The next two items are being taken together. Deputy Jim Higgins and Deputy Naughten have five minutes each and the Minister has ten minutes.
Adjournment Debate. - Meat Plants.
(Mayo): I thank the Leas-Cheann Comhairle for allowing this matter to be raised. The Irish Country Meats plant at Ballyhaunis, now called the Glan Bia plant, has a significance all its own. It has an economic significance in that it provides more than 200 jobs in an area starved of employment and bled white by emigration for decades. It has a social significance in that is kept the fire alight in many a household which would long since have been abandoned and kept open schools which would otherwise have been depleted or closed. It has an emotional significance in that seven years ago it faced the same bleak prospect it faces today.
UMP, formerly Hal-al Meats, was put to the wall because its bank failed to honour and underwrite a rather modest debt. Its examinership did not receive the necessary support from the banks and the receiver was called in. Several larger meat companies cast their cold, predatory eyes on the plant, with the intention of buying it to close it and remove a competitor from the marketplace. I have seldom witnessed anything like the determined campaign mounted by the local community, the chamber of commerce, the IFA and the ICMSA to keep the plant open. The present Minister was extremely helpful; he was Minister at that time also and took an active interest in the plant and its future.
Avonmore took over the Ballyhaunis and Ballaghadereen plants and Government agencies supplied generous grant aid. For the best part of seven years the Avonmore subsidiary, Irish Country Meats, has traded profitably from its Mayo plant. The plant has been modernised and boasts new sheep and beef lines and a state of the art boning hall. Its future looked assured.
When the news filtered through that the newly titled Glan Bia was actively seeking a buyer for the plant, shock waves went through the work force and local community. The move was seen in the context of recent remarks by the former managing director of Avonmore plc, Mr. Pat O'Neill, in The Sunday Tribune on 28 March. Commenting on a management buy-out, he said Avonmore had received a proposal which was not viable and would not accept a proposal which did not provide adequate value and did not assist in re-modelling the sector. He said that the company had obligations and responsibilities to do the right thing for the sector and could not be too self-serving. He said the company wanted to play a part in consolidating the industry – in other words, to decode the language, “McKinsey rules OK”. According to Mr. O'Neill, the Minister must move on the McKinsey report.
The report is the big fear. In blunt terms, it is clear that under the rationalisation plan the Ballyhaunis plant will be one of those put out of existence. The new owner will mothball it and receive a substantial golden handshake of several million pounds for co-operating in so doing. This is not acceptable. It is a modern, profitable plant which should be developed rather than closed. It has even greater commercial potential than has been realised to date. It is crucial to the social and economic fabric of this area – an area with no high-tech jobs – that it be retained.
Within a quarter of a mile of the meat plant is the company's rendering plant. Although it has improved it still has a considerable air pollution problem. The local community has tolerated a lot over the years but it did so in the interests of the jobs in the main meat plant. A rendering plant on its own will not be tolerated – it is both or nothing. The rendering plant should be upgraded if it is to continue in operation because much more needs to be done to it.
There is no objection to an outside company taking over the plant, provided there is a clear guarantee that the meat plant will be kept open and the jobs retained. I ask the Minister to intervene and to establish exactly what is going on. Why was the company so secretive and unco-operative at its meeting in Dublin yesterday with the IFA and the local chamber of commerce? I also ask the Minister to ensure that the expensive modernisation of the plant – a substantial portion of which was funded by the Irish taxpayer – is not to be unused, under-utilised or padlocked behind closed doors.
Thank you, a Leas-Cheann Comhairle, for selecting this important issue for the Adjournment, because it is of major concern not only to County Mayo and County Roscommon but to the province as a whole. Many people believe the proposed purchase of the two meat plants is a major step in implementing the McKinsey report, which proposed a dramatic reduction in the number of meat factories in Ireland. We must consider the livelihoods and lives of people in Ballyhaunis and Ballaghadereen, not only a report which has gathered dust for a number of years. Farmers, employees and the economy of the two communities must be taken into account.
The rumoured purchaser of the plants does not have a slaughtering facility for sheep and if the Ballyhaunis factory were to close there would be only one major sheep slaughtering plant in the west of Ireland. This is of serious concern to sheep farmers in the province because it would mean a monopoly in the marketplace and no competition at marts, in contrast to the two buyers which exist at present. The plant is, therefore, crucially important to the economic prosperity of many communities in the west. It is also rumoured that the sole reason for buying these plants is to obtain the rendering facility and that it is intended to close both slaughtering facilities. This would have a detrimental effect on cattle prices at marts and would reduce competition.
Ballaghadereen could not afford to lose between 200 and 270 wage packets. The town has been hit in the past by emigration and it is trying to build up employment, which is difficult. The slaughtering plant is the major employer and its loss would be a major blow which would signal the death of the town and its hinterland. I am delighted that the Minister of State, Deputy Davern, is replying to this matter because he is responsible for rural renewal. Without the facility in Ballaghadereen talk of rural renewal is pie in the sky, because there will not be enough people to do it. I hope the Minister takes this into consideration.
Glan Bia, which owns the two plants and proposes to sell them, is a farmer controlled public limited company. It has a duty to the farming community to maintain competition. Jobs in rural communities are vitally important and agriculture is the main employer in County Roscommon. These are two of the most modern factories in the country, both have received substantial grant aid in State and EU funds, both have made healthy profits, and we want a written commitment to keep both plants open. We have no problem with a new owner provided it runs the plants and does not run them into the ground.
