I wish to share my time with Deputy Ellis.
Private Members' Business. - Sheep Meat Sector: Motion.
Is that agreed? Agreed.
I move:
That Dáil Éireann, acknowledging the crisis in the Irish sheep sector and mindful of the many thousands of jobs on farms and in factories dependent on the industry, condemns the Government and the Minister for Agriculture, Food and Forestry for the sustained indifference they have demonstrated to the needs of the industry and thereby calls for urgent steps to be taken to address both the immediate crisis and the long-term structural problems of the Irish sheep sector.
We have a serious crisis in the Irish sheep industry which requires urgent remedy. It is a crisis that will require sustained negotiating on behalf of the Minister at Council level to ensure that the emergency issues are dealt with and that the cash prices which have bedevilled sheep producers throughout the country are addressed. He should be more pro-active in an area where there have been serious difficulties under his stewardship, an area in which one would have expected he would have shown some flair given that many of his constituents are seriously affected by what has happened, and is happening, in the Irish sheep sector.
In 1980 Ireland got access to the French market and the ewe premium was introduced. This was paid on each ewe in Ireland and in the UK it was paid on the lamb. I have heard that at some public meetings the Minister referred to the fact that perhaps some policy mistake was made when we sought the premium on the ewe rather than on the lamb. It is important to point out that at that time there were only 1.5 million ewes in the country, many in disadvantaged areas and many not attaining the lambing rates now available as a result of improved husbandry and breeding practices.
Clearly, if we were to build a sheep industry here the provision of the ewe premium was manifestly the accelerator which allowed for an increased breeding flock. Throughout the 1980s there was a huge expansion in the breeding flock. From a total of 1.5 million head in 1980 the herd increased to 4.6 million in 1994. The expansion of the herd goes back to the decision by the then Minister for Agriculture, Ray MacSharry, to give us unlimited access to the French market. The ewe premium was the foundation on which a sheep industry could be built.
Much work was done on the processing side by providing the infrastructure that would allow us to provide the type of carcass lamb and carcass sheep meat that would give us increased market share in Europe. Much of this work was done with FEOGA grant aid. Camolin, Athleague and other areas are testimony to a well organised sheep processing sector from which other sectors, notably the pigmeat sector, have learned in recent years.
Since 1991 we have seen the reform of the CAP so far as sheep are concerned. At that time we also had the introduction of the quota regime and — with the full support of everyone concerned — a ewe premium calculated across the European Union rather than on an island only basis, whereby each member state would do its own calculations. That was introduced in the belief that Irish prices would rise to meet French prices; in other words, there would be convergence in relation to the price and the ewe premium would be the support mechanism which would be uniformly applied at every level throughout the Community.
Since 1991 our experience has shown that the theory does not work so far as Irish sheep producers are concerned. In 1992 there was a collapse in lamb prices. In December of that year the then Minister, Deputy Joe Walsh, obtained a top-up premium of over £6 per ewe to meet that situation. Therefore, the Minister has a precedent if he wishes to look at it as to how it is possible to get recognition for the special status and the vulnerability of the Irish sheep sector in those circumstances. That precedent was set by his predecessor, Deputy Joe Walsh, in December 1992. In 1993 and 1994 prices were static. In 1995 there has been a collapse in early lamb prices due to currency differences, cheap hogget meat and the lower prices in France.
It is important that the Minister acknowledge that there is a problem of crisis proportion in the Irish sheep industry. Any comparison of average prices on a penny per pound basis for lamb at export in France for the months January to October 1994 versus 1995 show that very clearly. For example, in March 1994 we were getting £1.29p per pound as against £1.17p per pound this year, a 9 per cent drop; in April 1994 we were getting £1.40p per pound as against £1.17p per pound this year, a 16 per cent drop; in May 1994 we were getting £1.43p per pound as against £1.07p per pound this year, a 25 per cent drop; in June 1994 we were getting £1.02p per pound as against 93p per pound, an 8 per cent drop and a 4 per cent drop in both July and August 1995 as against 1994. There has been an increase in prices in October and all the indications are that prices for this month will be up on last year's prices but the Minister cannot take any credit for that.
There was a rise on the floor prices at the end of 1992 and 1993 as well as this year. Clearly lambs are scarce and there is still a lot of grass. Because of the change in the European regulations from the 50 per cent threshold to the 70 per cent threshold many producers feel they may not have enough females for next year and are buying in. That is another indication of domestic demand. Certainly no marketing strategy on behalf of the Minister or An Bord Bia or anybody else in the Department is responsible for the favourable fluctuations because nothing was done by the Department or the Minister during the year. The only initiatives from this Minister were two aids to private storage schemes which took out a minimum number of hoggets from the marketplace but they did nothing for price.
A study of any of the objective criteria, or any of the sources available for price, will show they did nothing for price. Any suggestion that things would have been worse but for "I did that" is seeking to distort the market realities. The reality is that we have 3 million sheep exports to contend with each year, 80 per cent of which goes to the French market. The Minister can claim no credit whatsoever in that regard.
When one looks at the magnitude of the crisis in terms of price — An Bord Bia being the source of the statistics — it is quite clear that this year, following on a bad year last year, is much worse. Figures from the Teagasc sheep research unit at Knockbeg show a decline in the price of early lambs between 1994 and 1995. The average price of early lambs in 1994 was £58.80; the figure for 1995 is £48.80, a decline of 17 per cent. The weighted average price of early lambs at Knockbeg was 125p per pound in 1995.
The Minister should know from the people I have met in his constituency and in the south-east generally that there is widespread frustration among farmers because cattle and tillage systems are now far more profitable than sheep. That is a reverse of the position that obtained in the 1980s.
A comparison of the gross margin per livestock unit for single suckling or cattle as against mid-season lamb production in the years 1990-92 and 1994 reveals a disturbing trend. The gross margin per livestock unit for single suckling or cattle was £218 in 1990; it is £329 now. The figure for mid-season lamb production is static; £242 in 1990 as against £245 in 1994.
The subsidies per livestock unit in single suckling have increased from £65 to £173 per hectare. The subsidies per livestock unit for mid-season lamb production were £130 in 1990, £104 in 1992, £98 in 1994 with a further reduction this year because of the method of calculation of the ewe premium. The gross margin in single suckling and cattle systems has increased by 51 per cent between the years 1990 and 1994. The gross margin in sheep has remained static but the support payments in single suckling and cattle systems have increased by 166 per cent since 1990. The support payments in sheep have decreased by 25 per cent over the same period. Overall since 1988, sheep farmers' incomes have declined by 27 per cent, with farmers in non-disadvantaged areas particularly affected.
