Over the past two weeks I have outlined in this House and in the Seanad the current position in relation to agriculture and the difficulties being experienced in recent times. I also believe I have outlined the background to these difficulties. Various actions have been taken by myself and the Government to alleviate these difficulties. I will set out a list of the measures taken.
Beef export refunds have been substantially increased. Over the past three weeks the refund on male beef has been increased by over 21 per cent or about 9p per pound. This refund is provided to meat exporters to allow them trade in markets outside the EU and brings the total export refund on male carcass beef to 51p per pound. One must consider the price being paid for cattle and the price per pound at 70p, 76p or 80p. A 51p subsidy is included in that price and one must consider that beef is being sold to third countries for 27p or 30p per pound.
I have also negotiated increased access to intervention for heavier cattle, with the carcass weight limit being increased from 340kg to 360kg. The steer 04 category will now be eligible. Both these measures will allow for close to 50 per cent of our steer production being eligible for intervention, whereas the previous figure was 15 per cent. There is something radically wrong with our breeding policy when only 15 per cent of our national kill qualifies for intervention. The processors' margin has been increased by 40 per cent. Direct payments to farmers have been speeded up. Already this year, £659 million has been paid under the headage and premium schemes, of which £353 million relates to payments made under the 1998 schemes.
The advance in suckler cow and special beef premium payments has been increased from 60 per cent to 80 per cent. This will release an additional £45 million to farmers in November and December. An outstanding BSE compensation top-up of more than £6 million has been paid to certain beef producers. These payments were issued on 15 October.
Additional facilities for live exports to EU markets have been approved, with 6,000 weanlings being exported each week and more than 100,000 calves and weanlings exported to the Continent. Last week there was a record number of 6,700 weanlings exported to the Continent. I have also negotiated the re-opening of the Iranian market for our beef exports.
As regards the sheep sector, I have ensured the continuation of the sheep headage top-up for 1998 worth £2.75 million. Earlier payment will be made of the second instalment of the ewe premium worth £26 million. These payments commence today, a month earlier than usual. An EU funded private storage scheme for sheepmeat has also been introduced.
We have negotiated a substantial increase in export refunds for pigmeat. The latest increase of 33 per cent will be of immediate benefit to pigmeat producers, combined with the putting in place of a 70,000 tonne private storage scheme. I ask the industry to avail of that 70,000 tonnes of storage for pigmeat as the pig industry is going through a difficult time. Other EU states are using this facility but we have not done so to date. I call on the industry to do so, particularly when it is combined with an increase of 33 per cent in export refunds which we succeeded in obtaining last week. By any standards, the above is an impressive list of achievements which represents tangible and real assistance for the sectors involved.
As well as low prices, we also had unusually wet weather this summer. Combined with below normal sunshine levels, this resulted in reduced grass growth in many parts of the country. In the peaty and heavy clay soil areas of certain counties, the capability of farmers to make silage and hay for winter fodder was greatly reduced. The Government has made £10 million available to deal with fodder difficulties being experienced by some farmers. The details of the scheme are being finalised by my Department today.
This scheme will be directed at sheep farmers with mountain grazings, suckler cow producers and small dairy farmers in the worst affected areas, based on a Teagasc survey published in September. I am satisfied the mechanism being put in place to implement the scheme is practical, uses resources efficiently and delivers the payments directly and speedily to farmers. It is important that these payments are made directly and speedily. We have had schemes which did not work very well. Vouchers went all over the place and the farmers who most needed assistance were the last to benefit. We will use existing headage and premia systems to get money to farmers directly. It will be a matter for the farmers to use the lower cost concentrate feed which is available to supplement their feed stocks for the winter. This scheme is targeted at those most seriously affected as we used the Teagasc survey to focus on those most directly concerned.
As well as the immediate fodder scheme, my Department, in consultation with the Department of Arts, Heritage Gaeltacht and the Islands, is in the process of finalising a cull ewe slaughter scheme, under which farmers will be compensated for the removal of between 100,000 and 200,000 cull ewes, particularly from the overgrazed commonages. I hope the scheme will be up and running in the next few weeks because culling will have to be completed by the early part of December. I pay tribute to my colleagues, Deputies de Valera and Ó Cúiv, for their assistance on this matter. The objective of the scheme is to ease the situation for those sheep producers who will be required to undertake some level of destocking under the environmental programmes in 1999. However, it would also assist producers who have not been able to find a market for cull ewes this autumn. At the same time, it will make a contribution to easing the fodder shortage problem facing many sheep producers.
Discussions have taken place between my Department and the farming and processors' organisations to examine the practicalities of the scheme. The general intention is that all farmers with land in degraded commonages should receive a slaughter premium to immediately remove at least a quarter of their ewes. As producers with land in overgrazed commonages will, in any event, have some of their quota rights withdrawn for 1999, this scheme, by providing additional compensation, will help them progress towards the required level of stocking, and at the same time provide an outlet for animals that have devalued significantly in the past months.
