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Dáil Éireann debate -
Wednesday, 27 Jun 1990

Adjournment Debate. - Sheep Industry.

With the permission of the Chair I should like to share my time with Deputy McCormack. I should like to express my sincere thanks to the Chair for permitting me to raise this matter on the Adjournment. I am anxious to stress the serious problems facing the sheep industry and I should like to give some background information regarding that industry. The number of ewes here increased from 1.6 million in 1980 to 4.2 million in 1989, a rise of 160 per cent. However, the industry is now bordering on collapse and immediate action must be taken to avoid a serious disruption of it. Farmers were encouraged by the Department, the Minister and the advisory service to get involved in sheep breeding as an alternative line of farming. They borrowed money to erect special units and fencing and purchased modern equipment to help them cope in the years ahead.

The marketplace is completely overloaded with sheep meat. We have reached a peak in Ireland and Great Britain. We are the main suppliers to the French market accounting for 30 per cent of imports to that market. Almost 90 per cent of our exports of sheep meat goes to the French market. The stage has been reached where sheep meat is being dumped on the French market and I suggest that the EC prevent dumping on the only market that is available to us. The EC self-sufficiency in sheep meat currently stands at about 85 per cent and there should be no reason for a collapse in the price of that product. In 1981 the cost per ewe per annum was £11 while the gross margin in the same year was £50. In 1988 the cost per ewe was £18 and the gross margin was £63. In 1990 the cost per ewe is £19.50 and while it is impossible to say what the gross margin will be, it is estimated that it will be about £38. I have no doubt that the Minister of State will take into consideration fixed costs and borrowings for housing and other facilities. In my view the net margins in many cases will be in the region of £10 per ewe and in the case of over-borrowings it will be nil or a loss.

In 1981 40 kilo lambs sold in the third week of June in Enniscorthy fetched between £48.80 and £52 and in 1987 in the third week in June at the mart in Enniscorthy 40 kilo lambs were sold at between £44 and £47. In the third week in June this year a 40 kilo lamb fetched between £34.50 and £37. I understand there was a further reduction of £2 in the price last week. Some of the lambs were sold at the low price of £31.

The price of wool has fallen from 80p per pound three years ago to approximately 27p or 30p per pound this year. I appeal to the Minister of State to ensure that steps will be taken to rectify this imbalance. In this regard we must immediately suspend New Zealand imports to the EC for three months to allow the market to absorb the present over-supply. New Zealand are allowed to export 200,000 tonnes of sheep meat to the EC. I accept that this is a GATT agreement which cannot be broken but, at certain times of the year, we should seek derogation from this rule. The EC is merely a dumping ground for New Zealand and the only way to rectify the situation is to suspend the importation of lamb for about three months. There should be an early payment of premiums for ewes. The Department is computerised and I appeal to the Minister of State to pay the premiums now instead of over the next four to five weeks. Some of these premiums will not be paid until next December, which will cause difficulty in relation to cash flow for farmers.

We should also put the APS scheme into operation. If the scheme is not put into operation we just fill up the cold rooms which have to be emptied at a later stage with the resultant flooding of the market.

A suggestion was made that we should give aid to Iran on humanitarian grounds. It would be a very good idea to send them sheepmeat as they are short of food. The Minister should also ensure that the ewe premium for the 1991 season will compensate for the losses this year and I understand that there is provision in the regulations for this. If the marketplace deteriorates further, adequate provision will not be made for winter feed resulting in high mortality in the ewe of flock. Action must be taken in this regard.

I appeal to factory owners not to take advantage of the present situation, to share profits with the producers and to remember that they have a great interest in the sheep industry. Sharing the profits and cushioning the financial losses to the producer will benefit everyone.

I should like to ask the Minister — through the Minister of State — whether he has any concept of the crisis facing farmers, particularly the small family farm? In County Galway — in my constituency — small and medium sized farmers depend on sheep and lamb production. My county is the most intensive sheep producing county in the country and the income of the farmers involved has been completely eroded this year. It would be a slight help if the 1989 headage payment was made because lamb prices have dropped to 80p per kilo, in other words £25 per head less than this time last year. What other section of the community would put up with this?