The net margin figures for lowland mid-season lambing ewes in disadvantaged areas were £35 in 1988 and £32 in 1994. The figures for non-disadvantaged areas decreased from £35 to £26. That is a national farm survey estimate. The 1994 figure represents a 27 per cent decrease on the 1988 figure in the non-disadvantaged areas.
Looking at all the data available and based on all the objective criteria from our advisory services, marketing experts and the Department, it is clear that is a crisis in sheep farming. What are we going to do about this problem? It is interesting to look at the ewe premium statistics. In 1992, almost £126 million was paid in ewe premiums. In 1994, the last complete year for which figures are available, there was a loss of £45 million to sheep farmers in the ewe premium payments and the reduction in the numbers upon which we are paying is only 300,000 out of a total of over five million. That figure alone proves we are being discriminated against in relation to the calculation of ewe premiums.
If there is any complacency at official or political level in the Department, its own figures prove that on a per ewe basis, on a total basis, on the basis of gross or net margins, on the basis, of comparative studies of single suckling or on any other basis, the sheep sector is in a serious state of decline because in the past number of years we have seen not only 7,500 leases of ewe quotas but also more than 5,000 transfers in the same period.
The Minister cannot continue to be a policy taker — as he has proven himself to be — rather than a policy maker. He cannot say he has inherited this problem and there is nothing he can do. He inherited the benign situation in the milk industry, to which he never adverts when he and his PR people are talking to people around the country; he inherited excellent situations in the cattle and pig industries and he will probably claim credit for the fact that world prices in grain have lifted above EU prices. The Minister will probably tell us he ensured that the sun shone for three months of the year.
That will not wash with the people who have ewes and hoggets they cannot sell and those with mid-season lambs who have had to bear the brunt of the problem. Early lamb producers are not getting any incentive to become involved in a far more costly operation, in terms of production systems, than the mid-season producer. Approximately 12 per cent of lambs coming on the market are early lambs and while the position that obtains in April and May is bad, if the premium price is not available for the premium product in the early part of the system, what will happen when that 12 per cent no longer remains in the early lamb production system? What will happen to the glut? The Minister will have to have private storage coming out of his ears to deal with the market that will develop if he allows that to happen. Many of the early lamb producers live in the non-disadvantaged and lowland areas and they are telling me, and anyone who wants to listen, that they will not be able to survive if this position obtains for much longer.
The Minister's responsibility is to deliver. We have had charters of rights and PR exercises and we have heard all the promises that were made. We were told this matter was the top priority, and so it should be for a Minister who is supposed to be in touch with his own constituency. However, the time has come to deliver and what the Minister promised in June would happen in September has not happened. In September we were told to wait until Christmas — I am sure Santa Claus will come down all our chimneys on that morning. Santa Clause will not be coming, however, if the Minister is simply referring to an extension of the rural world premium. If £5.37 per ewe on a million ewes, which is only 20 per cent of the total number of ewes, is the Minister's idea of delivering, that is not the opinion of sheep farmers. That will not satisfy them and talking down on the payment of the top-up premium will not do because it will not be accepted. The Minister's predecessor got a top-up premium in 1992 when the floor price was not as sustained as it was this year.
Sheep farmers and farm representative bodies have made it plain through public marches and constant lobbying at all levels that, on the basis of the method of calculation, an 8 per cent top-up premium is not only feasible, it is justifiable, fair play and is what is required. That top-up premium, in addition to the extension of the rural world premium, may provide some solace but we all know that is only an emergency measure. That only gives recognition to an income crisis in sheep farming. It certainly will not compensate sheep farmers who want to get back to the position that obtained in the late 1980s when they could market their product and make a living. That is what everybody wants to do but sheep farmers are being discriminated against in the marketplace and the Minister does not seem to be in a position to do anything about the problem.
Our main competitors in the French market are UK producers. It is clear they enjoy a competitive advantage because of their location and the availability of the Channel Tunnel. That is a fact of life with which we must deal to the best of our ability. In terms of overall fiscal policy, I outlined to the Minister another promise he made in regard to providing a scheme to help those affected by the currency problems that have arisen because of a weak sterling. The Minister has not delivered on that promise. He has not delivered in terms of doing something for sheep farmers.
Given the high national reserves, we have advocated a reduction in interest rates to help improve our competitive position vis-à-vis the sterling area. This would be of crucial significance to sheep farmers next year. If we do not deal with this issue sheep farmers will continue to be at a 7 per cent disadvantage next year, and this will be in addition to everything else that has gone wrong in that sector. The Government can achieve this reduction in interest rates if it has the political will to keep its public expenditure programmes under control. If Fianna Fáil was in Government it would avail of the opportunity to reduce interest rates. Such a move would be welcomed not only by sheep producers and processors but by all those involved in the indigenous food sector.
Our sheep meat is regarded as organic but we cannot sell our product if the Minister continues to accept the present method of calculation of the ewe premium. In 1991 everyone agreed with the theory which was due to be reviewed after five years in 1996. I call on the Minister to instigate that review now at European level. An all-embracing committee representative of the sheep sector, producers, processors and others and the Department should be set up to formulate and put our case that there is clear discrimination and active divergence of price which is exacerbated by French preference on the French market. It is clear that the necessary decisions must be taken now.
If the Minister and the Government are not prepared to insist that this is done now then our argument will be defeated. We cannot expect top-up premia if we are not prepared to insist on a review of the methods of calculation. I hope the Minister will confirm that this will happen. As we know, nothing happened in September and all that happened in June was that a decision was taken to allow increased access to New Zealand lamb. When the Commissioner was here he said that he was on our side, that everything would be all right and we should continue to make telephone calls. At long last people have started to realise that nothing is being done.
Some months ago we were given a promise that a carcase classification scheme would be established for the sheep industry, yet no action has been taken in this regard. It has been reported on the airwaves and elsewhere that the Minister is considering the establishment of a voluntary scheme under which people can decide whether to co-operate. We have seen the benefits of quality assurance schemes in the milk sector and other primary production sectors. We need a mandatory scheme in the sheep meat sector and the Minister must be prepared to say that he will defend the national interest and will not allow vested interests to say they will not proceed with a certain scheme because it will cause inconvenience, upset a production plant and cause a few problems. We need a mandatory national quality scheme now. We have been promised such a scheme for months, yet nothing has been done.
