The formal announcement last night by the Commission of its proposals for the reform of the Common Agricultural Policy makes this debate very timely. After a series of regrettable leaks which have given rise to immediate and predictable reactions the stage is now set for the beginning of considered analysis and painstaking negotiations. It will be a long and difficult road before the conclusion of negotiations, a conclusion which will require significant differences from the initial proposals——
Agriculture Industry: Statements.
Will the House please come to order?
It will be a long and difficult road before the conclusion of negotiations, a conclusion which will require significant differences from the initial proposals if it is to be acceptable to Ireland, and not just to our farmers, because of the unique importance of the whole agricultural sector to our overall economy.
What about copies of the Minister's speech?
Is there any possibility that the Minister will obtain scripts for us?
The Minister has not had a good hearing up to now, let us be more orderly.
I understand copies will be here shortly.
Has something gone wrong with the printing press.
I hope I will be allowed the injury time I will need at the end of this match, even though, in any event, we will beat them in normal time.
It is because of the importance of the agricultural sector to our economy that the Government have pledged to the social partners in the Programme for Economic and Social Progress the fullest consultations at all stages of the negotiations that will begin at the Council of Ministers next week. Concessions must, of course, be fought for in negotiations but simultaneously action must be taken which is entirely within our capacity to successfully meet the challenge of a new agricultural order in Europe and worldwide.
Undoubtedly, we stand at a crossroads. The agriculture and food sector has seen expansion and contraction, rising and falling incomes in periodic movements over the last two decades — long gone are the heady days of the seventies when commodity price increases were there for the asking.
These movements have been influenced by internal and external economic and market factors. But all the time there has been the moderating element provided by the market based support system of the Common Agricultural Policy. Now, as a result of a cumulation of domestic and international factors, we are faced with a fundamental overhaul of that policy as set out in Commission proposals adopted yesterday. That overhaul could have the most far reaching consequences, not just for farmers and their families but for all who lived and work on this island.
Before we consider the detail of what is being proposed, and its likely consequences, there are a number of points which need to be emphasised. First, these are proposals not decisions. As I said, long and difficult negotiations will be necessary before we reach decision stage. Secondly, there have been significant changes over the past ten years in the way in which the CAP is organised and managed and this drift, with adverse consequences for Ireland, would be set to continue if there were no reform decisions. Thirdly, the mechanisms of the CAP are not written in stone. What is important is that the principles on which it is based are not sacrificed and that they are given effective implementation.
The Commission indicate that these proposals respect these principles. Even if that were the case what is at issue is whether the new or revised mechanisms effectively implement them. It is on this crucial question that the Irish response must be decided. I will return to this critical point in the course of considering the Commission proposals.
While the pressure for reform was given an immediate stimulus by the growing budgetary and market difficulties in several sectors during 1990, the need for reform had been evident for a considerable time. It has been obvious for some years at least that a Community policy brought into being at a time when the European Community needed to increase its food production to feed its people was not the most effective and efficient at a time of surplus. Of course, the fact that the Community has moved from a position of deficits in the sixties to one of surpluses in so many product areas today is confirmation of the effectiveness of the Common Agricultural Policy in meeting the main objectives set by the founders of the Community over 30 years ago. The CAP has been so successful as to have become — to some degree at least — the architect of the problem now facing it. Internal contradictions involving, in particular, different arrangements for cereals and competing products have added another major dimension to the problem. At the same time, growing concerns about the need for better balance between larger and smaller Producers in the distribution of FEOGA support and increasing emphasis on food quality and environmental aspects have given a further impetus to the reform platform. International demands, both through the GATT negotiations and requests from Central and Eastern European countries for increased access to Community markets are further dimensions to be taken into account.
The Commission's broad approach to the reform process was set out in its reflections paper presented to the February Agriculture Council. The Commission indicated that it based its approach on a number of key objectives, foremost of which would be the retention of sufficient numbers of farmers on the land. Farmers would in future be seen as having dual functions of producing food and protecting the environment in the context of rural development. Another key objective would be to control production to the degree necessary to bring markets back into balance. While the fundamental principles of the Common Agricultural Policy would be retained, the new approach would seek to ensure a different distribution of support while taking account of the difficult situations of certain categories of producers and regions. In practice, this would mean a switch of support away from a policy of mainly price guarantees to one with greater emphasis on direct payments targeted to a greater degree to those in most need and the modulation of support arrangements and quantitative restrictions in favour of smaller-scale producers and disadvantaged regions. In the Council, all Ministers accepted that the Common Agricultural Policy needed to be reformed although they differed on how this should be achieved. There was an acceptance that current support arrangements, which were leading to higher budgetary costs and generating huge intervention stocks, in particular in sectors such as cereals, beef, milk, wine and tobacco, were not sustainable while incomes were declining. In the light of the views expressed, the Commissioner undertook to consider further how to frame the reform proposals.
This approach is set out in detail in the proposals which have just now become available. In general, their thrust is broadly similar to that already signalled by Commissioner MacSharry earlier this year. The Commission is proposing price reductions in many sectors together with some restriction on output and a significant package of structural measures. The other element in the proposal is a series of compensatory measures biased in favour of small to medium sized producers.
On a point of order, may we have a copy of the script? This is very bad practice.
Specifically, the Commission is proposing a 35 per cent reduction in support prices for cereals over three years. Producers would receive full compensation for the price reductions through a regionalised acreage premium but entitlement to such compensation would, in the case of producers other than small scale producers, be conditional on participation in a set aside scheme. Producers with more than 50 hectares of cereals would, however, receive set aside payments only in respect of a maximum of 7.5 hectares. These measures would replace the current stabiliser arrangements and the co-responsibility levy would be withdrawn. The Commission is also proposing reform measures for the oilseeds and protein sectors to ensure coherence within the arable crops sectors.
For the beef and milk sectors, support prices would be reduced by 15 per cent and 10 per cent, respectively, on a phased basis in part to reflect lower concentrate feed costs arising from lower cereal prices but also to take account of the market situations. For the beef sector, current rates of premia payable in the case of male animals and suckler cows would be increased substantially and would be limited to the first 90 livestock units and to extensive producers, defined as those with maximum stocking rates of 1.4 livestock units per hectare in the disadvantaged areas and two livestock units per hectare elsewhere. In addition, a new measure would be introduced to encourage the early slaughter of male calves from dairy herds and further measures will be proposed to combat the illegal use of prohibited substances. For milk producers, a premium scheme would be introduced providing a premium on the first 40 cows in every herd in the case of extensive producers. For both beef and milk, promotion programmes would be introduced with financing from producers, the industry and the Community.
In addition to the price cuts in the milk sector, the Commission is also proposing further compensated cuts in national quotas. Part of the cuts in individual quotas would be redistributed to priority categories while a voluntary cessation scheme would be introduced to avoid or moderate compulsory quota cuts for small and medium sized producers with quotas of less than 42,725 gallons. In addition, permanent buy-up arrangements would operate to provide for redistribution, restructuring or adjustment of quotas depending on the market situations and the co-responsibility levy would be withdrawn. In an innovative measure, payment of compensation and cessation premia would be by way of guaranteed bonds.
For sheepmeat, the Commission is proposing to limit eligibility for premia to 1990 levels with lower ceilings on the numbers of animals in flocks eligible for premia.
Reform measures are also signalled for some other sectors such as tobacco and wine while the support arrangements for other products will be reviewed in the light of the outcome of reforms to the major sectors.
To complement the reforms, the Commission is proposing a series of measures in the agri-environment and structural areas. The measures would be negotiated with the member states to take account of local and regional conditions. The type of measures envisaged include compensation for extensification of production, environmentally friendly farming and long-term set aside of land. In addition, there would be a more attractive early retirement scheme and increased and extended incentives for afforestation.
Let the briars and the rushes take over.
As I have already indicated, the full details of the Commission's proposals have only just been released and these will, of course, have to be fully assessed before we can respond in a comprehensive way to the approach involved. There have of course, already been some discussions at the Council on the need for Common Agricultural Policy reform. In those discussions, while accepting the need for reform, I have made Ireland's position very clear. In particular, I have stressed the important role of agriculture as the dynamo in Ireland's total economy and have left my colleagues in no doubt about my requirement that the reform must respect Ireland's vital interests and afford the fullest safeguards for the future of all categories of family farmers. I have cautioned against adjustments which go beyond the strict needs of market and budgetary requirements and have insisted that the revised Common Agricultural Policy must continue to respect the provisions of Article 39 of the Rome Treaty.
I have also pointed to the need for balance in the adoption of reform measures between the very legitimate expectations of smaller scale producers, that agriculture will continue to afford them the opportunity of a livelihood and the requirements of the more commercial element in our agriculture — an element which is vital to the maintenance of a competitive and vibrant food industry. As in the GATT negotiations, I have insisted that adequate Community funded compensation be made available to offset the adverse effects for producers and regions of support reductions flowing from the Common Agricultural Policy reorientation.
