing our cattle which is very much to be welcomed, and this debate is to be welcomed because it is timely and will focus attention on the importance of increasing the supply of raw material, quality beef cattle. It has been amply demonstrated that for those producers who operate efficiently and in well structured units cattle production can be and is a very profitable enterprise; it has been more profitable in the past 12 months than for many decades.

Cattle production offers one of the few opportunities for expansion in the present European environment and, given the consequences of the super-levy system, the longer term prospects for beef are very promising indeed. I do not agree that we have lost two years. The beef cow herd has been declining for the past 15 years. We have to get a market return to the farm which will encourage expansion, and now we have that market return in place. Farmers are getting a price for their cattle, whether calves, store or fat cattle, now and for the past 12 months that they did not get for the previous decade.

A major objective of the Government is to encourage expansion of the national cattle breeding herd and every effort will continue to be made by the Minister, Deputy O'Kennedy, and the Government to achieve this goal. However, to be realistic, the industry itself, the beef and cattle industry, have a responsibility in the matter. Farmers, processors and bankers all have an interest in increasing beef production and have an important role to play in creating expansion in the production of beef cattle.

People are very glib when they come in here and say that money, either Exchequer or European, should be thrown at this problem. The era of throwing money at a problem is gone and the major plank of recent Government action has been to create an economic climate which will facilitate expansion in all branches of economic activity.

The first results of this programme to improve the economic climate can already be seen in the form of reduced interest rates and minimal inflation, factors so vital to expansion in cattle rearing systems. Combined with the much improved cattle market prices in recent times, this is giving a major boost to the industry. Morale is high in the industry and there are indications that farmers have expansion of numbers in mind and are putting in place schemes to expand the beef herd because money and a margin are in it. Cow slaughterings are down by nearly a quarter this year and farmers are retaining extra cows in significant numbers. Moaning or whining or preaching doom and gloom at this point will do nothing for the industry. Genetically we can only go at so fast a pace and we are encouraging research and development. In the past few months, the Minister, Deputy O'Kennedy, announced a new twinning system which has tremendous possibilities for the future, though may be not in the short term. I think it will make as dramatic a development in cattle breeding systems as AI when it was introduced a number of decades ago.

People are probably over-reacting to special extra measures that the State can undertake. We must be realistic. We have a serious deficit in the public finances and cattle production is already in receipt of considerable support in one form or another. In an EC context any attempt to provide specific national aid to encourage growth in cattle numbers would certainly be frowned upon, and we should be the last to attempt anything which might be interpreted as a move towards re-nationalisation of the Common Agricultural Policy. A number of speakers, Deputy Gibbons in particular, put forward a number of schemes which have already been submitted to the EC and are clearly outside the scope of Directives of the Community, would not be allowed and would be seen as national aids. Again we have to be realistic in all these matters.

The Government have recognised for some time that we need a modern, vibrant processing sector. There is no point in Deputy Sheehan or anybody else talking about putting money into bricks and mortar. Any money that has gone into the processing sector has gone into improving the technology and the products that can be manufactured, and those products are returning a price to the farmer which is better now than it has been for years. That is the Government's policy and I think we are winning on it.

Again I welcome this debate. I reiterate that the Government and the Minister in particular are doing everything possible to encourage expansion of supply of this very valuable raw material.

Mr. J. O'Keeffe

I outlined yesterday the full extent of the crisis facing the beef industry and the details of my 20-point plan to resolve that crisis. I thank those who have contributed to the debate on my motion. However, I am utterly appalled at the cavalier response of the Minister for Agriculture to my motion calling for the implementation of a comprehensive programme to cope with the crisis in the beef industry.

The basic problem is that the Minister says there is no crisis, actual or impending. In this situation it is small wonder that the Minister has not been successful in taking any measures at national level to increase beef cow numbers and thereby, the raw materials supply for our meat factories. Furthermore, it explains his lack of success at making any progress at EC level by way of recognition of the problem.

