Dáil Éireann debate -
Tuesday, 8 Feb 1994

Vol. 438 No. 4

Adjournment Debate. - Pig Production Sector.

Mr. Dukes

I am grateful to you, Sir, for giving me the opportunity to raise this matter. The pig production sector on family run farms is in serious financial crisis. Since September 1992 producers in this sector have been making losses on every pig produced as a result of a highly adverse price ratio between pig and feed prices. For 1993 pigmeat prices per kilo were more than 13 per cent down on 1992 levels. Prices in 1993 were lower than they had been since 1985 and reached an absolute through in October 1993. During 1993 when pig prices fell by 13 per cent compared with the previous year, feed prices showed a decline of less than 1 per cent — the difference between those two reductions is the squeeze on pig producers' margins. For 1993 the pig price to feed price ratio was at its lowest level since 1985, falling from 6:2 in 1992 to 5:4 in 1993, reaching a trough of 5:1 in October-November 1993. Therefore, there is no prospect of any margin in those conditions.

It is reckoned that in order for our pig output to be competitive with UK product, feed prices here would have to be £25 per tonne less than currently. As a result of those conditions huge numbers of family run units are on the verge of collapse. In recent months significant numbers have been bought out by what I would describe as the corporate sector. This is not a new phenomenon but is new in terms of the scale in the last few months. The owners have been forced to sell due to the crippling losses they have been incurring for quite some time.

The Government could do a number of things in the short term to alleviate this problem and give some breathing space for medium to long term planning. In the first instance — this is directly within the control of the Minister for Agriculture, Food and Forestry — the veterinary inspection fee of £1 per pig could be suspended for 1994. Second, family-run units of, say, up to 300 pigs — should be eligible for the small business subsidised loan scheme recently announced by the Minister for Enterprise and Employment. The scheme was originally announced by the Minister of State at that Department but some days later it was found that the details of the scheme had not been tied up and it was announced again by the Minister. This scheme, which is designed for small scale enterprises, would be of particular assistance to family-run pig units.

Third, the family-run pig production sector should be given the same tax status as the corporate sector. Without action of this kind the family-run sector will simply disappear from pig production. I should like the Minister to tell me his proposals for dealing with this problem. It is not as if he does not know what the problem is. Representatives of the sector have spoken to him and his colleagues in the Department on a number of occasions during the past year. So far they have received no reaction whatsoever. I should now like to know the measures the Minister proposes to take to give some breathing space to the family-run pig production sector for medium and long term planning.

Minister of State at the Department of Agriculture, Food and Forestry (Mr. O'Shea)

As the Minister for Agriculture, Food and Forestry, Deputy Walsh, confirmed last month and as commentators are agreed, 1993 was a record year for farming. Pigmeat was the one sector which had a very difficult year due to depressed European markets.

The pigmeat sector in Ireland and in other member states of the European Union has been the victim of its own success in increasing pig numbers and pigmeat production to the point of temporary overproduction. In so far as Ireland is concerned, increased production has to be exported either to markets within the European Union, or to third countries, with the help of export refunds.

It is useful to remind ourselves of the progress in exports which has been made in recent years. Since 1988 export volumes have increased from 45,000 tonnes to over 100,000 tonnes, with corresponding export values of £70 million increasing to over £170 million. While these figures are impressive in themselves they reflect an industry which represents only 1 per cent of European Union production.

The first half of 1992 was a good period for Irish pig producers and for producers throughout the European Union. However, from the late summer onwards pig prices began to fall not only in Ireland but in other EU counties. There was a slight recovery in mid-1993 and again at Christmas. The period after Christmas is traditionally slack, and January this year has been no exception.

Throughout 1993 the European Commission took a series of market support measures at the behest of member states, including Ireland. In March an aids to private storage scheme was introduced which removed 80,000 tonnes from the market. In May a special scheme of export refunds for the export of 30,000 tonnes to Eastern Europe was introduced and a further such scheme also involving 30,000 tonnes was introduced in September.

At the same time the Union was faced with dealing with classical swine fever outbreaks in Germany and later in Belgium. This was done by the buying up at EU budget expense and the slaughter and removal from the market of substantial numbers of pigs — up to one million in Germany and half a million in Belgium. These measures all had positive effects on market prices.

The continuing difficult market conditions have been the subject of discussions at EU Council level, most recently at the Agriculture Council in October and November 1993. In addition the Minister, Deputy Walsh, raised the need for the Commission to take additional measures at a bilateral meeting which took place at his request with Commissioner Steichen prior to the January meeting of the Agriculture Council. This was followed by a discussion on the subject at the Council. As a result, the Commission has introduced a further special scheme of export refunds for the export of 40,000 tonnes to Eastern Europe.

On this occasion I would like to thank publicly the Commission for bringing forward this measure which has already had a positive effect on European prices. However, I would stress the need for continuing Commission support in the months ahead.

The major modernisation and rationalisation plan for the pigmeat sector carried out in recent years with considerable national and European Assistance amounting to 75 per cent of the capital cost has resulted in a modern and highly competitive industry with the emphasis on value added products aimed largely at the export market.

At the same time modernisation on the processing side has been at least matched by developments at production level where we now have very intensive specialist producers who have achieved an efficiency standard which compares very favourably with any other member state of the EU. Government commitment to the industry is clearcut. I refer Deputies to the National Development Plan 1994-99 where policy for the development of the food industry is summarised and which provides for the continuing expansion of the pigmeat sector.

All indications are that the market imbalance which has caused the recent difficulties will right itself later this year. In the meantime, the special sale to Eastern Europe is already having an effect on the EU market. I will be monitoring the situation closely so that the case of further action by the Commission, if necessary, will be put forward. When the cyclical upturn comes, I have no doubt that the Irish production and processing sectors, which as I have already said represent only 1 per cent of Union output, will be very well placed to avail of and profit by the increased opportunities arising.

Mr. Dukes

The Government is going to sit on its hands and do nothing whatsoever.