The Minister must take the necessary action instead of trying to placate all the vested interests he meets. While this is a great way of postponing the solution to a problem and keeps everyone happy for a while, when it reaches the stage that sheep farmers have no money then the Minister has to show leadership and be prepared to put in place a quality assurance scheme in the long-term interests of whatever remains of the sheep sector after this débâcle. This will not lift prices tomorrow morning or next week but it will lift them in two or three years' time when customers realise that we have a quality system and are prepared to put a price on quality. This will provide an incentive to producer groups and early lamb producers who are in the business of providing premium products at a time when the production season does not allow for it in the normal grassland. The Minister must display an ability to discriminate against premium product, next type quality product, hoggets, etc. If we are not prepared to classify carcases and put a value on them then we cannot berate the French and those who will still pay a common price regardless of what we export to them. The Minister has stood over this fundamental marketing dificiency despite the fact that the sheep problem was his top priority. If the Minister says he is giving priority to an issue then he should take decisions; otherwise it is all rhetoric and nonsense.
It is long past time when the Minister should have insisted that a top-up premium be paid. Over the past three months he said much about the problems in the sector and held interviews in Brussels which had nothing to do with agriculture but he has not referred to a top-up premium or put a price on it. He said he would do his best but if he does not deliver on his promises then the exodus from the sheep sector will increase and accelerate. I want to outline the reasons I believe the Minister should fights hard on this issue.
Our ewe premium quota is 5.03 million and, all things being equal, the sheep sector is one of the few in which young farmers can become involved. A young farmer cannot go out and buy 20 cows and unless he can afford a large investment he cannot get involved in any other sector. Ewes cost £20 each and he can become involved in sheep farming if it is competitive, viable and attractive. However, there is no confidence in the industry. Unless we restore this confidence through leadership and by delivering on crucial net issues which affect producers then we will deny young farmers the opportunity to become involved in the one enterprise open to them.
We put down this motion to ensure a proper discussion on this issue. As can be seen from what I said, using the word "crisis" to describe the problems in the sheep sector is not an exaggeration. The Minister can take emergency measures to alleviate this crisis yet the measures taken so far this year have achieved nothing. The Minister should indicate to the vested interests that he is serious about taking hard decisions regardless of whether he can achieve consensus on them. He should do something about these problems and ensure that farmers do not have to protest on the streets of Dublin during the winter months because of his inactivity and incompetence.
I wish to share my time with Deputy Nolan.
I am sure that is agreed.
We put down this motion not for any political reason but to highlight the financial losses suffered by sheep farmers and the effects of this on their families and future livelihoods. When one looks at the history of the sheep industry one realises that urgent action must be taken along the lines of that taken by the Minister's predecessor who secured a top-up premium some years ago.
We cannot walk away from the net reduction of 36 per cent in the price of ewes since 1988. If industrial workers were told their salaries would be reduced by 6 per cent per annum over the next six years the gates of Leinster House would be continually blocked by protesters. It is only now sheep farmers are realising there is a crisis. For the past six months they have been living on promises which the Minister has not fulfilled. It appears he is hedging his bets on the question of further action. The number of farmers leaving sheep production is frightening; it has fallen by 5,200 since 1992 and is expected to rise in the years ahead.
The undertakings given by the Commission to the Minister's predecessors have been thrown to the wind. In its recent statement the Commission undertook to take market management measures to alleviate the current difficulties in the sheep market, particularly in Ireland, but the action taken was limited. It also undertook in the light of the result of these measures, to consider if further action was necessary, in particular as regards the possibility of an upward adjustment in the level of ewe premium and an acceleration of its payment.
There is a need for a top-up payment of £8 per ewe to raise the premium to the required level. The rural world premium to which the Minister has referred is not the solution unless sufficient funds are made available to ensure each farmer receives a supplement of £8 per ewe. If it forms part of the arrangement for lowland farmers I hope the people I represent will receive £8 by other means. They have suffered greatly because the people who traditionally purchased their store lambs are no longer in business due to inadequate margains. This has proved to be an expensive year for those who concentrated on this type of farm enterprise.
At the next Council of Ministers meeting the Minister will have to seek a reduction in the figure of 13,500 tonnes of New Zealand lamb. It was agreed in June that the figure should be raised. New Zealand lamb is now widely available throughout the Union to the detriment of Irish producers. UK lamb imports have also had an impact on our market share in France. Perhaps the Minister will draw the attention of his colleague, the Minister for Finance, to the effect his policy of high interest rates-Deputy Cowen mentioned exchange rates—has had on the cost of our products in Europe.
We are not seeking a temporary little arrangement. We expect the Minister to secure agreement in Europe on the need to put a permanent mechanism in place to ensure equal treatment for sheep farmers who have suffered severely. The Minister may sneer but there is a crisis. Sheep numbers have fallen by 300,000 this year and if they continue to fall our share of the market in France will disappear.
The farm lobby groups argue that a top-up payment of £8 is necessary to bring sheep farmers back on to an even keel. I hope that when he attends the Council of Ministers meetings in December the Minister will stress that it gave a commitment last June that the Commission would undertake to take market management measures to alleviate the current difficulties in the sheep meat market, particularly in Ireland, and in the light of the result of these measures to consider if further action was necessary. This is long overdue and it us up to the Minister to deliver.
It is unfortunate that we had no option but to table this motion because of the Minister's inactivity. I wish to draw his attention to the plight of sheep producers. While the agriculture industry in general is prospering, sheep farmers face a crisis because of poor returns during the past year. This matter which the Government has failed to address adequately has been highlighted on a number of occasions by the farming organisations, sheep farmers and the Fianna Fáil spokesperson on Agriculture.
Sheep farmers are not the only ones calling for the introduction of a top-up payment of £8. In a report commissioned by the Minister on the sheep industry, An Bord Bia also recommended that the ewe premium should be increased by this amount. The Minister should now ask the Council of Ministers to honour its commitment given at the farm price talks earlier this year that, in the event of the market management measures failing to adequately lift lamb prices, the Commission would increase ewe premium payments to adequately compensate flock owners. It is evident to all those involved in the agriculture industry that the market management measures introduced earlier this year are not working.
