The crisis in Irish agriculture to which the Fine Gael motion refers is not new. Irish agriculture has been in a crisis of one sort or another for many decades. The policies of successive Governments have been incompetent and inept and Irish agriculture has never been allowed to realise its full potential and create wealth for those living on the land and jobs for those in downstream industries.
In 1971 there were 262,000 people on the land but by 1986 this figure had more than halved to 120,000. Between 1981 and 1986 about 60,000 jobs were lost from farms of all sizes. Farming lost more jobs than any other industry between 1981-86 about 60,000, or 12,000 per year. Manufacturing industry lost 6,000 jobs a year over the same period but there are twice as many people in the manufacturing industry workforce as there are in farming. For every job lost in manufacturing industry four were lost in farming.
I have referred on many occasions to the stark contrast between agriculture in Ireland and Holland. Holland is little more than half the size of Ireland yet only 120,000 people are employed on the land in Ireland compared to 309,000 in Holland. This has been achieved by the Dutch with an average farm size of just 25 acres.
It is against this background that the motion before us has to be considered. No one doubts that many farmers are facing difficulties but I am not convinced that the solution proposed in the Fine Gael motion is the correct one. Having listened continually for more than ten years, to Fine Gael talking about our national debt and the extent of our foreign borrowing and justifying cutbacks in essential services such as health, education and social welfare in order to reduce the level of borrowing, it is ironic to now hear them advocating a new area of foreign borrowing.
The Fine Gael motion seems to ignore the need for a long-term development plan or strategy for Irish agriculture. The motion correctly notes that many farmers are currently facing serious difficulties but it fails to acknowledge that many farmers had one of their best years ever last year. Agriculture will always be subject to some extent to cycles and income has to be averaged out over a number of years to give a meaningful picture.
The motion also fails to acknowledge that not all farmers have the same problems and that aid for agriculture has to be targeted towards those farmers who most need it and who will benefit most from it. The Fine Gael motion and particularly the section relating to the low interest rate loans for beef production would be of most benefit to the largest and most profitable producers.
While we would not necessarily endorse some parts of the Labour Party amendment the general thrust of it does acknowledge the need for longer-term structural changes in Irish agriculture. Therefore, we will be supporting the amendment.
One recent development of particular interest was the establishment of the new farming organisation, the United Farmers Association. The establishment of the new body clearly reflects the level of dissatisfaction among the farming community with the existing farm bodies. We welcome the establishment of the new body and wish it well. I am sure that there will be policy areas on which we will disagree but I hope that the new body will have as a priority the establishment of good relations and co-operation between farmers and non-farmers. I hope they will recognise that every citizen has an interest in seeing more effective and efficient use made of our land.
One of the demands of the new organisation is for the introduction of a two-tier pricing system for agricultural produce. This is a reasonable demand, especially as so much taxpayers money both at national and EC level, is being spent on price support. It has been estimated that as much as 80 per cent of all price support spent on farming goes to the top 20 per cent income bracket. This is clearly not justifiable and the introduction of a two-tier pricing system would ensure that public money would go to those who need it most. A long time ago somebody in my county said that it is the producer and not the product that should be subsidised. If that had been done we might have a different situation in agriculture today.
The dairy sector has been crucial to Irish agriculture and will continue to be of major importance. The value of our dairy exports amounted to almost one quarter of our total food exports in 1988, the last full year for which figures are available. The total value of food exports in that year amounted to roughly one quarter of the value of total exports — £2,899 million out of a total of £12,300 million.
Ireland's share of total EC milk output is only 5.4 per cent of total output and our economy is more dependent on milk than any other EC member country. Ireland is naturally suited to dairying. We have a mild climate and soil that is capable of growing good grass over a long season and the sun does not burn it up in the summer months. More than 80 per cent of usable agricultural land is under meadow and pasture. More than 70 per cent of all dairy products manufactured here are exported.
Ireland's special reliance on milk means that we should receive treatment from the EC and take that fact of life into consideration. Special consideration should be given to two areas. We should be allowed a higher milk quota and get financial assistance to help us with the problem of winter feeding. Winter feed would even out the erratic nature of milk and beef supplies to factories and make possible the winning of markets for a much wider variety of food products.
The compensation is unlikely to be paid by processors because in the one area where at present a steady 12 months supply is guaranteed, in the domestic liquid-milk market, the price per gallon paid to farmers is being cut, or atempts are being made to cut it. The milk quota system has been eased a little by Brussels allowing an additional 32 million gallons to be added to the Irish quota. Out of the extra 32 million gallons, 11 million gallons has been allocated to small farmers and producers with a quota of less than 12,800. Farmers have already applied for the extra quota. It is believed that individual applicants will get between 400-500 gallons and that this can be backdated to April 1989. The penalty for overproduction is severe, £1.10 per gallon. The penalty for 1990, this market year, will be increased to £1.27 per gallon.
The IFA claim that their policy in relation to milk quotas is to allow small farmers first bid for any milk quotas that come on the market, but it requires money to avail of this offer. This may be difficult to raise, especially as interest rates are again on the up and up. Only one-third of the additional milk quotas recently allocated by Brussels went to small farmers. It is because of the importance of the inclusion of disadvantaged areas to the people who depend on the extra grants that will come from the EC that I appeal to the Minister to proceed with all haste to have approval granted.
