Deputy Collins was in possession and had three minutes remaining.
Agenda 2000: Statements (Resumed).
Acting Chairman
I mentioned last night EU Commissioner Fischler's proposals for the reform—
Is a Minister taking the debate?
Acting Chairman
The question is well put. I am sure the Minister, Deputy O'Rourke, will send someone to deputise for her.
I mentioned last night that EU Commissioner Fischler's proposals for the reform of the Common Agricultural Policy under the Agenda 2000 negotiations have been rejected by the Government and farming organisations on the grounds that, in their present form, farm incomes would be reduced by £260 million per year and there would be a loss of £600 million to the national economy. Some 50,000 farm families would be non viable within five years and 20,000 non farm jobs would be lost.
A parallel proposal for co-financing of the CAP made by net contributor countries such as Germany and the Netherlands received a negative response. I understand the intensive nego tiations and consultations with other EU states by both the Taoiseach and the Minister for Agriculture and Food, Mr. Walsh, have made considerable progress. It is also believed a co-financing scheme under which member states would have to pay 25 per cent of domestic agricultural subsidies will be rejected.
I understand support is growing within Europe for a French proposal of degressivity, under which Commissioner Fischler's blunt price cutting mechanisms would be amended. According to this idea, small producers would be exempt from price cuts, while direct aid payments to larger farmers would be clawed back in line with increased productivity. Some of this money would be used for rural development. In negotiations, our Government will seek to amend these proposals further by raising the ceiling of £3,900 in direct aid payments at which farmers would be become liable for clawbacks. It will argue the special case of Irish grass based agriculture, where 80 per cent of production is exported, when talks begin in Brussels next week.
Over the past 12 years, the European Union has embarked upon many bold programmes. In 1987 the Single European Act was implemented, which paved the way for the completion of the internal market, where the free movement of goods, persons, services and capital would operate. This resulted in the implementation of more than 275 directives and regulations. By 1992 the internal market was, more or less, completed. Ireland during the years 1989-93 received large increases in European regional and social funds to help bring our economy up to more competitive levels. All European Union leaders agreed that an internal market could not succeed unless the poorer and peripheral regions in Europe could successfully participate in such a changing and challenging economic environment.
I wish to share my time with Deputy Coveney.
Acting Chairman
Is that agreed? Agreed.
I am amazed the debate is not important enough for either the Minister or his two Ministers of State to be present in the Chamber.
The impact CAP reform now under negotiation at EU level will have on our agricultural industry is alarming for our farmers and everyone associated with the industry. The future of our vital national industry is at stake. Ireland is the member state which will be most affected and hardest hit by the changes in the support arrangements for beef, mutton and lamb that are now under negotiation.
Agriculture is the primary land use in Ireland, accounting for 4.9 million hectares of grass and commonage areas, out of a total land area of 6.9 million hectares. It represents about 7 per cent of the GDP and 10.6 per cent of employment. These proportions are significantly higher than the respective comparisons for the EU as a whole.
When the food sector is included, overall employment amounts to some 14 per cent of the national total. The economy relies heavily on agriculture and its associated industries. Around 20 per cent of total exports come from the agricultural sector, together with in the region of 40 per cent of net foreign exchange earnings. Ireland exports agricultural products worth more than £1.1 billion each year to markets outside the EU and, together with its intra EU trade, approximately 80 per cent of its agricultural products are exported.
Irish agriculture is primarily based on livestock rather than tillage farming, with pasture, hay and silage accounting for some 70 per cent of land use.
If our farming population is not maintained at the status quo, it will have serious effects on the entire rural environment. Our schools, shops and churches, the very existence of rural life, all depend on the maintenance of a healthy farming community throughout the country. This can only be achieved by proper planning and attention by the various Ministers, who must encourage the revitalisation of rural Ireland.
In the CAP negotiations now taking place in Europe it must be recognised that Ireland is the only island nation in the EU. By virtue of that fact, Ireland deserves preferential treatment in the EU. Our only natural resources are agriculture, fishing and tourism. We do not contribute to the EU wine lake or the EU citrus fruit mountain. If we are to survive, our negotiators in the CAP talks must fight right down to the wire and our Minister must ensure that our population, particularly our rural one, is maintained.
The Government does not seem to have the will or the way to fight for the survival of Irish farmers in the forthcoming CAP negotiations. The Taoiseach and the Minister for Agriculture and Food appear to be blinkered in their approach to the serious problems confronting the farming industry. The concept of the family farm must be enshrined in any future CAP. Ireland's strategic best interest is to seek to defend, as far as possible, the principles of the CAP. These are: the unity of the market; Community preference – already eroded by GATT for some sectors; and, financial solidarity. Thus, a combination of lesser price cuts, enhanced supply management, continued 100 per cent central financing of CAP and compensatory direct payments from the CAP budget offer the least damaging strategy.
Ireland has a strong self-interest in achieving a reasonably balanced EU beef market. We are most vulnerable to a surplus in the EU because of our requirement to export almost 90 per cent of production. Reducing exportable surpluses is positive in the context of the World Trade Organisation; in other words, the volume requiring export refunds would decline. A major beef promotion programme geared to restoring beef consumption in all member states is vital. A combi nation of market balance measures applied across the EU would remove approximately 700,000 tonnes or 9 per cent of beef from the market.
A balanced EU market would help to close the gap of approximately 30 per cent between EU and Irish prices. The proposed 30 per cent price cut is excessive because first, the budgetary resources necessary for full compensation are unlikely to be available and second, suppressing prices to levels far below the cost of production is a disastrous policy for the producers in the longer term because a significant part of the premium is then required purely to cover production costs. It is vital for Ireland that the suckler cow premium be increased to £240 per cow or 305 euros, as suckler cows are the basic production unit in specialist beef production before payment of the extensification premium. The extensification premium should be doubled to £60 per livestock unit bringing the total payment to £300 per suckler cow for those qualifying for extensification. At the moment, 71 per cent of suckler cows qualify for extensification.
