Dáil Éireann debate -
Thursday, 16 Nov 1995

Vol. 458 No. 4

Ceisteanna—Questions. - Milk Quotas.

Brendan Smith

Question:

6 Mr. B. Smith asked the Minister for Agriculture, Food and Forestry if he will make a special case to the European Commission to have additional milk quotas made available to dairy farmers in the Border region, particularly those with less than a 30,000 gallon quota; if he will seek this additional allocation under the European Union's operational programme to promote peace and reconciliation in view of the importance of dairying on both sides of the Border, the need to regenerate the economy in that region and the positive effects that additional quota would have in sustaining viable family farm enterprise; and if he will make a statement on the matter. [17002/95]

Mr. Yates

A number of proposals have recently been put forward in regard to a milk quota-related initiative in the Border areas in the context of the peace process. I support any initiatives which would secure additional quota in these regions, especially for small scale producers. The Deputy will appreciate, however, that granting additional quota is a sensitive matter within the EU. If there is to be any hope of success for this idea it is, therefore, essential that it be fully supported by the UK as well as the Irish authorities and that it be pursued within the EU in a suitable negotiating context.

Mr. B. Smith

Will the Minister accept that with increasing buoyancy in world markets for butter and milk powders this is an opportune time to seek additional milk quota and that the increased milk supply should not be left entirely to non-European countries? Furthermore, will the Minister accept that the operational programme to promote peace and reconciliation is an obvious mechanism for seeking additional quota, given that two of the stated aims of that programme are to promote rural and urban regeneration and create employment, particularly as the majority of farmers on both sides of the Border depend on dairying which accounts for one third of agricultural output in the entire region?

Mr. Yates

I do not agree with the Deputy's first point. The world price of milk is 56p a gallon. Ireland's dairy farmers are getting £1.13. That is because of the quota regime. High prices are based on restricted production. Farmers in New Zealand can produce as much milk as they like, but at 56p a gallon. I am open to the idea of looking at B quotas and so on, but it is nonsensical to think that we can dismantle the quota system and maintain dairy farmers' income. As to the cross-Border proposal, we have had discussions with the Department of Agriculture in Northern Ireland, and I am very supportive of any measure. However, I have been advised in the strongest, most explicit terms that if this were to go through the normal channels of DG6, the SAC and so on, it would be rejected by the Council. It has to be parachuted in as a political proposal unrelated to the normal agricultural procedures. In that regard, Mr. Hogg, the British Minister, is coming to Dublin on Monday. I will be having discussions with him and this will be high on my agenda. There are already indications that the Scottish and Welsh Secretaries of State are not prepared to give fulsome support to this proposal because it would trigger similar requests in the UK. First I have to get the UK on board — I am working intensively on that — and then try to handle it in a non-agricultural dimension. Every country in Europe wants increased milk quota which is not available. We must, therefore, find a non-dairy argument to advance this.

Mr. B. Smith

I did not suggest that the present quota regime should be dismantled. I said that the operational programme to promote peace and reconciliation was an obvious mechanism for advancing the proposal. It is at the political level that the Minister should try to advance this. A relatively small percentage of quota would be of major benefit to the disadvantaged Border counties which have suffered tremendously over the years due to the political difficulties. One of the stated aims of this operational programme is to promote rural regeneration. There is no better way to promote rural regeneration than to have increased agricultural activity.

An Ceann Comhairle

The Deputy is making statements rather than asking questions.

Mr. B. Smith

Will the Minister pursue with the Commission, the Commissioner and the British Minister the positive proposal put forward by the major dairying co-operative societies on both sides of the Border?

Mr. Yates

That is what I am doing. It is our best opinion that if we were to submit this proposal to the Agricultural Commission as it stands it would be rejected. It would be blocked by every other member state, and it might not even have the support of Britain. The plan is to work up the proposal with the British authorities, to overcome the Welsh and Scottish difficulties, and to make a special case, perhaps through the President of the Commission or through the Anglo-Irish process. I am fully supportive of the fact that milk quota is the best way to ensure the maximum number of family farms North and South of the Border. I thought I heard the Deputy say that it is unfair that European farmers are restricted in their production while other farmers in New Zealand and so on are allowed increase production when there are market opportunities. Let us be in no doubt that in Europe milk production exceeds milk consumption by about 120 per cent. There could be a temporary benefit in relation to Russian purchases of butter or an abatement of production in New Zealand and Australia which might not be permanent factors. it would be wrong to jeopardise the buoyancy of the milk sector by dismantling the quota system in any way at this time.

Mr. Kirk

At present Teagasc and the Department regard 30,000 gallons as the viability threshold of a dairy farm. Is the Minister considering the possibility of raising that threshold, given that the economics of milk production are continuously under pressure? Does the Minister feel there is a need to modify the ring-fencing arrangement to take account of farms with a milk quota that does not reach the magical 30,000 gallon viability threshold and which are just outside the disadvantaged area boundary, having regard to the fact that they have the same soil type and operate similar farm practices as farms inside the disadvantaged area?