I have also held discussions with my colleague, the Minister for Social, Community and Family Affairs, on the smallholder's assistance or farmer's dole scheme. More than 7,000 farmers are in receipt of £33 million annually under the scheme which is available to all farmers on low incomes. The Department of Social, Community and Family Affairs will intensify its information initiatives at local level to increase awareness of the scheme and to emphasise its applicability to farmers. In addition, the scheme is being examined with a view to increasing its relevance to farming families. In this context, due account will be taken of the difficult income situation on certain farms arising from weather and market related conditions.
I also ask the Minister to examine a problem which has been the cause of much concern for a number of years, namely the RSI scheme for self-employed people. People who paid RSI from 1988 onwards and might have had six or seven years' payments did not receive any pension, merely a refund of their payments. I hope that with a little more arm twisting, we could expect something to be done about the scheme in the forthcoming budget. Farmers, having paid their RSI contributions, are entitled as an absolute minimum to a pro rata contributory pension.
It would be useful to comment on the likely overall agricultural income position in 1998 and changes which have taken place in recent years. Farm incomes, as measured by the CSO, increased in each year from 1991 to 1996 but declined in 1997, mainly as a result of price decreases for most of the agricultural commodities. This was very disappointing, particularly in view of the good performance of incomes over the previous five years. However, taking the whole period from 1991 to 1997, average farm income increased by approximately 50 per cent. It is worth noting, when considering farm incomes, that more than 50 per cent of farm household income is derived from off-farm sources. Off farm income in these households will, along with the rest of the economy, have been boosted by the general economic boom of recent years. Farm households have also benefited considerably from the low interest rates of the past few years, which are continuing to decline.
A central aspect of farm income is the amount of direct income payments to farmers. These have continued to increase throughout the 1990s and, in 1997, reached a record £940 million, which accounted for 48 per cent of farm income or approximately 25 per cent of farm household income. This amount represented an increase of more than 132 per cent since 1992.
Off-farm employment and other earnings, social welfare payments and direct agricultural payments taken together now account for approximately three quarters of the income of farm households. All of these elements of income have been increasing in recent years, including this year. The difficulty this year centres around one quarter of farm household income which derives exclusively from agricultural operations.
I would like to consider the overall picture for farm income in 1998, looking at the main sectors very briefly. The prices for livestock had generally been performing quite well up to mid-year but deteriorated since then, particularly as a result of the Russian crisis. The position relating to the milk sector is much more positive. Prices throughout the first seven months of the year are well ahead of 1997 levels. Although the uncertainty surrounding the Russian market may have a negative impact towards year end, a satisfactory increase in output value is expected. The outlook for output value in the cereals sector is one of little change over 1997.
Overall, the most likely outcome at this point in the year is that the value of gross agricultural output for all of these products will rise in 1998. However, the cost of farm inputs also looks set to rise, mainly as a result of the need to purchase increased levels of concentrate feed. Obviously, this overall picture also masks many differences at farm level and I am well aware that some farmers have been hard hit by recent developments. It is for this reason that I have sought to ensure that the measures to deal with the problem are well targeted.
As I have said already, direct income payments accounted for 48 per cent of income arising in agriculture in 1997. These payments play a significant role in supporting farm incomes and will do so again in 1998; this is a point which is forgotten when comparisons are made in regard to previous difficulties in agriculture. The fact that I have secured Commission agreement to the advance payment of 80 per cent of the suckler cow and special beef premia in 1998 will provide a significant boost to direct payments this year.
The House will be aware that I have had to defend the level of these payments arising from adverse comments in a German magazine in which some west Cork farmers were quoted as saying they had only to sit back in Castlehaven and wait for the cheques to arrive in the letterbox. That did not do our position in Europe any good. The broadcaster, Eamon Dunphy, contacted me seeking an explanation of the direct income payment situation.
Already in 1998, outstanding progress has been made in delivering these payments to farmers. Some £653 million has been paid to farmers under the various headage and premium schemes, of which £353 million relates to payments made under the 1998 schemes. Payments under REPS and the early retirement scheme amount to almost £108 million and £50 million respectively so far this year. The REP scheme is an excellent one, and the level of payment to farmers is the most badly affected areas is increasing annually.
An advertisement was placed in a southern newspaper last week which implied that the farm retirement scheme was to end and that farmers would no longer have a pension under it. There is no truth whatsoever in that. The scheme is firmly in place and I have held discussions with Commissioner Fischler on it. Rather than being terminated, it will in fact be improved. Two aspects of the scheme have been the cause of a great deal of anxiety. The first is the additionality clause in relation to the acquisition of additional land and the second relates to people with an off-farm income. It is very important that part-time farmers should qualify for the scheme. I received a positive response from the Commissioner and the scheme will form part of the overall Agenda 2000 negotiations which are expected to conclude by spring of next year. I cannot be sure when those negotiations will conclude as more new Ministers have been appointed to the Council of Ministers, one from Sweden, one from Britain and one from Denmark. The German Government has not yet appointed a new Minister and the French and Italian Ministers are due to be replaced in the coming weeks.