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Dáil Éireann debate -
Thursday, 5 Mar 1998

Vol. 488 No. 3

Adjournment Debate. - Lamb Prices.

Mr. Coveney

I am flattered that the Minister for Education and Science, Deputy Martin, is in the House for this matter.

So am I.

Mr. Coveney

I knew the Minister was expert at most things but I did not think sheep came within his ambit.

Even people who are not involved in farming are aware that there has been a disastrous collapse in lamb prices. An example of the stark facts in this regard is that the price of lamb in 1997 was 135p a pound. The price today is 95p a pound which is a 40p or 30 per cent reduction. This has a direct impact on the income of sheep farmers. In the days of the Celtic tiger, nobody is taking a 30 per cent cut, but that has happened to sheep farmers.

Another sinister development with regard to Irish meat on the European market is the new move towards nationalisation of food. The French market is paying ten francs a kilo more for its own lamb than for Irish lamb of comparable quality. This differential of 50p a pound is almost unprecedented. The ewe premium which directly supplements the income of sheep farmers has also been reduced. At the end of 1995, it was £20.59; it is now £12.42, which is a 40 per cent drop. In addition, a large number of ewes from Northern Ireland are getting into the system in the South. There are about 1.1 million ewes in Northern Ireland. Their slaughtering requirements are for less than 500,000 and they send less than 100,000 to the UK. It is estimated that the rest come south, which has a debilitating effect on our prices.

This is the critical time of year when spring lamb comes on the market, so it is necessary to take any possible steps to improve the price structure. The Minister promised before the election that he would introduce what is known as the extensification premium, which has not applied to sheep until now. He said that he would extend this programme to sheep producers. I am aware that he has made efforts to do so in Brussels, but there is widespread belief that he has not applied himself as efficiently to this task as he could have done by contacting his fellow Ministers for Agriculture and pushing for acceptance of this measure in Brussels.

Another premium, the rural world premium, is applicable only in disadvantaged areas at present. The Minister could make a strong case for its application in areas that are not disadvantaged. The ewe premium top-up could be considered where the average price in any EU State falls below the average EU price, which is the situation in Ireland at present. Headage payments in disadvantaged areas should be introduced for sheep.

Other schemes that could be considered include the aids to private storage scheme. It is believed that private storage, if introduced over the coming five to seven months, could reduce the large overhang of hoggets on the market. That overhang is part of the problem, and the APS scheme, which the Minister is working on, could help the situation. Lamb imports into the EU are opening the market more and more to New Zealand and other producers to the detriment of EU producers. This should be better controlled; it need not necessarily be phased out, but these imports tend to come on the market in vast quantities, and that should be better managed within the rules of trade. The Minister cannot do everything, but there is a list of measures from which he can select a proposal to sustain prices.

I apologise for the absence of the Minister for Agriculture and Food, who is at a meeting. This will be a learning experience for me.

Sheepmeat prices in 1997 were very satisfactory for much of the year. Prices in January, February and March, and from mid June to mid October were at record levels. This is a period in which nearly 701 of 1997 lambs were sold. Averaged over the whole year, the 1997 Irish market price was 2 per cent above the 1996 price which in turn was 21 per cent better than the 1995 average price. However, it is fair to say that in the closing stages of 1997 and in the early part of 1998 the market situation for sheepmeat in Ireland has deteriorated. Following two years of very good prices, November, December and January saw an unusual drop in market prices. The poorer prices of late 1997 have set a low floor for 1998 prices. Prices for the year to date are almost 30 per cent below the — albeit buoyant — prices of this time last year.

The difficulties on the market stem to a great extent from a large overhang of unsold lamb on the UK and to a lesser extent on the Irish markets. The particularly large stocks of unsold lambs in the UK and Northern Ireland, as a result of the strength of the currency, have depressed UK prices. This has increased competition for Irish product on the French market. The overhang on the Irish market, though smaller than that on the UK market, is nevertheless contributing to the problem also. There has been comment on the ewe premium which is the main form of EU market support. As Deputies will know, the premium is a market balancing mechanism which goes some way towards bridging the gap between institutional and market prices averaged across the EU. It is set annually and its level depends on the situation in the market in a particular year. The 1997 ewe premium has been set at £12.42, and has been compared unfavourably with the 1995 premium of £20.59. The reality is that in 1995 the average market price paid for a 20 kg lamb was £42.36, which with the premium of £20.59 gave a return of £62.95, whereas in 1997 the average market price for such a lamb was £52 which, with the premium of £12.42, gave a return of £64.42. On average, the Irish sheep producer was better off in 1997.

It is the case that there are producers now in difficulty, primarily those who bought store lambs in 1997 at high prices for a Mediterranean market which turned out to be more problematic than anticipated. The Minister for Agriculture and Food is fully conscious of the position of sheep farmers who are in this position at present and is also intent on protecting the 1998 spring lamb market. He has therefore already taken urgent action to address the core of the problem by seeking to have a quantity of 1997 season lambs taken off the market to allow market equilibrium be restored and to boost market confidence over the coming months.

His Department has made a strong case to the EU Commission for an immediate scheme of aid for private storage. In view of the fact that the problem is to a large extent of UK origin, it is essential that the UK are also part of the solution. The Department has therefore had high level contact with their counterparts in London to ensure that they give full backing to an APS scheme at EU level. An APS scheme which would remove a certain quantity of hoggets from the market until the summer would allow a breathing space in which market prices could be restored to a more satisfactory level. The EU Commission, in response to a request from Ireland and from the UK, has convened a special meeting of the Sheepmeat Management Committee in Brussels tomorrow, at which it is expected that an APS programme for Ireland and the UK will be discussed. The speedy availability of this market support should contribute substantially to alleviating the present problem.

In a wider perspective, l am conscious that in common with the rest of the EU, many enterprises in the Irish sheepmeat industry are going through a relatively difficult time despite good investments, hard work and state of the art management techniques. There is a need to build on the huge gains made in the past in terms of building up a major export oriented industry. There is also a need to improve the overall EU support system to better reflect the needs of the Irish sheepmeat sector. In this connection, Ireland has requested a top up premium, as suggested by the Deputy, and an extensification premium for sheep, arguing that the ewe premium support system must be sufficiently flexible to compensate producers who suffer poor prices because of structural handicaps such as distance from the market and high self sufficiency.

There is much that the industry can achieve in partnership to improve the future prospects of the sector and to secure the prosperity of producers and processors alike. To this end the Minister for Agriculture and Food has recently established the Sheepmeat Forum, consisting of representatives of producers processors, Teagasc, An Bord Bia and his own Department, to evaluate the future direction of the sheepmeat sector, and assess how the industry can collectively address the challenges it faces.

The forum has already held a very useful first meeting and the Minister anticipates that the exchange of ideas and views will lead to a very fruitful partnership allowing a better based, stronger industry to flourish.

There is much which can be done in the area of marketing, particularly on our main market which is France, which consumes 300,000 tonnes of sheepmeat each year. An Bord Bia is actively working to enhance the image of Irish sheepmeat on that market, including the planned launch of branded Irish lamb there. This will be promoted in the context of the SIAL food fair as well as promoted through programmes linked to the Tour de France in Ireland.

Mr. Coveney

All Deputies present are from Cork.

We are being proactive.

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