Vol. 458 No. 4
9 Mr. M. McDowell asked the Minister for Agriculture, Food and Forestry the action, if any, he proposes to take to ensure the continuation of the beef slaughter premium; and if he will make a statement on the matter. [17047/95]
The deseasonalisation slaughter premium is payable in member states where the number of steers slaughtered in the period 1 September to 30 November of the second preceding year exceeds 40 per cent of annual steer slaughterings. On that basis, the deseasonalisation slaughter premium will be payable in Ireland in 1996. This scheme is designed to encourage a better seasonal spread of slaughterings in regions with traditional seasonal imbalances in production. It has been very successful in Ireland in meeting this objective. There is a problem — emerging in Ireland this autumn — that that success would jeopardise the continuation of the scheme, i.e. cause slaughterings in the relevant period to fall below the 40 per cent limit, and thus cause a return to the previous seasonality patterns. In view of this, I have asked the European Commission, as part of a review of the scheme later this year, to propose a reduction in the trigger to 35 per cent in order to guarantee payment of the premium in 1997 and future years. This request is at present being considered by the Commission services.
Has the 35 per cent to be slaughtered between 1 September and 30 November?
Yes.
Traditionally would the figure not have been higher than that? Has it fallen as low as 35 per cent now?
We are still within that period and there are some weeks to go before we know what the actual outcome will be. A rough guess is somewhere circa 36 per cent, but that is not an official figure. We await the figures. Anything that meat processors can do to slaughter as much in the last week of November as opposed to the first week of December would be greatly appreciated.
This is worth come £15 million to Ireland. I do not think we will make the 40 per cent criteria. Last year we made it by less than 0.5 per cent, the figure of 40 to 41 per cent secures payment for 1996. This has been a victim of its own success. The seasonality pattern of stock coming off grass in the autumn is changing because of the extra £58 a head that farmers get from 1 January to April and tapering out after that. That has meant that more people have held on to stock and therefore the seasonality problem has been greatly resolved. Given the success of the scheme, it would be unfair to make it a stop go exercise as we would revert to a seasonality problem once the premium is lost. I am giving this matter my attention and I hope it will be retained.
Do the large numbers of live exports and cattle travelling on the hoof have any bearing on this matter or are they entirely irrelevant to it?
There is little variation in the pattern of live exports throughout the year. While we could revise the method of calculation to include the seasonality of live exports, that would not improve the figures. The percentage that falls in the period in question is irrespective of the total number slaughtered, which is a separate argument.
Due to the importance of the deseasonalisation premium for winter fatteners and the 5 per cent reduction in boneless rather than carcase beef — which puts us at a disadvantage with the Germans and others — and as export refunds have tumbled by 21 per cent for live exports and 13.5 per cent for beef exports, does the Minister agree that the deseasonalisation premium is crucial for farmers with winter fatteners? Is he optimistic that the premium will be obtained? If he fails to obtain it on the basis of reducing the threshold to 35 per cent, does he agree that to average the figure over a three or five year period would at least assure us of obtaining it? Will he confirm that irrespective of whether the figure is 36 per cent or 40 per cent, due to our seasonal cycle in beef production the premium should be paid?
Seasonality in beef production has reduced greatly. More farmers have cattle wintering facilities and do not sell off the grass. I agree that we should seek to retain the premium but I cannot say what the outcome will be. If the figure for slaughterings between 1 September and 30 November is below 35 per cent, I have been advised that the prospect of a satisfactory outcome is bleak. If the percentage is higher we can argue it is a marginal adjustment. This should not be a black and white issue in that we get all or none of the premium. The figure should be reduced proportionately. The scheme has been an outstanding success. As, essentially, Ireland is the only country that avails of it, other member states do not think highly of it. When we know the figures at 30 November I will devise the best strategy to ensure maximum payments under the DSP.
While acknowledging the difficulties facing the Minister in this area, if the premium is not obtained the live trade will become more competitive and profitable for beef producers. Due to our unique position in Europe as the producer of grass-based beef, would the Minister make a special case to retain the premium at the present level for beef farmers who fatten in the off season? There should not be a percentage clause. It is important that we encourage farmers who produce beef off season.
I agree with the sentiments expressed by the Deputy but if there is not a quantifiable seasonality problem, compensation cannot be obtained. I take his point that meat processors have a particular advantage in the period of the DSP because those premiums are not paid on the live cattle trade. However, the recent cuts in refunds on live exports, which are greater than on meat exports, have levelled the playing pitch. Farmers with winter fatteners paid far too much for store cattle this autumn. As there is no case to be made for those high prices, I caution farmers against paying them.
We are in a free market.
I am not complacent about the cuts in export refunds, I have rigorously expressed my opposition to them. I raised the matter at the last Council meeting. The commission has repeatedly said that every time there is a cut in refunds, the price of cattle increased. Cattle prices are buoyant at present, but should the market turn around, I will seek to have the refunds restored. They have not had the effect of reducing prices.
What is the figure for live exports as a percentage of total out-turn for the most recent year available?
We do not have the final figures. During the deseasonalisation assessment period steer slaughterings fell by 10.5 per cent compared with the same period in 1994. Steer slaughterings are unlikely to exceed 238,000 during the relevant period this year. The issue of the figure for live exports is a separate question, but it was approximately 270,000 or 280,000.
In regard to the deseasonalisation premium, will the Minister explain why the reduction in the beef export refunds last Friday relates to boneless processed beef only and not carcase beef? As that is the type of beef we sell to Iran, Russia and elsewhere, this cut will affect us more than our EU competitors, particularly Germany who have not suffered a similar reduction. Will the Minister also confirm that it is vital the deseasonalisation premium is paid this year because due to the reduction in export refunds the spring trade will not be as buoyant as the autumn trade? Given the tight margins under which winter fatteners must work, it is vital that we receive the £15 million. The figure can be averaged over the previous five years or the threshold can be reduced. As the Minister stated, this scheme is the result of successful negotiations carried out by his predecessor, Deputy Walsh.
The DSP for 1996 is assured. It is the 1997 premium that is in doubt. I am committed to deploying whatever negotiating strategy is necessary to obtain the premium. I spoke to Commissioner Fischler about the matter. We will have to await the figures at the end of November. It is important that as many animals as possible are slaughtered in the last week of November as opposed to the first week in December. I appeal to farmers considering selling cattle and to meat processors to bear that in mind.
The cuts in export refunds introduced last Friday were not put to the beef management committee. A vote was not taken on the matter. It was not a correct decision and runs counter to assurances given to me by Commissioner Fischler some weeks previously. I will table this matter on the agenda for the meeting on 29-30 November. When I tabled it last month I got considerable support from the French, German and Austrian Ministers. This stop-go policy on the suspension of prefixed schemes and the cutting of refunds is undermining the beef regime. The Commission would be well advised to review its modus operandi in this regard. I am not satisfied that it has taken into account the position of member states, such as Ireland, that export 90 per cent of their beef output.