I will now turn to sheep production. Imports of New Zealand lamb are a significant cost on the CAP budget which must not be passed on to Irish farmers. Voluntary restraint agreements, mainly with New Zealand, currently amount to 255,000 tonnes per year or 18 per cent of EU consumption. This cannot be allowed to continue.
On the issue of milk production, the European Commission proposal is for a 15 per cent cut in price supports over four years from the year 2000 onwards, namely 16.5p per gallon, together with partial compensation through a dairy cow premium. The priority for the Minister is to maintain EU milk prices and this can only be achieved by retaining the quota system and extending it to 2006 with a possible review in 2004.
Another matter of vital importance and one which the Minister must hammer home at the CAP negotiations, relates to Ireland's butter fat reference level. That should be increased from the existing figure of 3.58 per cent to the EU average of 3.95 per cent. This would bring a very worthwhile increase in Ireland's national milk quota which is so badly needed.
The Minister must take off the kid gloves in the imminent negotiations on the CAP reform proposals. It is now or never; the ball is in the Minister's court and he must fight to ensure that Irish farming will survive in the new millennium. He must lobby his friends and counterparts in the European Parliament and ensure that he does not throw in the towel or show the white feather in this vital round of CAP negotiations.
Mr. Coveney
Agriculture is undoubtedly in crisis at the moment. Prices have collapsed in almost all sectors simultaneously. Farmers' problems have been exacerbated by drastic weather conditions this year which have led to waterlogging and serious fodder shortages. Sometime in the middle of January, a neighbour of mine said he could not remember the last day it had not rained. Another black cloud now looms on the horizon, threatening to move in over Irish farming. It could make present hardships pale into insignificance in view of its potential to inflict devastation on rural Ireland.
The second round of CAP negotiations will commence next week in Brussels. If the Fischler proposals are accepted, Irish farming will not be able to cope with the consequences in the short-term. We all accept that agriculture must undergo a period of change to remain viable in the long-term. However, the impact and pace of this change must be controlled if the agriculture industry is to adapt.
I want to concentrate on the cereal sector which employs 16,500 Irish farm families. The Commission claims that without policy change, cereal intervention stocks will rise to almost 60 million tonnes by 2005. To prevent this, the Commission suggests prices be cut to world market levels in one step to make world trade more straightforward and allow the EU to export without refunds. Effectively, this means a 20 per cent price cut for grain which is the equivalent of £57 per tonne for off-the-combine grain. These prices are below the cost of production. Therefore, farmers will not make a penny profit from the work they put in to produce the crop. Grain producers will be entirely reliant on a cheque in the post for all their profits. Surely, this strategy is moving agriculture in the wrong direction? Farmers want to earn their money by working the land and receiving a decent price for their produce. They do not want to survive on the generosity of European taxpayers because they will not survive for very long in that case.
If we must accept this strategy, we should not have to accept that the proposed increase in direct payments will only compensate for less that 50 per cent of price cuts, resulting in an immediate and significant net reduction in overall profits. The compensation figures which have been quoted are based on a yield of 2.4 tonnes per acre which is completely inaccurate in regard to winter cereals. Adding further to the problem, it is suggested that area aid payments will, in future, be paid between 1 January and 1 March, rather than between October and December as is currently the case. This will mean that farmers will not make any profit until four or five months after harvest time.
We have all heard what will happen if the negotiations are not successful. I hope the Minister is aware of his responsibility. Rural Ireland is watching and waiting; these negotiations will be his acid test.
I welcome the opportunity to contribute to this important discussion on agriculture. The Council of Agriculture Ministers will meet in Brussels next Monday and the meeting is likely to continue for most of the week. The German Presidency is determined to reach agreement on CAP reform at the meeting. Whether it will be successful in achieving that objective remains to be seen. Whatever happens, far-reaching decisions will be made which will affect the future of Irish agriculture. Its future will depend on a positive outcome from the discussions.
The most significant changes which will affect us relate to the reduction of beef premia to create the national envelopes, reductions in our main beef premium ceiling and suckler cow premium rights, the abolition of beef intervention and its replacement by a scheme of aids to private storage and a 15 per cent milk price reduction. The Minister has already indicated, in the strongest manner, his concerns about the effect the proposals will have on Irish farmers' incomes and the lack of equity between member states and different types of production. He has taken every opportunity to put this case in bilateral meetings with Commissioner Fischler and his ministerial colleagues, most recently when he met Commissioner Fischler in Dublin earlier this month.
An issue of major importance to Ireland is the level of compensation in the beef sector. The Commission proposals aim to shift the balance of compensation in favour of intensive production. The Minister stressed the need for changes to be made to favour extensive production and that a satisfactory outcome to this crucial issue is essential. It is also central that an effective intervention system is retained to ensure that, in the event of temporary market disturbances, it will be possible to provide a floor in the market. That situation was seen last autumn when, despite the fact that we got increases in export refunds and private storage, it was necessary to introduce intervention. It had a stabilising effect on the market. It is critically important for Ireland, which has such a dependence on export markets to third countries and is so vulnerable to them, to have intervention retained. We have only to look at the annual report from Teagasc on incomes to see that incomes in the beef sector are among the lowest of any farming enterprise.
The Commission proposals in the milk sector also give rise to difficulties for Ireland. They involve a 15 per cent price reduction and compensatory premia, which would only compensate for 60 per cent of the price reduction. This inadequate compensation is unacceptable. The proposals also involve a milk quota increase of 2 per cent but the proposed allocation of this increase between member states is uneven. Ireland's share amounts to a 1 per cent increase, while some other member states receive increases of up to 8.4 per cent. This is clearly unfair and not acceptable.
A complicating factor in the negotiations is the future funding arrangements for the CAP. A report on EU financing arrangements was published by the EU Commission last October. This report addressed the complaints by some member states that the burden of their net contributions is excessive. One of the options put forward by the Commission to redress the imbalance is co-financing of direct payments to farmers by the EU and member states. Co-financing is com pletely unacceptable to the farming community. At last month's Council of Agriculture Ministers' meeting the Minister pointed out that the Common Agricultural Policy has been built up over 40 years on three central principles, market unity, Community preference and common financial responsibility, and that it has contributed enormously to the solidarity which has cemented the Community over the years. We cannot now begin to dismantle that achievement to provide a partial answer to a problem that goes far beyond the CAP.