The Minister says there is no crisis and quotes selectively from statistics by way of support for this contention. In particular he mentioned last evening that cow slaughterings are down by 22 per cent or by 17,000 since 1 January this year, as if this proves his point. In fact, cow slaughterings in the first quarter of 1988 are down by about 15,000 or 20 per cent but the Minister ommitted to mention that steer slaughterings are down by 55,000 in the same period or 28 per cent, and total slaughterings fell by 74,000, or 23 per cent, in the first quarter. Do these figures suggest anything other than a scarcity of supply? Taking the year as a whole and seasonal factors, if these figures are projected throughout the full year we could have a drop of 400,000 in total slaughterings in 1988. At current prices this would involve a reduction in output of £270 million. This is the possible magnitude of the problem, and I challenge the Minister to review his position and at the very minimum — even if my worst fears are not realised and I hope they are not but they are heading that way — to accept that we have a crisis of major proportions.

Clearly there is a major and fundamental inconsistency between the importance attached by the present Government to developmental measures for the beef processing sector and the virtually total lack of support for the necessary measures to ensure adequate supply of raw materials. The result of this approach will be an inbuilt overcapacity in processing and a total inadequacy of raw materials supply. This is the central thrust of my argument and the basis on which I formulated my proposals providing for a comprehensive programme to achieve the necessary increase in beef cow numbers.

My basic contention is that there is need for an innovative, radical comprehensive programme, to achieve a dramatic increase in beef cow numbers of the order of 300,000. The Minister seems quite satisfied that the measures now being taken are sufficient. Of course, there will be some expansion in the beef cow herd in the next couple of years in response to the high profitability of suckling systems. However, all the indications are that under present policies the expansion will not be fast enough to keep pace with the drop in dairy cow numbers.

The Minister was quite selective in his use of statistics. He referred to the increase in the beef cow herd in 1987 but did not give any figures. There was an increase of at most 15,000 but there was no reference to the fact that at the same time there was a drop in the number of dairy cows of the order of 55,000. Simple subtraction gives a figure for the net drop in the national herd last year of 40,000. Unless these figures are accepted and responded to, the crisis of which I speak will deepen and develop in the years ahead.

The Minister seems to be suggesting that for 1988 there will be no problem because there will again be some increase in beef cow numbers. One interpretation of his remarks yesterday evening is that this increase will be of the order of 40,000 to 50,000 but I believe the Minister is over-optimistic in his assessment. The figure is more likely to be 25,000 or 30,000. My policy document contains the figure of 25,000 which I would expect to be confirmed in the next livestock census. The Minister has not addressed the fundamental question of the anticipated drop of a further 200,000 dairy cows over the next four years and its consequent effects on calf supplies to the beef herd. I do not intend to go into the argument about the 100,000 which were lost.

The Minister, although he has been in office for 13 months, is trying to push responsibility back to the previous Administration. I am not interested in that exercise. I am interested in assessing the present situation and producing an adequate response. Those who are involved in the beef industry and all with an interest in ensuring the continuation of its major contribution to the economy must be in utter despair at the attitude of the Minister. He does not even recognise that there is a problem. Obviously there is no hope of a solution from the present Minister and Government.

The Minister referred in his speech to the difficulty of obtaining EC approval for some of the proposals in my 20-point plan. We in Government faced similar difficulties in securing a favourable deal for Ireland under the milk quota regulations. Yet, because we were convinced of the importance of milk production to the economy we were able to launch an initiative at diplomatic and political level which resulted in a favourable conclusion to those negotiations. If the Minister would take on board the seriousness of the situation and approach the EC on a similar basis there is every reason to expect that he should be able to obtain a similar result but obviously there is no hope of such a result unless the Minister is convinced of the extent of the problem.