Financial hardship has been inflicted on flock owners as the ewe premium is inadequate to compensate them. This has had a devastating effect on the sheep industry which is worth £300 million. It is clear that lamb prices throughout Europe will not converge as originally anticipated. In these circumstances Irish sheep farmers, with the lowest lamb prices in the European Union, have a rock solid case to make for the introduction of a permanent top-up payment to guarantee fair competition. Evidence of the validity of the case being made by Irish sheep producers is that the European Farmers' Union has rowed in solidly behind the campaign to secure compensation to resolve the income crisis in the Irish sheep sector.
The Minister should not wring his hands and say there is nothing he can do. We ask him to take action immediately as it is clear that the income crisis in the sheep sector is as deep and more damaging than that which prevailed at the end of 1992 when the then Minister, Deputy Walsh, introduced a top-up payment. As an interim measure the Minister should provide the same level of assistance.
Over 5,200 flock owners have been forced out of production with a massive reduction of 300,000 in the size of the national flock. An emergency top-up payment of £8 per ewe is the minimum required to compensate sheep farmers. Teagasc figures show that between 1988 and 1994 their incomes collapsed by a massive 36 per cent. This would not be accepted in any other sector of industry, be it agriculture or otherwise. Taken against the background of an increase in farmers' incomes in other sectors of agriculture this is unacceptable.
During the past ten years sheep farmers have built an industry that is now worth over £300 million. It provides an essential source of income for 48,000 farmers. Over 2,500 people are involved in its processing and marketing sector. This was achieved by a huge investment, bank borrowings, hard work and personal sacrifice by all the families involved. It would be unacceptable if the Minister stood back and allowed the rug to be pulled from under Ireland's third largest farming sector. We demand that he urgently negotiate a short-term rescue package for the sheep industry and put in place a sustainable long-term plan to ensure it expands and becomes a profitable enterprise.
I move amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann endorses the effective measures which have already been taken by the Minister for Agriculture, Food and Forestry to address the difficulties which have been experienced by sheep producers this year and commends the intensive efforts by the Minister at the Council of Agriculture Ministers to secure further support for the sector.".
I am delighted to have this opportunity to deal with agricultural matters and with what is a serious concern about sheep.
I am well aware of the income situation in the Irish sheepmeat sector during 1995. I wish to put in proper context the exact nature of the problem which exists and needs to be clearly understood. Nineteen ninety five has been a disappointing year for a certain segment of sheep producers. The essence of the problem is that prices during the prime early season production period failed to reach expected levels. Producers who concentrated their supply of lambs to the prime market suffered a considerable shortfall in returns. There are a number of factors which caused this poor market performance. Among the most important causes were external factors such as currency fluctuations which gave Sterling and British an advantage, supply and demand shifts on the French market, which is by far the most important export outlet, —over 70 per cent—and the conflict between the development of sheep production and the diminution of consumer demand in the United Kingdom for the past number of years. There was one important internal factor, namely, the negative influence of over-fat hoggets during the early part of the year, which was largely a speculative, trade.
Once the negative impact of the market development began to be apparent early in the spring, I recognised the likely effects which might result for the sector and took immediate steps to obtain redress. The difficulties of the Irish sheep meat sector have been my number one priority from a political and official point of view and no effort has been spared either by myself, my officials, to whom I pay tribute, or the relevant State agencies to assist sheep producers. There has been no indifference: the contrary is the case. The efforts I have made have ensured that the effects of a poor market, albeit bad, have been softened, the demand for Irish lamb in both home and export markets have been boosted and the direct and practical intervention of the EU Commission has been secured. Action was taken twice during 1995 to restore confidence to the market at a critical time. I have sought a greater level of income support from the EU and put specific proposals to the Commissioner in regard to the kind of assistance which might be provided.
It is argued quite strongly and with some justification that the current EU regime has not achieved price convergence. The proposals I have put to the EU Commission are intended to remedy that situation by directing additional support towards member states whose prices are lower by a specified percentage than the EU average. I have suggested 10 per cent as a reasonable trigger mechanism. It is worth noting that sheep prices at the moment are quite good and for the past few weeks have been better than not only last year, but the last three years; 1994 was generally accepted as being quite a good year for sheep producers. As someone who produced lambs as far back as 1978, I accept the overall sheepmeat situation has been depressed for the last several years. Therefore it is important that we properly define the nature and extent of the problem if I am to convince the EU Commission and my colleagues in the Council of Ministers.
It is important that the realities are brought to the attention of the House. A number of difficulties combined to depress the lamb market in Ireland in the early part of this year. The following are the most important and significant: turbulence in the currency markets earlier this year created difficulties for sheep and lamb exported from Ireland, by upsetting the traditional trading patterns in France, which is our main export destination. The performance of sterling gave exporters from the United Kingdom a significant price advantage over Irish exporters in a volatile market. In addition the traditional French exports of light lamb to southern Europe were discontinued because of the strong French Franc and this produce was diverted instead to the domestic French market. The UK will export 100,000 tonnes of sheepmeat to France this year; a second factor was the restriction of exports of live sheep to the Continent from both Ireland and the United Kingdom. Irish live sheep exports were 16 per cent below corresponding 1994 levels in the first half of 1995. The very sizeable UK live export trade was almost completely stopped and product was exported in carcase form instead; a third factor was the significant decline in lamb consumption in the United Kingdom over the past three years — of the order of 20 per cent — in response to higher retail prices following the termination of the variable premium support system in that market. This demand shift resulted in the release of greater quantities of British lamb on the French market. Had that decline in consumption not occurred the market position would be much healthier. There is also the reality of strong competition from white meat, particularly poultry; the presence of an exceptionally large quantity of 1994 season hoggets on the Irish market in March and April at the time when prime new season spring lamb became available seriously depressed the going price for the new season product.
I have taken a series of measures to deal with the situation. Having consulted the various interest groups involved I submitted a memorandum to EU Commissioner Fischler in March 1995 outlining the serious market situation in Ireland and seeking additional suport by way of the ewe premium for the low market prices which then obtained in Ireland. My proposal was that where market prices fell significantly below the average EU, an additional top-up compensation should be provided and I also sought extension of the rural world premium to all sheep producers. Therefore I have put specific solutions to the Commission.
