Dáil Éireann debate -
Wednesday, 11 Mar 1992

Vol. 417 No. 2

Written Answers. - Beef Industry.

Phil Hogan

Question:

160 Mr. Hogan asked the Minister for Agriculture and Food if he will outline what has gone wrong with the Irish beef trade in the past year; the reason there is a crisis in the beef industry; whether the present situation is purely a temporary setback or is likely to be of a permanent nature; if the problem is peculiar to Ireland or is EC-worldwide; whether there is a solution to this particular beef crisis; if he will outline the implications for EC beef support measures; and if he will make a statement on the matter.

Minister for Agriculture and Food (Mr. Walsh)

The beef sector in Ireland has been experiencing market difficulties because of a number of external factors, namely an increase in imports to the EC market, a decline in EC consumption due to BSE, the closure of certain third country markets, also because of BSE, and the closure of the Iraqi market due to the Gulf War. These factors have also affected the beef sector in other member states. As a result, reliance on intervention has increased in Ireland and in the EC as a whole. Without this intervention support, cattle prices throughout the EC would have fallen sharply.

Ireland also has been consistently to the fore in expressing concern at the unacceptably high level of live imports into the Community in recent years, and with a number of other member states was instrumental in having a safeguard measure introduced in 1991 which limited live imports to 425,000 head. This provision was again renewed this year at Ireland's request. As an additional direct response to the difficulties in the sector, the EC Commission proposed, and the Council of Ministers agreed last December, that the suckler cow premium should be increased, on a once-off basis. As a result, an additional supplement of £15.81 per head is being paid in respect of such cows in Ireland.

In addition, the arrangements for processors' margins implemented following the 1991-1992 prices negotiations led to a fall in cattle prices over the summer. Due to revised arrangements requested by Ireland, this fall was halted and reversed last August-September and cattle prices have remained relatively stable since then.

At present difficulties with intervention have arisen because of the very high rejection rate being applied by the European Commission to quantities offered for intervention intake. Because large quantities of bull meat are, for speculative reasons, being offered for intervention, the Commission has been forced to apply a 90 per cent/95 per cent rejection rate to these bids and has felt compelled to apply high rejection rates to steer meat also. Following representations to the Commission by Ireland and by other member states, the Commission undertook to review the detailed arrangements for intervention with a view to removing the speculative aspects of the system. This would enable a more realistic acceptance rate for quantities offered into intervention to be applied, and would afford a greater degree of certainty to the beef sector. Notwithstanding these difficulties, cattle prices have, as I already indicated, remained relatively stable since the new arrangements for processors margins were implemented last year.

In the context of the ongoing discussions at EC level on the reform of the Common Agricultural Policy, which will determine the future framework of the beef sector for some time to come, my aim is to ensure that the interests of our primary producers are fully protected and that the processing sector can develop in a way that enables them to respond to market requirements. I intend to obtain the best possible result for our producers by ensuring that the compensatory premia being proposed to offset the fall in the intervention price are at an adequate level and are in a form suitable to Irish production conditions.

Prospects for exports of beef and cattle to the Middle East and North Africa are better this year than in 1991. The Iranian authorities agreed last November to reopen their market to Irish beef and this agreement was formalised last week during the first meeting of the Irish/Iranian Joint Commission. Commercial negotiations on volume and price are underway. Libya has also agreed to accept our beef and I hope that this will be followed later this year by an agreement on the resumption of cattle exports. Exports of beef to other countries in the region such as Egypt and Saudi Arabia are proceeding steadily. The volume of exports will of course depend on commercial factors such as price and supplies on the international market and, in the case of Iraq, the framework for trade set by the United Nations. Increasingly, trade depends on our being competitive internationally and we must plan for an industry which can take most of its returns from the market rather than from intervention.

I am, of course, aware of current financial difficulties affecting certain beef processing firms. Nevertheless, I am satisfied that beef processing in Ireland is inherently profitable and I believe that the industry has the capability and expertise to produce a quality product and make inroads on major export markets, thus ensuring a viable future for all engaged in this vital sector of the economy.