I understand I have 40 minutes. I wish to give ten minutes of my time to Deputy Ahearn.
Private Members' Business. - Agricultural Policy: Motion.
Is that satisfactory? Agreed.
I move:
That Dáil Éireann calls on the Government to:
(a) recognise the present crisis in Irish agriculture with particular reference to the present GATT round negotiations;
(b) acknowledge the serious income crisis now affecting thousands of Irish farmers;
(c) implement measures that will help to alleviate some of the problems associated with the present crisis in the areas of milk, beef and store cattle, cereals and sheep; and
(d) make low interest loans available to finance beef production.
The Government is therefore called upon to arrange for the funds to be borrowed on the German market, cover the exchange risk, arrange for the funds to be on-lent by the Associated Banks with a modest handling charge, the lending rate to be kept at or below 11 per cent.
This motion presents me with the opportunity this evening to bring to the floor of Dáil Éireann the many and varied problems besetting agriculture and to propose certain measures that will be of immediate benefit to farmers. I know of no other period during the past 15 years when there has been such a sudden, sharp deterioration in the fortunes of agriculture and all independent observers agree that the future is far from bright.
The present difficulties in themselves would present major problems for the future prospects of thousands of small farmers who are currently struggling on deplorably low incomes. However, the implications for agriculture of the present round of GATT negotiations are frightening to say the least. The signs are ominous. Previous rounds of GATT negotiations centred largely on the liberalisation of industrial world trade with very little impact on agriculture. Many decisions on world trade liberalisation policies have greatly affected agriculture in recent years but it is also true to say while their overall effect applied to what one might call the peripheral areas which resulted in great pressure being brought to bear on some sectors of the industry, notably the cereals sector, they did not greatly affect incomes overall. I think everybody in the House will acknowledge this.
In relation to the present GATT negotiations, there is no doubt we will be in serious trouble if the Americans get their way. If the United States proposals to phase out all subsidies for Irish and European agriculture succeed, not alone will the goalposts have been switched since the time we joined the EC but the match will be played on an ice rink. If Irish and European farmers have to accept world prices, as suggested by the United States, then a gallon of milk will be worth no more than 60p, beef cattle about 55p per pound while lambs will be worth about £20 less than they are now. If anyone doubts this horrendous scenario, all they need to do is look at the position of New Zealand lamb in world markets at present. Frozen lamb from this far distant country can appear on Irish supermarket shelves at prices 20 per cent below those being charged for fresh Irish lamb.
For farmers and rural communities the outcome of the present round of GATT talks is of paramount importance. The people in general and farmers in particular saw great opportunities in an expanded European Community and voted accordingly in the early seventies. The provisions of the Treaty of Rome gave new hope to a food exporting nation like Ireland and presented opportunities to export food to a market of over 250 million people in Europe.
Under the Common Agricultural Policy farmers were guaranteed that they would secure a reasonable income from their labours while, at the same time, consumers could expect top quality food even at times of great scarcity at reasonable cost. Border taxes were gradually dismantled and farmers began to compete in the real sense of the word in the marketplace. No one will deny that costly mistakes were made. Because prices were guaranteed farmers began to produce food of a kind that consumers did not want. Meat processors, given the availability of intervention, found it easier and much more profitable to dump up to 100 per cent of their throughput into this safety net system, putting little effort into marketing.
Nor could anyone claim that the benefits of such a price regime were evenly spread. The number of small farmers throughout the European Community declined at an alarming rate. What the critics of the Common Agricultural Policy do not realise is that because of the uncertain nature of farming, depending as it does on many factors outside the control of man, there must be some safety net to protect producers. Of course farm produce must be consumer-orientated and market led at all times but provision must also be made to protect the livelihoods of as many farmers as possible.
Let the consumer also be wary of the perceived panacea that world market prices may bring. They would want to be very careful. Consumers always say that what they are looking for is cheap food but natural disasters, such as diseases, have and will continue to dictate the volume of produce. It is important that emergency provisions be made to ensure that there will be no food shortages. It is important that there is a system in place to enable us to secure supplies of food in the event of an emergency and to ensure at a time of shortage that consumer prices will not go out of hand.
I have always accepted that the Common Agricultural Policy must be tightened. We have been treated to some austere measures to curb unwanted produce during the past five or six years. However, the principle of the Common Agricultural Policy which is enshrined in the Treaty of Rome must be retained. The undoubted industrial muscle of the United States cannot be underestimated but surely two million American farmers should not be allowed to dictate the future for nine million European farmers. In essence, the United States proposals to GATT represent an attempt to merge two entirely different and incompatible farming systems. I believe such a marriage would not be successful and such a system would not work for us, the more vulnerable partner.
Millions of European farmers voted in favour of the principle of the common agricultural policy as contained in the Treaty of Rome. I see little evidence of farmers, not alone in Ireland but all over Europe, wanting this to be replaced by the treaty of Washington. Because of our small size, Ireland would stand little chance of influencing the ultimate outcome. However, in the EC there are powerful countries who could put real pressure on the USA and on the CAIRNS group of countries which seem to favour the world low price regime. Can we be sure here that there is a firm resolve on the part of all the EC member states to oppose the US? Recent changes in the European bloc countries, and in particular East Germany, may well mean a major shift in financing arrangements of the EC budget. As the House is aware, Ireland are net gainers with West Germany, the main losers as far as the EC agricultural budget is concerned. Some experts predict that West Germany may not be too unhappy about the prospect of lower agricultural product prices. The President of COPA who was in the gallery last week also referred to this matter when he was in Dublin and I sincerely hope that the cohesion we hear so much about in the European Parliament will be maintained because if the Germans decide on any line of action other than the one we hope all countries in the system are on then obviously we will be in great peril here.
Several bad periods spanning a number of decades are etched into the minds of farmers. Older farmers still shudder when they remember the effects of the economic war in the thirties. The forties and fifties were generally depressed. In recent times what farmer will forget the disaster that was 1974 when cattle and sheep could hardly be sold? If the US get their way the decade of the nineties will overshadow anything that has gone before.
Why can we in this Chamber here not debate the problems associated with Irish agriculture and the GATT negotiations? I have asked for such a debate on no fewer than four occasions and, for whatever reason, the Taoiseach and the Cabinet decided to say no. I would have thought that no other topic would have been as important in this decade. We should have a one or two day debate in this House and we cannot get it.