Mr. Yates

These are general knowledge questions on the dairy sector. I am quite happy to entertain them, but they are far removed from the Border peace proposal for extra quota. The quota system is assured until the year 2000. My best guess is that it will continue for some time after that. There may be a two-tiered approach, or changes in the butter regime with the possibility of introducing a dairy cow premium, as originally proposed by the then Commissioner Ray MacSharry, which would lower the cost of butter and make it competitive with other yellow fats.

I have an open mind on the question of the 30,000 gallon quota. However, the reality is that milk under the restructuring scheme dried up because of the cheque book approach of many people who bought up leases. For leases under three years I introduced a 10 per cent clawback, and a penalty to prevent overheating. Certainly, farmers in the 30,000 gallon category or below cannot get enough milk, but increasing the threshold would mean that there would be less milk for those who are eligible.

Regarding ring-fencing, all I can say is that we have introduced it and I will review it after one year. If the Deputy has particular concerns of marginal adjustment on the periphery of disadvantaged areas, I will examine that.

Mr. Leonard

Would the Minister agree there is irrefutable evidence to support special measures for the Border region? The figures for a co-operative in Monaghan in which I was involved all my life before entering politics indicate that between 1984 and 1992 there was a reduction of 36 per cent; 1,176 people went out of milk production and there were 16 new entrants over that period. Forty-four per cent of farmers in north Monaghan and 30 per cent in south Monaghan gave up dairying. North Monaghan has suffered most from the reclassification of areas. Would the Minister also agree that small quotas do not justify the expenditure required to meet quality demands and that farmers cannot secure the funding to do so? This creates a catch-22 situation with the result that most farmers opt out of dairying, ending up with no income from their farms, and they are not even in the severely handicapped area.

Mr. Yates

I wish to allay the Deputy's fears. There is no suffering under reclassification because everyone who was recommended by the appeals panel was submitted. All County Cavan has been included and a substantial part of Monaghan. I am delighted with the successful outcome of the reclassification.

Mr. Leonard

The Minister would not say that if he lived in Monaghan.

Mr. Yates

The points made about the milk quota could also be made by farmers in Clare and other areas. I would be happy to secure an increased milk quota whether through the peace process or any other means.

Mr. Cowen

When the quota regime was introduced in 1984 we were given a commitment that in the event of increase quota becoming available Ireland's special case would be looked at in view of the importance of the industry to our economy. The situation in the Border regions applies equally to all other areas. Dairying is by far the most popular farming enterprise. Yet the number of dairy farmers has decreased from 80,000 top 40,000 since the quota regime was introduced, while the technical people estimate that there will be fewer than 30,000 dairy farmers by the end of the decade. Does the Minister agree that all the evidence points to the necessity for him to make the strongest possible case in Brussels for an improvement in our quota? Since the quota regime was introduced our quota has been reduced by 8 per cent in national terms while the Italian quota has been increased by 11 per cent and the Greek quota has been increased by 20 per cent. Given the points made by Border Deputies today, the findings of the Clare Leader study, the trend in the dairy industry and the commitment heralded by the then Minister for Agriculture, Deputy Deasy, in 1984, will the Minister do everything possible to secure an increase in the quota for the many farmers who will go out of business if they do not get a quota? Approximately 50 per cent of quota holders have only 22 per cent of the quota.

Mr. Yates

I will be happy to take any measure likely to secure an increase in the national quota. I have raised with my officials the increases in the quotas for Italy and Greece which were determined when the Deputy's august party was in office. The best advice available to me is that there was a dispute about the method of calculation of the national quotas for Italy and Greece and this led to the increase. No country has been given extra quota per se. Rather, there was a suspension of 4.5 per cent of the quota and this was made permanent. The farm organisations and others took a case to court but lost — the Commission strongly resisted it. The Commission has been very firm on the reduction of quota over the years and I have been advised that there is no likelihood of an increased quota. I will be happy to pursue any means of securing an increased quota.

Mr. Cowen

We are talking about the demise of dairy farming. What is the CAP about?

Mr. Yates

Under the GATT the Commission could table a proposal for a further 1-2 per cent cut in the quota in 1996, 1997 and 1998. I will strongly resist any such proposal.

Mr. Cowen

It will not happen.

Mr. Yates

It is all very well to say I will ask for an increase in the quota but it is not a proper basis on which to raise expectations.

Mr. Cowen

The Minister can put a stronger case than that.

Mr. Yates

I accept that milk quotas are an integral part of the structure and profile of family farms and I will pursue any measure which has any chance of securing an increase in the quota.

Mr. Cowen

The Minister is a politician, not a bureaucrat.