Dáil Éireann debate -
Tuesday, 2 Nov 1999

Vol. 509 No. 6

Private Members' Business. - Incomes from Agriculture: Motion.

Mr. Connaughton

I move:

That Dáil Éireann condemns the Government for its lack of understanding of the ongoing deepening income crisis in agriculture and, in particular, its total failure to open up market export opportunities for both cattle and sheep, and calls on the Government to:

adequately co-finance the REP, headage, farm retirement, on-farm investment and young farmer installation aid schemes and control of pollution grant schemes over the next seven years through the national development plan on a pound for pound basis, taking into account the increased numbers of farmers who may join such schemes up to 2006;

immediately open discussions with the EU Sheep Policy Committee to have the current calculation of the ewe premium scheme changed to take into account the particularly low level of lamb prices in Ireland, and to have sheep included for extensification payments;

re-open the Libyan market for live cattle;

abolish stamp duty for young farmers;

increase the installation aid grant for young farmers;

provide an opportunity for small and medium sized milk producers and young newly trained entrants to achieve viability for breaking the land/quota system in a controlled and imaginative way, leading up to an efficient milk restructuring scheme;

expedite the national cattle breeding plan;

provide extra funding to An Bord Bia to provide a very distinct country-of-origin labelling system for Irish bacon and pork products on the home market; and

provide adequate funding for Leader groups.

I propose to share my time with Deputies Gerry Reynolds, Naughten, Crawford, Dukes and Jim Higgins.

Acting Chairman (Mr. Foley)

Is that agreed? Agreed.

Mr. Connaughton

The Minister for Agriculture, Food and Rural Development and the Government should be ashamed of their stewardship in light of the sorry state of agriculture. Agriculture, as one of the most important sectors of the Irish economy, should not be in such a depression at a time when virtually every other sector is booming. I wish to record in this debate the tremendous anxiety many farming families have about their very existence and the great uncertainties they have about future successors to their farms.

Many commentators outside farming will say that I am an alarmist, that these are over the top comments and this is the same old rural rant of looking for more. Whatever about the validity of that argument in the past there are very strong signals of a difficult economic situation for many farmers and, unfortunately, the future does not look rosy. Over 4,000 families leave the land each year but what is almost as alarming are the huge numbers who are forced to take a job outside the farm to earn a half decent living. Another damning indicator is the falling number of young men and women who attend our agricultural colleges. This year saw the closure of St. Patrick's College in Monaghan and a number of others must be feeling very insecure at the moment. However, on the ground, the lack of income is the greatest factor and will dictate whether a farmer can rear a family on the land.

No meeting of farmers held anywhere in Ireland takes place without reference to the serious state of the industry and the huge uncertainties around the corner. Another indicator is the inability of many small to medium sized farmers to secure loans, even for working capital, from the banks. This will come as quite a shock to many people given the booming economy. This week I received a telephone call from a 60 acre suckler farmer who needed working capital and a small loan to build a slatted house. This house is a central part of his REPS plan and if it cannot be built he will either have to change his REPS plan or pay back the money he owes. This man is an average small farmer with approximately 30 suckler cows. He receives some farm assist and would be regarded as being a thrifty small farmer. The future does not look good for him.

Many sectors in Irish agriculture are going through a horrendous time, despite the spend of the Minister and the Department elsewhere. For example, store cattle farmers never had it as bad with animal values having more than halved in two years – this applies to 70 or 80 per cent of the cattle. Sheep farmers' incomes have collapsed since last July with an all-time price disaster this autumn. The hill sheep farmers were gutted this year. Pig farmers are haunted by the present market prices. Their trouble has lasted for much longer than the experts predicted. To my knowledge, there are no pig farmers actually breaking even. They have lost £15 per pig over the past 12 to 18 months. It appears the family-owned and managed pig enterprise is doomed.

While this year's grain harvest was excellent all the signs are that as a result of Agenda 2000 many smaller grain growers will be pushed out. Small dairy farmers with small to medium sized quotas firmly believed they would get a reasonable share of the much publicised Agenda 2000 extra milk quota. They were disappointed when it was divided and they received no more than 700 gallons each, which will not be of any help. Farming need not necessarily have such a depressing future. There are hopeful signals, especially if there is a political will to make structural changes that will improve farm incomes and keep farming families on the land.

Any Government worth its salt must have the capacity to see beyond today in its vision for rural Ireland. It must be obvious to everybody, even outside farming, that farmers are the custodians of the countryside. The very existence of the rural landscape in keeping with best environmental standards can only be safe if there are enough farmers, particularly young farmers, who produce wholesome food in an acceptable environmental context which is the rightful demand of consumers everywhere. However, there is one major caveat in this – farmers must be provided with an opportunity to make a decent living from the land. Their hands cannot be forever tied behind their backs. This places a great responsibility on the European Union, the Minister and the farming community.