The Commission responded in the form of a direct market intervention which was confined to Ireland. A scheme of aid for private storage, which provided subsidies to lamb processors to buy up and store the equivalent of 11,000 season hoggets, played an important part in controlling the downward trend in prices and allowed the market to recover and provide more realistic prices for 1995 season lamb.
A hoax.
The APS measure cost £300,000, eliminated the hogget problem and restored market confidence at a moment when panic selling of lamb seemed to be threatened. That measure was widely recognised by the industry at the time.
£5 million.
At the June Council of Ministers I again put the issue before my fellow Ministers and the Commission. Subsequently I secured a commitment from the Council to provide market management measures for a second time and to review the operation and level of the ewe premium. In the event this was a very important commitment and is the foundation of my current efforts at the Agriculture Council. In July a second scheme of APS took 756 tonnes, the equivalent of 41,000 lambs, off the market both here and in Northern Ireland, and provided quite generous levels of subsidy which cost the EU £800,000. This second market measure was especially timely and effective in that it not only removed a sizeable quantity of lamb from the market but created conditions which by the end of the summer allowed prices to pick up and rise to levels above those which existed in 1994. The value of this measure was fully recognised by the industry, particularly the meat processors who had originally poured cold water on it.
What about the farmers?
The Minister without interruption.
Currently lamb prices are 4.5 per cent above last year's level and this satisfactory price has been in place for the last six weeks. The overall gap between 1994 and 1995 is of the order of 5 per cent. Our colleagues on the other side of the House did not mention any top-up premium or the extension of the rural world premium in 1993 and 1994.
At the end of July I also secured agreement to the earliest ever payment of advances of the 1994 ewe premium. It is consistent with what was said about the charter of rights that all payments——
The Minister is in power now.
Deputy Hugh Byrne was very quiet this time last year.
Let there be no interruption from any side of the House. The Minister is in possession.
It is my overriding priority that all payments from the Department be brought forward, such as headage payments. We have done away with the advance payments at a cost of £20 million. Added to that, not only will we have the earliest ever payment of the ewe premium but the first two instalments were paid together.
100 per cent of nothing is nothing.
The £80 million paid directly to producers supported their incomes in difficult market circumstances. Comparing the 1995 premium to last year's I hope that £120 million will be paid this year in ewe premium payments. This will be an additional £20 million in the pockets of Irish sheep producers. The ewe premium overall should be between £2 and £3 per head higher this year than last and will help cushion the losses suffered through market weakness early in the year. It is important to emphasise that the main difficulty was in the late spring/early summer period and the main adverse consequences fell on those who produce lamb for that period. Any solutions must address the real problem.
I ensured that retention periods for 1996 ewe premium, while complying with the requirements of EU legislation, strike a proper balance in the orderly disposal of lambs. There has been synchronisation between Northern Ireland and the Republic and there will be a single retention period in Britain. We have had a number of bilateral talks with our colleagues in DANI and MAFF in that regard. Those changes will help to avoid tensions in the market next year.
I tackled this issue head on and will continue to do so. A series of measures specific to Ireland have been taken. They were introduced at critical times and there is evidence to show that they had a positive effect. This is part of an ongoing process.
It is without success.
The best is yet to come.
It gets better than this?
This is Disneyworld.
At both the September and October meetings of the Council of Ministers I kept the problems of Irish sheep producers on the negotiating table. I lost no opportunity to bring the matter to the attention of my colleagues on a direct one to one basis. I raised it bilaterally with Ministers and the President of the Council. The Secretary of the Department and I had an intensive meeting with Commissioner Fischler a fortnight ago.
The Minister will be delivering on the matter soon.
I ensured that my officials availed of every opportunity to press this just case. I am in no doubt that there is a full understanding of and sympathy for the difficulties experienced by Irish lamb producers this year in the Council of Ministers and the Commission. I am determined that this understanding will be translated into effective action on their behalf.
I do not need to be convinced of the importance of protecting the future of our sheep sector. It is operating in an increasingly difficult and competitive market with pressure being exerted not only by exporters in other production countries but also from other meats. The difficulties for the sector are not as a result of a decline in political supports — there was a cut in export refunds in other areas — but are due to market difficulty. No Minister can be held responsible for the market price of sheep.
Excuses will not put bread on the table.
Lamb is a relatively high priced product which tends to be sold at the top end of the market. Therefore, it is natural that it should be subjected to strong competition. Our sheep sector has a number of important advantages. It has the ability to produce a top quality produce in a good environment and has the benefit of good consumer perception. We have established a good production base and were able to significantly expand sheep numbers before quotas became a reality.
There was reference to the decline in the number of sheep producers. In 1988 there were 48,000 sheep farmers and the number rose to 53,000 in 1993. The latest figures show there are 48,000 producers. In 1988 the ewe flock was 3.97 million. It rose to over 5 million by 1993 and is now 4.67 million. We have the same number of producers as in 1988 but a much larger national sheep flock.
We need to remedy the weakness in the industry. Not all the problems are caused by external factors. A greater effort needs to be made to achieve quality on a more consistent basis. For that reason I asked An Bord Bia to carry out an indepth analysis of the different aspects of the sheep industry with particular attention on the export market.
More consultants.
The report is in the final stages of completion and I believe it should be the basis for formulating a strategy for the period ahead. A number of matters are clear. Irish produce is most vulnerable in its quality and consistency of product. The French market on which we are so dependent will penalise poor quality production. If we do not produce exactly what the market demands our competitors are fully prepared to take over our market share. As a step towards the achievement of the required standards of excellence I have opened discussions with lamb processing plants which aim to introduce an effective and workable lamb carcass classification scheme in all export processing plants with effect from the beginning of next year. I am determined that this should go ahead.
Deputy Cowen referred to this matter. I always said it would be introduced in 1996. It was not my intention to do otherwise. However, an elaborate classification grid with mandatory independent policing by my Department would have the direct consequence of imposing a significant levy on sheep producers. Something of the order of 50p per lamb was suggested. There is no support among sheep producers for this. I have made it clear that the value of the classification system is such that I am insisting that it go ahead. I want a workable basis on which it will be implemented voluntarily but failing that, if necessary, I will introduce a compulsory scheme. My first attempt is to secure the co-operation of producers.