Let me now turn to the domestic scene which is very depressing. I am sorry to have to say in the House that the Minister for Agriculture is obviously out of touch with reality as is the Minister for Finance. I will come to him in a moment. The Minister for Agriculture announced, with what I can only describe as a fanfare, his achievement at the price-fixing talks in Brussels. Depending on what humour he was in on the particular day it was either £60 million, £70 million or £80 million he had secured and this was taken up and reported by the press. What became of those so called benefits in the following two or three weeks? Let me tell the House what became of them. Anybody attending a mart anywhere in Ireland in the last few weeks or who was unlucky enough to have to sell cattle or sheep at our factories would certainly have an answer for the Minister for Agriculture. Since that day prices have nosedived all around.
The decision to get intervention beef paid for at 45 days instead of 120 days is something I have been calling for under the Fine Gael plan for the last three or four months. We did not get it to 30 days but we got it to 45 days. We were told that would mean a 3p per pound automatic increase at the factories but not alone did producers not get the 3p prices were 8p on average less this very morning than they were on that day when the Minister came home with the goodies. Two days ago Ireland looked for intervention facilities for about 8,000 tonnes of beef and my understanding is that we got intervention for 2,000 tonnes, one-quarter of what we looked for. I believe the factories are working in concert with each other because all the quotas this morning from the ones that were actually quoting were remarkably similar. I would regard this week as the blackest in 1990 for beef producers. I am also informed that in the next two or three weeks the EC Council of Ministers are about to allow the importation into their territory of 198,000 young cattle and about 50,000 tonnes of beef for processing at a time when we cannot sell ours. I hear not a single word from the Minister for Agriculture and Food against that. I know of several farmers this week who have beef cattle to sell and cannot get rid of them. Against that background, where are the magnificent results the Minister claimed he has achieved?
The present scare about mad cow disease illustrates the Government's shortsighted approach to marketing. What an opportunity it would be for Ireland now if we had a branded product in Britain where we have been used to selling and where there is no language barrier whatever. Taken in that context we can see just how shortsighted was the Government's decision to halve funding for CBF two years ago. The Government's record on the entire beef processing industry is pathetic. There are no fast lanes opening up, despite what the Minister of State, Deputy Joe Walsh said when he launched the abortive Goodman package a couple of years ago. There is a rumour that Commissioner MacSharry wants beef prices to continue to fall. Maybe this is to ensure that there will not be a huge difference in price between the EC and the US at the end of the year when the GATT negotiations are scheduled for completion.
The milk price is rapidly falling and at Question Time last week the Minister was absolutely at sea in the midst of it all. The assertion by the Minister for Finance here last week that some 60 acre dairy farmers earn incomes of between £40,000 and £50,000 annually would be laughable except that if this view were shared by his colleagues farmers could expect very little help. I have about 60 acres of land If I thought I could earn £50,000 on it I would not be here. I do not know where the Minister got details of any 60 acre farmer who earned £50,000. It may have been an off the cuff remark but in my view it was a silly rumour to put around.
Minister Reynolds has little good to say for farmers as far as taxation is concerned. He dismissed out of hand any suggestion that farmers should be allowed the special PAYE allowance enjoyed by PAYE workers. Indeed he implied that farmers had means available to them to claim for expenses that other taxpayers' had not. I resent that. Generally speaking the Minister was quite hostile to the farming community on that occasion.
The negative approach by the Minister for Agriculture and Food to the problems of Irish farmers can be summed up in his answer to a Dáil question here last week when the beef crisis was being discussed. His only contribution on that occasion was to say that cattle prices were no worse than they were in 1987. Input costs such as fertiliser and machinery increased dramatically not to mention the cost of borrowed money. It appears that the Minister has more or less accepted there is nothing he can do for Irish agriculture. If this inferiority complex is seen in the same light in the EC as it is seen here in Ireland, we are in big trouble.
The Minister was equally evasive on the funding of the disease eradication scheme. The board of ERAD have stated publicly that this round of testing will identify a much greater number of reactors. Obviously there will have to be a supplementary budget for animal disease eradication, as the 1990 estimated provision of £35 million approximately will not cover the cost of the scheme.
I hear rumours — I admit they are rumours, but rumours are usually right — that the Government may expect farmers to increase their disease levies from the present £6.90 per animal to about £10 and for milk producers from 1.2p per gallon to 1.7p per gallon. Given the general dissatisfaction with the entire TB and brucellosis scheme and with the major decrease in farm incomes I see this proposal sinking like a lead balloon. There will be a great deal of trouble if this proposal is floated.
There are many and varied ways, even in the present difficult environment that farmers can be helped and without any great cost factor. Last January Fine Gael launched a ten point plan which if implemented quickly would bring great relief to thousands of farmers both large and small. I will list the points so that they are on the record. In order to overcome the seasonality factor for winter beef producers and thus ensure that there will be an even distribution of animals going for slaughter throughout the year, farmers who fatten cattle should know at the time they are purchasing them that there is a minimum price level below which they will not go at the early part of the year. That is most important. The suggestion by some commentators that this would help only the big farmers could not be further from the truth, because the store producers, whom I know more about than I do beef producers, suffer if the beef producers are not in the market at the back end of any year. It will benefit everybody to get this right.
As I have said earlier, we call for the reduction in the payment period from 120 days to 30 days. I can say that the Minister has worked on this and it has now been reduced to 45 days. I genuinely believe that the meat processors are pocketing the money in the interim. It is time the boot was put into them for not passing this on to the producer.
It is very important that the Government seriously consider supplying farmers with loans at low interest rates for very specific purposes under certain conditions. I was around during 1981-82 when the concept of a Euro loan was introduced but I am now talking about a different type of regime. It is now possible for me as an individual, as it is for everybody else here, to borrow in Deutsche Marks at nine per cent per annum. Naturally the associated banks would have a handling charge, which is normal enough, but I would not be prepared to give them the level of handling charge that they would like. It should be possible to arrange to borrow money for certain productive purposes at an interest rate of around 11 per cent at no cost to the Exchequer. All the Government would have to do is underwrite the exchange rates. I fully understand that the risk of exchange rate fluctuations is very great when the loan extends over five or six years but short-term loans of six to 12 months should not encounter this difficulty. This period would tie up with the normal cycle for cereal, beef, and pig producers. The benefit would not be confined to big farmers. I know of many small farmers who would be much better off if they could borrow for this purpose at a rate of 11 per cent rather than at the rate of 15 or 16 per cent which they have to pay at present. I am asking the Minister to consider that suggestion immediately.