This problem has arisen before and, in fairness to the current Minister, he did his utmost to ensure the plants remained open. I urge him to ensure again that the plants' future is guaranteed because they are vitally important to the economic prosperity of the towns. Without them, we could close the communities because there will be no one left. The tax designation will mean nothing because there will be no one to take it up. I ask the Minister to get a commitment from Glan Bia and the new owners that the plants will be kept open, employment remains in the town and competition is maintained in the west.
I apologise in advance to my colleagues opposite in respect of the quality of my voice. I am suffering from a chest infection.
Let me put the record straight regarding the processing plants concerned and the reference to the McKinsey report in that context. The McKinsey report was commissioned last year by Enterprise Ireland at the Minister's request and was submitted to him last autumn. It set out the most appropriate future strategy for the Irish beef industry and involved a list of recommendations aimed at improving the marketing, processing and production of Irish beef. The study concluded that the industry could improve profitability by the adoption of a series of initiatives across all levels of the sector. In summary, an important recommendation at processor level was that processing capacity should be reduced substantially through a self-funded buy-out scheme. Greater discipline in marketing and the introduction of a quality based pricing system was also recommended. At producer level the main initiative recommended was the production of better quality cattle in order to recover and increase export levels in EU markets. A greater degree of partnership between producers and processors was also recommended to develop a long-term and mutually supportive relationship.
Following examination of the report it was decided to set up a task force to examine and make recommendations on the future of the industry, which would be translated into a plan of action. The McKinsey report would provide a useful starting point for the work of the task force but would not be relied on exclusively as a basis for drawing up a plan of action for the sector. This membership of the group, which I announced on 10 November 1998, was drawn from senior levels within the production and processing side of the industry as well as from the relevant State agencies under the chairmanship of the Secretary General of my Department, John Malone.
In launching the task force I was mindful of the need to put the industry on a sound footing, once and for all, and to embark on a process of change which would enable it to overcome the obstacles which have hindered its progress. The task force held its first meeting on 18 November and the following terms of reference were agreed: "To devise an action plan for the development of the beef industry covering the whole sector from primary production through to processing and marketing with a view to enabling the sector to overcome the obstacles impeding its development and to generate better returns from the markets." The task force was expected to have concluded its deliberations earlier in the year but the Agenda 2000 negotiations have delayed this. Despite their expressed disappointment, I am sure both Members will agree that the Minister for Agriculture and Food, Deputy Walsh, did a tremendous job in respect of Agenda 2000. The task force is now approaching the final phase of its deliberations.
There is absolutely no link between the reported change of ownership of the processing plants in Ballyhaunis and Ballaghaderreen, or any plant in the country for that matter, and the recommendations in the McKinsey report. I emphasise that any sale or purchase of these plants is a matter for the parties involved.
I recognise that a proposal or even a rumour about a proposal to sell a plant will cause concern among employees with regard to their future security. The beef industry overall employs about 5,000 people at processing level. Unfortunately, over half those jobs are on a part-time basis with workers employed two to three days per week only. This will not be sustainable in the future because of the availability of other full-time employment opportunities. The drain of skilled workers from the sector is already a major impediment to the development of the industry in many parts of the country.
There is general agreement that there is excess capacity in the sector, the removal of which will provide the catalyst for more full-time jobs and improve the attractiveness of employment in the sector for existing employees and potential new entrants, and that career development opportunities exist for staff at all levels.
The needs of producers must be addressed in any plans for the sector. Many of these producers provide the backbone of the labour force in the processing plants. Since the autumn of last year, Irish farmers received only approximately 75 per cent of the cattle prices paid to their European colleagues. Clearly there is a need to significantly narrow this gap, which will not be easy. The impact of the BSE crisis in 1996 continues to linger. The fall in consumption on EU markets, the renationalisation of some of these markets and the greater dependency on volatile third country markets all point towards the major challenges ahead.
The aim will be to recover and increase market share on the high priced EU retail markets. To do this, action must take place on all fronts. The task force invested considerable time in addressing this area. Clearly there must be closer co-operation between producers and processors in order that the requirements of the EU markets are satisfied. An immediate step forward in this regard would be to provide for a payment system on the basis of quality. There is also a major requirement for the highest standards of food safety and hygiene at processing level. This will require ongoing investment, apart from the need to develop economics of scale which would reduce unit production costs and provide greater returns to the producer. Therefore, the debate on rationalisation must be seen in proper context as part of the development of the industry, not simply in terms of removing excess capacity. Rationalisation alone will not solve the problems of the sector – action is required across a range of fronts.
The recently concluded Agenda 2000 agreement provides a framework for taking construc tive and forward looking action. The economies of beef production have been preserved, there have been major increases in direct payments provided under this agreement and our production base has been preserved through the retention of the full suckler cow quota.
There is speculation about a change in ownership in these plants, which is part of commercial life in any business. The outcome of this process is not clear and it would be unwise to jump to hasty conclusions. If the factory is as good as the Deputies say it is, I am sure an interested party will seize the opportunity to purchase it and ensure that its employees are given work on a full-time rather than a part-time basis.