The importance of securing a satisfactory outcome for Ireland on Common Agricultural Policy reform has been to the forefront of Government thinking over several months. This was given concrete recognition in the Programme for Economic and Social Progress where the Government committed themselves to keeping the Common Agricultural Policy reorientation under the closest review and to using all their influence with the Commission and our Community partners to secure our interests. I have been actively following through on this.
I have, of course, had regular contact with the Commissioner and, at either ministerial or senior official level, we have met almost all other members states over the past six months to underline the Government's concerns about the forthcoming agricultural reforms and to set out unambiguously Ireland's requirements. I believe that as a result of these meetings there is now a greater appreciation of our needs in the various Community capitals. I expect that this will be very helpful to our cause as the negotiations proceed. Furthermore, now that the details of the proposed reform have become available we will intensify our efforts in this regard.
The Government will continue to do all that is necessary to keep our Community partners fully appraised of all our concerns. The Dáil can be assured that the Government are fully conscious of all the implications of Common Agricultural Policy reform and of the vital necessity to the entire economy that a balanced and satisfactory outcome can be secured. The Taoiseach underlined this at the recent summit.
While Ireland's general approach to Common Agricultural Policy reform has been spelled out since the debate commenced, it is not possible, as I have already mentioned, to adopt a definitive position until all the details of the proposals have been fully analysed and their consequences assessed. This examination will include not only consultations with relevant organisations on the approach to be adopted throughout the negotiations as provided for in the Programme for Economic and Social Progress, but it will also make use of the most appropriate research and economic analysis such as recent work by the ESRI. Before any decisions are taken or positions adopted, the Government will be honouring their commitment — again in the Programme for Economic and Social Progress— to present the organisations involved with an assessment of the consequences of the reform proposals for Ireland. This work is already under way in my Department.
Nevertheless, it is clear at this stage that further cuts in milk quotas and substantial price reductions create major difficulties for us, especially as the effects of the price cuts fall unevenly on different regions and different types of production. With the exception of tobacco, the reforms only affect the cereals and livestock sectors. These sectors are, of course, at the heart of Irish agriculture.
Within the livestock sector the comparative positions of red and white meat producers would be disturbed. There is an imbalance in the treatment of the compensation issue between the different sectors; livestock producers relying on the less intensive grass based production would be inadequately compensated by comparison with more intensive cereals based production. This surely conflicts with one of the declared aims of the reorientation which is to give an impetus to extensive, more environment friendly production systems.
There seems to be a lack of appreciation in the proposals of the vital part played by agriculture in the entire economies of certain member states and of the damaging consequences of particular measures on the general level of economic activity in such countries, including employment levels and the balance of payments. Of course, the new approach will also be more costly in budgetary terms, at least in the medium term.
There are, of course, positive aspects in the proposals. Substantial compensation is provided, especially for small and medium-scale extensive producers who constitute the majority of farmers in Ireland. There is at least an acknowledgment that we should be concerned with support for family, rather than factory farming — although Ireland might not fully agree with the way in which it is proposed to do this. The socio-structural package has a number of attractive elements in it. There is a promise of a greater concentration on rural development policies arising out of the mid-term review of the operation of the Structural Funds.
We are not necessarily opposed to the Commission's intentions. We have, however, major difficulty with the details. These will, of course, be the substance of the negotiations and it is impossible even to guess at this stage what the final outcome will be. It is, however, possible to be clear about the elements which will need to be present for the outcome to be broadly acceptable to Ireland. We will need to be satisfied that the mechanisms finally agreed effectively implement the underlying principles of the CAP; adequate financial resources are guaranteed both immediately and in the longer term to underpin the policy; adequate support is given to ensure that the vital commercial element in our agriculture remains viable; support for extensive production takes realistic account of what is required to maintain the economic basis of modern family farms; compensatory elements do not discriminate against grass based livestock production; the needs of economies critically dependent on agriculture are properly met; and any changes in the CAP are dovetailed with, and given full credit in, the finalisation of the GATT negotiations.
The last mentioned point is critically important. We must ensure that the GATT negotiations take place in parallel with the negotiations on the CAP reform package. Any agreement reached in one must take account of what we are to agree in the other. Otherwise we run the risk of losing out on two fronts.
The GATT negotiations are again returning to centre stage. It is certain that another major effort to bring the round to an early conclusion is about to get under way. The House will remember that the Community and the participants have been committed since 1986 to agree in the Uruguay Round on a more market orientated agriculture trade policy through substantial and progressive reductions in support. The Heysel meeting in December broke down mainly because the US and some others could not agree with the Community on the nature and extent of these reductions, I might say, because we could not agree with the United States on the nature of their demands.
Following the resumption of the negotiations in February and the US Congress agreeing to extend the fast track negotiating procedure, the negotiations are likely to take off again over the next few months in expectation of a decision before the end of the year.
Major difficulties, however, remain in the GATT negotiations. The US, despite occasional indications of increased flexibility, have not changed substantially from the position they adopted in the December meeting and that position is broadly supported by the Cairns Group of agricultural exporting countries, including Australia, New Zealand and Canada.
The Community's GATT offer, which was agreed only after long and difficult discussions last autumn, proposed a 30 per cent reduction in aggregate support for groupings of the main products by 1995-96 from the 1986 levels with a 10 per cent reduction for other products. All non-tariff Border measures would be converted into tariffs under certain conditions and the resultant tariff equivalents would then be reduced by an amount reflecting the reduction in support prices. Export supports would not be subject to any specific level of reduction but would be reduced as a result of reductions in support and protection because of certain subsidiary commitments. While some further signals were given by the Commission in the course of the Heysel discussions last December, the Community's global position remains unchanged and is essential for us.
During the discussions on the Community's offer at the Council I insisted that producers had to be compensated for losses attributable to the GATT outcome. A majority of Community Ministers also supported this stance. As a result, considerable safeguards were built into the Community's proposal. In particular, the Commission gave undertakings on complementary measures, on ensuring Community preference and a clearer commitment on safeguarding export refunds. The Commission has accepted that any future adaptations to support and arrangements that will be necessary shall take into account the difficult situation of certain categories of producers and regions and that the total level of assistance to the less favoured regions should not be reduced as a result of the implementation of the outcome of the GATT negotiations. This is particularly helpful for Ireland now that I am on the point of having 72 per cent of the country classified as less favoured.
What about——
That is a pure formality, I am glad to tell the Deputy.
(Interruptions.)
If Deputy Sheehan ever heard of an A point at Council negotiations then he would be pleased to know that this will be an A point at the next Council meeting because of the work we have done with our colleagues.
I am determined to ensure that the Community's basic position is upheld in these negotiations, as I believe are my colleagues in the Council, despite demands from some members within the Community and elsewhere for further concesions to be made. I have made my position clear on the need for the fullest involvement of the Agriculture Council in the negotiations on agriculture. It is also important that agriculture is not isolated and targeted in the GATT negotiations, as the US and the Cairns Group would like to do. The conclusions of the recent summit were very helpful in relation to this and to the continued involvement of Agriculture Ministers.
However, we should not take an entirely negative view of the Uruguay Round. There are many positive aspects to it. The achievement of a settled and liberalised environment will facilitate international trade, and not only to the benefit of our competitors. It is not just a one way street. Such an environment is preferable to a retreat into regional trading blocs which would impede trade, restrict the growth of economies and lead to ever increasing numbers of trade disputes involving retaliation and counterretaliation. Finally, the GATT negotiations offer is the only way in which we can secure agreements to have output controls operated by the other Community reciprocated by the other major producing and trading countries.
The importance of the agri-food sector to the Irish economy is unquestionable. Apart from the vital role it plays providing outlets for our agricultural products, it is the single most important element in the economy and in our external trade. The sector accounts for about £6 billion or almost one-third of our total manufacturing output. It is also a significant contributor to employment directly at manufacturing and processing level and indirectly in the distributive, catering and service trades.
For too long, however, the ability of the food industry to reach its full potential was stified by overreliance on commodity trading and market support systems. That situation will have to change. Over the past few years the Government, acting through my Department and the various agencies concerned, have been working strenuously to maximise the industry's contribution to the wellbeing of the entire country. This is being done by providing the support and encouragement, both financial and otherwise, which the industry needs to enable it to become more fully market-led; in other words, an industry which can supply food of the type of quality demanded by consumers and which can be produced and sold competitively.
The process of change is a slow and sometimes painful one and results are not always immediately obvious. I am confident, however, that provided the momentum for change, which has built up in recent years, is maintained, the food sector and all those involved in it will have a very bright future. The Government, of course, will continue to play their part. On this point I should remind the House that in the three years up to December 1990 a total of £117 million — £75.3 million in national aid and £41.7 million by way of FEOGA aid — was awarded to the agri-food industry. In addition, already this year I have announced the award of substantial further national aid to the pigmeat and dairy industries. I should also like to remind the House of the commitment given in the Programme for Economic and Social Progress to seek special funding to enable the food industry to adopt to changes in the CAP support system. That commitment will be honoured.