The EC headage scheme should be used in a different way. At present we hear a great deal of talk about extensions. I cannot comment on them because I do not know the degree of the extensions, but any extension is welcome. However, there will be thousands of farmers all over Ireland in the non-designated areas who will not be able to avail of any headage payments. The vehicle is there. I see no reason farmers are not pinpointed on a farm basis. I envisage no problems in doing this.
Capital acquisition tax is stalking the land at present. Many farm fathers and mothers are afraid to think about farm inheritance. The proposal in the budget was totally inadequate. Obviously, the thresholds will have to be increased to take account of property values since 1978.
On many occasions I have asked the simple question in this age of computerisation: why can a farmer not get his lifestock grant on the day that it is due? Why do people have to wait for three, four, six or eight months for a payment that is rightfully theirs? It is nothing short of scandalous that there are farmers waiting for various grants for six, seven or eight months just because something went wrong somewhere along the line. We need to effect change in this area immediately. The costings for farm buildings should be changed immediately. I had understood that the Minister was about to announce this a few months ago but he seems to have gone cold because obviously he was not able to push it through in Cabinet. If this was to be announced, it should have been done a couple of months ago.
Small milk producers countrywide should get an additional milk quota. I will speak at greater length on this point on another occasion. We also believe that Teagasc should be given the leading role in integrated rural development programmes. It is vitally important that Teagasc have a say.
Finally we must have a land authority. I have spoken at length over the past five to ten years on this topic. We are further away from it now than we ever were. The Minister of State does not seem to be making any noises about a land authority.
The Deputy was in the driving seat.
At least I set up the principle of the authority but the Minister does not appear to have run with the idea at all. I know that it is a hot potato from which the Minister has backed off. This is a pity because the authority is badly needed.
There are two other points that I wish to refer to before my time runs out. Cereal producers are under threat. I had occasion to meet ten or 12 of the biggest and best farmers on a deputation a couple of months ago. They convinced me that, despite the fact that the asset value of their farms would be in the region of £250,000 to £500,000, they have lost money for three years on the trot. I have not the slightest doubt but that many of them will go out of business entirely if a new regime is not put in place. I put the idea of a supply management system to the Minister last week during Question Time — he seemed to agree with it — but I have never heard him talk about it where it counts most, in Brussels. In other areas where the EC have tried to regulate the market, they have failed for the reason that there will be over-production in the more favourable cereal growing areas of Europe. For that reason I can see no hope for Irish grain producers unless we introduce the management supply concept. I am asking the Minister to take that on board.
If this motion does not achieve anything else it can serve to highlight what the Government could do. I fully accept that there are matters that are outside the control of the Government and the Minister, but most of the points I have raised tonight are internal matters which could alleviate some of the problems. I do not understand how any Minister could get himself hyped up to say to Irish farmers that they are now £70 million better off when in fact they are experiencing a nose dive. I do not agree with this negative stance that farmers would be £70 million worse off if the Minister had not achieved this. That is a negative way of looking at the problem. It is time we were more honest about these matters. I accept there are things that the Minister cannot help. No matter who is sitting in that chair he will have trouble but it appears that the Department have been on autopilot for the past 12 months. I have seen no really new initiative that would lead me to believe that the Minister understands what is happening. I do not like to be too critical because we have to accept there are certain things which the Minister can do and cannot do.
It is one thing for an Opposition to come in here and criticise but it is another matter to come in and signal where the agricultural industry should go. I do not pretend to have all the answers — I am sure I do not have — but if the ten points I have mentioned were at least tried out in the next year, particularly in the next six months, people would be better off and the agricultural community could begin to breathe again.
Above all else we should take the GATT negotiations seriously. Until recently people regarded this matter as a big yawn but it will come back to haunt us. It is incumbent on Fianna Fáil, Fine Gael, Labour and everybody else to bring the facts home to the people. This is the greatest problem that has confronted us for many a long day. I sincerely hope that the Government will do much more to educate the people of the enormous implications involved. We in Dáil Éireann should give a good example. It is very difficult to organise information sessions all over the country if we cannot initiate one on the floor of Dáil Éireann. I would ask the Minister to let us have a one or two day debate on this matter. Certainly from the Government's point of view there can be no embarrassment because every Government has been faced with this problem. Every Deputy should come in here and say what is on their minds. There are only four or five weeks left in this session and I hope the Minister will take my suggestion on board.
I would like to thank my colleague, Deputy Connaughton, for sharing his time with me. I support his motion. The crisis in Irish agriculture today is one of the major problems facing our economy. The whole fabric of rural life is threatened, the future of thousands of Irish farmers is at risk and the hope of many family farm units is dashed. Irish agriculture is at a cross roads and its future can be protected only, first, by recognising that the crisis actually exists — and we hope to convince the Government of that in this debate — and second, having recognised the crisis, by ensuring that immediate measures are taken to rescue the declining income of thousands of farmers. Another problem is that the percentage of the CAP allocated to dairying has fallen from 30 to 16 per cent. The crisis is all the greater in that all types of farm enterprises are affected and this can be proved by a very simple comparison. Milk prices are down by 15p to 17p per gallon since last year; lamb prices are down by almost £25 per head since last year; calf prices are down by almost £100 per head since last year, and cereal prices are falling by almost 3 per cent every year. Thus every farmer, whatever his enterprise and/or size, is experiencing a severe decline in income.
In the last few weeks sheep farmers have faced an unprecedented income crisis. That crisis is even more difficult to comprehend when, at a time when Irish lamb has reached its lowest level in the past ten years, we continue to import New Zealand lamb. Since spring 1987, prices have declined by almost 30 per cent in Ireland and yet in other EC countries the price of lamb has either declined marginally or has actually increased. Compared to this time last year the sheep farmer is receiving about 45p per pound less for his product. The failure of our sheep enterprise is a severe blow to many young farmers starting out on a career in agriculture. For them, sheep farming was an attractive enterprise when they were prevented from going into dairying because of the quota system. There is room for expansion in sheep farming. There is capacity for good production and capital input is manageable. The real problem is that today, in comparison with a few years ago, we export up to 75 per cent of our sheep production. This problem must be tackled by identifying the causes. One reason is the price paid for imported New Zealand lamb. The second cause is poor marketing in an effort to get the best price for our lamb on the French market. These two areas must be investigated immediately because Irish sheep farmers have a future here if corrective steps are taken.