I welcome Government approval for the early introduction of the new farm assist scheme which is designed to benefit farmers on low income. Entitlement to payment under the new scheme will be effective from the first week of April 1999. To allow for the necessary preparatory work, including means testing, the first payments, which will be backdated to April, will issue in the first week of June.
I am pleased the early introduction of this scheme will be part of a package of measures designed to form a practical response by the Government to the real plight of low income farmers. It will not only benefit farm families with children but will also provide increased payments to couples without children and to single farmers. To facilitate the introduction of the scheme from April, the Government is allocating an additional £10 million in total for the new scheme in 1999, which will bring to £43 million the total sum being provided to assist farmers on low incomes in a full year.
In view of the imminent introduction of the farm assist scheme, the signing on arrangements associated with the current smallholder's assistance scheme are being suspended for those who now seek a review of their existing claims. Anybody thereby qualifying for smallholder's assistance will be transferred to the farm assist scheme with effect from 26 May 1999 and will have their additional entitlements under the new scheme backdated to April 1999. Applications for smallholder's assistance will be taken in lieu of an application for the farm assist scheme for those who fail to qualify for smallholder's assistance but who may have an entitlement to some payment under the farm assist scheme.
The new farm assist scheme will benefit in the region of 13,400 farm families. This includes the existing 6,600 smallholders and a further 6,800 low income farmers. Features of the new scheme are that it is designed specifically for farmers on low incomes and replaces the existing smallholders' assistance scheme, it will be means-tested taking into account farm income and off-farm income of a farmer and spouse, farmers will not be required to sign on to avail of the new scheme and existing claimants can apply at any time to have their means reassessed if they consider that their income position has deteriorated since they were last subject to a means test.
I welcome the statement made last night by the Minister for Agriculture and Food, Deputy Walsh in which he announced details of the 1999 fodder scheme. A sum of £20 million is being made available for the measure. This, in addition to the £21 million paid out in December 1998, brings the Government's contribution to fodder related schemes to £41 million this winter. The Minister emphasised that the current scheme would have two main elements, a general fodder scheme and a special fodder hardship fund. The Minister said that the general fodder scheme would operate on the lines announced on 5 February. The scheme would apply in all disadvantaged areas and covers farmers with suckler cows, lowland ewes and milk quotas under 35,000 gallons. Payment rates will be the same as in the 1998 scheme subject to the same ceiling of £300. Farmers who have already qualified for payment in December 1998 will receive a 50 per cent top-up on their payment.
The special fodder hardship fund will operate for farmers who did not qualify for the 1998 scheme or the general fodder scheme for 1999. The Minister pointed out that he intends to operate this scheme on a nationwide basis. The objective of the fund is to provide support to cattle farmers who are almost totally dependent on a small farm enterprise as a source of income. The maximum rate of payment per applicant is £450 for farms located in the district electoral divisions designated for the December 1998 scheme and £300 in all other areas. To qualify for consideration under the scheme an applicant must fulfil a number of strict criteria. Teagasc certification will be required and application forms, which include full terms and conditions, are now available from Teagasc offices.
It is an opportune time for our financial institutions – I understand there are 37 – to bring forward a scheme to aid farmers who have severe financial problems and to provide them with interest free loans. If they did that, it would be much appreciated. Farmers' business has formed the backbone of much of the business of those financial institutions down through the years. It is time those financial institutions responded to the current difficulties faced by farmers.
I wish to share my time with Deputies Durkan and Crawford.
Acting Chairman
Is that agreed? Agreed.
The agricultural proposals in Agenda 2000, if adopted in their current form, would mean farm incomes will be reduced by £260 million per year and there would be a loss of £600 million to our economy. This would mean 750 farm families in my county of Roscommon would be in a non-viable position within five years. Because of the economic importance of agriculture in that county, it would have a catastrophic impact on agricultural based non-farming jobs.
When Commissioner Fischler came to Ireland recently he was not aware of the consequences of Agenda 2000 proposals on sheep production here. He did not know that sheep prices are a major issue here. The sheep industry is a crucial part of the economy of many counties like Roscommon, but it is obvious the Minister, Deputy Walsh, has not made a case for the sheep sector. Had he done so, Commissioner Fischler would not have sung dumb when he came here recently. The Minister's bluff is being called and he has been caught out.
Approximately 44,500 farmers, of whom 84 per cent come from disadvantaged areas, are being forgotten about in the Agenda 2000 negotiations by the Government. While the sheep sector is not directly involved in these negotiations, the proposals would have a major impact on sheep prices and production here. That is because, as well as a reduction in beef prices, there would be a similar reduction in the price of sheepmeat. A proposed 30 per cent drop in the price of beef would be repeated in the lamb trade. The proposed increase in extensification would force many farmers out of lamb production as it would be more economical for them to keep cattle on their land than sheep, which would be taken into account for extensification but no payment would be made in respect of them.
The proposed maize subsidy would also affect sheep production, as a continental farmer would be paid in respect of feed fodder, which cannot be grown here. At present there are 4.9 million ewes here, which represents a drop of 300,000 in the past three years. The reduction will be more dramatic over the coming three years if the Agenda 2000 proposals are agreed in their current format. This prediction is not beneficial to Ireland or the EU as we currently have a net deficit of sheepmeat in the EU. Two hundred and fifty-five thousand tonnes of sheepmeat is being imported, mainly from New Zealand, and dumped on the European market, accounting for almost one in every five lambs consumed in the EU.