In the public mind, farming means the EC, the Common Agricultural Policy and milk quotas. Farming, and the General Agreement on Tariffs and Trade — GATT — is a new development to many people. When the General Agreement on Tariffs and Trade come into being in 1948, it was intended to provide a set of rules to bring some order into the marketplace. All the member countries of the EC and others — in all 96 governments — are parties to this agreement. This accounts for 90 per cent of world trade. GATT's professed aim is to liberalise world trade. The depression of the thirties, a time when home markets were protected by high tariff barriers, still haunts many countries and many economists. Ireland followed the thirties' economic policies into the sixties.
GATT rounds of talks were at first, from 1948, directed towards liberalising industrial trade but in 1986 it was decided to include agriculture. This was agreed at a conference of trade Ministers who met in Uruguay in September 1986. They laid down an agreed plan, an agreed target, to reach agreement on agriculture by the end of 1990. The total period of this negotiation is known as the Uruguay round.
Ministers taking part in the Uruguay round see CAP as the obstacle to liberalising agricultural trade and as a matter of unfair competition. Many countries, other than those in the EC, have special measures by which their agriculture is aided. All these matters are now on the table and there is general agreement that they must be resolved by the end of 1990. Irish farmers would lose heavily if agricultural trade was fully liberalised.
The fact is that GATT controls 90 per cent of world trade and 96 countries are known as its contracting parties. With a further 28 countries applying its rules the talks must be taken extremely seriously. The basis of GATT — a principle now to be applied to agriculture — is best expressed in these words, "no country participating in GATT is to give special trading advantages to another or to discriminate against it; all are on an equal basis and all share the benefits of any moves towards lower trade barriers".
GATT's ultimate objective is expressed in the above statement but, for the present, they do allow some exceptions, regional trading arrangements, and developing countries. Even where exceptions are admitted the special measures allowed are of a strictly limited character.
Where protection is allowed to domestic industry it must be in the form of a customs tariff and not through other measures, for example, import quotas. This measure must be agreed and is then binding on members of GATT. Countries can also seek a derogation from particular GATT obligations and emergency action if, for example, imports are putting domestic industry out of action on an alarming scale.
GATT allows us to enter into agreements that are closer than the general rules which govern relations between the GATT contracting parties.
GATT has had, so far, much less impact on agriculture than in other areas. Agricultural protection, although customs barriers have been reduced, has actually increased in other forms during the 40 years of GATT's existence. GATT was in being before the EC was established but the EC was allowed to protect its market against low-priced imports of such products as cereals, beef and dairy produce. The protection took the form of a variable levy system. The EC in exchange for being allowed to protect its market in relation to cereals, beef and dairy produce agreed to bind itself to low or zero import duties on products like vegetable oils, proteins and cereal substitutes.
When this agreement was made, the imports of the products just named was of fairly limited volume, but the volume has greatly increased in recent years as oil industry spin-off products, such as gluten, come in as cereal substitutes or for cheap feed, replaces cereals. This problem needs to be discussed in the present GATT negotiations because of the serious problems faced by cereal producers. Cheap feed leads to cheap livestock production and has led to a beef mountain.
Few, if any, farmers can see any virtue in a return to the pre-quota system of unrestricted production of milk and the accumulation of its manufactured products in storage. Storage costs money. The main difference between the EC and other GATT countries is in relation to subsidies. The USA, and a group of food exporting countries outside the EC, called the Cairns group, and the EC countries are in disagreement on supports for agriculture. The USA proposes that all, or almost all, subsidies and supports for agriculture be phased out or drastically reduced in the next ten years. All levies and quotas, the existing supports, should be translated into a tariff equivalent and, they say, this could then be negotiated downwards or eliminated over a period. Export subsidies, they propose, should be phased out over the next five years.
A number of decisions were taken in 1989. The Brussels Summit in 1988 laid down the financial guidelines within which the market and the price side of CAP affecting the rural and agricultural world would, in future, operate. This applied to the FEOGA guarantee fund up to the year 1992. It laid down production limits for major farm products.
The number of dairy cows always greatly exceeded the number of beef cows and the numbers in the dairy herd, until recent years, have remained fairly steady. The beef cow herd numbers have experienced much more movement. In the years just before entry to the EC — when entry was clearly on the cards — the beef cow herd grew by 16.3 per cent in 1971, 8.9 per cent in 1972, 32.9 per cent in 1973 and 12.4 per cent in 1974. Between 1974 and 1984 the number of cows in the beef herd declined steadily. In 1974 beef cow numbers totalled 732,000. The number fell to 421,000 in 1983, the lowest total since 1970, at 387,000 head. Since 1983 numbers have fluctuated but mostly in an upward direction. In 1989 the total had increased to 562,000 head.
The beef industry export about 80 per cent of what they produce and our income from beef exports in 1988 was £716,874,000 million. The importance of the beef industry to farming is shown in one survey which said that 48 per cent of all farms are engaged in some way in dry stock production.