The parameters were set in Agenda 2000 for the next six years for production targets, intervention levels, the cheque in the post system etc. We have little alternative but to work inside these parameters with the understanding that we must be vigilant in the upcoming world trade talks so there will be no further constraints placed on our farmers. Great negotiation skills will be required by the European Union to fight its corner in those world trade talks.

Irish farmers have proved time and time again that they will respond to the changing circumstances but if there are no clear achievable targets and planned action mapped out over the next six or seven years there will be nothing but uncertainty and indecision. Even in the midst of a very poor cattle trade with factory prices no more than 82p to 84p, there are chinks of light in the export weanling trade. We have proved that the best Irish continental weanlings are much sought after in Spain and Italy and are making good money. This type of outlet should inspire the Minister to provide as much leeway and support as possible for the Irish Cattle Breeding Federation to dramatically upgrade the quality of our cattle.

A point that is not often made is that we probably have too many cattle in our eight million herd. We definitely have far too many inferior animals. We must get our act together. There is as much as £150 difference per head in cattle of the same weight but the world of difference in quality. If continental farmers can purchase our best weanlings for a good price and still make a profit, it should surely be possible for us to do so, if the beef industry is properly organised. Flat pricing should be discontinued in factories. We should introduce a mechanical grading system with great haste that will remove the subjectivity from grading. On the cattle breeding side, there is a place for synchronisation so that cows may be brought in heat and inseminated to give greater managerial capacity to farmers. This service should be provided by the AI service and done under their strict supervision of the station veterinary office, as is the case in France. There should be no need for local vets to be involved. This would help reduce costs significantly.

There is an important role for An Bord Bia in the identification of new markets and in the difficult task of regaining our market share on continental markets. In fairness, the quality assurance scheme organised by An Bord Bia is widely regarded as one of the best in Europe. However, a market for meat and live cattle should receive assistance from An Bord Bia as this undoubtedly creates better competition at home and in the long run is good for the industry. As regards meat processing, there should be a case for EU Structural Fund investment in processing plants but only with strict conditions attached. This funding should be accessible to processors who can prove they will market their product in the highly priced EU markets. Under no circumstances should this funding be made available to a processor whose primary orientation is towards third country markets.

No sector of Irish agriculture was treated as shamefully as the sheep sector by the Minister when he allowed himself to be outmanoeuvred at the Agenda 2000 talks. The Minister came out with the white flag of surrender raised high in the air in so far as our 45,000 sheep farmers are concerned and he has continued to totally ignore them. It is well accepted that the sheep regime did not form part of the Agenda 2000 talks, but let nobody tell me that certain commitments could not have been sought which would help sheep farmers considerably over the next few years.

The Minister always seems to have a blind spot for sheep farmers. How could any Minister accept a situation where sheep would be calculated for extensification purposes but not paid for? Any farmer who carries cattle and sheep will have little difficulty in determining what system he should stay in to maximise his income. Sheep farmers are selling off ewes at an alarming rate for prices as low as 18p per lb. At present there is no live store lamb trade in Ireland. If extensification cannot be obtained by the Minister, at least he should ensure that sheep are taken out of the equation altogether so that it will not be a minus factor.

Sheep farmers have another huge anti-competitive factor working against them. Farmers in France and Belgium receive the same ewe premium as we do, but the continental price for lamb is much higher than here, at £1.50 compared to 84p or 85p. The removal of the so-called 7 per cent stabiliser would help sheep farmers to the tune of £4.30 per ewe. Since 1992 Irish sheep farmers have been denied a total of £244 million because of that miscalculation of the ewe premium scheme, yet nothing has been done about it. One way or another an all out political and diplomatic attack will have to be made on behalf of sheep farmers or else they will be wiped out. About 700,000 sheep will be taken off the hills while another one million sheep will leave the lowlands next year unless something is done.

This debate is intended to heighten awareness of the problems in this sector, and when Deputies are voting tomorrow I hope they will remember this fact. I spoke earlier about the reluctance of young people to go into farming. This is a subject I keep returning to. The State does not give a positive signal to young people to enter farming. We have an installation aid scheme which was introduced in the mid-1980s at £5,600 per participant. If it was considered to be a realistic start-up grant, surely in 1999 it should be much higher. Fine Gael is giving a commitment that, in Government, we will provide £12,000 for suitably qualified young farmers on taking over the land. It will be paid on the basis of £8,000 on installation and £4,000 after five years farming.

To provide further help to young people starting up who may have a huge asset base but very low credit rating because of their age, Fine Gael proposes a very low interest rate loan over ten years to a maximum of £30,000 for farm development purposes. Fine Gael believes that stamp duty should be abolished for this category, and I hope that will happen. Those measures can be justified economically. It costs the State almost £75,000 to train a vet and, according to Forfás, it now costs £11,700 to create a sustainable industrial job. On those facts alone, young people entering farming are entitled to what is being proposed.