Farmers in the dairying sector, having experienced two or three profitable seasons, are now facing a severe drop in their incomes. The reduction of 15p per gallon of milk means a drop of £90 per week in the gross income of a 30 cow herd owner. Why has there been a decline of 17 per cent in milk prices in Ireland while in Holland there has been a decline of only 9 per cent and in Denmark, only 3 per cent? We export 47 per cent of our dairy products, mainly butter and skim milk powder, outside the EC.
Since 1988 the butter export refund has been reduced by £257 per tonne while skim milk powder refund has been reduced by £485 per tonne. The effect of all of these factors has been a very weak dairying sector. Along with the declining milk prices, dairy farmers are faced with an alarming increase in the cost of inputs and interest rates were never higher, all of which contribute to a massive attack on the income of the dairy farmers. The future is even bleaker for our farmers because, when Europe expands, we will be faced with a major threat to the price support system and its effectiveness will further diminish. Our future lies in changing from a product that is dependent on support to a market-orientated product and the sooner that change is brought about the better.
As Deputy Connaughton said, the income of cereal farmers is another major concern. That has continued to fall since the mid-eighties, leaving up to 30,000 grain growers trying to survive on alarmingly declining incomes. The major cause has been the use of stabilisers, leaving no incentive and no reward for increased production. The effects of the use of stabilisers in cereal production must be reviewed immediately, particularly for the benefit of the Irish cereal grower. We must accept that the cereal policy has been disastrous for the Irish cereal grower and has been totally unfair. Another problem is the import of 18 million tonnes of substitutes taking the place of our cereal production at home. This is a ridiculous policy while there is overproduction at home.
As I have said, all sectors of our agricultural industry are affected by declining incomes. The beef crisis, caused by a variety of factors is of major concern. Beef prices within the EC have held firm in the past 12 months. For example, prices increased by 5 per cent and 4 per cent respectively in the United Kingdom and France from November 1988 to November 1989 whereas in Ireland they dropped by 10 per cent. The overall supply and demand for beef within the EC is favourable. Self-sufficiency in beef in 1989 was 97.8 per cent. We must ask: what is the problem in our beef industry. Is it seasonality of supply, poor marketing, poor quality cattle or just simply a lack of effective competition between meat factories at home and no live exports to provide competition abroad?
If I had the time I would like to put forward what I consider to be solutions to the crisis in the beef industry. Much of the problem is caused by the total reliance of the beef farmer on the dairy farmer for calves. The low percentage of dairy farmers involved in suckling highlights the continued dependence of the cattle farmer on the dairy farmer for his supplies. This has caused calf prices to increase since 1982 by almost £160. Yet, during the same period beef prices have remained almost static. The net result of this is a total decline in the profitability of beef.
The problems in Irish agriculture are not recent. They have been with us for the past few years. The solutions are long-term and the quicker we provide a strategy on a long-term basis for the future of Irish agriculture the better.
I propose to share my time with Deputy Leonard and to allow him about ten minutes. I propose to deal with the points raised by Deputies and to show that this Government have been extremely positive in dealing with agriculture despite the negative statements from Deputies Connaughton and Ahearn.
The GATT negotiations are aimed at liberalising trade in agriculture by reducing support and protection. The Common Agricultural Policy is the mechanism for supporting and protecting Irish and Community farming and underpins the prosperity of agriculture throughout the EC. This support continues to be necessary because Community agriculture is structurally weak and extremely diverse by comparison with our major competitors. For example, there are about ten million people employed in this sector in the Community and the average farm size is about nine hectares, whereas, in the US there are about two million farmers and the average farm size is 184 hectares.
For these reasons, Community agriculture cannot be left entirely to market forces and will continue to require support and protection measures in the foreseeable future. Because we are committed to developing the value of our agricultural production and ensuring that farm incomes are kept at a reasonable level we can support the Community's policies in relation to agriculture in the GATT negotiations.
The Community's proposals are comprehensive, realistic and consistent with the aims of the negotiations. They are also in line with the reform measures which have been taking place within Community agricultural policy over the past number of years. In the GATT negotiations we must ensure that the Community gets tangible credit for these reforms. The main issues in the agriculture negotiations were discussed at the Council at the end of April and the Community's position was strongly re-emphasised. These issues were also discussed at an informal meeting of European Agriculture Ministers and senior civil servants at Innsbruck earlier this month. These were not all Community representatives but most of the EFTA countries were represented, as was Poland. The communique issued after that meeting was useful in that it showed that the EC has considerable support for its position on agriculture in GATT.
In the communique Ministers agreed that agriculture could not be discussed exclusively on the basis of commercial considerations. It was also agreed that credit should be given for reform measures taken since the beginning of the Round and that some countries would need balanced external protection and the maintenance of dual price to re-establish balanced markets. These are all issues of importance to the Community on which we obviously have the support of other European countries. We will continue to press, within the Community, for maintenance of the present line and I have no doubt we will succeed in that.
Deputy Connaughton in his opening contribution made reference to the fact that if Americans get their way Irish prices will drop to world levels and disaster will strike. I am afraid Deputy Connaughton is surrendering before negotiations have even begun as regards agriculture in the GATT Round. His contribution will give heart to the United States and other interests opposed to the EC and the Common Agricultural Policy. Defence of the Common Agricultural Policy is the firm determination of the Ministers of the Twelve Community countries.
I am glad to hear it.
The Commission is negotiating on behalf of the Community. The agriculture side of the negotiations is in the hands of Commissioner MacSharry who is manager of European Agriculture. No one can doubt his determination to defend us in the negotiations.
I am afraid he does not show it.
Why is Deputy Connaughton talking of a crisis? The negotiations will tell their own tale. Deputy Connaughton should not be crying wolf in this House at a time when the country and other members of the Community are adopting a courageous attitude as part of the negotiations in the Round. Perhaps the Opposition would be better served in being supportive of the Government's line in the discussions and in the debate tonight on this matter.
If we could trust what the Government are at we would support them.