The Minister must get three basic concessions from the Commission. First, he must secure the payment of extensification premia for sheep, equating to £9 per ewe. If the Commission calculates it must compensate, it is crucial that an extensification payment is provided for sheep. Second, he must get a guarantee that any price reduction in lamb will be fully compensated through a higher ewe premium. Third, he must secure improvements and regulations in the importation of lamb from third countries. Countries cannot be allowed to dump lamb on the market when they have a glut at home, thereby depressing the price of the Irish product. We must have an even, all year around supply of lamb. The EU cannot enter into any further import agreements with third country markets. These three concessions must be sought and obtained if we are to ensure a continuation of the sheep industry in Ireland. I urge the Minister to ensure we have a viable industry in the years to come.
The negotiations now taking place are crucial and will set the pace, tone and context for Irish and European agriculture for the foreseeable future. They are taking place with the full support of the House, the agricultural sector and a large segment of the business sector. I support the Minister for entering these negotiations in a forthright fashion, not apologising to anybody, but negotiating on behalf of the country to ensure we get a good deal which will ensure the survival of the agricultural sector and rural Ireland over the next ten or 15 years. We note the negotiations are taking place against the background of the MacSharry proposals which, when effected, had a very debilitating effect on Irish agriculture, something many of us predicted at the time.
The negotiations are also taking place against the background of the world trade agreement, the consequence of some aspects of which some of us warned about several years ago. They are taking place against the very undesirable face of renationalisation which we have seen in the EU. When entering the negotiations I ask the Minister to ensure the vital national interests of the country are kept to the fore and that we do not see a re-emergence of renationalisation which would be to the great advantage of larger member states.
I wish the Minister, the Taoiseach and all concerned well in the negotiations which are taking place this week. Any criticism is meant in a positive way, as Ireland's national interests, not just in farming, are at stake over the next week or ten days. The future of many farm families and the question whether agriculture will remain the single most important industry in the economy are at stake. The proposals of the EU Commission would cut farm family incomes by £260 million and would destroy rural Ireland.
One only has to look at the importance of agriculture and related industries in terms of income and jobs in my constituency of Cavan-Monaghan to realise how serious the situation is. The failure of the Government to defend the farming community during the worst income and fodder crisis in living memory creates a poor background in which the Minister will defend this major industry and our vital national interest in Europe. Pig, livestock and sheep farmers certainly have lost faith in the Minister and in his failure to take real action to open markets or provide adequate support. As I said last night, dry stock and deer farmers have been left out of the fodder scheme and pig farmers in the Border area have been totally ignored. The quota system for dairying, introduced in 1983, has served the industry well and should not be changed. The EU proposals would cost European taxpayers far more money and would result in a drop in farmer incomes. Why change a system that works?
In negotiations which took place in 1983 we were promised that if there was an increase in quota anywhere in Europe, Ireland would have the first say. In this context the agreement which the Minister for Agriculture and Food and the Taoiseach has already made with the cross-Border group must be delivered. In the context of peace in Northern Ireland there is an opportunity for goodwill to be shown to that region of the country. Farmers and the industry in that area will be watching to see whether the commitments are delivered upon. Delivery speaks louder than words.
The Minister must take a very strong line against the re-introduction of the May silage subsidy. As the Minister knows, it is only possible to produce May silage in a very southern part of the island, and it will be very detrimental to grass production if this is allowed to be part of the agreement.
The Commission proposal for a 30 per cent cut in beef prices is totally unacceptable and the Minister must put forward alternative proposals which will cut back on production all over Europe rather than allow many more farmers to be taken from the land.
If the EU wants to include sheep in the stocking density calculation for extensification premia, the premium must be extended to include sheep. Otherwise lowland sheep production will end with serious consequences for the economy.
I welcome the Taoiseach's last minute efforts at European level. When he was leader of the Opposition he and many of the current Ministers had all the answers on how to open markets during the then serious BSE crisis. After their total failure during the past 18 months, the people will watch with interest how the Government will defend and protect our future.
I welcome the proposals of the IFA and the other farm organisations on how to deal with these issues. I want to see everybody concerned working flat out over the next few days and weeks to make sure the disaster which could happen if the EU Commission's proposals are introduced is minimised as far as possible. That will not be easy. I spent many years in Europe on a voluntary basis and I know the difficulties which face the Minister. I ask him to please use his veto if necessary in the interests of the country.
The Agenda 2000 negotiations take place at a very difficult time for farmers. Anyone living in a rural area will realise farmers are working harder than ever. Their incomes are in decline, cattle prices are below the cost of production and lamb producers and hill sheep farmers are in despair over prices which have only begun to recover in the past two weeks. In three years cattle prices have fallen by over 20 per cent and grain prices by 25 per cent while last year sheep prices fell by 16 per cent and pig prices by 20 per cent. Pig farmers are accumulating debt at a frightening rate. In Border counties in particular producers cannot even get their pigs slaughtered.
The Agenda 2000 proposals are seriously damaging to Irish agriculture and the economy. The Department of Agriculture and Food agrees they will cut farm incomes by £260 million per year and farm output by £600 million per year. They will affect Ireland more than any other member state because two of the sectors being reformed, namely, beef and milk, together account for 71 per cent of Irish agricultural output and separately account for 37 per cent and 34 per cent respectively. When the contributions of agriculture to the economies of member states is taken into account, the economic importance of either beef or milk to Ireland far exceeds the economic importance of any other agricultural sector in any other member state. It is no wonder the Minister for Agriculture and Food has stressed that major Irish economic interests are at stake in these negotiations. The Government sees that our national interest is under serious threat. The proposals not only threaten agriculture, but the very fabric of our rural economy. Let us make no mistake about it – rural Ireland is under threat with these proposals.
We have been told the proposals are necessary to make us more competitive with world producers, such as America, Canada and New Zealand and to bring prices down to world levels. The reality is that farmers are going bankrupt in these countries, something we do not realise. A much glossier picture is being painted, but the real one is very different. The US Government is pouring billions of dollars into farming to stave off massive degradation in its rural economy, and so are the Canadians. Despite all the hype about how great the New Zealanders are, they only have 14,000 dairy farmers left and there will be fewer than 10,000 in ten years time. Farmers in these countries must travel hundreds of miles to get their children into education and their nearest neighbours may be hundreds of miles away. I do not believe this is the type of future we want for rural families.