Nowhere will the Government's commitment to agriculture be tested more than by its financial contribution through the national development plan towards agriculture in the areas of REPS, early retirement, disadvantaged areas and forestry. It now appears that the Government is basically matching pound for pound the funding made available under those headings by Brussels, and that is a good thing. I want to sound a note of caution, however. From the figures I have seen, not enough headroom has been made available over the next six years to take into account either the increased numbers in REPS or those in the retirement pension scheme. Should the increased numbers come onstream, which we all hope for, because of the financial ceiling that has been imposed over the period, the Government might have to look to other farming sectors to cut expenditure. That is something we certainly do not want. I want to ensure the Minister is fully aware that the agriculture industry is very worried about this matter. It is vitally necessary there should be no interference with headage payments, I put down a marker on that point right now.

I now turn to the debacle in Libya, Egypt and many other Third World countries where the Minister has failed miserably to get the all important breakthrough on live cattle exports. There is nothing this country wants more than an opportunity to sell the type of cattle that can be sold on those markets and to clear the backlog. The Minister had all the answers two and a half years ago before he went into Government, but on this issue, barring one or two trips abroad, he has been extraordinarily quiet.

I spoke earlier about rural development. I fully understand that in the future there will be many people other than farmers living in rural areas and this is to be welcomed. It is very important that we create the necessary job opportunities in those areas, both for farmers and people who have nothing to do with farming but who like to live and work in rural areas. I am extremely concerned by what I have heard concerning expenditure cuts for the Leader groups. They have shown great leadership in recent years in demonstrating how such integrated work can occur where jobs are created. If what I hear is true, it would be a retrograde step.

On the question of breaking the land-milk quota link, I hope it will be done in a controlled and imaginative way which will lead to a milk restructuring scheme. I hope the many people who worked hard and financed the purchase and leasing of milk over the years will be given priority when this share-out occurs. Furthermore, every effort must be made to give young people an opportunity to make a decent start in life. I hope they will get a chance to make a decent living through the restructuring scheme.

Backbench Fianna Fáil TDs, who are getting a great deal of stick from the farming community at meetings around their constituencies, should reflect on what I have said tonight. Leaving politics aside, what I have been speaking about is what is actually happening on the ground. The Government will have to do more. We have problems with the TB scheme, offal collection and fallen animals. A man in Galway rang me this morning to say he was being charged £60 for a dead animal, yet he cannot obtain a licence to bury it on his own land. Can the Minister imagine the costs involved in those circumstances?

I wish to address the famous Independent Deputies Healy-Rae, Fox, Gildea and Blaney. Incidentally, all four come from areas with severe problems, particularly in the sheep sector. There has not been a bleat out of them this year, despite the fact that some of them openly stated when they arrived in the House that it was the small sheep farmers who provided the support necessary to get them elected. When they vote tomorrow they should frighten the Government which has displayed such complacency. The Government clings to good news but it turns its back on the old reliable agricultural sector. As a result, many members of the farming community will be waiting in the bushes at the next election and they will remember how the Minister turned his back on old friends.

The Minister has become so complacent that he genuinely believes nothing can be done. That is the worst possible attitude one can have at this stage in the development of the agriculture industry. If the Independents want to be seen to make a positive impact in their areas, they will certainly send the Government a message tomorrow.

Mr. G. Reynolds

I congratulate my colleague, Deputy Connaughton, for tabling this motion because the agriculture issue needs to be debated, not avoided. The sector is still in crisis. Last year, all the Minister was willing to do was blame the weather conditions. He was not prepared to devise legitimate and imaginative policies to try to alleviate the serious financial difficulties in which many farmers found themselves. The store lamb trade in the counties I represent, Leitrim and Sligo, is on its knees. Prices as low as £15 and £16 are being paid for lambs. This is worse than at this time last year. What action does the Minister propose to take to resolve this problem? Last year one could use poor weather, lack of fodder and other issues to explain poor prices. This year there was a good summer and there is plenty of fodder for the winter, yet prices continue to tumble.

Another problem the Minister refuses to do anything about is the culling scheme for ewes which was initiated without any dialogue last year. Many farmers in my county and constituency are still awaiting payments under that scheme. The Department of Agriculture, Food and Rural Development is using excuses such as lack of folio numbers and commonage areas. This attitude is causing great distress in many areas. Many farmers provided information on folio numbers and other details last year to the Department but the same chestnut is being used again this year to delay payments to a sector which is in crisis. Farmers are urgently in need of payments to provide for their families, but the Minister is standing over that situation in his Department. It is not good enough.

Beef producers are also suffering greatly. The Minister has failed to take on the meat plants and the amount of money they are paying to farmers. Beef prices are between 80p and 85p a pound for beef. This is unjust and barely covers the costs of beef producers. Many farmers look in disbelief at their European counterparts who are receiving more than £1 a pound for beef. They wonder why the Minister is unwilling to take any action against the meat plants to try to resolve this problem. If the beef sector dies, many farmers in my area, who provide weanlings to the sector at this time of year, will not survive. This typifies the policy of Fianna Fáil in Government. It is unwilling to take into consideration small family farms and the people who are finding it extremely difficult to survive in these harsh financial times. The Minister has turned his back on them. It is amazing that the Fianna Fáil Party in Government is turning its back on the people who supported it and elected it to Government over the years. When they are most in need of some action, the party looks on and does nothing. It is horrendous that the Government has allowed this to continue.