In all of this, we are in the main targeting value added production to move us away from reliance on intervention products. To underpin this effort in the dairy sector, I have recently announced grant aid for a major new research and development project at Moorepark into which all the key players in the dairy sector can now link.
While it is true that EC supports can mitigate prices and income problems in the short term, in the longer term the future is in marketing more of our products in premium outlets in the EC. We joined the European Community to have access as of right and not as a favour. We have been in the Community for nearly two decades and while there have been great strides, for example, in building up meat vacpac exports, much more could be done, much more must be done. A successful marketing strategy to put more Irish products on Community supermarket shelves requires funding, quality assurance and targeted promotion of the product.
That is why a year ago I encouraged CBF to prepare an industry wide strategy which would involve producers, processors and exporters, that is, all those whose contribution is essential to achieving recognition that our product was not only wholesome and met the highest health standards but ranked with the best quality the rest of Europe had to offer.
I considered that this was a priority and, despite the rigorous constraints on the public finances, the Government allocated an extra £0.25 million to CBF last autumn. This year I was very pleased to obtain a doubling of their grant-in-aid to £1.5 million. The industry, too, are making a special voluntary contribution of £1.5 million to finance the planned target of 10-15 per cent growth in beef sales to Europe in 1991. With these resources and moneys from the EC Structural Funds, CBF's income in 1991 will be over £7.5 million or double what it was two years ago.
I have already mentioned, quality. A quality product like Irish beef, produced in superb natural conditions, can realise its full benefit only with successful promotion and marketing. Government can assist, but the future rests ultimately with those in the beef sector whether producers or processors who are close to the cutting edge of the market. Quality must be built in at each stage of production and marketing. It is not an optional extra. That is why I was delighted recently to launch a quality assurance scheme for beef which aims to establish a new identity for Irish beef on continental and other markets. Its clear intention is to position Irish beef on premium markets.
It is not reflected in the prices at the marts.
CBF are providing direct market entry support for beef sales to Britain where they have planned a series of promotions in supermarkets. They will expand promotions in the five target markets — France, Germany, Italy, Netherlands and Spain and are opening an office in Spain. I have personally participated in promotion campaigns in Germany, Italy, Spain and the UK. I have been very encouraged by the response and propose to continue this work in coming weeks and months.
One thing which we cannot afford to allow is any activity which taints our reputation as a producer of good wholesome food. In this regard I would like to say something loud and clear about the illegal use of veterinary drugs for growth promotion. I have already made some strong statements on the matter. I reiterate that those involved in illegal activities can except no mercy. They will be pursued and subjected to the full rigours of the law. A number of cases are already listed for hearing. I am determined that any illegal use of these substances shall be stamped out. The confidence of consumers and the reputation of our meat industry cannot be put at risk because of the irresponsible action of a small group.
It would be unrealistic to claim that nobody will ever attempt to break the law. But what I can, and do, claim with conviction is that I and my Cabinet colleagues are fully aware of the importance of the meat industry to not only the farming community but our economy as a whole. We are prepared to take whatever measures may be appropriate to ensure it is protected and that its good reputation will not be damaged.
I have already informed this House of my intentions to introduce some further legislation to facilitate the detection of offenders and to make provision for substantially increased penalties in certain circumstances. However, I must point out that legislation and penalties alone will not deter some individuals who take a very short-term view of the profits to be gained from their illegal enterprises. We cannot guarantee that these unscrupulous individuals will not attempt to break the law, but we can make the exercise extremely difficult and highly unprofitable.
I have said before that the problem can be eliminated very quickly if the collective will is there. The representative associations of all the partners in the beef industry condemn this illegal activity. I encourage all members of these associations to follow this advice.
I would like to conclude on this issue by pointing out that, following eight months of extensive surveillance and testing, the evidence available shows the alleged levels of abuse are exaggerated. Reports emanating from Ireland have been picked up by the international media and have put pressure on the reputation of the natural, wholesome quality which our beef enjoys. I wish to assure the House that where these reports have appeared, appropriate action has been taken to counteract the allegations made. Officers of my Department serving in Irish embassies abroad have been most vigilant in this regard. In addition CBF have been fully briefed on the factual position and the measures being taken to counteract abuse in order that the necessary assurances can be given to customers. Furthermore, I am very pleased to note that, as I have already demanded in the Council, the Commission will propose a programme to give reassurance to consumers in relation to the absense of substances such as devil dust, not angel dust, hormones and other prohibited substances in meat.
This issue of quality is of critical importance to Ireland. We must be able to make full use of our natural advantages as a food producing country. Our aim must be to be perceived as the European producer of natural organic food. I will not be satisfied until the strict regulations we have introduced here and are now implementing are followed on a Community-wide basis.
While the "guarantee" side of the CAP will continue to be the principal conduit through which the Community's support for agriculture will be channelled in the future, the contribution of the Structural Funds will take on increasing importance in the years ahead. As I already mentioned, the Commission is proposing an improved financial package for a range of structural measures including early retirement, forestry, extensification and environment-friendly farming practices. These should form a useful supplement to the many measures already operating in the structural areas.
The Government have the strongest commitment to maximising Ireland's usage of the Community's structural support arrangements in ways which develop rural areas generally. The House will already be aware that in October 1988, with assistance from the EC, I launched a pilot programme for integrated rural development in a number of specially-selected areas throughout the country. The aim of this pilot programme was to promote "bottom-up" development through encouraging the communities in those areas to decide on their development priorities, to take the necessary steps to bring them to reality and be responsible for the results. The programme was a success, so much so that I have now got the approval of the Government for a nationwide rural development administrative structure in the light of the experience we gained from the operation of the pilot programme. My intention is that this structure will administer the scheme for small and Community enterprises contained in the operational programme for rural development which I announced last December.
All of the other measures proposed in this operational programme have now been implemented. In general the programme provides for diversification of agricultural production through alternative farm enterprises, including agri-tourism, for infrastructural measures such as rural roads and fishery harbours, and for assistance for training and education services for agriculture and fisheries. This has meant that in recent months I have been able to introduce new schemes of grant aid to encourage onfarm enterprises such as deer, horse and other animal production, for greyhounds, for a new nationwide agri-tourism scheme, the response to which is very encouraging indeed, for horticulture and for services in rural areas. The programme also contains support for R & D and marketings in the food industry. Teagasc has been given the role of promoting the new measures among the rural community.
Another significant development about which I am quite pleased is the Community's initiative for Rural Development known as Leader. This is a very exciting and innovative initiative which provides an opportunity for the rural community to identify a role for itself and to actively participate in its own development. The aim is to improve the development potential of rural areas by tapping local initiative across a broad range of areas and activities and by supporting the community in actively working to realise its own plans. The underlying philosophy is similar to that employed in our own pilot programme which is one of development from the "bottom-up" rather than from the "topdown". Local bodies are actively engaged at present in drawing up business plans I look forward to a whole series of exciting projects emerging from these plans.
On the disadvantaged areas, Deputies will be aware that in the Programme for Government of September 1989 commitments were given to increase headage grants, to negotiate with the EC on a maximum extension of the disadvantaged areas, to introduce an appeals system for borderline areas not included in the extension and to abolish the off-farm income restrictions from 1990. I am very happy to inform the House that all these commitments have been honoured.
As regards our extension proposals, the final stages of ratification are expected to be completed in the coming week for an extension of 1.9 million acres.
Half the farmers of the country are left out.
A rigid time limit applies to this debate. Interruptions, therefore, are not acceptable.
As regards our extension proposals the final stages of ratification are expected to be completed in the coming week for an extension of 1.9 million acres. This extension will be the largest secured by Ireland since accession and increases the percentage of our land area designated as less favoured from about 60 per cent to 72 per cent which is almost five times that secured by the then Government in 1985.
As regards reclassification, our proposals to reclassify over 1.3 million acres to more severely handicapped status and almost 300,000 acres of mountain sheep grazing land to less severely handicapped status are at present under active consideration by the technical services of the Commission and should be adopted in the fairly near future. Provision has been made to increase headage payment rates later this year and this will complete the four stage programme for the disadvantaged areas outlined in the Programme for Government. The abolition of the off farm income, the extension and reclassification of areas and the increase in rates will lift the annual cost of the headage schemes from £60 million in 1989 to £100 million this year — a very significant increase by any standards and one which will benefit the low income sectors of the farming community.
Finally, for the first time, an appeals panel has already been appointed and procedures have been introduced to enable local groups of farmers in areas included in the extension to lodge appeals this month against exclusion and to have their cases reviewed.