During the past three years farmers have benefited from strong and steady income increases bringing total farm income in real terms to the high point of the decade in 1989. Up to the present the farm sector, as a whole, has enjoyed some very good years, a point underlined by the household budget survey which showed that farm households have had, on average, a higher level of disposable income than either urban households or rural non-farming households.
Over many years we have seen cyclical trends in farm incomes where economic forces operated to bring about income increases during a period of several years which would be followed by a period of slowdown in growth. There are some indications that we are currently at the high point of a period of income increase but that is not to say that farmers are facing serious difficulty, nor yet indeed a crisis.
The recent reduction in the price of cattle and sheep took place against a background of record price achievement in 1989 while a reduction in cereals prices reflected world market trends. However, during this year volume increases in cattle, sheep and cereals should largely offset the effect of these price reductions. Furthermore, we have sought to ensure in Community negotiations that the basic supports necessary to underpin a successful agricultural sector are secured. The recently agreed prices package will make an important contribution. For beef, intervention prices should improve. There is a commitment from the Commission for better support for internal market prices and improved export marketing opportunities. In the case of the cereals sector the various elements of the prices package should more than offset the constraining effects of the stabiliser mechanism.
Nobody would believe that.
The outlook for farming is very hopeful. The record achievements of the past few years may not be reached but, in the face of some downturn in prices, support mechanisms and volume increases will ensure that very reasonable income levels will be sustained.
I am aware of the current difficulties being encountered by Irish lamb producers due to a fall in market prices but I am glad to note some recovery has occurred in the last week. The drop in meat prices is due to a number of factors including the advantage to British lamb exports to the French market caused by the drop in the value of sterling vis-à vis the French franc, the lower level of clawback on British lamb exports and increased slaughterings both here and in Britain. Wool, skin and offal prices have also shown a drop in prices over the corresponding period last year due to the increase in supplies and difficulty in export market outlets to China.
The 1990 ewe premium will however compensate producers for the loss in income sustained this year, for example, the difference between the basic price and the average market price adjusted to take account of the stabiliser and the technical kill out co-efficient.
I will believe it when I see it.
The ewe premium for 1989 was fixed at £17.75 at the sheepmeat management committee on 4 May. Payments of the 1989 premium will be made when inspections are completed in early June.
A sum of £25 per lamb.
The estimated total value of the 1989 premium will exceed £80 million and this benefit to Irish producers should maintain confidence to the sector and assist farmers in dealing with the present difficulties. In addition to the payment of the 1989 premium, two instalments, each representing 30 per cent of the estimated 1990 premium, will be paid later this year. Total ewe premium payments this year should exceed £130 million. In addition, headage payments will amount to approximately £14 million.
I should also mention that, as part of the EC prices package which we recently negotiated, an additional premium of £3.40 per ewe will be paid from 1991 onwards for all eligible ewes to beneficiaries in disadvantaged areas. This would amount to an additional £9 million to sheep farmers in a full year.
The common organisation of the market for sheepmeat sector provides for private storage aid arrangements. Monthly tenders have been in operation since the beginning of this year for those regions of the Community where prices fall below the 70 per cent benchmark level. The private storage arrangements should provide an important safety measure for the sector.
In addition to the above measures, CBF's export market development and promotion programme in 1990 will continue to be concentrated on moving more of our lamb sales into higher priced outlets. Promotional campaigns will continue to emphasise the grass-based method of production and the improvements in quality which have taken place since the introduction of the code of practice. A campaign to promote lamb on the home market was launched recently. This campaign highlights lamb as a natural product which is now of particularly good value.
Under GATT arrangements third country suppliers of sheepmeat have free access to the Community market subject to a 20 per cent duty. On the setting up of the market organisation on sheepmeat in 1980 the Community negotiated agreements with all the main suppliers, including New Zealand, under which they agreed to limit their supplies in return for a reduction in the duty to 10 per cent. The agreement concluded on 25 September 1989 between the Community and New Zealand was a renegotiation of that agreement and was the culmination of protracted negotiations which has an impact on other commodities and has implications under GATT arrangements. During these negotiations we were successful in ensuring maximum protection for the Irish producer while at the same time respecting our international obligations.
Under the terms of the Voluntary Restraint Agreement with New Zealand, Ireland and France have been designated sensitive zones whereby quantitative restrictions apply. Under these arrangements New Zealand may issue Voluntary Restraint Agreement export certificates up to a maximum of 450 tonnes in 1989 and 540 tonnes in 1990. However, in 1989 the total volume of New Zealand imports into Ireland amounted to only 30 tonnes and to date, export certificates for 1990 amount to 86 tonnes. As Ireland's production of sheepmeat in 1989 exceeded 58,000 tonnes, the limited quantity of imports from New Zealand did not affect price levels here.
In the overall Community context, New Zealand agreed to reduce its annual quota by 40,500 tonnes to 205,000 tonnes and, within that quantity, for the first time accepted a ceiling on fresh meat exports. In return, the Community agreed to reduce the import levy from 10 per cent to zero.
As far as the dairy sector is concerned, prices for the main commodity products in the sector have declined since late autumn 1989 and they are now at or below intervention levels. However, this downturn in market conditions follows a prolonged period of market buoyancy throughout 1988 and most of 1989 when the Irish dairy industry, in particular, enjoyed exceptional market conditions. Irish dairy exports reached record levels during that period and producer prices increased, on average, by well over 20p per gallon. This market buoyancy, coupled with an extensive Community programme of stock disposal, enabled the Community's stocks of butter and skim milk powder to be virtually eliminated.
The decline in the market necessitated the reintroduction of intervention purchasing of butter by tender in January 1990. Since then about 88,000 tonnes have been taken off the Community market. Under the rules governing the intervention purchasing of skim milk powder, the purchasing period did not commence until 1 April and so far about 51,000 tonnes of skim milk powder have been taken off the Community market. However, this level of purchases must be put into its proper context — as recently as January 1987 Community stocks of butter and skim milk powder stood at 1,252,000 tonnes and 770,000 tonnes, respectively. The elimination of these large stocks overhanging the market means that the market is now in a more healthy position and, therefore, more responsive to improvements, at Community level, in market management measures.
As soon as the decline in market conditions became evident, we approached the Commission seeking readjustment to several of the aids and disposal schemes. applicable in the dairy sector. The Commission has since acceded to a number of our requests including, in particular, increasing export refund levels for a number of dairy products, restoring the maximum storage period under the scheme for private storage of butter to 210 days and introducing a new scheme to aid the disposal of butter for use as concentrated butter for cooking. The Community has also aided the export of butter to Eastern Europe.
