Dáil Éireann debate -
Thursday, 18 Dec 1997

Vol. 485 No. 4

Written Answers. - Intervention Prices.

Pat Rabbitte

Question:

18 Mr. Rabbitte asked the Minister for Agriculture and Food the new procedures, if any, which are planned at national level for the better supervision of payments in view of the findings of the EU Court of Auditors that Irish cereal farmers got roughly £200 million too much in compensation for each of the years from 1993-96, while beef farmers got overcompensation of £25 million; and if he will make a statement on the matter. [23207/97]

Minister for Agriculture and Food (Mr. Walsh)

The 1992 reform of the CAP provided for a reduction in intervention prices in the beef and cereals sectors and for compensation to be paid to producers through the direct payment system. The over compensation referred to in the report of the European Court of Auditors relates to the level of compensation provided for in the reform for the cuts in institutional prices relative to developments in actual market prices following the reform. There is no reference in that report to the amounts referred to by the Deputy and I am not aware of the source of that information. The Court of Auditors has not suggested that the over compensation has resulted from inadequate procedures or controls on the payment.

As far as the cereals sector is concerned, it is true that prices on world and EU markets remained buoyant after 1992, particularly in 1995 and 1996, due mainly to weather induced shortages and depletion of world stocks. However, EU prices have fallen below pre CAP reform levels and this is evidenced by an increase in consumption of cereals in animal feed of at least ten million tonnes up to 1996, and a reduction in intervention stocks from 33 million tonnes to less than two million tonnes in June 1997.

It is worth noting also that producer prices in Ireland in 1997 were 28 per cent below those in 1992 and were 33 per cent down on 1990 and 1991. In the circumstances, it is clear that the adequacy or otherwise of compensatory payments can only be assessed properly over a reasonable period of years and not over the relatively short period during which exceptional market conditions prevailed.

As far as beef is concerned, it might be noted that the European Commission, in its comment on the report, has rejected the Court's finding that European beef farmers were overcompensated. It is difficult in any event to quantify the extent of any overcompensation because developments in cattle prices are influenced by several factors, and trends can only be established over a longer time-frame than that covered by the report. In this regard, it might be noted that cattle prices in Ireland were significantly lower in 1996 and 1997 than in 1992.