The farming community in Ireland have had two very difficult years for a variety of reasons. Some of these were market related and the consequences of the build up of surpluses. Some related to changes in Eastern Europe — desirable politically but with attendant trade complications. Some related to factors as diverse as the Iraq was and the BSE problem, and some to changes in the operation of the Common Agricultural Policy. Where we have been able to take mitigating action nationally — including using our influence to moderate proposals to change the Common Agricultural Policy — we have done so. But the fact remains that the environment in which we make policy and in which our farmers and processors must operate has fundamentally changed.
The agri-food sector and the Irish economy generally have benefited to a significant degree in the past from the Common Agricultural Policy arrangements. Neverthless, we cannot ignore the deficiencies in the existing policy. The nature of the support system has led to the development of production unrelated to market needs. Substantial Common Agricultural Policy expenditure has not prevented the decline in farm income or the drift from the land. We would be deluding ourselves in believing that existing arrangements can be maintained with minor amendments. There is a willingness in the Council to adjust the Common Agricultural Policy fundamentally to make it more relevant and responsive to current and forthcoming requirements, although Ministers differ in their approach to reform.
We cannot hide from the implications of the Commission proposals or of the GATT negotiations but neither should we exaggerate their consequences nor fatalistically accept what is on offer. The Community can stand firm in the GATT and reach an agreement which is reasonable and takes account of what we have done and may do in the future in regard to changes in agricultural policy. Furthermore, we can ensure that commitments on compensation are honoured.
On Common Agricultural Policy reform, nothing can be gained by imitating the ostrich. But neither should we abandon our stand that changes in the policy must respect the principles of the Common Agricultural Policy, protect family farming, not factory farming, take account of the diversity of agriculture in the Community and be based on a secure and guaranteed budgetary framework. I intend to use all the resources available to me to oppose those aspects of the proposals which do not meet these aims and which, as a result, are neither in the interests of Irish agriculture or of the Irish economy. In this, I know I have the full backing of the Government. I trust I have the support of the House. I have also the support of the industry generally and of its representative bodies. United behind a clearly identified national position we can ensure that reform of the Common Agricultural Policy works for rather than against our long-term interest.
(Interruptions.)
I would not go to the country on that speech.
The applause is noted, muted though it was.
Commissioner MacSharry's proposals must be a cause of considerable concern to all the people of this country, not just the farmers. For Ireland to lose hundreds of millions of pounds per annum will put a major strain on an already depressed economy. It is a true adage that when farming is doing well the country is booming. Conversely, when farmers come under pressure every sector of the economy feels the impact.
We cannot allow the proposals put forward in Strasbourg yesterday to become law. We in Opposition will render every assistance to the Government in fighting our country's corner. Our European alliances with the Christian Democrat parties who share in the rule of six member states will be utilised to the full by our Leader, Deputy John Bruton, myself and our MEPs in an effort to avert what would be by far the greatest setback we have suffered since our entry into the Community.
I am alarmed by the smugness and downright indifference to the seriousness of the problem by the national media. Reform of the Common Agricultural Policy is definitely a necessity but it should not be at the expense of tens of thousands of jobs here, on and off the farm, as well as the financial ruination of many of our best farmers, No European Community compensation will repay those who have borrowed and worked hard to build up farms. Irish cereal farmers will become as rare as the corncrake, if not totally extinct. Ever since the leaking of the original document in December last the media have viewed the implementation of the proposals as being inevitable. The proposals announced yesterday belie everything that has been said by the Government in this House over the last six months. The leaked document was genuine. We knew since last December what was coming. Yesterday confirmed our worst fears. On foot of the leaked document we could not get a debate in this House because the Government pretended that the document did not exist. Of course it existed, and the sooner we started to fight the better would have been our chances of winning.
It is only today that we are having a debate on something which will have a massive impact on the whole economy, on every man, woman and child in the country. The Government and the Minister have been seriously negligent in pretending that the problem did not exist and — to use the Minister's own expression of ten minutes ago — have been sticking their heads in the sand.
And the Taoiseach.
The Government in general.
You would say that, would you not?
I am talking about facts. Facts are one thing that the Minister continually evades in this House. Everything is in the first person —"I am doing this and I am doing that". The Minister is up against it now, and we will see what he can do. This is the real test.
(Interruptions.)
We have heard pious platitudes but now we want to see action and the right results.
Since the leaking of the documents in December last the media have taken the implementation of the proposals for granted. They have looked on those proposals as being of little consequence to anybody other than farmers. This is not so. The worst aspects of Commissioner MacSharry's proposals must be opposed and defeated. Commissioner MacSharry says that over 90 per cent of Irish farmers will be fully compensated. We do not have any faith in those promises. Even if the compensation was granted, and was desirable, which it is not, we do not have any faith in that promise. The 160,000, who constitute 90 per cent of the farmers here, should be able to work the land as they have done for centuries.
We do not want to see this land lying idle. These people have pride in their work and do now want to depend on hand-outs. Both the Minister in his speech here today and the Commissioner in his proposals have missed this totally relevant point. Farmers do not want to depend on hand-outs; they want to work their land.
They want to make a decent living.
When we joined the EC in 1973, farmers were promised a fair price for thier produce and they have worked hard in the interim to achive that goal. Some sections of the media have greeted these proposals with something akin to glee in the mistaken belief that they will affect only farmers, particularly large farmers. In addition Fianna Fáil MEPs in Europe day in, day out, have been promoting and supporting the proposals put forward.
A Deputy
It is disgraceful and embarrassing.
If we in Government had attempted to put any such proposals forward, which of course we would not, or attempted to get support for such proposals, we would either have been lynched or have had to leave the country. Yet Fianna Fáil MEPs——
Fianna Fáil would have been understanding; the spirit of the nation.
—— have the affrontery to actually promote the proposals which have been emanating from Brussels. The Minister is smiling as if this was a big joke.
I am smiling at Deputy Spring's remarks. Perhaps the Deputy is suggesting that Deputy Spring does not have a sense of humour.
There is nothing to laugh at.
Deputies, I will not allow interruptions. I ask Deputy Deasy to please avoid inviting interruptions. Everyone will have the opportunity of making a contribution——
A Deputy
Not everyone.
Acting Chairman
—— so let us avoid interruptions from all sides of the House.
We asked for a week's debate on this issue three months ago.
I hope the Progressive Democrats will also contribute.
They do not have any policy on farming yet.
Acting Chairman
That remark should be withdrawn. The Chair should not be commented on during a debate.
Some of the worst protagonists who fought years ago supposedly for farmers' rights are now strutting around in sheep's clothing neatly bleating and saying that the proposals are okay and everything is in order. This is despicable, dishonest and totally anti-national.
I would have no confidence in a compensatory payments system as I do not believe it would ever compensate hardworking farmers. In addition, I cannot see the EC Commission putting up the massive amount of money required to pay eight or nine million European farmers — that is the total if one takes approximately 90 per cent of the ten-11 million farmers in the Community. It is much more likely that individual Governments, particularly those of the industrialised nations, will have to subsidise their farmers with national aids, something, of course, we cannot afford.
That is the point.
This is what is going to happen. Commissioner MacSharry can talk about compensatory payments until the cows come home but the fact, is that the Commission is not going to give the money which would be necessary to compensate milk and beef farmers for the losses they will incur. These proposals are primarily an attack on beef and milk farmers. Of course, farmers who are involved in cereals can forget about it — they are supposed to be eliminated. It is also an attack on sheep farmers. Under these proposals cereal farmers can forget about it. There will be a huge reduction in income for beef and milk farmers.
The British, Germans, French and even the Italians, all major industrialised nations, will be able to provide compensation nationally to their farmers. Therefore, what we are seeing is the total dismantlement of the Common Agricultural Policy and individual countries will have to subsidise their farmers, something we cannot afford. I want to give a simple example to illustrate this point. Not alone can we not afford to subsidise farmers but according to a report issued during the past few days by the ESRI — themost reputable independent economic survey groups in Ireland — we will have to raise as much as £700 million extra in taxation by the year 1995 if these proposals go through. If we have to raise £700 million extra in taxation rate for which we were all hoping, this will mean a massive hike in rates.
The Minister referred — and he has done this numerous times lately in the Dáil — to the disadvantaged areas scheme and to the considerable increase in the most recent submission. He also pointed to the 1985 submission which was put forward when we were in Government. There is no comparison between that submission and these proposals. I want to clearly point out that there was no crisis in farming in 1985. Incomes were buoyant and we were getting annual increases of considerable dimensions from Brussels. That is not the scenario today.
This year, for the first time since we entered the Community, we suffered a major loss in the annual price package negotiations. The conservative estimate is that we lost £80 million. Last year there was a drop in farm income of 16 per cent. The projection for 1991, without any of Commissioner MacSharry's proposals being implemented, is of a further drop of 11 per cent. The severe reductions in farm income and minor cutbacks in Brussels yielding a loss of £80 million are whole new ball games. Is it any wonder that every farmer wants to be included in the disadvantaged areas scheme? Farmers are not fools. They sense, probably very correctly, that if their land is not classified as disadvantaged for either headage payments they will not be beneficiaries of compensatory payments and, even if they are, that they will be of a very minor nature. Their demands and requests to be included in the disadvantaged areas scheme is a reflection of what they think of the negotiating ability of the Minister and the Government in this instance.
