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Dáil Éireann debate -
Thursday, 23 Apr 1998

Vol. 490 No. 1

Ceisteanna — Questions. Priority Questions. - Dairy Sector.

Michael Creed


4 Mr. Creed asked the Minister for Agriculture and Food the future he envisages for small-scale dairy producers in the context of the proposed reform of the Common Agricultural Policy. [9526/98]

Negotiations on the EU Commission proposals for reform in the milk sector have only begun and are likely to take some time. I have already made clear my position in regard to certain aspects of the proposals both to Commissioner Fischler and to my colleagues at the Council of Ministers, in particular as regards the allocation of additional quota between member states and the inadequate level of compensation for the proposed price cuts. I have highlighted the economic importance of the milk sector to this country as well as the role of milk production in protecting viability at farm level. During the course of the negotiations, which are not expected to be finalised for some time, I will place very strong emphasis on protecting the interests of all Irish milk producers, including small-scale producers.

Will the Minister agree there is a precedent at Council of Ministers level in so far as the importance of the dairy sector to the Irish economy was recognised when quotas were introduced? Ireland received an increased quota over and above that of other member states. The negotiations took place in 1983 and we were allowed 4.3 per cent on top of that year's production. In that context will the Minister reactivate the commitments given at that time that in the event of the national quota being increased the importance of the dairy sector to the agricultural economy would justify an increase in quota over an above the European average?

Will he accept that the proposal from Commissioner Fischler is a betrayal of the commitments given in so far as a 1 per cent increase is unacceptable? Thousands of young farmers are being forced out of dairy production because they cannot get additional quotas. Will the Minister consider this issue as a core principle? The European Commission should be told that we will not accept a gallon less than any other country in the context of additional quotas. The Austrians will receive an increase of 7 per cent and Finland 8 per cent. This country deserves increases of that order on foot of the commitments given and recognition of the importance of dairying to the economy.

In 1983 when my predecessor, Deputy Deasy, was Minister responsible, a relatively good deal was done for Ireland. The volume of milk was calculated in line with production in the previous three years and we received an increase in excess of 4 per cent, which was a good deal. The difficulty is that we started from a low base. Many improvements have taken place in technology, yields and production since then. It is unacceptable that some European countries get considerable increases while we are excluded. The Deputy is correct in stating that Finland, Austria and Spain received increases of 8.4 per cent, 6.8 per cent and 4 per cent, respectively. Under the additional 1 per cent, Ireland will not receive an increase. That is clearly unacceptable, particularly in light of the addendum written into the Council regulation in 1983 which specifically stated Ireland would be given priority in the event of additional quotas being made available. I made that clear in my submission to the Council of Ministers and in bilateral negotiations with Commissioner Fischler in Dublin. There are no circumstances under which the current proposals are acceptable. At the very minimum, there must be equity among member states.

A further anomaly which is detrimental to Ireland involves butter fat. Members will be aware that many farmers face penalisation this year in respect of butter fat whereas they have been able to utilise a number of disciplines to remain within the parameters regarding volume. The butter fat level for Ireland was set at 3.58 per cent. I understand the level for this year will pan out at 3.6 per cent. Nonetheless, this will incur a quite substantial penalty. The average level for the European Union is 4.1 per cent. Therefore, other member states can produce butter fat at this level and incur no penalties while Ireland, with its 3.6 per cent level, incurs penalties.

It is my intention to make progress in respect of both constituents and volume, particularly in light of the written declaration appended to the 1983 arrangement. We are entitled to any increases on offer. As the Deputy pointed out, there are thousands of young farmers, new entrants and existing quota holders who could benefit from the provision of additional quotas.

I thank the Minister for indicating that not a gallon less than the increases given to other countries will be acceptable to Ireland. With regard to milk quotas and the Fischler proposals, a central plank of the compensation packages that have been published involves the payment of premia in respect of dairy cows. There is a proposal which is gaining considerable momentum, that the dairy cow premium should be targeted at smaller producers. A further proposal from certain members of the IFA suggests that the premium should not be made available to anyone with a herd of more than 30 dairy cows. Would the Minister favour that proposal in an effort to maintain the economic viability of as many small dairy producers as possible?