In Athenry mart last Monday, ewes were sold at £17 per head. That was a despairing act by the farmers and a vote of no confidence in the future of the sheep industry and lamb production. Those farmers are being forced to abandon their sheep enterprise and, as lowland sheep are making so little, what chance will mountain sheep producers have with the opening season in Maam Cross on Saturday?They will get practically nothing for their lambs this year. Will the Minister stand idly by while despair and frustration build up in the farming community? Will he also stand idly by while rural areas are depopulated and the whole fabric of society is irreversibly wiped out? In the meantime, three factories, Goodman, Kepak and Halal, have formed a cartel which is controlling the price of sheep. Farmer producer groups are forced to supply lambs to those factories at give away prices. Shame on the Minister and the Government for allowing this. Farmers and their families are being devastated but, if they apply for the dole or medical card, they are refused on the grounds that their income is over the eligibility level. The guidelines in this regard were fixed in April 1989 and they were based on the farm income of 1988.

The Deputy is straying from the question which I granted permission to Deputy D'Arcy to raise.

I am sorry, I thought it was relevant. There is a great worry and frustration among farmers and there will be a revolution if things do not improve. Why are the IFA so quiet? Where is Joe Rea now? A new farmers' association has been born because of despair in regard to the future——

The Deputy will now bring his remarks to a close.

Farmers are being forced to protest. Let the Minister and the Government be warned before it is too late to redress the situation.

I am glad to have the opportunity to reply to the motion put down by Deputy D'Arcy regarding the difficulties facing the sheepmeat sector.

Over the past six years sheep production has proven to be a very profitable enterprise as evidenced by the enormous expansion in sheep numbers which, on the basis of the latest available statistics, are at present at a level of 7.7 million head, an increase of approximately 1.1 million head over the previous year. Our current breeding flock stands at 4.5 million head, an increase of 0.5 million head on the previous year. This expansion in numbers was helped by obtaining a strong foothold in the valuable French market, the main export market for sheepmeat, and by assured Community support arrangements by way of the ewe premium and headage payments. In 1989 alone, 48,000 producers were in receipt of some £70 million in direct payments under the ewe premium scheme and some 26,000 producers received £14 million under the sheep headage scheme.

The current difficult market situation in relation to sheepmeat 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 sterlingvis-á-vis the French franc, the lower level of clawback on British lamb exports and increased slaughterings both here and in Britain leading to increased supplies on the market. The cumulative export slaughtering figure for Ireland for this year to the week ending 16 June is up 31 per cent on 1989 with the figure for May showing a 43 per cent increase on the same month last year.

The price of wool and skins fluctuates from time to time but is dictated by supply and demand on world markets. The international wool and skin prices are unduly low at present but good returns were achieved in 1988 and in most of 1989.

The 1990 ewe premium will, however, help to compensate Irish producers for income loss sustained this year. Indeed in 1990, producers will receive a once-off additional payment arising from changes in payment procedures. As a result of these changes the following payments per eligible ewe will begin in July: the advance of £6.53 which is the first instalment (30 per cent) of the 1990 premium for all areas; the £8.25 balance of the 1989 premium in disadvantaged areas; and the full 1989 premium of £17.75 in all other areas. Payment of a further advance of 30 per cent of the 1990 premium will commence in December with the balance to be paid in March 1991.

The estimated total benefit of the ewe premium to Irish producers in 1990 will amount to some £130 million as compared to a normal annual figure of £70 million to £80 million. Headage payments will also amount to £14 million. In addition, as part of the EC prices package, an additional payment of about £3.40 per ewe will be paid from 1991 onwards for all eligible ewes to beneficiaries in disadvantaged areas.

These substantial payments will be of considerable assistance to producers especially in the context of cash flow problems as a result of the current difficult market situation.

The common organisation of the market for the 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 provides a safety mechanism 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. It is vital that we continue to make every effort to improve product quality in the years ahead if we are to remain competitive and increase our share of the premium export markets in Europe. In this connection the Department, in co-operation with the Pedigree Sheep Breed Societies, are continuing to expand the "lean meat improvement programme" in pedigree flocks to help improve carcase quality.

A CBF-sponsored 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. Indications of the response to this campaign are very positive with consumption of lamb in Ireland showing a considerable increase.

All of these measures should be of considerable assistance in providing stability in the lamb market both now and in the future.

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