The picture of the beef industry last year is rather mixed. Net disposals of cattle and calves were estimated to be about 1.5 million head in 1989 a decrease of 10.5 per cent on 1988 and exports of live cattle fell by 20 per cent in 1989. At 170,000 head this was just over half the average level of live exports in 1985-1986. It is the lowest level of live exports since we joined the EC.
The slaughtering of cattle at meat export premises — for the second consecutive year — was 8 per cent lower than the previous year. The 1989 export slaughterings were estimated at 1.2 million head, 103,000 head fewer than in 1988. Slaughtering for the domestic market was 4 per cent lower than in 1988.
In 1989, 8,000 fat and breeding cattle were imported. The output of cattle and calves is estimated at 1,784 million head. This amounts to a 2 per cent increase on the 1988 figure of 1,749 million.
Since the foundation of the State, agricultural policy has been preoccupied with maximising the incomes received by farmers. This is understandable but it also reflects a tendency to see agriculture as an industry in its own right, rather than simply the first stage of an integrated sequence combined with processing and marketing.
Seen in this way, the primary objective of Government policy should be to establish the productive practices among farmers, which are most conducive to effective processing and marketing. For example, the Irish dairy industry currently is characterised by a massive glut of milk during the summer months. It requires a high level of processing capacity to handle this glut, with the result that much of the plant lies idle for the rest of the year. This imposes heavy costs on the processing sector. Lack of continuity of supply during the year also means that the processing sector cannot diversify into other consumer products with short shelf life, such as soft cheeses. Similarly, Irish farmers seem unable to grasp the importance of properly graded and presented produce, which is essential if reliable and dependable long term market outlets are to be secured.
What is required is an integrated and comprehensive development plan for agricultural production, processing and marketing whose central objective would be to maximise the overall contribution of the sector to the economy in terms of income generated and employment created.
The immediate aim should be a policy designed to maximise usable output from our national land resource, in order to provide the materials for an expanded processing sector. In the case of small farms, this requires a programme of consolidation of holdings, in order to create new farm units capable of providing a family with a reasonable standard of living by working these units alone. It should be noted that research has shown that medium sized units of this kind tend to be the most efficient farms in Ireland.
What we believe is needed is the establishment of a farm and food development authority to formulate and implement a comprehensive and integrated development plan covering agricultural production, marketing and processing. The authority would achieve this by including all relevant organisations, agencies and groups within their planning ambit. They should be a statutory agency on the lines of the IDA, located outside the Central Civil Service structure.
To summarise, The Workers' Party believe that: (1) the primary function of the agricultural sector should be to provide food of adequate quality in sufficient and regular supply to consumers, and at reasonable costs; (2) agricultural producers should receive a reasonable income from their produce; (3) agriculture should make the maximum possible contribution to the national economy in the form of optimum productivity at farm level applied to well developed linkages with the rest of the economy, involving both support industries and services and downstream processing and marketing. The present situation in agriculture leaves much to be desired in these areas; (4) agricultural production and processing should be conducted in such a way as to minimise damage to the natural environment; (5) in the interest of maximum efficiency, agricultural producers should be adequately trained, and should have at their disposal adequate resources — including land resources — to allow them to generate an adequate income from farming alone; (6) an effective land use policy — allied to effective employment and welfare policies outside agriculture — is required in order to encourage those with insufficient land resources to make their land available — through sale or leasing — to others who can make better use of it; and (7) it is desirable that farmers should control to the maximum extent possible the downstream processing marketing of their produce, both in their own interest and in order to secure Irish control of this sector of vital national importance. State policy in relation to agriculture should vigorously promote this objective.
The Workers' Party favour a fundamental reform of the Common Agricultural Policy which — as it has worked in the past — has fostered the production of wasteful food surpluses while artificially raising food prices to unnecessarily high levels, has distorted world food prices with negative consequences for producers in developing countries and has been inequitable in its distributional effects by giving the greatest rewards to the biggest producers.
The Workers' Party favour a major transfer of funding from the CAP to the EC Structural Funds as offering a more equitable and beneficial — in terms of its long term development potential — method of securing funding for Ireland from the EC. As the proportion of CAP funding going to Mediterranean products is likely to rise in future years, and as Ireland obtains a higher proportion of structural rather than CAP funding, such a transfer is likely to work to Ireland's overall advantage. As major cutbacks in CAP funding are inevitable in any case, The Workers' Party favour seeking an early and orderly agreement on how this transfer should be effected.
The Workers' Party are confident that, given Ireland's natural advantages in key agricultural areas, an efficient Irish farming sector can prosper in the less interventionist market environment which is likely to prevail in the EC in the coming years.
The Workers' Party favour the establishment of an agricultural development authority, an ADA, akin to the IDA, to oversee the formulation and implementation of a vigorous and comprehensive agricultural policy in Ireland. This authority would offer grants and other incentives in return for achievement of agreed performance targets and would be free from day to day political interference. Their major functions would be to formulate a national land use plan — including utilisation of peatlands, afforestation and amenity areas — with appropriate production targets at national and local level; to formulate and implement an effective land policy; to integrate research and practice and to promote effective integration of production, processing and marketing.