Joe Walsh
Question:11 Mr. J. Walsh asked the Minister for Agriculture, Food and Forestry the reason the crisis in regard to export refunds was repeated in 1997 in view of the very severe effect of cuts in 1996. [3210/97]
Priority Questions. - Export Refunds.
There were no cuts in export refunds in 1996. Refunds were actually increased by 7.5 per cent for beef and 5 per cent for live cattle in February 1996 followed by a further increase of 12.3 per cent for both categories effective from 1 May 1996. Between September and November 1995 the Commission cut export refunds on four different occasions in order to control the level of subsidised exports to third country markets to comply with the GATT export ceilings which had come into operation for the first time in 1995. Under the GATT agreement the limit on subsidised exports of beef is due to fall from 1.137 million tonnes in 1995 to 821,000 tonnes in 2000.
Following these cuts in refunds I expressed serious concern to the Commission about the approach being adopted to limit the level of subsidised exports and I suggested alternative ways which would achieve more effective management of the licensing system to achieve this objective. In any event these cuts were fully reversed in 1996 through the increases I have already outlined. These high refunds, in conjunction with the very flexible intervention arrangements, stabilised the industry and underpinned producers' incomes in a period of great difficulty for all concerned.
The decision to cut refunds by 10 per cent on 15 January this year following the suspension of licences applied for in the previous two weeks was a matter of serious concern to me. The decision is attributable to concern on the part of the Commission about the high volume of licence applications in a situation where two thirds of the GATT ceiling has already been used. I raised the matter immediately with Commissioner Fischler while the Taoiseach raised the matter with Commission President Santer with a view to having the decision reversed. The matter has also been raised formally at the Agriculture Council with support from other member states. The fact that the Commission has acceded to my request to reduce the validity period of licences to 30 days as a method of controlling applications in order to stay within the GATT limits is a first step in the process which will hopefully see refunds increased to their former level. I will maintain pressure on the Commission and seek the continued support of my colleagues in the Council of Ministers to achieve that result.
Will the Minister confirm that export refunds are now 10 per cent lower than in September 1995?
Yes.
Would the Minister agree he has failed over that time, and particularly during the Irish EU Presidency, to reverse that?
No. From May 1996 to January 1997 they increased again to 64p per pound. The Deputy should be aware this is all part of the GATT deal he negotiated. The licence prefixed so far is for 770,000 tons. As he knows, the GATT year runs out on 30 June and the limit is 1.19 tons. The Commission divide up the remaining 35 per cent of licences available and try to have an orderly disposal. They do not want a situation where there are no prefixations left in April or May. That is the reason for the cut.
The Irish had heavy prefixations before the revaluation but they have acted very responsibly subsequently. The very heavy prefixations on the Continent caused the problem. Whether our representations to have them reversed will be successful will depend on the level of prefixations that now apply at the lower rate.
Is it not true that in autumn 1995, following the major cuts, the Minister publicly declared this was a temporary matter and he would have it reversed, thereby deluding farmers?
Similarly, on 5 January 1997, the same optimistic statement was made, and rather than a reverse, an additional penalty was put on when the South African market export refund was cut by a further 10 per cent?
I was successful in getting a temporary decision whereby the cuts in autumn and late 1995 were reversed and we had the full level of refunds for the massive level of prefixations from May 1996 to January 1997. Whether the present level is temporary will depend on the level of prefixations.
The Deputy mentioned South Africa. This is not a matter relating to the GATT. It is particular to South Africa and the rate of refund for boneless female beef and boneless male forequarters. There was an 8 per cent reduction because there was a change in the refund zone applicable to South Africa for those cuts of beef. This pressure was put on by South Africa and neighbouring States because of the damage higher refunds were causing their native beef production. Those African countries have sought the abolition of all refunds and a compromise was reached to modify by 8 per cent.