There is no doubt that action of this type has helped to offset the effect of the market downturn. I am of the view, however, that further action needs to be taken to strengthen the Community's internal disposal measures and we have recently again requested the Commission to readjust the conditions under a number of its aid schemes. In this context, the Commission's commitment in the recent farm price negotiations to maximise the disposal opportunities for butter and skim milk powder and minimise sales to intervention must be welcomed.
The successful outcome of the farm price negotiations, including the green pound devaluation and shortening of the intervention payment delays of course, will also help to firm up the market. Commodity prices for the main dairy products have already increased as a direct result of these measures.
Our traditional dependence on commodity products, however, means that we are particularly vulnerable to fluctuations in market returns for these products. We have stated on a number of occasions that, in the longer term, the protection of dairy farm incomes will depend on the extent to which the industry succeeds in developing a more diversified product mix and on more effective promotion and marketing of the unique attributes of dairy products.
Government action in other agricultural sectors is continuing to underpin farm incomes. On the horticulture side I would like to mention the passing by the Oireachtas of the Bill which set up An Bord Glas as a statutory body. We will be announcing the membership of the new board very shortly. That board will then take over from the interim Bord Glas which has done an excellent job over the past three years.
The chief task of the new board will be to put into operation the excellent development plans for horticulture published by the interim board. That development plan foresaw that over a five year period the industry would be brought to a stage where imports would be replaced by home products to the tune of £31 million a year. As well as that there would be an increase in the value of horticultural exports of £27 million a year. The achievement of those targets would result in the horticulture industry providing an additional 1,800 full-time and 1,500 part-time jobs. I am very glad to be able to tell the House that there is every reason to believe that these figures for employment will be exceeded. In 1989 alone a total of 700 new jobs were created in horticulture; of these 40 per cent were full-time and the remainder part-time.
As was set out very clearly in the development plans which I have already mentioned, the greatest problem facing Irish horticulture in general is that of marketing. Producers must keep quality and presentation in mind. Good marketing means that individual producers will set about producing crops only when they have a very good idea of where, to whom and when their produce will be sold. Producers must constantly have in mind the needs of the final consumer. This means, above all, attention to quality and the determination to see to it that only very good quality, very well presented products are put on the market. In modern conditions there is far more to good marketing then the work of the individual producer, important and all though he or she is. Producers must learn to work in groups. This is a gospel which I have been preaching for some years now, as have the interim Bord Glas. I make no apology for saying it again because I am quite confident that if the principles of good marketing were put into operation by Irish horticulture producers the forecast for the industry in the development plans would be well exceeded.
We must remember that up to 60 per cent of all our consumption of fruit and vegetables is marketed through the main supermarket chains. Producers must be able to match these outlets with their marketing arrangements. Where producers are not yet at a stage where they feel that they can set up a producer group, they should, if at all possible, work very closely with wholesalers. Everybody in the production and distribution chain has much to gain through co-operation with others in the business. This can only lead to better profit for all those involved and a better situation for the whole economy.
Finally, I would like to mention the new unit for the development of organic farming which has been set up in the Department of Agriculture and Food. This unit will have the task of developing all aspects of organic farming. This is an area which must not be neglected. We are living in times when the importance of the environment is becoming more and more a factor in the attitudes and decisions of people. Traditional farming and horticulture, as we know them, will continue to be for a long time to come the main suppliers of food. However, people are becoming more sensitive about the use of chemicals and fertilisers. We must maintain a balanced view on these matters but we must recognise that there is a growing interest in organic production. This country is in a particularly advantageous position to benefit from this growing interest. It could become an important element not only in home trade but also on export markets.
I support the Minister of State. When Deputy Connaughton opened the debate he said we would not have enough time but we would not need two days to debate the number of positive suggestions he made.
Ten of them.
He was also critical of the farm price review. No measures ever achieved greater acceptance than those agreed under this price review.
Until the Minister came home.
There was a welcome from practically everyone interested in agriculture.
Except farmers.
It is a question of everybody being out of step with our Johnny. The most relevant point was made by Deputy Ahearn when she said that the problems were not recent. Certainly there are long-standing problems in agriculture. Problems will arise from time to time due to such factors as weather conditions, demand and supply. We have to face this in a positive way.
Deputy Connaughton mentioned beef, milk and lamb but there is an answer on each of those points. Beef production is a matter of efficiency. A positive improvement was made by the Minister in July 1988 when he secured the pollution grants. Undoubtedly some of our biggest losses were incurred because 50 per cent of cattle were wintering out, while the rest were kept in slatted houses. I attended a meeting where a person said that seven applications for slatted houses had been made in one townland. Never before was there such a flood of applications. This must be compared with the position in the early eighties when all grant aid was completely abolished.
There is much criticism of slaughtering plants. They seem to cash in when there is any downturn in prices. It is time the farmers formed producer groups. They cannot expect the State or anyone else to deal with this matter for them.
My county is the premier producer of poultry. We produce eggs, broilers and turkeys. People there set up their own efficient structure and it did not cost the State a penny. The only cost to the State was for the creation of jobs in processing plants. A massive number of jobs were created for a reasonably small IDA and FEOGA investment. The ball is at the foot of the producers and if they could do for beef what farmers in Monaghan have done for poultry they could regulate the market very nicely.
When we entered the EC our full concentration was on securing increases. A couple of pence on the gallon was an achievement. We should have been concentrating on more efficient production, improving the presentation of our products and marketing. The co-operatives were committing the same kind of error by dumping their produce into intervention instead of seeking new markets. During a by-election campaign in Tipperary I could not get cheese in a certain hotel, although it was the best milk producing area. At the time the co-operatives in the county were loading 56 pound boxes of butter into cold storage and drawing their cheques. Following our EC entry we moved quickly from a supply and demand market to an intervention system, under which massive amounts had to be paid for storage facilities. Intervention killed initiative. Co-operatives and others who did not use these facilities should have been recognised and given a bonus.
It has been said that nothing is happening in agriculture. Let us examine developments in the past few years. I have already mentioned the excellent anti pollution grant scheme. There is also a suckling grant for small milk producers who have to dispose of cows. Grant aid was given by the Minister. The cattle headage grant has been payable since last January irrespective of means. I believe there will be a real upturn in cattle numbers within two years. The annual payment of £47 for 20 years for forestry will give a great boost to that industry. The amount payable is the equivalent to the income gained from grazing livestock on the land.