Agriculture has been the backbone of our society for many years. The Minister is presiding over the destruction of this once proud industry. He has little time to turn the ship around but if he does not act urgently, he will be remembered as the only Minister for Agriculture, Food and Rural Development who failed to fight for the future of agriculture at Cabinet and European levels. He has much work to do and I hope he does it. When he was in Opposition, he said he would be the great saviour. He was like John Wayne in the House, blaming this side for not taking action. The Minister has been in office for two and a half years but the agriculture industry has continuously deteriorated. It is time for the Minister to react to the problem. If he does not do so, he should consider his position.

Mr. Naughten

I congratulate my colleague, Deputy Connaughton, for tabling the motion. The Minister has turned his back on the 34,000 sheep farmers in Ireland. He is acting as if they do not exist. However, if he keeps going as he is, they will not exist in a year or 18 months. The Minister has put the final nail in the coffin of sheep farmers. He has ignored calls for reform of the EU sheepmeat policy. The price of lamb over the past six months has collapsed to less than 50 per cent of the price last Easter. Farmers have lost confidence in sheep production and its future because the Minister left sheep producers out in the cold during Agenda 2000 negotiations by failing to ensure that sheep were removed from the extensification calculation and by failing to reform the ewe premium system which has short-changed farmers by £30 million per annum in premium payments or £6.27 per ewe.

It is time for the Minister to take his head out of the sand and face reality. At a time when the sheepmeat trade is collapsing, why are New Zealand producers allowed to export prime cuts of lamb to the European Union? When the WTO agreement comes up for discussion, it is crucially important that it is restructured and that only carcase meat and no additional tonnage are allowed into the EU. Why are French lamb producers getting prices which are almost 50 per cent higher than those of their Irish colleagues, particularly as French farmers are entitled to the same ewe premium? Is this in keeping with the EU principle of equality of treatment for all farmers? Why are consumers being charged up to £90 per lamb but farmers are failing to get even half that amount?

The store lamb trade in Ireland has collapsed. Farmers are bringing store lambs to the mart but they are not even receiving bids for them at present. Farmers are getting out of the sheep trade and are not breeding ewes because they have no confidence. Prices have collapsed and farmers see no future for sheep farming. They are moving to purchase suckler cows because of the new system of extensification which ignores sheep producers. Although there is overproduction in the European Union at present, they are also moving into beef production. This will intensify the problem in the beef sector.

When was the Minister last abroad to promote Irish lamb and beef? When he was in Opposition, we thought a new airline company, Air Walsh, would be established if he was in Government. The Minister and the Taoiseach were going to fly here, there and everywhere hand in hand. The Minister has failed to promote Irish beef and lamb. He has failed to travel abroad and he has failed to bring the Taoiseach with him as he promised when he was in Opposition. It is time to shape up or ship out.

Teagasc is inviting companies such as Boston Scientific and Thermo King to open agricultural events because it sees no future in farming, particularly for young people. The Minister has ignored the agricultural crisis, especially in the sheepmeat sector. It is time he ensured a fairer ewe premium is put in place which is equal for all farmers throughout the European Union. He must ensure that the extensification clause is changed and that if sheep are included, farmers are paid. Otherwise, sheep should be removed altogether. Either way, a decision must be made. The Minister must also ensure that lowland sheep producers get a proper headage payment and that any new headage funds are targeted at such producers. The Minister has buried his head in the sand for long enough. It is time to realise there is a crisis and ensure the sheepmeat sector becomes viable.

An Ceann Comhairle

I remind Deputies that remarks should be addressed to the Chair.

Mr. Crawford

I also thank Deputy Connaughton for giving us this opportunity to debate the serious crisis in agriculture. I will deal first with the serious crisis in the pig industry in the Border region. I welcome the presence of the Minister for this debate because when I raised this matter two weeks ago, none of the three Ministers with responsibility for this area were present and it was dealt with by the Minister with responsibility for housing. I am glad there is an improvement in that this evening.

I hope the Minister will take seriously the problems of the pig industry in the Border region. In the last week or so a number of young farmers went out of business. In 1998 pigs in the Border region were 12p a kilo less than in the Minister's area of Cork and Tipperary. In 1999, the difference was approximately 8p in the first quarter. Farmers in the Border region have, with the full support of Fianna Fáil and Independent Members, put forward a case to the Minister – I appreciate that he met the delegation last Wednesday – for a once off payment of approximately £4.8 million to try to salvage the remaining operations and ensure those involved stay in business.

A letter from the Minister's office was read at a meeting of Monaghan County Council yesterday. It stated that there was a 23 per cent increase in pig prices this year. That indicates how far his office is out of touch because, once again, the price of pigs has collapsed.

Deputy Connaughton said there was a good market for weanlings in Europe. Good quality weanlings are leaving the country. This will create serious problem for the beef industry, including the possibility of creating long-term beef markets. However, given the crisis at farm level, I welcome any opportunity that arises.