If the Minister can avoid taking hard decisions he will do so.
There is no diminution of my determination on this issue. If Deputy Cowen is advocating another levy on sheep producers——
Go and implement it.
I took swift action in the pig sector when I was appointed Minister and suspended levies. I would welcome the Deputy's support in due course if I cannot reach agreement. I accept it in the constructive spirit in which it is put forward.
If prices were what they should be producers would not mind paying.
Make a decision.
The last thing sheep farmers need at this stage is an arbitrary levy.
Political cowardice.
We need to match our competitors in quality and efficiency. At producer level there is scope to increase the number of lambs per ewe. We need to ensure that our breeding policies are correct. Quality is paramount. There is an optimum weight at which lambs should be slaughtered. For instance, does the industry run the risk of creating a hogget problem early next year? Attention should be paid to the experience of this year.
When I went to the Rungis market I was told by buyers, distributors and so on that it did not matter about the quality of the carcass; once it is over 18 kilos there is no market for the lamb, not to mention the problems of over fat. We must be very careful not to create a hogget problem in 1996.
I recently had discussions with our New Zealand colleagues and the prospects for early 1996 are quite positive. There are emerging markets which can be exploited. The German market is widely recognised as having good potential for expansion. It is a high quality, demanding market. I know An Board Bia are alive to and working on those possibilities.
The question of New Zealand lamb imports is an issue which is frequently raised. Deputy Ellis gave the impression that a decision was made this year which altered the position of New Zealand imports. This is untrue. I understand the factual position is that they will not achieve their full quota this year and my efforts have been to work with a legal agreement, a voluntary restraint agreement which I inherited——
The same old tune again.
——but I am determined to ensure that there is price responsibility between New Zealanders and ourselves. I met the three principal exporters in Auckland.
Was that the reason for the trip?
Absolutely. I went out of my way for sheep farmers.
We read all about the Minister.
It is a long way from Courtown Harbour.
I am not a keen traveller and do not enjoy flying.
Like myself.
I am so concerned that there is no sub quota between chilled and frozen product in the overall quota of 225,000 tonnes that we must approach the New Zealanders on the basis of having a common interest in price. They have as much a vested interest in high prices as we have in their wish to export from January to June. I am determined that we will have that co-operation.
Regarding what Deputy Ellis said, the reality is otherwise. New Zealand has had long-standing rights of access to the European market subject to a 20 per cent duty, for unlimited quantities. For many years the New Zealanders agreed, through negotiation, to limit the quantity they send to Europe in return for a levy concession. The GATT deal allocated them a somewhat higher quantity——
What was the percentage?
I am coming to that.
Peter Sutherland finished that.
——than the most recent voluntary restraint figure but, above that figure, a prohibitive tariff applies, that is, above that level, in normal circumstances, imports are not possible. That is the GATT deal. It did not create a new or exceptional right but took account of an historic entitlement and placed on a more formal and permanent basis a form of quantitative limitation. Unfortunately, it has been done and cannot be renegotiated.
I have had an opportunity to put directly to the New Zealand industry and its Minister for Agriculture Irish producers' concerns at their level of access and at the level of prime cuts that can be put into the marketplace. It is in their interest not to conduct their business in a manner which would disrupt the market. It is also the case that there are technical limitations on the volumes of chilled produce they can import. Indeed some concerns voiced in this area are exaggerated.
I have tackled the difficulties in the Irish lamb market on all possible fronts over the past ten months.
Without any success.
That is not so.
Excuses for difficulties.
I am adamant that the speed and effectiveness of this action has controlled the effects of the difficulties to which I referred. I assure the House I will persist in my efforts at the Council of Agriculture Ministers to ensure a satisfactory outcome. Since there have been many references to it, the position is that, in the commitment I received on the price negotiation in June last, it was always considered it would be within the European Union year 1996 any measure proposed by the Commission would be contemplated. This means it will arise within the context of the conclusion of the Spanish Presidency. I never said, nor did any of my officials, that the solution would be reached in September. That would be simply impossible because the method of calculation of the ewe problem, taking market prices into account, runs right up to December. This means we will not know the normal level of premium, calculated on the basis of market prices, until that calculation has been concluded.
There was a reference to the position in 1992 — Fianna Fáil argued that this is compatible with 1992 — that my predecessor, Deputy Joe Walsh, got it and that I should get it. Needless to say, I will unhesitatingly use any arguments or resort to any precedent to obtain an exceptional deal for Ireland.
Will the Minister ring Joe and get a handout or contact him?
The Deputies opposite will like this.
The Minister is a great man at rewriting history.
When I inquired about the position and the circumstances that gave rise to that top-up premium in December 1992 I was told bluntly that had been Commissioner MacSharry's last meeting, that he was on his way out the door.
(Interruptions.)
I understand that Commissioner Fischler will not talk to the Minister.
Second, 1992 had been the last transition year from the old method of calculation to the new——
The Minister will try anything.
A spin doctor required.
——which was absolutely without precedent. Notwithstanding the fact that the market is a lot stronger now than in 1992, I remain not only——
A top-up premium with excuses is what there is now.
——hopeful but confident that I will secure a satisfactory response from the Commission which it will fund.
My difficulty — obviously that of someone who has the responsibility of negotiating this package; it is not one of the Opposition because they do not have that responsibility — is that to change the method of calculation of the ewe premium requires the Commission to propose it and that it be accepted by a qualified majority. Deputy Cowen as a former Minister for Transport, Energy and Communications will be fully aware of European Union voting procedures. I do not want to mislead anybody on this issue but, frankly, no other member state of the European Union will vote with Ireland on the issue of changing the method of calculation.
Is the Minister beaten before he even goes?
We have three votes. Leaving aside the fact that the Commission will not propose a change in the method of calculation, I can say that, if there is any prospect that I can use our Presidency in 1996 — as part of the review referred to which may be carried out in the first half of 1996 — I will seek to have it as my absolute top priority so that it will incorporate the points made on price convergence.
Will the Minister call for that review now?
The review will take place anyway.
No further interruptions, please, Deputies.
The Minister and I are engaging together.
I want to be absolutely clear on this issue. Anything I can do to support the issue of price convergence, notwithstanding the problems vis-à-vis carcase weights — about which Deputies opposite know and on which I will not dwell here — I will do to secure the best possible outcome. If that review moves into the latter half of 1996, I will certainly have it as one of my top priorities.