The number of farmers wishing to be included in the disadvantaged areas scheme is like a stampede. I have attended meetings all over the country which have been attended by hundreds of farmers. They know that things have gone totally wrong and they want some sort of safeguard. They believe the disadvantaged areas scheme will enable them and their families to survive. These people have reason to be concerned. The Minister said today: "We are not necessarily opposed to the Commission's intentions".
That is scandalous.
Now the cat is out of the bag.
Those are the Minister's own words. He has been condemned by his own statements. This is the first clear signal that the white feather is being shown.
Read the full piece.
"We are not necessarily opposed to the Commission's intentions" are the words used by the Minister.
This is the first sign of surrender.
Acting Chairman
Order, please.
The next sentence is equally damning.
Out with the white feather.
The Deputy should not try to distort the position; he should read the full statement.
Acting Chairman
Order, please.
(Interruptions.)
That was a clear sentence which the Minister qualified in subsequent sentences.
The Minister is going nowhere fast.
Out of his own mouth the Minister has been condemned.
May be it was the computer.
Acting Chairman
Order, please.
The Commissioner, Mr. MacSharry, has repeatedly stated up to as late as yesterday that the problems facing the agricultural sector in Europe arise from the surpluses and he has blamed European Community farmers for causing this problem. He is being extremely unfair and dishonest because the surpluses being stored in the Community at present — this is disgraceful and I would not dare to be the last to deny it — correspond with the imports of agricultural produce from outside the Community, some of which have been imported legally but a huge amount of which has been imported illegally. Yet, he has made no reference to this maniputlation and distortion of the overall situation.
I am not so naive to pretend that the problem could be solved by pulling the shutters up and stopping all imports but this is not practical and the Minister would get no sympathy in Europe if he were to plug that particular line. However, the true situation and the problems being caused by imports, in particular illegal imports from countries outside the Community, should be analysed. This has not been recognised. We recognise that people in Western Europe, including ourselves, have sympathy for their colleagues in Eastern Europe, who have been oppressed for 50 years, realise that they must get some assistance and be given some concessions but the Minister should be honest and recognise, identify and state so. He should not pretend that the problem has been created within the Community itself.
An argument used widely by the media is that these proposals should be welcomed because they will mean a large drop in consumer prices. We all know that that will not happen. If the price being paid to the farmer, the producer, is reduced there will not be a corresponding reduction as far as the consumer is concerned. It may drop initially for appearances sake but within a matter of days or weeks it will go back up to what it was and eventually the price will be increased over the initial level. That is the proverbial carrot being dangled to get the public on side but we should not buy that as it will not happen. What I see very clearly is a considerable number of job losses in food processing industries as well as in allied industries, including the farm machinery sector and in industries manufacturing fertiliser sprays and all the other various commodities which are used in growing crops and producing livestock. There is a huge number of job losses in that area when money is not in circulation.
There is no compensation.
These people who invest in agriculture will not be compensated. I do not mean to make any disparaging comments about small farmers but it is the major producers who provide the bulk of what is produced in the country. If they are put out of business or if their production levels are reduced then all other industries such as farm machinery industries and the building sector which derive benefit from the construction of agricultural buildings will suffer enormously.
They are suffering.
We all know that. There has been a massive downturn in the building and the hardware sectors. All of them will tell one that this has been a disastrous year so far because people do not have money to spend due to the fall in farm incomes. They are taking a beating.
A survey carried out by the ICOS, the Irish Co-operative Society which is the umbrella organisation for co-operatives, has clearly identified that these proposals will lead to the loss of 16,000 jobs in agri-related industries and businesses, as if the position was not bad enough already.
Sixteen thousand families.
The Deputy is so right. In addition, 22,000 farmers will be put out of business as their farms will no longer be viable because of price reductions and quota cuts. Think of the effect this will have on the economy. People in the media might say that I am being unfair in criticising their coverage but they have to face up to the fact that a further 40,000 people or perhaps more will lose their jobs. Who knows exactly what the knock-on effect of these proposals will be but they will be catastrophic. I do not want to be melodramatic. I think the writing is on the wall and we all see it quite clearly.
Except the Minister.
It is obvious that Mr. MacSharry has seriously miscalculated. He has not considered what the knock-on effects will be and has not thought it through. We are the ones who are going to suffer. No other country in the Community depends on the production of milk and beef to the extent we do. Beef is ten times more important to us than it is to any other country in the Community while milk is seven times more important. We are all supposed to accept the same cuts although, relatively speaking, it is of far greater value to this country than to the other countries I have mentioned including the industralised states. One could also mention Holland and Denmark who, because they have refined, modernised and efficient systems of agriculture, can afford to take the knocks but we cannot do so.
Mr. MacSharry's plans take no cognisance of the loss of production which will lead to a major recession in the food industry which will lead to the job losses mentioned. I do not know whether the media have seen this — we have seen it — but one-third of all jobs in this country are to be found in agri-related industries which generate £6,000 millions a year. If the Minister wrecks the agri-economy he will put that many industrial and farm jobs and money in jeopardy. The loss of the economy would be beyond comprehension.
It is very obvious that price reductions, even of the order of 10 to 20 per cent, although they could be considerably greater, for milk and beef in addition to quota cuts, will make many of our farm enterprises non-viable. The collapse of the price of grain has a twofold downside for us. It makes our cereal farmers noncompetitive and eliminates our advantage of feeding our animals cheaply on grass. Agains, the significance of this has been lost on the popular press. We cannot afford to lose that advantages. We have enough physical disadvantages already, our domestic population being so small and our distance from the European market being so great, without having to suffer the loss of our one significant advantage, our ability to feed our livestock on cheap grass. The collapse of the grain price eliminates that advantages.
Agriculture is too important a segment of our economy to be treated on a par with the rest of Europe or America and we should remember that they are calling the shots. Agriculture is by far our largest industry and cannot be allowed to be destroyed by problems originating in mainland Europe and further afield. Our farming techniques are traditional and efficient and are not a major contributory factor to the problems of the Common Agricultural Policy. We should outlaw factory farming but not family farming.
However, we have invited some of our problems. Our milk co-operatives, and many of our meat plants, have depended for too long on subsidised storage and guaranteed prices, better known as intervention. These industries, in conjunction with the farming organisations, should have devised a strategy to lessen our dependence on price support systems such as intervention and export refunds.
Acting Chairman
I must ask the Deputy to conclude.
It is obvious we need greater investment to be able to produce saleable commodities. The days of putting butter and skim milk powder into intervention storage are limited, but in the interim the Government must get derogations from the EC to protect our vital national interests. The Minister for Agriculture and Food and, above all the Taoiseach, must see to it that the other Heads of State are acquainted with the gravity of our problem. It may be that the final decisions will be taken at the next or subsequent meeting of Heads of State but they will have to be decided by the Heads of State. We will have to fight every inch of the way. We will support the Government as long as they are up front and fight a fair fight, as long as they are honest with Members of this House and the farming community.
I am glad this House has the opportunity of discussing and considering the serious difficulties facing the agricultural sector. Given the interrelationship between the agricultural sector and the rest of our economy this debate is long overdue. Many Members have been seeking this debate for months. It is regrettable that the Minister, and the Government, could not find the time to come before the House to seek our co-operation and assistance in relation to the very serious difficulties facing the country. I have certain worries in relation to the future of agriculture. I must confess that those worries have not been allayed in the least by the Minister for Agriculture and Food's contribution this morning. I am sure the farming sector will feel likewise.
The Deputy would say that. I did not expect him to say otherwise.
We know, and the Minister does not, that is the difference.
One thing that is fairly obvious from the contribution of the Minister is that he has not been out in the country contesting the local elections because if the Minister had happened to be in his constituency — indeed, I believe he told people in his constituency he would not be seeing them for about 12 months because he would be going off negotiating — he would have seen the extent of rural poverty and the pressure on the farming community.
I was in my constituency.
He would have seen the vast number of cattle on the land because there is nowhere to dispose of them. He would have heard people complaining about the price of calves because they cannot sell them but there is no evidence in the Minister's script of any basic understanding of the gravity of the difficulties facing families right across the farming community, big and small, milk and beef producers.
The Minister, for months, has been evading the serious difficulties which were coming at him like a train at 90 m.p.h. in the hope that somebody would pull the brake before he would meet the train. He has had to come into the House to explain his position. The other parties have the opportunity of starting their concerns and the Minister, and the Government, will go off and negotiate. I am not sure if that is in the best interest of the farming community and the economy as a whole. We have lost valuable time. We have known what would come from the European Commission yet we have been stuck in our position which is that we will wait until we know the proposals in detail, after all Commissioner MacSharry is one of our own and he will not let us down. So much for old friends looking after their old friends. Obviously, the full impact of the Commission's proposals will hit home now that the statement has been made. However, by and large the proposals are not very different from what we anticipated over the past 12 months. I am at a loss to understand why the Minister for Agriculture and Food, and his Department, were not be in a position to state the Irish Government's position.