When the Minister was on this side of the House he said the Libyan and Iranian markets would be opened up. Indeed the visit of three members of his party to Iran had the effect of stopping the unloading of a boat; it held up the opening up of that market for a period. At the time, an attempt was made to claim responsibility for something the Fine Gael led Government was doing. At present there is no market for Fresian cattle, Holsteins or culled cows.

Young farmers are facing a crisis and I invite the Minister to visit my county to see how serious it is. The county has a high reputation for intensive farming in poultry, mushrooms and in County Cavan, at the other end of the constituency, in pigs. Thirteen young farmers applied to attend St. Patrick's Agriculture College, yet that college has now closed. Is that any reason for the Minister to be worried? Seemingly not. Unless steps are taken to give realistic help to young farmers there is no future for them.

My colleague, Deputy O'Hanlon, has submitted a question about the areas of severe handicap that are no longer included under Objective One. My parish and the surrounding area in County Monaghan has the most difficult land in the country, yet it has been omitted from inclusion as a severely handicapped area. I implore the Minister to take whatever steps are necessary to remove this anomaly and include it in the severely handicapped areas so that it can qualify for Objective One status.

Mr. Dukes

The motion calls on the Government to provide adequate financing for the REP scheme, the farm retirement scheme, for on-farm investment, for the young farmer installation aid scheme and for the control of pollution grant scheme over the period of the next national development plan. These schemes are all essential to the maintenance and development of the economic contribution of agriculture and the food industry. In addition, they are essential if agriculture is to make its proper contribution to promoting the drive towards sustainable development, which is the stated policy of this Government and its predecessor.

The REP scheme and the control of pollution grant scheme are central parts of sustainable development in agriculture. Looking to the future, something like the model of the REP scheme is bound to become the overall framework of a sustainable agricultural development policy. It is time we recognised that, not only in this country but also in the EU. We must anticipate its arrival and position ourselves to get the benefits of being the first in the field.

With every day that passes the control of pollution grant scheme becomes increasingly important as we become more conscious of the extent and sources of low grade pollution of our water courses. The young farmers installation aid scheme has suffered from the scandal of the "on again, off again" approach of the Government. At a time when fewer members of farm families are showing a willingness to make a career and livelihood in farming, we should be removing obstacles from their path rather than increasing them.

The construction of this scheme, and its operation in practice, have both become excessively bureaucratic and remote from the real needs of ensuring well qualified successors for farm operators. The scheme must be simplified and streamlined and made far more effective if it is to play any substantial role in contributing to the quality and innovativeness of a new generation of farm operators, because these people in their turn will have to deal with ever more severe economic pressures and ever more restrictive environmental demands. Deputy Connaughton outlined our proposals for making that scheme work.

Similarly, the early farm retirement scheme needs major rationalisation and simplification. Time and again, Members come across applicants for the scheme who are ruled out of benefit because of bureaucratic considerations that are largely irrelevant to the principal objective of the scheme, which is to mobilise land into the hands of progressive young farmers while providing reasonable conditions of retirement for their predecessors. In what other walk of life would one's behaviour ten years before one makes a decision determine whether one is eligible for a pension? We must not let bureaucratic requirements prevail over the basic objectives of the scheme.

The forthcoming millennium round of world trade talks is another area requiring close attention if we are to ensure that agriculture and the food sector remain dynamic sources of growth in the economy. The EU was comprehensively out-manoeuvred on agricultural trade in the Uruguay Round. Since the conclusion of that round we have seen the systematic withdrawal of the EU from many of its former markets around the world. In each case EU exports have been replaced by exports from some or all of the Cairns Group – the US, Canada, New Zealand and Australia. As a result of an agreement in which the EU was obliged to curtail its exports supports and increase access to its market, some of these countries have moved into markets vacated by the EU with the assistance, either overt or covert, of export support programmes. We must not allow that to happen in the forthcoming round because we paid far too heavy a price on the last occasion.

Mr. Higgins

(Mayo): The fact that so many Members from many diverse constituency backgrounds – Galway, Leitrim, Roscommon-Longford, Cavan-Monaghan, Kildare and Mayo – have contributed to this debate speaks volumes. The attendance by so many to speak with such passion in support of the motion moved by Deputy Connaughton indicates the anger, anxiety and frustration felt on all sides in all counties at the catastrophe unfolding before us but the most annoying aspect is the Government's seeming acceptance of it as inevitable.

When we left the 19th century the main items on the political agenda were the Land Acts – the Gladstone, Balfour, Wyndham and Ashbourne Acts. In the space of approximately ten years there was an agricultural revolution when the land of Ireland changed from land owned by landlords and run by tenant farmers. The aims of the previous years, of fair rent, free sale and fixity of tenure now look modest. For the first time, the land of Ireland was handed to the people of Ireland. Davitt must feel betrayed at the manner in which that legacy is being betrayed by the Government.