The path towards globalisation in agriculture is not the path we want to travel. European agriculture has its own specific characteristics which include different regional identities, a variety of products and a large number of family farms. It needs to be versatile, sustainable, competitive and consumer and environmentally friendly. This is the vision of agriculture to which we can subscribe.
Some three quarters of all Irish farmers depend on beef which is ten times more important to Ireland than to the EU as a whole. The Commission proposes to increase the extensification premium by a substantial amount from an average of 44 ecus to 100. On the face of it, this is an effective encouragement to extensification. However, it has also proposed to include hitherto uncounted animals while maintaining the qualifying maximum stocking rate at 1.4 livestock units per hectare.
The benefits of the increased premium are thus offset by the changed method of calculation of the stocking density. Not only, therefore, is there no incentive to further extensification but many farmers who find themselves pushed beyond the 1.4 stocking density are likely to decide to make up for the loss of the extensification premium by switching to intensive production. We should not penalise extensive producers by taking away their extensification premium and, in the process, encourage them to become intensive, which is hardly in the best interest of the beef industry in Ireland or throughout Europe.
It is foolhardy to drop the protection of intervention while implementing a 30 per cent price drop. Intervention has had a bad name because it became the visible manifestation of what people regarded as a wasteful Common Agricultural Policy. However, in recent times it has been used, as originally intended, not as an end in itself, but as a support to the market in difficult situations. If intervention is the best way of supporting the market at a particular time, there is no reason it should not be used. We cannot be expected to accept the Commission's beef reform proposals without adequate compensation and support arrangements for the market.
Hill sheep men and intensive lowland lamb producers must also be protected. Under the Agenda 2000 proposals on extensification, sheep would become a liability on livestock farms because they would be counted in the stocking rate without benefiting from the premium. It is unacceptable that Agenda 2000 does not address the problems which the CAP reform will cause in the sheep sector.
In the dairy sector, some countries want to postpone reform altogether, while others want to see an early end to quotas. Our priority must be to maintain Irish milk prices. This can only be done through the quota system. The proposals which previous speakers mentioned to reintroduce a maize silage subsidy to some countries, which would be worth about 10p per gallon, and not to give an equivalent subsidy in Ireland is unacceptable and inequitable. If the quota is to be increased for any member state, then we must insist that the 1984 EU farm ministers commitment that Ireland will be the first in the queue for any quota increase is fully honoured. Our national butter fat reference should also be increased from 3.58 per cent to the EU average of 4 per cent. Last year and this year we have been penalised for exceeding our butter fat reference, while countries producing far more are getting away scot-free.
The proposed cut of 20 per cent in grain is excessive and producers will be further disadvantaged by the new proposal for the abolition of monthly increments and the later date of payment of compensatory aid. We have some of the best grain growers in Europe and we cannot let Agenda 2000 damage and undermine our native grain sector. The set aside mechanism must continue to be used to manage supplies and prevent grain surpluses from destabilising markets and depressing prices to producers. Whatever price cuts are imposed, they must be compensated for in full.
As regards rural development and structures, I welcome the consolidation of all existing agricultural structural measures into one regulation. It is important for us that there is a strong rural development emphasis and we should support this approach. However, the Commission proposals to switch headage from livestock to area payment would discriminate heavily against progressive well stocked farms in the disadvantaged areas and would slash maximum payments by half and should be resisted. In transferring headage to the Common Agricultural Policy budget, the EU must provide the necessary resources. It is also essential that 100 per cent EU financing of the CAP is maintained otherwise CAP will no longer be a common policy because wealthy member states will be able intervene to help their farmers but poorer countries will not be in the position to do so.
That new resources are not being proposed for the EU budget to cope with enlargement to include five eastern European countries and Cyprus is totally unrealistic. The experience of East Germany, where massive budget resources were required to support development for a population of only 20 million, proves that EU enlargement to include 63 million additional people cannot be achieved on the cheap. Without extra EU budgetary resources, the cost of enlargement will be borne by the existing net beneficiaries of the EU transfers. The impact of the Agenda 2000 proposals will be more severe on Ireland than on any other member state.
Europe's political commitment to the European model of agriculture is being put to the test in the present negotiations. We cannot have a European model unless we provide the budget to pay for it. If we do not pay, we will end up with the American model which would destroy thousands of family farms in the Ireland and Europe. I wish the Minister every success in the negotiations and I know he will pull out all the stops to get the best achievable deal for Ireland. I thank the IFA which has, in fairness to it, presented the difficulties farmers are encountering without overstating the case and the major difficulties Agenda 2000 holds for Ireland.
The Labour Party has supported successive Governments in their attempts to secure the best possible deals from Europe for the Irish farming community. This can be expected, as already outlined by our party spokesman on agriculture, Deputy Penrose, in his contribution last night, provided the Government is committed to ensuring farm families have a sustainable income and that the maximum number of families are maintained on the land.
The present proposals are likely to have a devastating effect on farm families with estimates of between 20,000 to 35,000 families leaving the land over the next five year period. Unfortunately, this may not be the end of the problem and we could see a further deterioration in numbers in future years. The Labour Party believes we still have time on our side to rectify these terrible predictions, if the Minister and his negotiating team put forward the most realistic points possible next week in their bargaining with fellow EU ministers.
Ireland is no longer the poorest EU member state but the agriculture sector is still severely disadvantaged. Irish beef is selling at prices 25 per cent below the EU average. It is indisputable that a tiered direct payments or area based system would achieve a more equitable distribution of farm supports. By focusing supports on low income farmers the flight from the land would be stemmed.
On average, Irish farmers are the oldest in Europe, with only 12 per cent under the age of 35. On average, they are 15 years older than their Australian counterparts. On his visit to Ireland last week Commissioner Fischler made some important points about the quality of Irish produce. Better training is required, in terms of production and quality assurance, if Irish agricultural produce is to prove attractive to the European consumer. The difficulty is that the agriculture sector cannot attract young people. There is a failure to harness their potential because they are aware they can achieve a much higher standard of living outside farming.