I do not think the farming community were expecting too much of the Minister, his junior Ministers of the Government in asking them to state clearly and categorically the position from which they would not be departing. The farming community should be able to feel they have somebody they can depend on fighting for Irish agriculture in Brussels. However, on the basis of the Minister's speech this morning I am afraid Irish farmers will go home more worried than they have been for the past 12 months. I do not believe the Minister is aware of the anxiety of farmers. Farmers would not complain in the past because they felt they were getting a fair crack of the whip but they are now up against the wall and have no options.
We are not just talking about individual farmers but about a very important sector of the Irish economy. I am not sure whether the Minister has managed to convey to his colleagues in the Council of Ministers or, indeed, that the Taoiseach, who for the past 12 months has been waltzing away from the seriousness of this problem, has conveyed to his colleagues in the EC the vital importance of agriculture to the Irish economy. It is clear from the tables that agriculture accounts for 10.3 per cent of our GDP. Greece is the only country in the European Community with a higher percentage of gross domestic product from agriculture. Are we talking about a level playing pitch? Denmark derives 4 per cent of GDP from agriculture, the Netherlands 4.1 per cent, the UK 1.7 per cent and Belgium 2.2 per cent. It is clear that the impact of European proposals on these economies will be minimal compared with the impact on the Irish economy, where 10.3 per cent of GDP is derived from agriculture. There will be a massive impact across the beef and milk producing sectors. The plans released last night do not take into account existing imbalances and the dependence of various sectors of the Irish economy on agriculture.
We are not talking only about agriculture. When agriculture is suffering and cash is not circulating in the rural economy it affects the retailing, hardware and building sectors in town and villages. The farming community do not have the cash they had two or three years ago, yet I did not detect in the Minister's speech an appreciation of the seriousness of this problem. Years ago people used to say that Ministers were out of touch. That was the glib expression used about every Minister in every situation. I am forced to wonder if the Minister and his colleagues, whom I have described in the past as able men, are fully cognisant of the problem.
I would have been far happier if the Minister had come into this House today with the backing of the Taoiseach and his colleagues and of the farming bodies, having had meetings with these groups and with the social partners, and the participants in the Programme for Government, and outlined in five or ten points the solid cornerstones of our agricultural policy. The situation is very different.
I hope there is no clear message in the Minister's departure. Gone forever, possibly.
With the help of God.
No such luck.
The Minister said that we are not necessarily opposed to the Commission's intentions but that there are major difficulties quite obvious for all to see. He said we are heading into a period of difficult negotiations, the outcome of which it is impossible even to guess. I find it hard to understand why we have not a clear strategy designed to achieve our objectives, particularly since Mr. MacSharry holds the Community agriculture portfolio. The Minister said that there are certain aspects with which we will have to be satisfied. They are important aspects and they are worth restating. These are the principles on which we will have to protect our agriculture. If we fall down on any of them, we are effectively losing the argument on behalf of Irish farming.
The Minister stated that the mechanisms finally agreed will effectively implement the underlying principles of CAP. He could have elaborated on the principles of CAP we wish to see retained. Is he totally satisfied? There has been a strong body of opinion in this country in the past few years that the benefits of CAP have not been evenly distributed. Well documented research has shown that 80 per cent of the benefits which have come from Europe have been directed to 20 per cent of the farming sector. The farming organisations should be looking for changes to ensure that there is a fairer distribution of income from Europe. It is not good enough that the biggest and strongest in 1973 continue to get bigger and stronger, while many people are getting off the land because they cannot survive and sustain their families under the present regulations.
The Minister talks about adequate financial resources to be guaranteed both immediately and in the longer term to underpin the policy. I did not detect any long-term strategy revealed by Commissioner MacSharry last night. He was talking about a quick fix. Perhaps we should declare this to be a redundancy package for farmers. The same unfortunate consequences apply to redundancy payments in agriculture as to industrial redundancies. They are fine for the first six months but after that one is in serious difficulties. I did not detect in Commissioner MacSharry's press statement yesterday or his arrogant presentation on television last night any long-term commitment to Irish farming.
The Minister talked about adequate support to ensure that the vital commercial element in our agriculture remains viable. That is gobbledegook. He should have told us what he was talking about. It is glib language which has no meaning to somebody trying to make a living on a small holding. The Minister also referred to support for extensive production taking realistic account of what is required to maintain the economic basis of the modern family farm. Again the Minister could have outlined how he intends to protect modern family farms as opposed to the big production units on the Continent which are far removed from farming as we know it. Will the Minister guarantee protection for the family farm?
He wants to ensure that compensatory elements do not discriminate against grass based livestock production. If the present proposals are accepted, grass fed beef will become totally uncompetitive. We are saying we want to produce from a clean environment the best beef in Europe but at the same time the Commission seems to be quite happy with mass production in factory units on the Continent, irrespective of feeding or other arrangements. The Minister is not nailing down the protection of grassbased production. We are very proud of it but does it matter to the Europeans? The Minister will have to answer that question in due course.
The Minister states that the needs of economies critically dependent on agriculture must be properly met. Our economy is nine or ten times more dependent on the beef sector and seven times more dependent on milk. I have not heard anything from the Minister that gives an indication that the Commission or the Council of Ministers appreciate our greater dependence on agriculture compared with our partners.
The Minister focuses on changes in CAP dovetailing with the GATT negotiations. We are having this debate at quite a late stage and one has to be critical of the handling of the GATT negotiations by the Twelve. The Americans know what they want and are pursuing it rigorously and with determination. Meanwhile the Europeans are trying to sort things out among themselves. We are up to three years behind in establishing our position in relation to CAP and GATT. We should have fixed our positions and be able to tell the Americans what European agriculture requires.
We have left ourselves in a very weak negotiating position. At all times the Americans have been the ones putting the cards on the table. They have been stating their position and we have not stated our bottom line. I wonder if the Minister can secure his objectives in relation to the Common Agricultural Policy and GATT at the same time. We seem to be losing out on both fronts. My worry is that because of sloppiness in the general GATT negotiations we are going to lose out on GATT and, in the meantime have been unable to protect our agricultural sector in terms of the changes now proposed by Commissioner MacSharry in the plan revealed last night.
It is unfortunate that the Minister is not getting the agreement of this House today. There may be some differences in the nuances of agricultural policy. Some of the parties in this House may be more concerned for the consumer than for the farming organisations but, because of the importance of agriculture to the Irish economy I am quite confident that the Minister, Deputy O'Kennedy, could get an agreed motion or resolution from this House which would strengthen his hand and the Taoiseach's hand at the end of the day. Ultimately it is the Minister for Agriculture and Food and the Taoiseach who are going to have to carry the can with European colleagues. It is unfortunate that they could not have come into this House, stated the position and gone out of this House this evening with an agreed resolution. An agreed resolution would reflect the concern of the farming organisations, even though they have some differences among themselves on emphasis, the industrial sector and the people generally. It is very obvious throughout the country that this is not a problem solely and narrowly confined to agriculture because agriculture has a bearing right across the economy. Obviously this is going to end up with the Heads of Government for negotiation. It is unfortunate that the Taoiseach cannot go to those meetings with an agreement arrived at with all the political parties in this country, all the political representatives and the farm organisations.
I would like to see the three main farm organisations get together on this problem quickly and put down on paper for the Minister for Agriculture and Food the main problems as they see them. It does nobody in the farming industry any good that we now have three organisations trying to protect farmers in different areas. It is unfortunate that we cannot have an agricultural lobby stating the position clearly because of its seriousness and because of the drastic consequences for the Irish farming community if the MacSharry proposals go ahead.
As I have said, the Minister's speech does not give rise to great confidence. He talks about exciting developments and repeated a number of announcements he had made already in this House. Unfortunately they seem like a party political broadcast to a very serious crisis. In one instance I can conclude that the Minister is admitting defeat. Right throughout his speech he accepts what is coming down the line from Europe. He talks about points of detail and says we must get more detail, as opposed to stating the principles and concerns of Irish agriculture. I believe those principles have to be very firmly stated to our European partners and I am not convinced they have been so stated.