It is most unlike Deputy Cowen to make some disparaging remarks about me——
Only the rhetorical ones made on Louth-Meath radio recently.
He asked if I was taking credit for cattle and pigs prices. Notwithstanding the ferocious criticism to which I have been subjected in relation to my stance on live exports, I have ensured a floor price for cattle——
From whom?
I have been subjected to criticism and have always maintained that a floor price for cattle is best sustained.
Banning live exports was never an option.
There was reference to the pig sector. When I assumed office on 14 December 1994, one of my most difficult tasks was to meet pig producers——
We are talking about sheep.
——who had been led a merry dance throughout 1994 with a litany of promises about a special aid package through CBF and so on — special subsidies to be paid, including a sow subsidy — all of which was not available and could not be honoured. However, I did implement a series of special measures for pig producers which has resulted in a dramatic recovery in that sector.
Nonsense.
For the first time in three years, 1995 will show clear profitability in that sector.
(Interruptions.)
The Minister has two minutes only remaining. He must be allowed to complete his remarks without further interruption.
The Minister will not pull the wool over our eyes.
Notwithstanding some of the political undertones in this debate, I regard this as a constructive opportunity for the House to endorse the very strong actions I have taken. I support anything that can be done by producers, the industry as a whole and the Opposition, in the most constructive spirit, to ensure we can present a united case so that, when we face into this meeting, we shall have a realistic appraisal of the position, put forward the best technical case, based on price convergence, thus ensuring we maintain maximum sheep output.
I wish to say categorically to sheep farmers that there are cyclical difficulties in that sector but we must take the long-term view. I want to provide a series of measures, Council measures, market measures through the APS, income measures through the rural community, through the premium itself. I will continue to pursue all those objectives. We will deal with the quality issue, with the strategic approach through An Bord Bia.
We have received a concerted response through my officials, State agencies and Teagasc——
By the spin doctors.
——to ensure we can improve the output, yield and quality of the sector.
This motion, as at present drafted, does not do justice to the seriousness of the problem. Nonetheless I recommend the alternative amendment to the House. I assure sheep farmers that on entering the next meeting — it is at present unclear whether there will be one or two meetings but meetings will probably be convened for 30 November and 1 December — this will be my top priority and I remain confident of a satisfactory outcome.
I propose to share my time with Deputies Coughlan and Killeen.
I am sure that is satisfactory and agreed.
This debate is particularly important not only for the large numbers of our farmers involved in sheep production but for our agricultural industry and economy as a whole.
The importance Fianna Fáil attaches to the need to introduce urgent measures to help the sheep sector is demonstrated by the fact that our party spokesman, Deputy Cowen, tabled this thoughtful, positive motion. The Fianna Fáil Party decided this issue was of such importance it should devote its limited Private Members' time this week to this issue.
Serious problems have confronted the sheep sector for some time, but unfortunately the Minister's efforts to address and successfully tackle those issues have been negligible. Where is the Minister's much trumpeted claim of almost a year ago that the difficulties of this industry would be confronted and overcome? The days of announcing and recycling good news press releases of developments that took place before the Minister took office must come to an end as reality dawns on some commentators and interest groups.
The Minister's policy for the past ten months has been that good news is the sole prerogative of the current Minister and to address the difficult issues by inferring they were caused by the previous Minister. That public relations strategy has a short life span, but sadly it is too long for the different sectors which are not being helped by the Minister and his Department.
The Fianna Fáil Party realises the contribution the sheep meat sector makes to the economy as it represents 5 per cent of agricultural output. Obviously, the income difficulties of sheep farmers need to be addressed. We must not continue to discourage sheep production. A decline in the numbers involved in sheep production would lead inevitably to fewer applicants to participate in EU schemes, such as the ewe premium scheme, and would constitute a loss of income to the country, income available to us through a transfer of resources from the EU.
The An Board Bia study launched over a month ago demonstrated clearly the drop in income sheep farmers have experienced during 1995. Allied to that has been the severe reduction in the ewe breeding flock with the serious follow-on consequences of falling volume and output that will confront us in future. For some time, farmers in this sector have highlighted the difficulties. Hard working farmers do not take to the streets of Dublin for the fun of it, but only when genuine grievances arise.
Farmers in my county, particularly north west Cavan, have stressed the difficulties due to the poor prices obtained by producers in the April to July period of this year — a 15p drop in one week alone. Under present circumstances those farmers cannot see themselves making up those losses in the short-term. They also indicated to me the severe losses incurred in the spring of 1994 and the spring of 1995 during the lambing season.
Realistic and attainable proposals have been put forward which, if implemented, would help considerably to alleviate the cash crisis facing many farmers. There is general agreement the calculation of the ewe premium on an individual country basis would be to our benefit and would constitute fair play. If this mechanism of calculating the ewe premium is not attainable, a top-up premium mechanism is necessary. The gap between Irish prices and the EU average justifies an £8 per head ewe premium top-up. The anticipated convergence of EU lamb prices has not materialised. Surely there is every justification for changing this scheme. If one of the basic aims of any scheme, in this case the ewe pension scheme, is not attained there is an undeniable case to change it.
Another anomaly that needs to be addressed is the method of calculating the extensification premium with sheep being included for stocking density but excluded for payment purposes. Deputy Cowen outlined earlier other policy changes which are necessary and attainable. Particular difficulties may face the farmers in lowland areas but we must not ignore the difficulties facing those in the disadvantaged areas.
In the area I represent the vast majority of farmers involved in sheep production have small holdings and can ill afford to face continuing losses. The decline in the number of farmers involved in this sector and the drastic drop in ewe numbers will have serious consequences for rural areas. If the present unsatisfactory situation is allowed to continue the loss of income from the sheep meat sector will be disastrous. We need action from the Minister now. It cannot be delayed until 1996.
When I listened to the Minister I thought he was a lovely man, but if that is the attitude he is to take in negotiations he will be eaten up. Platitudes are all very well but not when it comes to making deals. If the Minister admits there is a problem and cannot face up to it there will be serious repercussions for sheep farmers.
With regard to sheep prices I agree the early lamb producer has been hardest hit. From speaking to some of the farmers in Donegal — not all of them are early lamb producers — I am aware that many of them have not even made the price of the meal they need to feed the lambs. With a 15 to 20 per cent decrease in sheep prices a serious problem is developing. I hope the Minister and his colleague on the back benches are aware of it.