I welcome the Taoiseach's commitment in recent weeks to establish an expert working group on agriculture. For some time the Labour Party has pointed to the need to devise a long-term plan. A fire brigade approach has been adopted by successive Ministers. It is imperative that the Agenda 2000 proposals maintain the maximum number of farm families on the land and ensure farming remains a viable option.
In the past year the myth that farmers are super rich has been quashed. It has taken the appalling weather conditions to bring the point home to the many critics on the sidelines. The findings of a recent IFA survey show that 37,000 farmers earn less than £155 per week. The findings of the Roscommon rural household survey show that 50 per cent of households are earning less than £5,000. The needs of this group should be at the core of the Agenda 2000 reforms.
Seventy per cent of direct income supports go to the 30 per cent of better-off farmers who are engaged in a diverse range of production activities on larger holdings. What is required is a long-term national plan to make young people aware of what farm life has to offer, which accepts that the face of farming is changing with the introduction of new technology and an increase in the number of part-time farmers.
The points made by Commissioner Fischler about Irish beef should not be ignored. It is proving difficult, however, to have the Libyan and Iranian markets reopened. Irish beef is unique in Europe in that it is grass fed in a superior environment for beef production. The quality of the suckler herd, however, is not as marketable as is steer cattle. Product development must be at the core. This should be addressed as a priority. I wish the Minister well and look forward to further debates on the Agenda 2000 proposals to ensure a progressive and developing agricultural scene for all farm families.
I pay tribute to the IFA for the way in which it has presented its case in its detailed document which has been costed and indicates the impact the Agenda 2000 proposals and the reform of the Common Agricultural Policy will have on all sectors, from dairying and beef to sheep and tillage. No one can deny that the Common Agricultural Policy has been of benefit to agriculture which has been transformed in the past 25 years into a modern, vibrant and intensive industry. The downside is that many farmers have been left behind. Large tracts of rural Ireland are being farmed by elderly individuals. There is no progressive plan to encourage the transfer of land to the younger generation.
It would be remiss of me not to stress the importance of agriculture to the economy. The population of rural villages is declining. Statistics suggest that in the next five years 50,000 will leave the land. This is impacting on school numbers. Those who have been reared on farms want a better future. Unless structures are put in place to reinvigorate rural areas, there will be theme parks throughout rural Ireland and congestion in our cities. The American model has failed. Villages across the mid-west have been decimated. Recently the French Government advertised in international newspapers to encourage non-nationals to purchase land in certain areas to ensure the survival of rural communities.
The enlargement of the European Union is politically unstoppable. This is welcome to ensure stability on its eastern frontier. The downside is that no provision has been made in the EU budget to facilitate this. The funds currently available under the Common Agricultural Policy should not be redirected for this purpose.
The principle aims of the Common Agricultural Policy have been laid down in stone. They include free access to markets, impartiality and a commitment to support rural communities. Agriculture has been transformed to the point where we now have some of the finest and most efficient dairy and tillage farmers in the world. We also produce the finest beef in the world. This can be put down to the transfer of funds. The downside is that many farmers have been left behind, mainly in areas where land is poor and which are removed from the major milk markets of Cork and Dublin in which dairy farming is prospering and there are large herds which can support a family. Outside these areas many family farms are no longer viable without financial support. It is important that we have a national plan which outlines the strategic plans for agriculture for the foreseeable future. Farmers are most concerned about the huge uncertainties. There are rumours that quotas will be abolished in 2006. Any such move will have to be planned strategically. I would prefer if quotas remained as supply control management has been successful in the dairy sector. Farmers want to work for a living. They do want to have to wait for a cheque from Brussels, they want to earn their livelihoods and sell a quality product on EU and world markets. I fear the worst if there is no plan which assures farmers of where they are going so they can reinvest in and reinvigorate their businesses.
Equality between member states has been mentioned by several speakers. I am disappointed with the Commission's proposals on the national envelope. This will be the death-knell of the Common Agricultural Policy as the word "common" should mean that every country will be treated equally.
Reference has been made to maize arable aid, the impact on prices and the efficiency of farmers in other member states. We are at a disadvantage on a number of fronts. We are the only remaining island nation and peripherality is a cost factor which must always be taken into account. The Government has given priority to ensuring that Ireland's position is made clear in the negotiations. There can be no undermining of funding for rural Ireland, particularly for farming communities.
The beef industry has gone through a difficult time in recent years. Much of this is due to over-supply and intervention. Intervention should remain but it is not the answer as it is too costly. We are grant-aiding farmers to produce beef, which is in over-supply. It is put into intervention and sold in two or three years at a reduced price. We must look at the supply controls with regard to beef and remove stock which breed poor animals unacceptable to supermarkets. If we are serious we have to look at the culling of suckler herds and concentrate on breeding animals for which there is a market.
The price for beef in other EU countries is 25 per cent higher than Irish farmers are being paid. We export 90 per cent of our animals so we are vulnerable and fully dependent on EU and world markets. We are nearing the completion of the first round of the GATT and now face into WTO negotiations which will further complicate matters. The Government must take a strong line in the Agenda 2000 negotiations and CAP reform to ensure that our national interest is protected.
The Minister has met many of his EU counterparts to lobby the strategic point that we are so dependent on agriculture. We remain a rural-based society and agriculture is the only way to sustain its viability. The IFA made proposals to Government and the Commission on CAP reform in a successful and ambitious document. We would all jump for joy if we were able to secure the full package it has outlined. I am confident that the full weight of the Irish diplomatic service, the Government and farming lobby groups will ensure solidarity among European farmers so that our national interest will be protected, ensuring a future for agriculture.
If we are serious about sustaining rural Ireland we have to remove the uncertainty with regard to quotas, intervention, world markets and the direction in which we are moving. Until such time as we remove that uncertainty, farmers will be less inclined the upgrade their facilities to ensure their viability and the continuation of an industry which has survived many knocks. This is a critical time. I wish the Minister and Minister of State well. Deputy O'Keeffe has been vigorous in his attempts to meet farming communities and has listened intently to them. I compliment him and hope that good news will emanate from Europe in the next few weeks regarding agriculture.