The first realistic test of the MacSharry plan has to be whether it is going to work for farming and in the Irish context. One wonders whether Commissioner MacSharry has asked himself if his proposals will strengthen Irish agriculture. Will those proposals weaken agriculture? Will poverty be eradicated from the family farm? There is poverty right throughout family farming in this country. Will agriculture continue to play the central role in the Irish economy it has played since the foundation of this State? Will agri-business, upon which we have placed a great deal of emphasis in the last ten to 15 years, continue to be a viable business and a very important part of our economy? From my understanding of these proposals and from a first reading of them my response to these questions would be in the negative. The plan is aimed at getting farmers out of farming as painlessly as possible from the EC point of view. The essence of the plan is to ask milk producers to produce less milk, beef producers to produce less beef and cereal growers to produce less cereal. That effectively is the net essence of the MacSharry proposals of last night. If the proposals as enunciated last night are given effect we are talking about producing less milk, less beef and less cereal. Obviously, if that happens Irish agriculture is going to become significantly smaller than it is at present. There is little consolation in that for the people depending on agriculture.
The plan says that without the reforms proposed by the Commissioner and adopted by the Commission annual surplus production will be well in excess of foreseeable export outlets. In other words, the markets are not there, intervention can be tolerated no longer and farmers must be got out of farming, to put it bluntly. It is easy enough to see the logic of this approach from a European perspective and given the minor dependency the European economies have on agriculture. Obviously it is not big deal to them if they have to get farmers out of production and off the land, but in the Irish context the long-term implications of this plan are potentially horrific for Irish farming. These implications must be examined without giving undue weight to the compensatory arrangements or the redundancy payments which are built into the plan because, in effect, these are purely transitory and will be gone in two or three years. If the plan is worked through in its present form we will be producing far less, there will be fewer farmers and even for those fewer farmers average farm incomes will be significantly lower than they are at present.
That is not all. The balance of trade will be much worse for a country such as ours with all it implies for our small, open trading economy. If far less is produced there will be far less to process and the employment knock-on effects will be substantial. The figures indicate that at least 5,000 jobs in the vital growing and processing industries will be lost. That would be a tragedy when these industries are making an important contribution to our economy. As is well known, the food industry in Ireland accounts for one in every five manufacturing jobs compared with about one in 12 in the Community as a whole. It is worth noting that there are no proposals throughout the MacSharry plan to deal with the wreckage the plan will leave behind it throughout the agri-business sector. It does not get around to looking at that aspect.
It is difficult to make an objective assessment of the overall damage this plan, if unamended, will create. The independent estimates from the ESRI, on whom certainly we can depend, forecast a decline in agricultural output of about £429 million, 17 per cent of which is hard to take by any standards, a decline in farm incomes of £200 million and the knock-on effects in industry and services of at least 5,000 jobs. In addition, ICOS estimate that ultimately the plan will lead to a decline in farm numbers of about 22,500 coupled with an increase in family farm poverty. As Deputy Deasy stated, if he had come into this House any time between 1983 and 1987 and put up these proposals there would have been a rush from the Fianna Fáil benches to get him out of the House. He would have been called a traitor, what he would have been attempting would have been called national sabotage, or words to that effect, having regard to the social consequences of any such proposals. The serious effects that the present proposals would have are reflected in the fact that Fianna Fáil backbenchers are not interested in this debate. They are throwing in the towel as their Minister seems to be doing in Europe.
We have to work from the basic tenet that this plan will not work for Ireland, for Irish farming or for the Irish economy and that its publication is a major crisis for us. The last thing we need for Irish farming is a redundancy package, and that, effectively, is what is being proposed. Likewise, we do not need a complacent Minister for Agriculture and Food, as the Minister has been in relation to these negotiations. The words that have gone out from here this morning will offer little consolation to our farming community. Our own spokesperson, Deputy Kavanagh, warned the Minister more than once on the impending farm price package. On every occasion he did so, the Minister insisted that that was not the occasion to respond. We had to wait until after the Commission made their announcements. Unfortunately, we have seen how that strategy has failed, given the direct announcement from Commissioner MacSharry last night. I am sure the farming community themselves will remember the promises made quite recently by the Taoiseach in the course of the local elections, to use his words, he was going to "bang the table" at the Luxembourg Summit. He was going to ensure that our concerns about the future of our largest industry were known and understood at the highest levels in Europe. They will not need reminding about how he clapped himself on the back on his return from that summit, telling us that all these issues had been put firmly on the European agenda.
These are the official minutes of that meeting and there is not one mention of our case in the 32 pages.
The records speak for themselves.
The Deputy must know that it was not on the formal agenda.
Acting Chairman
Deputy Spring has only two minutes remaining.
It should have been on the agenda.
It was discussed at the Taoiseach's insistence but was not on the formal agenda.
It was not recorded.
If it was discussed it would have been recorded.
Acting Chairman
Deputy Spring has two minutes left.
Twelve minutes.
Acting Chairman
There should be no interruptions.
That intervention was helpful in putting the record straight. So much for the Taoiseach telling this House that the matter was going to be on the agenda and that he was going to bang the table and sort out our colleagues in Europe in relation to how serious these matters are for the Irish community. There is no doubt that there was certain embarrassment at the leaking of the MacSharry proposals. At that stage the Taoiseach made a serious attempt to lessen the damage that would be done to the Fianna Fáil Party in the local elections, but obviously that has left its legacy.
Acting Chairman
Lest there be any misinterpretation, Deputy Spring has exactly two minutes remaining. He started his contribution at 11.53 a.m.
I have been slightly misinformed by somebody in relation to the time allocated.
Acting Chairman
Deputy Ferris said that you have 12 minutes left. You have exactly two minutes.
I always respond to the Chair, and I will stay in order. An aspect of this debate which seems to have been lost completely relates to the serious starvation problems that exist. I do not have enough time but I want to put on the record of the House the serious position in relation to the Third World, which did not even warrant a mention by Commissioner MacSharry. This matter should be addressed in the context of the reform package and the proposals that are now in place in relation to the CAP.
Agriculture is destined to take a hammering. The Government have not been successful in dealing with agriculture. They have slashed the budget of Teagasc to the bone and have presided over the debacle of the TB and brucellosis eradication schemes. The Government have talked a lot about agriculture but unfortunately have done very little. I regret that the Minister has not been able to bring about the legislative changes he spoke of when we discussed hormones and angel dust or devil dust. It is a matter of regret that the Minister was not able to find time to bring those issues before the House because people who are causing massive damage to Irish agriculture are still walking away from our courts. Perhaps the Minister would come back to this House——
Acting Chairman
The Deputy must conclude now.
I am sure the Minister is aware that people are walking away from courts with heavy fines. The Minister said months ago——
The Deputy has a little legal background experience and he knows well how the procedures operate. He should not try to distort that as well.
I am not distorting anything. The Minister came before this House three or four months ago when I raised this matter and said he would bring about changes in the law, but he has not done so.
It is being done.
The Minister has not done so, and the position is so serious that it should be done.
As has been previously pointed out, the gist of the proposals has been well known for some time, and on that basis The Workers' Party have carried out an analysis of the position. Whereas it is not possible to go into every detail of the proposals issued last evening there is no doubt that the consequences of the package of reforms announced by Commissioner MacSharry will be very serious for Irish agriculture. On the other hand, the consequences of not facing up to the need for fundamental reform of the Common Agricultural Policy will be even more serious not just for agriculture but for the Irish economy and the entire European Community.
The Workers' Party have been pointing out for several years now that the writing was on the wall for the CAP and it was time to look for alternative structures for agriculture. Yet successive Governments and the main farming organisations have failed to face up to reality and have tried to fight an unwinnable battle to preserve CAP spending at its current level. Commissioner MacSharry has shown that he is prepared to bite the bullet, and we have to face up to that. A farming policy which produces goods for which there is no market, which adds up to £15 per week to consumers' food bills, which consumes up to 60 per cent of the entire EC budget and which allows 80 per cent of all price supports to go to the top 20 per cent income bracket has no future and is not worth fighting for.
It is hard to understand that a person with a quota of 100,000 gallons of milk could get a hand-out of £35,000 while his neighbouring farmers are starved because they do not have sufficient land to increase their quota. It is about time that system was ended. We must at the same time take into consideration the fact that the producer of 35,000 or 40,000 gallons of milk cannot afford to take a 3 per cent cut in production. That person will have to lease his quota and will use some of his profits to pay for that quota. That should be taken on board. If the emphasis is placed on that producer a structure could be developed whereby people who want to remain on the land will have some chance of doing so. On the question of land acquisition, there must be a policy to enable people to acquire and lease land so that they will have a sufficient quota to provide them with a sustainable standard of living on the land.
Whatever about the theory, the intervention system in practice is simply unacceptable. If there was a long-established industry in this country employing thousands of workers, producing for instance, a particular type of car for which there was no longer a market, and in order to protect the jobs of the workers the Government or the EC decided to buy up the surplus cars, so many cars had to be bought that the country ran out of storage space and had to hire ships to store the cars offshore, just imagine the outcry there would be over the waste of public money and the demands to halt this wasteful practice. Yet this is the story of Irish agriculture after almost 20 years of EC membership. There were no more enthusiastic advocates of Irish membership of the EC than the farming organisations, who promised that the whole country would benefit from the access of Irish agriculture to CAP funds. Almost two decades later, despite the very substantial transfer of funds, the agricultural sector's net contribution to GNP remains unchanged; the numbers obtaining a living from farming have declined by 40 per cent and the number at work in the food industry has declined by nearly one-third, from 46,000 to 33,000.
