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Dáil Éireann debate -
Wednesday, 28 Apr 1999

Vol. 503 No. 7

Priority Questions. - Beef Industry Rationalisation.

Paul Connaughton

Question:

20 Mr. Connaughton asked the Minister for Agriculture and Food his policy on rationalisation of the beef processing industry; the plans, if any, he has to impose a statutory levy on all meat processors; the steps, if any, he will take to ensure that the cost of any rationalisation plan in the industry will not fall on farmers; and his views on the structures necessary to ensure that the primary producers do not ultimately pay for these rationalisation plans. [11015/99]

The McKinsey report on the beef industry, which was commissioned by Enterprise Ireland at my request, concluded that there is a substantial degree of over-capacity in slaughtering facilities in the beef sector in Ireland. The report estimated that the removal of half of the excess capacity would be worth £18 million per annum in immediate cash savings to the industry and recommended that the surplus capacity should be removed. The recommended means of removing the excess capacity was by means of an exit fund formed by the processing industry itself.

The beef task force, which I established last November, is currently preparing an action plan for the future development of the beef industry. This action plan will address all the constraints facing the industry at present, including the over-capacity and the need for rationalisation of slaughtering facilities. The views put forward by McKinsey are being considered in this context. It is my understanding that the task force has not yet finalised a definitive position in regard to the implementation of a programme of rationalisation. When I have received the report of the task force I will examine its recommendations.

That was a sidestep if I ever heard one. The dogs in the street know the stage at which the committee reviewing the McKinsey report is, yet the Minister of State tells us that because the committee's deliberations have not concluded, he does not know what he will do next. Will he introduce legislation to impose a levy on all factories? If not, how does he propose to impose one? While there is overcapacity in processing, will he give a guarantee that the cost of whatever rationalisation takes place will under no circumstances be borne by farmers? Will he give an undertaking that it will not be possible for meat companies, such as Irish Country Meats in Ballyhaunis and Ballaghaderreen, to offload parts of their businesses under this programme? As a result of the McKinsey report they might find it easier to accept a compensation payment and close. Given the location of such factories, there would then be no competition, for instance, in the west.

The Deputy has raised this matter on a number of occasions on the Adjournment etc. and he has had access to all the available information. Nothing is agreed until everything is agreed in regard to this programme. The Deputy is well aware that there is massive overca pacity in the industry. He is also aware that we are facing a rationalisation process and agreement on that is necessary for the future of the industry. A total of 1.6 million animals are slaughtered in 38 licensed factories but one operator controls 38 per cent of the industry.

There is also massive undercutting in the marketplace while Ireland exports approximately 60 per cent of its beef to third countries. We must get to grips with the problem. I have stood on public platforms with the Deputy and admired what he has said about having a more organised approach to the beef industry, including the marketing and promotion of products. If we can get our house in order and reach agreement on this, statutory levying will not be required. The farming community is conscious that it will have to pay another levy and we are also conscious of that problem. They have lobbied us and told us that they do not want another levy, nor do the organisations representing producers want another levy. Agreement will be reached on this because we will keep working until a programme is in place to rationalise the industry.

We have no control over what ICM or any other organisation does. It is part of the private sector, the enterprise society, and long may that last. Anything we do is not damaging to the industry. Our job is to regulate and promote the industry.

I am talking about a statutory levy on factories in that those who remain in the industry will compensate those who leave it. Is it the Government's intention to introduce a statutory levy on them or some other system? The Minister must surely know at this stage the direction the committee is taking. I was told that we were supposed to receive its overall findings yesterday. You and your senior ministerial colleague must surely—

It would be better if the Deputy addressed his remarks through the Chair rather than directly to the Minister, and vice versa.

I am sorry, a Cheann Comhairle. Will a statutory levy be imposed on factories which remain in the industry in order to compensate those which leave?

There is no agreement on a levy.

Is it under discussion?

Yes, we must be realists on this issue. Money must be found to rationalise the industry.

The Deputy and the Minister of State should address their remarks through the Chair.

Mechanisms are being looked at and another meeting will take place. Nothing is agreed until everything is agreed.

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