I stated on a number of occasions in respect of the Santer proposals that I am extremely conscious of the degree of equity and support for the Irish industry. Supports for the different sectors should be granted at the level to which we are entitled and they should also be distributed fairly and equitably. In the context of the advice I will receive, particularly from the consultative groups which have been established, I will consider the different models suggested in terms of my negotiating position. I will be obliged to choose the model which best suits Ireland, from which we can obtain the best deal and which will benefit the greatest number of farmers. We are not yet in a position to consider this matter in the global context but we will seek the best deal for Ireland and the greatest degree of equity.

Does the Minister believe equity should be applied to all producers equally or should it involve front-loading compensation premiums for smaller producers?

Considering our experience to date in respect of a number of European schemes, there is no doubt that 80 per cent of the supports on offer were initially given to 20 per cent of farmers. Over the years that ratio levelled out somewhat to 70:30. It is desirable to encourage more equitable distribution. A number of the proposed measures will provide an opportunity to include a greater degree of equity in the final outcome. However, that outcome will be based on what is best for the country and will contain a degree of fairness and equity.

In the context of the case the Minister intends to make in respect of milk quotas, I assume he will strongly highlight the fact that the only hope young Irish people have of taking up farming as a profession lies in the provision of reasonable milk quotas. Will it be possible for the Minister, outside the realm of the negotiations on the Santer proposals, to make a case for farmers who marginally exceed the butter fat limit? Will the Minister be able to put such a case to the European Union in the next few weeks?

At the next meeting of the Council of Ministers there will be an opportunity, in the context of this year's price proposals, to raise the last matter to which the Deputy referred. I take the Deputy's point and I assure him I will make the case.

With regard to the milk industry, many Members have had cases brought to their attention, particularly in the context of the farm retirement scheme, where families who have owned farms for generations are finding it extremely difficult to encourage their sons or daughters to assume responsibility for those farms.

It is impossible to encourage them.

This is a worrying aspect of current social change and we will do everything possible to redress the problem. However, that is easier said than done because young people have become more mobile as a result of our excellent education system and they are now in a position to take advantage of better opportunities at home and abroad. It is becoming extremely difficult to encourage people to remain in farming. If their parents cannot convince them, it will be difficult for us to do so. However, if we can make their choice more attractive by virtue of the policies upon which we embark, we will do so.

With regard to the case the Minister intends to make in respect of additional milk quotas, I am sure he is aware that Lakeland Dairies, in conjunction with its counterparts in Northern Ireland, has suggested that such quotas should, as part of a North-South initiative and in the interests of peace, be made available to the six northern counties and the six Border counties — Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth — to provide assistance to small suppliers whose quotas are set at under 30,000 gallons. Will the Minister lend his support to that initiative, in respect of which there has been strong lobbying and which is being favourably received?

Does the Minister accept that the benchmark of 3.58 per cent in respect of butter fat is extremely low in modern farming terms given the progress made in improving the production of this substance through better management and breeding standards applied to our dairy herds? Will he make a case to the Council of Minister's to have the level increased substantially and backdated for one to two years to assist the many progressive farmers who have suffered greatly? These individuals have complied with their quotas to the exact gallonage but they are incurring severe penalties because of the low benchmark set in respect of butter fat.

In respect of milk quotas, the farmers who immediately spring to mind are situated farther south than those to which the Deputy referred.

We were afraid of that.

I agree with the Minister on that matter.

I met Dan Buckley and the people from the northern dairies, Lakeland Dairies in particular, NCF and some others along with representatives of farmers in the southern part of Northern Ireland. A legitimate case can be made for additional milk. I put that case and I have also asked the Taoiseach to take it up. The timing is appropriate in the context of the peace agreement in that this would be a dividend arising out of that settlement. I redoubled my efforts and got the process moving again. I cannot say I am hopeful of an outcome but this is the most appropriate way to be helpful in relation to cross-Border activities.

What about the butter fat?

It is low by European and international standards but over the past 20 years, as a result of proper breeding and good nutrition, we have improved our national herd and our national constituent levels. We are stuck with this historically low benchmark which was established in 1983. That is irrelevant now and out of line with our own production systems and those in Europe. I am seeking to have it levelled out throughout Europe.