Ireland accounts for only a very small proportion of total Community agricultural production, but is one of the biggest users of the intervention system. As of May last, this country accounted for almost 40 per cent of total skim milk powder held in intervention by the Community. We produce about 5 per cent only of the Community's butter but account for around 30 per cent of intervention stocks. Almost 25 per cent of total beef held in intervention is Irish. We have the totally immoral spectacle of families — farming families among them — being unable to put adequate food on the table for their children, while two South American ships are anchored in Cork harbour with tens of thousands of tonnes of butter deteriorating in their holds.
This is, of course, a Community wide problem. There are other products in intervention in the other EC countries in respect of which Ireland accounts for very little, such as cereals, wine, pigmeat, tobacco and olive oil, in respect of which we do not feature at all.
Any agricultural policy — at national or Community level — should be assessed on how it measures up to certain objectives: to provide a good quality, varied and adequate supply of food as cheaply as possible; to enable the land to provide the maximum number of families possible with decent incomes and to increase its overall contribution to the economy in terms of income generated and employment created; to do so in a manner that preserves, so far as is practicable, the environment and ensures that the countryside is preserved as a leisure resource available to the entire Community; to take account of the need to support the development of the Third World economies, for whom agricultural production and exports is of such importance; and to provide raw material of sufficient quality, quantity and regular availability as is necessary to maximise the efficiency and potential for development of downstream industries in processing, marketing, etc.
The reality of the Common Agricultural Policy is very different. It costs a fortune to run — up to 60 per cent of the entire Community's budget, almost £25 billion in 1991. Its complicated structure invites waste, inefficiency and fraud. In 1989 it cost something approaching £2.5 billion simply to store intervention stocks. The value of those stocks depreciated by around £1.8 billion over the year. It takes an army of civil servants, inspectors and other unnecessary bureaucrats to operate, manage and police it.
It is estimated that between increased food prices and additional taxes it costs the average family around £700 per year. Much of the CAP spending is absorbed by various commodity traders and other middlemen. Of the amount going to farmers, 80 per cent goes to the top 20 per cent.
The obvious waste and huge cost of the CAP has been successfully used, particularly by the UK, to block the development of other common policies by the Community in areas where they are clearly necessary. In any event, it leaves little of the Community budget for anything else.
It is estimated that the EC support prices are 20 per cent higher than they need to be in order to keep efficient farmers in business. In theory they are subsidised by this additional amount in order to protect the incomes of the smaller farmers. However, since it is a subsidy to production, the most efficient benefit disproportionately and, year by year, there are fewer farmers and farms get bigger. Thus, while average farm incomes and the real gross income of the industry falls, that of the most efficient usually increases and consequently what was supposed to have been an exercise in social solidarity has actually seen a further widening of the income gap between large farmers and small landowners. Several studies have shown that the CAP is a much less efficient mechanism for getting subsidies to their targets than either the Regional or Social Funds.
The drive for increased intensive production provoked by the CAP has been doubly damaging to the environment because of the consumption of resources and the pollution caused by waste. Against this background, it is not surprising that there has been a growing realisation that the CAP cannot be allowed to drift on in its present chaotic state. The Workers' Party have long recognised it; Commissioner MacSharry recognises it now.
While there are many details which still need to be clarified, the main drift of the MacSharry proposals seems to be a step in the right direction providing as it does, a step away from incentives to over-production, chiefly by the big producers, and towards targeting spending on smaller and poorer producers. What seems to have been overlooked is that the MacSharry plan actually provides for a substantial increase in CAP spending, bringing it from around £26 billion to around £29 billion. What reasonable person can object to more money being spent and more efficiently targeted, especially when it is likely to lead to cheaper prices for consumers and less wasteful production?
The proposals for direct income support rather than subsidies on production are particularly welcome and should be of real value to the smaller farmers who need them most. We must ensure that the overall level of EC support for Irish agriculture is maintained to at least existing levels so that the overall Irish economy will be cushioned against the immediate effects of the proposals.
The MacSharry proposals are only part of what must be an ongoing process of reassessment of agricultural policy at both EC and national level. In many respects the problems of agriculture are similar to the overall problems of the peripheral regions. The problems must be approached in a similar way. Direct payments to smaller farmers can only be a temporary arrangement, and neither is there any long term value in protecting low paying, inefficient industries.
The existing Structural Funds must be retained, although to do their job properly the funds available need to be substantially increased. Any decrease in CAP spending in Ireland in the longer term must be compensated for by an increase in Structural Funds. There must be a shift away from intensive production in favour of organic methods of production. The demand for organic food products is likely to continue to grow. Such a shift could be particularly beneficial to Irish agriculture and other less developed regions of the Community.
There needs to be a shift, as part of an interventionist industrial policy, of higher paid, value added, high technology industries from the cramped centre to the less developed regions. There needs to be a specific programme for direct investment in and development of industries based on the natural resources indigenous to the peripheral and largely agricultural regions. The Community must assist with the reorienting of agricultural production to fit in with industry. Support must be provided for diversification into the production of non-surplus food and other non-food products.
I studied the proposals in the Leader programme and I do not think one can disagree with the proposal that the major adjustments in rural economies have been the cause of concern at EC level for some time. The report referred to mounting food surpluses and falling farm incomes which are leading to a serious questioning of the continuation of the Common Agricultural Policy. An integrated approach is required to the continued development of the rural economy. The Leader programme, if properly implemented and the advice given to farming communities could lead to a policy for the future.
At home the priority for national agricultural policy must be to put the country's agricultural resources to their most productive possible use. There is a need for a comprehensive plan to work towards this objective. This plan should identify smaller farmers with development potential and provide them with the means to reach this potential. Small farmers who do not wish to expand, who wish to remain in agriculture, should be encouraged to diversify into new areas, such as forestry and agri-tourism. Farmers who do not see a future in farming should be allowed to retire with dignity or to move into new careers with their land being reallocated to developing farmers, through sale or lease. However, the proposal in this regard is ambiguous and should be clarified. Farmers who want to leave the land should be properly advised at a very early stage.
As I pointed out earlier, there is a strong case for diverting much of the CAP funding which currently goes to bigger farms to the Structural Funds, with the specific aim of creating new job opportunities in rural areas, for those wishing to diversify or move out of farming altogether.
The ultimate aim of agricultural policy should be to create a core of commercial farms which can compete successfully in the more open markets which will result from reduced CAP funding. These farms should be capable of giving their owners a reasonable living while also supplying food at reasonable prices to consumers.
A new breed of farmer is required who can afford to look beyond tomorrow and take the long term requirements of the sector into account. There are at the moment too many quick buck merchants in the industry who are prepared to sacrifice all our futures in their own short-term interests. The scandalous failure to control bovine TB and the alarming spread of the use of angel dust are but two indicators of this cancerous element in the Irish farming community. We need a farm policy which can, and will, mercilessly weed out these people.
We also need a farm population more committed to the long term development of markets for high value Irish food products. We can no longer afford an industry which is happy to feed animals on summer grass and sell into intervention in the autumn. Because of the seasonal nature of the industry — this was referred to earlier — cereal imports should be very carefully looked at. We should also look at the seasonal nature of our production. Why was there not a policy to extend production to the winter season? Why were workers let go from factories in which large amounts of State funds were invested? We should have a system where milk will be produced in the winter. It would have been easy to do this but there was no effort to implement it. I am very concerned about the cereal substitution imports allowed because they could affect the industry.
Agricultural policy needs to develop a farmer controlled meat processing sector with individual farmers committed to supplying plants which they own and control themselves. While the dairy sector has developed well on this model, the meat sector remains characterised by anarchy, with factories opening and closing, and firms coming and going, with bewildering regularity.
The Workers' Party call for the establishment of an agriculture and food development authority analagous to the Industrial Development Authority. This authority would bring the various interest groups involved in Irish agriculture together in order to hammer out an agreed long-term plan for the industry. Broad goals would be set for the different sectors, and specific goals within each sector. Assistance to producers and processors would only be provided to the extent to which they were prepared to meet agreed targets in terms of quantity and quality of output, and to the extent that long-term supply linkages were established between producers and processors. All involved would have to contribute towards funding both scientific research geared to the industry's needs and the development of stable markets for Irish food products.
The Irish agricultural sector can have a prosperous future in the context of more open European and world markets. We have basic advantages relating to soil, climate and, above all, a reputation for a clean environment. Many more off-farm jobs can be created on the basis of an efficient farm sector. These goals will not come about if the various elements are left to their own devices. There is a need for dynamic political and developmental leadership from the State to knock heads together, get things moving, sort out the chaff and create a sense of unity and purpose behind a programme of reorganisation and reform for a better future for us all.
Debate adjourned.