I spoke many times about the monopoly operated by the Dublin District Milk Board. They could send milk to every town and village throughout the country but a provincial co-operative could not send a gallon of milk to Dublin. This was the position for years but the system was changed shortly after Fianna Fáil's return to office in 1987.
No area has shown greater success than horticulture, with great developments in fruit, vegetables and potatoes. Unnecessary imports will be greatly curbed in coming years as a result of the Minister's plans.
There is a supposed crisis in regard to lambs but there has been a very big increase in sheep numbers. This has had an effect on prices. The continued weakness of sterling has provided cheaper lamb for the French market from the United Kingdom. This has had an effect on our prices. The ewe premium, increased for the disadvantaged areas as a result of Commissioner MacSharry's proposals, makes up for the loss of income.
I now turn to the mushroom industry. I was a bit concerned by the Fine Gael Deputies who were in great voice about the drop in sales and the loss to the producer due to the weakness of sterling. However, no reference was made to this point in the motion before us tonight. The depreciation in the value of sterling has had a serious effect on the incomes of people involved in the mushroom industry. What action could the Government have taken to put this matter right? The Minister for Agriculture and Food, An Bord Glas and the Industrial Development Authority, together with mushroom producers and exporters, have been very active in considering the ways and means by which the mushroom industry can improve its position as a result of the depreciation in the value of sterling. The answer they have come up with is that the solution lies in the hands of the producers and marketers.
If a study was carried out we could see that the reduction in the value of sterling has meant a drop of about 6p per pound for mushrooms while at the same time producers who produce a higher quality produce can get up to 20p per pound more for their mushrooms. Reference should have been made to this point in the motion before us in view of the concern expressed about it over the past few months.
I move amendment No. 1:
To delete all words after "Dáil Éireann" and insert:
"acknowledging that a major restructuring of Irish agriculture and food production is necessary to
—end poverty-line farm incomes
—make the transition to a more liberalised agricultural market which removes artificial upward price-fixing mechanisms
—reverse the concentration of agricultural land into the hands of fewer, wealthy farmers and corporations
—create a more ecologically-sensitive, sustainable food producing sector;
and further aware that the present investment policies of financial institutions are unsuitable to the nature of agriculture investment and capital return, at the terms which reflect the long pay back period of farm investment calls on the Government to ensure that long-term credit facilities corresponding with the investment requirements of Irish agriculture are made available to farmers, and in particular to
(a) statutorily require financial institutions (banks, insurance and hire-purchase companies, investment houses, pension funds), to invest 10 per cent of their new annual investment portfolios in Agricultural Development Bonds
(b) ensure the moneys arising from the purchase of these bonds to be advanced as loans to farmers at fixed long-term (e.g. 15 and 20 years), low interest rate terms (e.g. 5 per cent p.a.) for commercial development of their enterprises
(c) ensure the interest accruing to the financial institutions from the bonds to be tax-free.
That such loans to be made available:
(1) to progressive farmers who are
—engaging in land development and infrastructural projects which will lead to higher value-added production
—switching to import-substitution production in horticultural and tillage sectors
—enlarging farm-holdings and dairy quotas to economic levels
—converting to organic horticultural or livestock farming or introducing more ecologically-sensitive farm practices
—developing alternative enterprises (e.g. agri-tourism alternative livestock and horticulture, farm-house processing, etc.).
(2) for the installation of young farmers
(3) to farmers with high debt repayments to be eligible for loans to lower their repayment levels
(4) or to any activity that contributes to the productivity of Irish agriculture;
that these Agricultural Development Bonds and loans to be supervised by Teagasc and the Agricultural Credit Corporation as part of a long-term agricultural developmental plan designed to create jobs in the food production and processing sectors of the economy and to increase the number and incomes of family farmers participating in agriculture on a full-time basis."
I was struck by the Minister's contribution in so far as he seemingly could not find any serious fault with the contribution made by the Fine Gael speaker. The similarity of the positions of the two main parties in the House is striking.
The Labour Party amendment to the Fine Gael motion indicates our regard for the primacy of agriculture, the importance of farmers and their families and the importance of the workers and their families in the spin-off industries. Our amendment also recognises the malaise in the whole industry and the potential for wealth and job creation, a good clean environment and the development of our rural economy.
Our amendment effectively rejects the band aid-type philosophy which is evident in the Fine Gael motion before us tonight. This is a catch-all, meaningless motion with only one specific objective — selective assistance for ranchers and beef barons.
The Deputy was not listening to me.
I was listening to the Deputy but I did not accept what he said. I did not interrupt the Deputy and I will seek the protection of the Chair if I have to.
I find the Fine Gael motion unacceptable for that reason. I am well aware of the type of people who finish off our beef and of how wealthy they are. They live all around me in my constituency — I only have to look out of my window to see them — and I can assure the House that the Government do not need to assist them in any way at all. Their incomes might be somewhat reduced but they are the one sector in farming who can well afford to bear a reduction in the massive incomes they have accrued over the years. They only ever employed a man with a dog and a stick whom they put into a bad cottage and, when he was finished, and could not follow cattle any more, they threw him out on to the road. I will not seek any support in this House for the beef barons and ranchers who live in the midlands. I represent a midland constituency and know these people very well.
Following prolonged and intensive study of our agriculture and its problems —I was happy to be involved in this study —and discussions and consultations with farmer organisations and unions, the Labour Party produced an agricultural policy document which has been widely welcomed by farmers and unions. I believe we are the only party in modern Dáil Éireann to have produced such a document and put our cards on the table. Indeed, I would welcome such proposals from Fine Gael or the Government parties.
What we found was a history of disastrous neglect over a long period of what should be our primary industry. We found a series of ad hoc decision-making, a Band Aid crisis without any structure or clear policy position being held. We found widespread rural poverty, a lack of transport, extremely bad roads — a Minister for potholes could be employed forever in improving our roads — a lack of health services where women and children simply cannot get to health services and frightening isolation of women and old people. We also found a land structure which is a major obstacle to a modern agricultural sector where only 20 per cent of farms are categorised as modern, only 16 per cent of farmers are under the age of 35, up to 50 per cent of farm holdings in the west are fragmented, and 25 per cent of agricultural land is owned by only 5 per cent of farmers. That is the type of land structure we found.