The figures speak for themselves. Before the Dáil went into recess last July I asked the Minister to provide me and the House with information on the number of farmers who had applied for agricultural grants in County Mayo in 1992 and 1998. In 1992, 14,218 farmers were claiming grants. Six years later, in 1998, that had declined to 13,085. This means that in Country Mayo 1,133 fewer farmers were claiming livestock grants in 1998 by comparison with 1992; effectively, it means that 1,300 farmers had gone to the wall. They were non-eligible or they did not think it worth their while to apply. They were non-existent. These figures have been replicated in every county along the western seaboard and throughout the country. What is being said tonight is accurate and valid. It is hard, not harsh. We do not want promises, platitudes or sticking plaster solutions; we need to get agriculture up off its knees now. We need radical solutions, otherwise it will be much too late.

Minister for Agriculture, Food and Rural Development (Mr. Walsh)

I move amendment No. 1:

To delete all words after "That" and substitute the following:

"Dáil Éireann commends the Government and the Minister for Agriculture, Food and Rural Development for their continuing support for the agriculture, food and rural development sectors, and their efforts to deal with the issues currently affecting farmers through:

the success of the Minister in protecting and enhancing the incomes and prospects of farmers over the medium term through the agreement reached in negotiations on Agenda 2000;

the success of the Minister in relation to the European Commission's allocation of £1.75 billion towards the financing of the Rural Development Plan for Ireland;

the Government's inclusion of substantial funds in the draft National Development Plan to aid farmers and the food and rural development sectors in the years ahead;

providing very substantial direct income support to farmers involving record direct payments of over £1,000 million to farmers in 1998 and a high level of support to be continued in this year and future years;

providing very substantial market support for farm produce involving in excess of £500 million expended in 1998 to support the prices of farm produce;

supporting farmers and the food industry in maintaining high standards of food safety and animal welfare, so essential for the protection of consumers and the development of markets;

supporting farmers, particularly young farmers, through the restoration of the farm installation scheme and concessions in the taxation and stamp duty regulations;

the successful programme of improving the efficiency of our farms through continued reform of quota arrangements;

the continuing and successful efforts of the Minister to aid farmers and the food industry in expanding overseas markets for livestock and food exports;

the setting up of an agri-food 2010 Committee to develop a strategy for the long-term future of agriculture and the food industry.".

Agriculture, food and rural development are very important topics and it is appropriate that they should be debated in this House. I welcome any opportunity to inform Deputies of the developments taking place in agriculture. For that reason, I welcome the opportunity to contribute to the debate.

There are other reasons for me to welcome this debate. It gives me yet another chance to correct the numerous unfortunate misunderstandings that the Opposition seems to labour under regarding the main issues affecting agriculture. It allows me to address their inexplicable refusal to recognise that this Government has done tremendous work over the past two and a half years in helping Irish farmers through a series of difficulties and in putting the industry on a sound footing.

By any standard the outcome achieved in the Agenda 2000 negotiations was a tremendous success and secured the medium term future of Irish farmers' incomes and prospects. I make no apology for reminding all concerned of the anxiety caused by these proposals when they were first introduced in March 1998. These proposals would have involved a loss to Irish farmers of £233 million per annum, that is, a loss of £1,386 million over the seven year period. The final outcome involved a gain of £395 over the seven year period. That was a massive turnaround of almost £1,800 million. These gains were hard won after tough negotiations. I was particularly pleased that the Heads of Government of the 15 member states when they met in Berlin last March – a meeting I attended – agreed that the decisions adopted regarding the reform of the CAP within the framework of Agenda 2000 will constitute essential elements in defining the Commission's negotiating mandate for the future multilateral trade negotiations at the world trade round. That round is beginning in Seattle at the end of this month and it is important that the gains won in the Agenda 2000 negotiations will be retained.

Work is under way on a range of policies from improving the efficiency of Irish farms, through the reform of the milk quota systems, for example, to the highly significant work of planning the strategic direction of the sector's long-term future. The latter is being undertaken by the experts I appointed to the 2010 Committee set up in May following the successful conclusion of the Agenda 2000 negotiations. While I am not under any illusion that I can convince the Opposition to voice approval of this Government's significant achievements or of the importance and cohesion in our approach to planning for the future, I can set down for the House the facts and let them speak for themselves.

The Opposition motion refers to support for Irish farmers and their communities. The facts show the true picture. Last year, under my direction, the Department of Agriculture, Food and Forestry spent almost £2 billion supporting Irish farmers, the food sector and rural development. Such large expenditure, equivalent to 4 per cent of GNP, belies the accusation of lack of understanding and support for our 146,000 full time and part time farmers, for rural communities and for the food industry. The total commitment of the Government to support agriculture, food and rural development is beyond doubt, given the ongoing annual level of expenditure of almost £2 billion.