We are at a competitive disadvantage, being the only country in the EU without a land link to the EU. We have a unique case to make in the EU with regard to transportation costs and consequent price problems. I agree with the proposal for an £8 per ewe top-up. If that is not accepted by the Commission another solution will have to be found. Given the number of solutions the Minister has put forward over the last year I cannot see why the matter has not been resolved. He told the IFA and many others the matter would be sorted out. I would like to see the Minister coming up trumps now. The Minister should tell us whether he can sort out the matter. If he does not enter negotiations strongly he will not have a hope. The Minister asked for our support and I am sure all Members would be supportive if the Minister could produce a deal.
I have a bee in my bonnet about other issues related to the sheep industry. The Minister mentioned the farmers' charter which was supposed to make everything rosy. With the farmers' charter everybody would get their premia in time, there would be no problem with the area aid payments and there would be somebody to answer the telephone day and night. That is not the reality.
I am sorry to hear that.
The problem is that the Minister does not know about it. When we answer the telephone in our offices we get complaints about people not being able to contact the area aid offices, that a mess was made of the area aid scheme this year, that those involved did not know the differences between lowland and hill farmers and, as a consequence, people were not paid in time. The matter has been addressed but to say that everything is rosy in the Department of Agriculture, Food and Forestry is erroneous. It is high time the Minister faced reality——
The heat from the TV cameras should do the business.
I will have to get more spin doctors.
The Minister has six.
In my opinion it was wrong to eliminate compulsory sheep dipping. I know pressure was brought to bear by people who have private dipping baths to remove compulsory sheep dipping, but I can categorically say it has not improved matters and there had been an increase in scab. We need to look again at this issue. We used to have disease free status in regard to scab but things have changed and we should consider reintroducing compulsory sheep dipping.
A wool premium of £4.80 is payable in disadvantaged areas; I think it should be available throughout the country. Will the Minister consider it? Farmers are in financial difficulties. I whole-heartedly agree with the introduction of an £8 premium. The matter needs to be addressed as soon as possible as 1996 may possibly be too late for some farmers.
I am pleased to have the opportunity to support the laudable efforts of my colleagues to draw attention to the serious crisis in the sheep sector. I compliment them for raising this matter in an effort to ensure that effective action is taken. The Government amendment is extremely worrying and clearly the Minister and the Government do not realise the extent of the crisis. If they think they have addressed it, they are very much mistaken.
The facts speak for themselves. Farmers are deserting the sheep sector in droves—over 5,000 have left sheep farming since 1992 and the lucky ones left it before this year because 1995 has been truly disastrous. The appalling drop in lamb prices could destroy many farmers and the Government must not continue to ignore their plight. Unfortunately, these real individuals face financial ruin because of the price collapse. Farmers must have profitable enterprises if they are to have an income to live on.
What is all too often dispassionately referred to as farming profits is nothing of the sort for most people but is the pay packet which must feed and clothe the farm family. It is very difficult for the vast majority engaged in agriculture to rear a family on the level of income available to them. There are few profitable farming enterprises and in 1995 sheep farming was not one of them.
For those engaged in sheep farming the expectation of an income to which they quite rightly aspired is barren and unfulfilled. Some people are under extreme financial pressure. They have good cause to fear that their reward for hard work and substantial financial outlay will not be the income for which they budget but massive losses and in the worse case scenario, financial ruin. No Government can afford to stand idly by when that is facing a very important sector in Irish agriculture but unfortunately it is what is staring many farmers in the face.
The real tragedy, as has been pointed out by so many speakers and very eloquently by the IFA, is that action can be taken which will redress the balance in favour of Irish farmers. The existing ewe premium can readily be topped up to provide a realistic subsidy to make up for losses in the marketplace, and this was its original function. This was done successfully by the former Minister, Deputy Joe Walsh, in 1992. In fairness, Deputy Yates went to great pains to outline his own efforts at Council of Ministers level but these efforts must be redoubled to ensure that short-term measures are introduced to alleviate suffering in the sheep sector. I believe it can be done and all it requires is the effort and commitment of the Government to advance the case strongly enough.
The facts are plain to be seen — it is a matter of selling the case to the other Ministers. The IFA called for an emergency ewe premium of £8 per ewe to offset the unprecedented lamb price collapse—that is the IFA description—and for a standard method of ewe premium calculation in each country or alternatively, and perhaps more easily achieved, a top-up mechanism to be automatically put in place.
In the longer term it is vital to eliminate the large price gaps between Irish, UK and French lamb prices. The Irish price seems to trail fairly close to the English level but it trails disastrously behind the French level. If I understand correctly, the differential in 1995 is of the order of £10 per lamb. That is a massive price differential. The Minister made great play of weight and quality. Of course, we must work towards achieving what is required in the marketplace but other factors are at play and while we pretend that weight and quality are the only factors, we cannot adequately address the factors that militate against Irish sheep farmers. Until the Government recognises that, it cannot begin to address the problem.
We can rightly say that the quality of Irish lamb is extremely high, and the last thing we should be thinking is that it is not, because we are playing into the hands of those who are setting the price of Irish lamb at an artificially low level. Irish lamb producers are being discriminated against and that issue has to be faced up to in this country before it can be dealt with. The pricing structure must be carefully examined. We must not be conned into thinking that quality and weight are causing the problem.
The IFA has called for a co-ordinated approach to selling by Irish exporters to France and increased lamb promotion by An Bord Bia. This is within our power but it is something we have not been doing effectively. We have ducked and weaved away from the price differential between sterling and the punt and have done everything but addressed the issue. We have advanced every excuse but have taken no action. The Minister for Tourism and Trade — whom I sometimes have the opportunity to question — always transfers the matter to the Minister for Finance — perhaps he is right because he cannot deal with it — but it must be dealt with because it is causing hardship. Besides the farmers and those directly involved in agriculture as sheep farmers there are consequences for butchers and a huge number employed in meat factories. This has also to be faced up to. A catastrophe is facing the Irish sheep industry and it will have far-reaching consequences. We need to recognise what these will be and address them. The Minister has taken some action at European level. He urgently needs to have successes there, and to have the position in regard to New Zealand addressed at European Commission level.
Debate adjourned.