Vol. 492 No. 1
10 Mr. O'Shea asked the Minister for Agriculture and Food the progress, if any, which has been made in having the ewe premium calculated with reference to the market price for sheep meat in Britain and Ireland rather than the present EU-wide basis which is totally irrelevant to market prices in Ireland [13469/98]
The basic sheep meat Regulation 3013/89 provides for the payment of a premium to bridge the gap between the average EU sheep meat price and a basic price for sheep meat. This approach, based on the concept of a "single income loss" across the Community, replaced the regional system which was in force until 1992. The main reason for the change was the advent of the Single Market in 1992 involving the removal of borders between member states which was expected to lead to a greater convergence of prices throughout the European Union.
This convergence has not taken place to the degree expected by the Commission and for this reason I have made a very strong case to have the ewe premium system re-examined. So far the Commission has not agreed to reopen the method of calculation, but I am continuing to press the matter.
I welcome the Minister's commitment to a re-examination of the method of calculation. It is essential that he continue to put pressure on the Commission to do so. The Minister is well aware of the problems being experienced by the 10,700 or so farmers in receipt of the EU premium from his Department. Under the extensification scheme, sheep are included in the livestock count for stocking rate density, but they are not eligible for payment under the scheme. The EU cannot have its loaf and eat it. It cannot impose an unworkable measure on sheep farmers. I acknowledge the difficulties being experienced by the Minister in this regard because, as one of the last variable premiums under the EU market support regime, there is bound to be resistance to it. Does he agree a premium set in absolute terms would be more beneficial? At present, as the price increases, the premium decreases and vice versa, but that does not benefit sheep farmers. What steps is the Minister taking to deal with the problem? Has he raised the matter at Council of Ministers level or secured support from British farmers and the British Minister for Agriculture? Has he contacted the British Minister for Agriculture about the matter? The ewe premium should be calculated with reference to the market prices for sheep meat in Britain and Ireland rather than on the EU-wide basis which was introduced under Regulation 3013/89 in 1992 because of the advent of the Single Market.
There are a number of problems with the sheep industry generally. Unfortunately, sheep meat is not considered in the Santer proposals for Agenda 2000. In my submission I requested that sheep meat be included in new proposals and that some of the improvements the Deputy sought should be considered. The proposed reduction in the price of beef and cereals is bound to affect the sheep meat industry.
We are seeking a top-up of the ewe premium in any member state where the price reduces significantly. During the past three or four years we have had a price reduction relative to other member states. While the premium increases when the price decreases, we have to operate within a basic EU-wide system which places us at a disadvantage. I have brought this to the attention of the Commission, Commissioner Fischler, his cabinet and to the Council of Ministers. We are continuing to press that case.
I have also established a sheep meat forum to examine other aspects of the matter. Question No. 31 on the Order Paper addresses the extensification scheme, under which sheep are taken into account for stocking rate density but are not included in the payments. That is a classic anomaly. I have asked the sheep meat forum to examine those matters and to adopt a concise policy decision. Essentially, the sheep meat industry will have to improve its quality and its carcase classification, which was agreed at the last sheep meat forum. The product will have to improve to deal with New Zealand imports.
When pressed, the Commission suggested the introduction of a flat rate premium, but that would place us at a greater disadvantage. Under the current system at least the premium increases if the price decreases. A flat rate premium similar to the special beef premium, which the Commission suggested, would not suit Ireland. We want to get the best possible deal for our 47,000 or so sheep farmers, most of whom farm in disadvantaged areas. We want to ensure the industry is viable and that we get the best possible outcome from negotiations in Europe.
This is an age-old question about the balancing of the ewe premium. The interests of sheep farmers might be best served under the Minister's proposals for the extensification scheme. If sheep were included in the £80 Santer proposal, the increase for each ewe could be as high as £7 or £8. I assume that is the line the Minister will take. Will the new grading system the Minister proposes to introduce this year redress the anomaly whereby farmers in other countries seem to get a better price on the market? Will it ensure a higher price for quality products?
The new grading or classification system was agreed unanimously at the recent sheep meat forum and I hope it improves the position with regard to price. In 1992 Irish prices were 74 per cent of the EU average, in 1993 they were 80 per cent, in 1994 they were 82 per cent, in 1995 they were 82 per cent, in 1996 they were 85 per cent and in 1997 they were 91 per cent. Our prices have been consistently lower than those in the EU. My main concern, however, relates to the anomaly in the extensification scheme. Sheep are taken into account for livestock units, but not included in payments under the scheme. We want the scheme extended to include sheep and I will continue to press for that until we succeed.