Very clearly the contribution of beef to agricultural production and to the overall economy is very substantial. It is of much greater importance to us than to other countries in the Community. The same kind of argument we made about the milk quota can be applied in this case. Beef represents 38 per cent of our agricultural production, whereas the EC average is only 13.6 per cent. No other member state is anywhere near us in this regard. Some comparative figures include Denmark at 9 per cent and France at 15 per cent. The Minister has a case and plenty of ammunition to convince others if he is convinced himself. Agricultural output in Ireland represents a far bigger proportion of total output than in other EC member states. The share of agriculture in Irish GDP is over 10 per cent, while the EC average is only 3.4 per cent. As against the EC average, agriculture is of three times greater importance in Ireland. We are, therefore, in a unique position to present a case to Europe to enable us to implement policies along the lines I have proposed in my comprehensive action plan. The first major hurdle is to convince the Minister of the extent of the crisis and of the need for urgent and radical action. The continuing drop in overall numbers in the national herd is the major agricultural priority. A Minister for Agriculture who does not even recognise this priority does not deserve the confidence of the Irish people and should be giving serious consideration to an application to the Taoiseach for redundancy or redeployment.

The Progressive Democrats put down an amendment which on the face of it had some merit but because it refers to only three of the proposals in my 20-point plan it lacks a basis for the comprehensive approach which is necessary to cope with the enormity of the crisis and is, therefore, too limited in its approach to be accepted.

The Minister detected what he thought was one inaccuracy in my lengthy policy document. I have to take issue with him for nit-picking. The Minister knows that I was referring to a certain combination of grants available in the disadvantaged areas, not taking into account grants that might subsequently be available if the calves were kept. If that is the only inaccuracy the Minister has to focus on in my document I am happy enough.

There were a number of references to the cost to the taxpayer and I was particularly careful not to follow the old approach when drawing up this policy document of throwing money at the problem at the taxpayers' expense. I am cognisant of the problem of the public finances and for that reason I introduced proposals which involved actually drawing back certain premiums such as the calf premium for dairy calves and using that money for other purposes. I was also taking advantage of the opening available to us to get much more substantial recoupment from the Community for the same Exchequer funding. On that basis I have claimed that there is no additional cost to the Exchequer in my proposals. A detailed and serious examination of those proposals will show that if we can achieve the kind of numbers I am talking about and additional exports of £200 million a year there would be a benefit to the Exchequer of approximately £50 million per annum. There are papers available which will show that exports in the agricultural and food sector give a direct return to the Exchequer of 25 per cent approximately. The figures are based on the situation in 1982 but because of the higher tax rates since 1982 the figure of 25 per cent should probably be higher.

The main defence of the Minister was the work of ACOT. He had to scramble around in his attempts to defend the indefensible. It adds insult to the injury being inflicted on that unfortunate body, ACOT, to produce them here by way of defence to this motion. We already know that people are being hunted out of ACOT and the latest proposal is to redeploy the people whom the Minister claims are to solve these problems by offering them opportunities in the tax office and elsewhere. The flimsy fig-leaf displayed by the Minister in his defence simply will not work. While I compliment ACOT on the work they are doing, it is altogether unfair to that very reputable body to wheel them in here to provide a flimsy fig-leaf for the Minister in his difficulties. It must be accepted by everybody that there is a fundamental and serious problem, in effect, a crisis. The Minister saying here last night that there is no crisis reminds me of his respected colleague, Deputy Brian Lenihan talking about there being no problem. That is not the way to approach such a serious issue. The Dáil should recognise fully the crisis facing the beef industry, note the Fine Gael proposals for a resolution of the problem and debate them. I am glad the Minister took an interest in them and was the first to ask for a copy. I hope they will be looked at seriously. I want the Dáil to confirm that this House seeks the introduction and implementation of a comprehensive programme now to achieve the necessary increase in beef cow numbers. This is the only reasonable response to the crisis in present circumstances.

An Leas-Cheann Comhairle

Is amendment No. 1 in the name of Deputy McCoy withdrawn?

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Is the motion in the name of Deputy O'Keeffe agreed?

Question put and agreed to.