I welcome the opportunity to speak on the proposed reform of the CAP. There is no doubt that the current negotiations will fundamentally change the face of Irish agriculture up to 2006. They will also have serious consequences for the Exchequer. I assure the Government that we will support its negotiating strategy in the national interest to ensure that the impact of the proposals is minimised and that the best possible future can be carved out for agriculture.
It is important to take an overview of the three driving forces behind the reforms. The current political situation in the EU will make our negotiating strategy more difficult. The defeat of Helmut Kohl's Government is a major loss to small countries, particularly Ireland. He had a sympathy with the agricultural industry which is manifestly absent in the new German Government. He also had a vision of Europe and the role of small member states.
Thirteen of the 15 member states are now headed by socialist governments and sympathies have significantly moved away from primary producers to consumers. The previous balance in the debate is now lacking. A number of the net contributors to the EU, such as Germany, the Netherlands and other heavy hitters in the Council of Ministers, are seeking reductions in their contributions. This places the debate in context and makes the negotiations very difficult.
By 2002 or 2003, enlargement will see five new member states joining the EU, with perhaps another five joining by the time the current reforms are completed in 2006. This explains the momentum behind trying to conclude these negotiations before the enlargement process is completed. There are also the WTO talks and the increasing demands by non-EU countries for more liberalisation of trade. All of these issues mean that the Government face an enormous and daunting task and we wish them well. However, the Minister's performance does not give us great confidence in his negotiating skills.
That is unfair.
I did not interrupt the Minister of State.
In fairness, the Deputy should withdraw the comment.
Deputy Creed without interruption.
Perhaps the Minister of State thinks he could do a better job than the Minister, Deputy Walsh. The Minister of State is aware from the in-depth discussion with representatives of the pig industry yesterday that there is huge anger among farmers. Many of them are going to the wall and there is little sympathy for many reasons in the community for the agricultural sector. The Minister's performance has been abysmal over the past two years, but we are seeking a good championship result in the negotiations. We wish him well and we will support him.
Strategically, three fundamental principles are the key to a successful outcome. This is aside from the issues involving the commodities, including beef, cereals and the dairy sector. The three fundamental principles cannot be conceded because it would mean throwing in the towel to a significant extent. Other speakers mentioned the first principle, which is the common element of the agricultural policy in the European Union. We should not throw in the towel and accept a position where national exchequers would contribute 25 per cent of the cost of the Common Agricultural Policy budget as currently proposed by many of the net contributors to the budget.
That is not on; it is gone.
I accept it is not on, but it is a negotiating strategy which will be used by others. If we accept a position where national exchequers provide even 5 per cent of co-financing, it would be the thin end of the wedge. It might be an easy pill to swallow today when there is buoyancy in the Exchequer, but when the economy takes a downturn, which is as inevitable as night follows day, it will be much more difficult for small countries to absorb than the major economies on mainland Europe.
As a fundamental principle, a single inch should not be given in that area. The consequences would be horrendous and we should not be deluded by the current buoyancy in the Exchequer in terms of our capacity to implement such a policy in the future. It is estimated that it would cost the Exchequer approximately £225 million by 2002, and it would be a growing demand. It would have horrendous consequences in terms of the overall budget of the Department of Agriculture and Food and for taxpayers generally. We cannot afford to entertain the proposal.
The second fundamental principle in our negotiating strategy must be recognition that Ireland is a largely grass based producer of beef, sheep, which is not mentioned in any of the commodities under consideration, cereals and milk. Ireland was significantly disadvantaged in the negotiations in 1992 under the MacSharry reforms. They involved a reduction of approximately 20 per cent in cereal prices and a maize silage supplement. If the current proposal of a 30 per cent cut in cereals is added to those changes in conjunction with a continuation of a maize silage grant to farmers on the Continent, with no proposals to extend extensification to the sheep sector – sheep are included in the calculations of the 1.4 livestock units – we will run the risk of seriously undermining our extensively based production which is environmentally friendly, as demanded by the consumer. There would be horrendous consequences for Ireland if this point is conceded.
The third fundamental principle in our negotiating strategy relates to the two previous principles. The term "vital national interest" is still recognised in the negotiations. The value of this term has been debased because it is used too frequently as a knee jerk reaction to every minor trouble faced by the agricultural and fisheries sectors. However, these negotiations are not only of interest to 120,000 farmers. They are of national interest to the Exchequer because of the co-financing proposals which are on the table and the threat to our extensive based production as opposed to intensive cereal based environmentally unfriendly production. We should be aware of that fall-back negotiating position which is based on the fact that no policy should disproportionately disadvantage any member state relative to others. We should not be afraid of playing that card.
Regarding milk quotas, a commitment was given in 1984 that in the event of the quota regime being reviewed, an additional milk quota would be secured for Ireland as a priority within the European Union. It is illogical to accept anything less. The 1 per cent proposal on the table is entirely inadequate for many people who wish to remain in dairying at a viable level.
Regarding the non-payment of extensification in the sheep industry, there will be major consequences for the sheep industry if beef prices are reduced significantly. The only way that can be meaningfully addressed is by payment of extensification.
The current rural development proposals are a disgrace. There is little in terms of a financial commitment. I appeal to the Minister to ensure he is not forced into making decisions within a timeframe set by the German Presidency. We will have to live with these policy decisions for the next six years up to 2006. I would not worry if the negotiations carried on until the next Presidency of the EU if it meant getting it right. I appeal to the Minister and his officials to ensure that they are not forced into making decisions under an artificial timeframe which will have enormous and serious consequences for Irish farmers.
I welcome the opportunity to contribute to the debate on Agenda 2000, the negotiations on which are due to start next week. Ireland, particularly rural Ireland, has benefited enormously since our entry to the Common Market, as it was known in the early 1970s. For example, the standard of housing and accommodation has improved dramatically.