I will now outline the main forms of Government support for the sector. In practical terms the Government's commitment to farming can be seen in the level of direct payments made to farmers. In 1998, direct payments amounted to in excess of £1 billion. This represented 56 per cent of total farm income. Following the successful outcome of Agenda 2000, figures produced by the Food and Agriculture Policy Research Institute suggest that by 2007, direct payments will account for more than 70 per cent of farmers' incomes. In addition to this direct support, substantial indirect subsidies are also provided to Ireland's agri-food sector. For example, expenditure on market support measures such as export refunds and intervention amounted to almost £0.5 billion in 1998. National expenditure on disease eradication, research and training and administration of schemes amounts to almost £400 million.

I recognise that the past few years were difficult for many farmers. This was due to problems caused by the BSE crisis, poor weather conditions last year and the closure of the Russian markets. In recognition of these difficulties, I introduced a range of measures to alleviate the situation last winter, including a £40 million fodder package. In order to support vulnerable farm households, the Government introduced a new farm assist scheme for which £43 million was provided. This was specifically targeted at low income farm households. To date, 7,404 farmers have been approved for this scheme, receiving average payments of almost £80 per week. Some 1,126 farmers are still in receipt of smallholders assistance with average payments of £74.60 per week. The Department of Social, Community and Family Affairs are in the process of transferring all remaining recipients of smallholders assistance who are eligible, to the farm assist scheme.

In spite of these difficulties in recent years, we must acknowledge that by comparison with other EU countries, Irish agriculture has performed very well in the 1990s. For example, average income from agricultural activity grew by more than 20 per cent in real terms in Ireland over the 1990s, compared to the average EU growth of only 12 per cent. In the UK, average income fell by almost 20 per cent over the same period. An increasing number of farmers are now supplementing their income through off-farm employment. This has been facilitated by the national economic boom and growth in employment that we are currently experiencing. On average, more than half the farm household income now comes from non-farming activities. I welcome this as a positive development which will ensure the economic viability of many farming families and farming communities in the future. Another benefit to farmers from the current economic climate is that interest rates are at very low levels. This is reflected in the fact that in 1998 interest payments amounted to almost 11 per cent of farm income, compared to almost 30 per cent during the period of the very high interest rates in the early 1980s.

Having set out the general background, I will now deal with the individual points raised by Deputies in their motion. First, in supporting young farmers, installation aid for young farmers has been restored. The early retirement scheme is also a valuable incentive for young farmers to take over the management of farms. In addition, there is stock relief, the two-thirds reduction in stamp duty, land leasing for farmers over the age of 55 who lease out their land, the first £4,000 of rental income is exempted from income tax where a lease is for a period of five to six years and the first £6,000 for leases of seven years or more. Similarly, relief under the capital acquisitions tax means that most farm transfers are exempt from this tax. An individual aged 55 years or more is exempt from capital gains tax provided the sales value of the farm is less than £250,000. If the disposal is to the owner's child, then the exemption applies irrespective of the sale price.

The National Development Plan is an exceptionally important plan which will be unveiled around the middle of this month. All the measures mentioned by the Deputies in the motion have been included in this plan. The measures will be financed by structural and guarantee funds. On-farm investment schemes such as the control of farm pollution and the installation aid for young farmers will operate under the Structural Funds. Total public funds for agricultural development under the Productive Investment Inter-Regional Programme will be of the order of £278 million over the seven year period. Allocations for individual schemes have not yet been finalised. In addition, total public funds amounting to £172 million will be available for rural development type measures addressing some of the commitments in the White Paper and alternative enterprises under the two regional programmes. The amount includes national matching funding for Leader Plus and approximately £35 million is expected from the EU for this community initiative.

All training and research activities under the National Plan are being brought together with a view to ensuring a co-ordinated approach and Departments will receive indicative allocations for their respective areas. The position in relation to the food industry is similar with allocations made across the industry as a whole, but with indicative allocations for the food sector to cover capital investment, research and development, marketing and promotion and training. Co-financing by the EU in respect of the above measures will be identified in the plan, but it is expected to be very small in comparison to the Exchequer funding being provided.

A special CAP rural development plan has been drawn up and submitted to the Commission for approval by the end of 1999 to draw down EU funds allocated for REPS, early retirement, compensatory allowances and forestry. These measures have been alluded to here tonight. As regards financing, very substantial Exchequer funds in the order of £3,405 million are being provided to cover these four measures, with approximately £1,740 million of the full amount coming from the EU. I expect that that substantial amount of money will be adequate to cover those schemes for the term of the plan.

Further details on the funding arrangements will be contained in the plan which will be published in the middle of this month. Overall, funding for this Department will be increased by approximately 50 per cent and this should ensure that increased demand can be adequately catered for over the seven years of the plan.

On 13 October I announced my proposals for the distribution of the additional milk quota and also in relation to quota management measures which are possible following changes in the EU regulations agreed as part of Agenda 2000. The additional quota was relatively small. Nonetheless, it helped to provide additional milk for some of the categories provided for.

In the distribution of the quota I had regard, on the one hand, to the need of younger farmers already in milk production and, on the other, producers with small or medium size quotas. The amount of milk was not great – 20 million gallons – and much more milk will become available under the new management of the milk quota regime.