The only response to this problem from the two conservative parties tonight and previously was when Fine Gael, in Government, nearly battered the Land Commission to death and the promise by the Taoiseach in the House — I heard him say this — to provide the burial details for the Land Commission. I was delighted to hear the Fine Gael spokesperson say he is now in favour of a land agency. This is good news. We need a land agency to correct the situation we found. The Government produced an excellent White Paper on this issue which was so radical that I was afraid to put it into our policy document because I thought the Labour Party would reject it as being too radical. Obviously the Fianna Fáil Party rejected the White Paper at some stage because they now believe there should not be any land agency at all. However, all they have put in its place is the cheque book so that the fellow with the biggest bank balance can buy the most land. This will have the effect of again concentrating land in the hands of fewer and fewer people. Failure to promote a land policy which puts land into the hands of young and expanding farmers, limits the land holding of larger farmers — all of which was proposed by Fianna Fáil and then jettisoned for some reason — and promotes a family farmer profile, has created considerable poverty and inefficiency in Irish farming.
We also found farmers who were caught in a vicious economic trap. The inevitable reduction of CAP subsidies — whether both sides of the House like it or not, it is inevitable — means that the farmers must produce more to maintain their present standard of living. To produce more they must increase their use of petro-chemical fertilisers, pesticides, hormones and antibiotics. They cost the farmer more while endangering the consumer, the farmer and the food worker. The farmers make less by producing more dangerous food of which in many cases there is a massive surplus such as grain mountains and wine lakes even though there are many people hungry.
Unbridled capitalist agriculture robs farmers of their land, the soil of its fertility and consumers of their health. It is a frightening tale of chemical dependence by farmers, of health risks to consumers, of the destruction of the soil, water supplies and the environment, of risks to food processing workers and the elimination of family farms. That is taking place in the name of profit for a handful of farmers, food processors and petro-chemical companies.
We found in our study an incomes policy for farmers which is called the price support scheme, or the CAP. That policy directed 80 per cent of subsidies from the EC to the top 20 per cent of farmers. I submit they did not need any subsidy and that the subsidies went to the wrong people. On several occasions the Minister agreed with me on that point but the Minister of State tonight expressed support for the system. The CAP policy decimated the rural economy. It reduced the number of people active on the land from 180,000 in 1970 to 90,000 full-time farmers in 1990. Tens of thousands of farmers, and their families, have been forced into economic deportation by a prices policy that benefits only the already rich farmers, the large ranchers and the big farmers. That policy has created not just poverty in rural areas but mountains of beef and grain and lakes of milk and wine, produce that many cannot afford to buy because of the artificially high prices set for them. It must be remembered that that occurs because of the subsidies of the ordinary taxpayer.
We have a scandal in my constituency where a colossal building is full of intervention beef and other produce. In front of that building there is a council housing estate that has 80 per cent unemployment. Those people receive beef from those sheds once each year on a give-away basis through the St. Vincent de Paul Society. Is somebody serious in suggesting that such a policy is good for farmers, for consumers, for workers or for anybody? The original concept of the Common Agricultural Policy was excellent but it has run out of control and created the greatest scandal in this century, excluding the holocaust. It is scandalous that we should produce mountains of food and permit people to starve. It is scandalous that we should produce grain for cattle when they, in turn, will be turned into beef mountains. The CAP gave rise to that great scandal. It was all for the sake of enriching the already rich sector of farming, often to the neglect of agriculture as a whole.
I am pleased that finally the penny has dropped and it is now accepted that this madness cannot continue. It could be said that the CAP is now on a life support machine. The plug should be pulled and the patient allowed to die. The IFA are desperate to reverse the tide and are campaigning against the GATT talks. They are late, they should have thought of this when they were reaping the profits, when they were putting all their produce into intervention and when prices were set at figures that people could not afford. They are trying to turn back the tide in the interests of their rancher members, the people who gained substantially from the CAP. There is evidence of the death throes of the CAP. I welcome the practical positions put forward by the new united farmers organisation in today's newspapers. They represent a breath of fresh air in the farming community. I have already praised the ICMSA on the positions they have adopted on various issues.
What has been the response of Fine Gael to this crisis, to this scandal? Fine Gael, who proudly call themselves the farmers' party, have put forward a catch-all meaningless motion before the House, a collection of ad hoc band aid proposals which are unstructured. They have thrown a sop to their friends, the beef barons and the ranchers, and they want the general taxpayer to subsidise those friends. In the west of Ireland we have a saying that there is no need to rub a fat pig with lard. The Fine Gael proposal in my view represents an attempt to rub the fat pig with lots of lard.
In contrast, the amendment by the Labour Party recognises the need for an alternative to the CAP. It examines the incomes of the farming community and recognises that many farmers are below the poverty line. It examines upward price fixing, disastrous land structures and damaging farm practices. The Labour Party recognise the investment policies of banks and financial institutions as not being suited to agricultural investment. Those fast buck, quick turnover policies do not allow for long pay back periods required in agricultural investment. Those policies led to the problems in Leitrim where the banks have taken control of large tracts of land. They have left the farmers in that county — I would love to see a grid map of the county which coloured in blue the farms the banks control — as caretakers, nominal owners, but effectively employees of the banks. They are there for a particular reason, so that the banks can avail of the grants for forestry. When that takes place the farmers will be put off the land because the banks will acquire the land for the original loans they made available to the farmers. That type of investment is not suited to Irish agriculture.
The banks and the financial institutions not only have a responsibility to their depositors but also have a responsibility to the community at large. Agriculture being the primary Irish wealth producer, must have favourable long-term capital available to it. The banks and the financial institutions must have a social conscience as well as looking to their profits. At present banks are the only practical source of loan capital for farmers since other financial institutions are not willing to invest in projects which have such a long pay-back period. Over the decade banks have been reducing their commitment to the agricultural sector. In 1983 more than 16 per cent of their borrowers came from the agricultural sector and in 1989 this was reduced to 10 per cent, a drop of more than one-third. It could be argued that the banks were shifting their loans-investment profile into other productive areas such as manufacturing to create jobs but that is not the case. In 1983 more than 20 per cent of borrowers came from the manufacturing sector. In 1989 this was reduced to 15 per cent, a drop of more than 25 per cent.
Debate adjourned.