When Ireland entered the EU, it had a market for its agricultural produce. This ensured that agriculture came top of the list. In the past agriculture was the Celtic tiger when many other sectors were in trouble and not doing as well as they are at present. Agriculture formed the basis of the economy. Many people were reared and educated on small family farms. However, we are now in a major transitional period and agriculture is under pressure in terms of the Agenda 2000 proposals. Agriculture is no longer an attractive option for young people and it is vital that we emerge with the best deal possible from the Agenda 2000 negotiations which may be concluded by the end of March.
I agree with other speakers that we should not agree to the proposals just because of a timetable set by the German Presidency. We must ensure that we get the best possible deal from the negotiations. If decent proposals for Ireland emerge from the negotiations, it might put new life into Irish agriculture. There is much concern about the future but a good deal from the Agenda 2000 negotiations might kick start the industry.
Stringent quality control measures have been put in place in the milk industry over the past 25 years. It has stood the test of time and we have secured good markets on the basis of our hard work. The same cannot be said of some of the other sectors. In 1984 when milk quotas were first introduced, Ireland was promised that if there was a change to the system, it would receive priority. The offer of 1 per cent is a disgrace and must be fought strongly to ensure that Ireland gets a fair crack of the whip. On the previous occasion, the 4.5 per cent increase in milk quotas was given across the board. If we are serious about preserving family farms and rural communities, any additional quota that becomes available will have to be allocated to smaller farms. I speak for the area that I represent, Cork North-West, in particular Duhallow which is made up of small family farms. Rural communities are under enough pressure without their backbone industry coming under more pressure. If there is an increase in quota I hope it will be allocated in the way I suggested.
In the past 25 years milk policy was very much to the fore. The co-operative movements were very strong. The production of milk was market driven and the emphasis was on quality. The same cannot be said of the beef industry. Under the Common Agricultural Policy, which empha sised numbers rather than quality, any animal standing on four legs could get a premium, and one of the reasons agriculture is now in such dire straits is the number of cattle for which there is no market. If we went back to our quality control base and ensured that the beef we produced was of top quality and could be marketed readily it might help. That is probably outside the concerns of Agenda 2000, but it is something we should look at.
In the context of rural development policy, since the last CAP reform, Leader I and Leader II were put in place, and these programmes were of great help to rural communities. Small businesses were given reasonably substantial grants. These are now employing three or four people and helping to rejuvenate the rural communities. We cannot locate massive industries in these areas because there are not enough people, but if small businesses in such communities can employ three or four people it can be of great benefit to the communities in which they are located.
In the past ten years or so small villages and towns have come under increasing pressure because of the decline in agriculture and the drain of people from traditional employment to large urban areas. We now have emigration not to England or America but to the large urban centres. If we had told the people who were leaving on the emigrant ships to go to various parts of the world ten years ago that we would be able to provide employment at home, they would have laughed at us. However, we can provide employment in these rural communities if there are serious initiatives in Brussels and in the European Community.
The Government has a difficult task. It has put much work and effort into the negotiations and I wish it well. The German Government has changed its outlook, but I am confident that the Minister for Agriculture and Food, the Government as a whole and the Diplomatic Service will do everything to ensure that Ireland's case is fought well.
I pay tribute to the Minister of State, Deputy O'Keeffe, for his various visits to my area since he took office. We look forward to further visits in the future.
I propose to share my time with Deputies Theresa Ahearn and Paul Bradford.
That is agreed.
We are very much opposed to these CAP reform proposals because they will be detrimental to rural Ireland. Without farmers rural Ireland will fade away. Recent research indicates that over 70,000 farmers exist on £156 a week and at least 37,000 of these have no other income outside of farming. Many exist below the social welfare limits. It has been the purpose of such schemes as the farm assist scheme to help such farmers. It is of critical importance that we maintain subsidies because many farmers are sell ing products at less that it costs to produce them. We are aware of the crisis that already exists in the beef industry and other segments of farming. The situation will be further compounded by these CAP reform proposals.
It is essential, therefore, that we put forward as strong a case as possible and lobby strongly against what is proposed for Ireland. I do not propose to go into detail on the CAP reform proposals. They have been elaborated already by my colleagues. However, milk is to County Limerick as oil is to Texas. It is a very important component. We know the impact the farming lobby makes on rural Ireland and the dependence of shops on them. The CAP reform proposals will have spin-off effects. Farmers are often criticised by urban people, but urban Ireland itself will go into decay if farming is adversely affected, because many jobs will be lost.
I wish the Government well. The farming lobbies have to keep up the momentum. We have to indicate as strongly as possible that we are totally opposed to these proposals.
Fifteen thousand farmers took to the streets yesterday in demonstrations in 28 towns throughout the country. It was not a demonstration of anger or frustration but a demonstration of sheer devastation, sheer worry about their prospects. Under the proposals in Agenda 2000, it is estimated that farm incomes will be reduced by £260 million and that a further £600 million will be taken from the rural economy. In addition, 50,000 farmers will be made non-viable within five years and 20,000 non-farm jobs will be lost in our towns and cities.
I agree with Deputy Creed that Agenda 2000 is not just a farmer's issue but a national issue. These proposals could have disastrous consequences not only for farmers but for the entire economy. How many industries would have to close down to have the same disastrous consequences these proposals could have on the economy? What would be the outcry if so many jobs were to be lost in other industries? The proposals to cut beef by 30 per cent, sheep by 20 per cent, milk by 15 per cent and cereals by 20 per cent will force farmers out of these traditional areas of agriculture and transform what we have always cherished, our family farms, into ranch-style units.
The Minister for Agriculture and Food has a huge responsibility in these negotiations to protect the future of this industry which is still our major employer. He can save this industry only by convincing our EU partners and his colleagues that Irish agriculture is in a unique position and is most vulnerable. We recognise that agriculture must be reformed in order to remain a vibrant and profitable industry. However, the proposals confronting us today will not reform but will kill this native industry.