I decided in the first instance to set down the rules only for the quota becoming available on 1 April 2000, that is, 20.5 million gallons at this stage, and leave decisions on the 11.5 million gallons becoming available on 1 April 2001 for a later date. On that basis I decided that 15 million gallons would be made available to producers with quotas below 55,000 gallons who meet certain strict criteria. I also decided that five million gallons of milk will be made available to a special scheme for younger active producers who commenced milk production since 1993, again subject to certain strict criteria.

The balance of 500,000 gallons available from the 20.5 million will be set aside for special cases arising out of the operation of the general distribution. This is to deal with exceptional cases where particular problems are encountered by some producers in meeting the eligibility criteria.

I now turn to the management of the quota regime. The agreement under Agenda 2000 allowed for a greater degree of flexibility in the application of the quota regime. I have decided to use the opportunity to change the system operating in Ireland to ensure that active committed producers have greater access to quota over the coming years. It is essential that the system should allow for greater certainty to those producers so that the dairy industry, which is highly export dependent, can meet whatever competitive challenges lie ahead.

I have decided, therefore, that the transfer of quota based on a rigid link between milk and land which has existed since 1984 will be replaced by one which allows for the sale of milk quota based on the existing restructuring scheme which has worked successfully in this country. This will be done in an equitable way aimed at encouraging the best possible development of the milk industry, while recognising the interests of the parties involved. It will facilitate a more orderly arrangement for the distribution of quota and will ensure that a large quota of milk will be available for restructuring.

Such a move will have several benefits. It will allow quota to be targeted towards priority categ ories while giving certain access to all producers. It will help to maintain quota within the less advantaged areas. Most importantly, however, it will keep the price of acquiring additional quota within the reach of smaller and medium sized producers. The current system of acquiring quota with land has led, over the years, to increased quota costs adding in turn to production costs. In many cases, producers were taking on the burden of additional land which they did not need and which was of no real help to their enterprise.

As part of the alternative system of quota transfer, I have decided to restrict the number of times in which dormant quota may be leased into the temporary scheme. It is important that these quotas should be available to active, committed milk producers on a permanent basis. This restriction will be introduced on a gradual basis but the final outcome must be that the milk quota is available to producers on a permanent rather than a year to year basis to enable them plan their production with some degree of certainty.

I recognise that introducing changes to a system which has been in place for 15 years is a complex and sensitive matter and I am conscious of particular situations, for example, inter-family transfers and cases of existing long-term leases, where some people have a substantial part of their quota on a long-term lease. There are no circumstances in which that can be terminated abruptly and I have no intention of doing that. The Department of Agriculture, Food and Rural Development has taken up these matters with legal advisers from the Attorney General's office and will also be meeting with the EU Commission in the near future to consider how these and other situations can be accommodated within the regulations.

The general reaction to my proposals both on the quota allocation and the quota management changes has been positive. It is accepted by most people involved in the industry that the proposals are fair and in the best interests of the dairy sector generally. They will reinforce the position of active milk producers as well as supporting young and smaller scale farmers.

With regard to expediting the national cattle breeding plan, I am particularly satisfied with the Government's track record on this issue. We recognised some time ago that our cattle breed improvement programmes needed upgrading and to be put on a fully commercial basis. We have to start with proper breeding programmes to breed the correct animals for specific markets. Every day of the week people are paid on quality, particularly for live cattle, and research is being carried out on an objective mechanical grading system which would be put in place shortly. The sooner that happens, the better.

In relation to Leader groups, the Government is committed to the Leader model of rural development. The Leader concept is particularly suited to Irish conditions with our tradition of self-help and voluntary and community development. There is no doubt that Leader I and Leader II were highly successful in regenerating rural areas. It is my ambition to ensure that Leader II will continue the good work done under Leader I.

Leader Plus is the EU community initiative to which the European Commission is committed under Agenda 2000. The Commission has indicated that it will finalise the new community initiative before the end of the year. This will allow new programmes to be presented and approved as early as possible in 2000. I assure Deputies that once the terms and conditions of the new programmes are finalised by the Commission, there will be no delay in implementing the new programme either on my part or that of the Department. We intend to approach the implementation of Leader Plus in a carefully planned manner to ensure that the new programme makes the maximum contribution possible to the development of rural areas.

The EU has recently announced the allocation to Ireland of £35.4 million for the implementation of Leader Plus. In line with the reduction in the level of funding for community initiatives generally, the funding of Leader Plus is a reduction on the funding provided for Leader II. Nevertheless, the considerable allocation for the next programme is a demonstration of the EU commitment to continue the Leader model of development.

Provision for the additional State contribution to Leader Plus is being made in the national development plan and consideration is being given to provide funding to enable some of the useful experiences of Leader I and II to be incorporated into national programmes. These funds demonstrate the Government's commitment to the principle of "bottom-up" involvement in local development and will allow the momentum built up under Leader I and Leader II to be continued.

I will summarise the current position in the main market sectors. The level of throughput of finished cattle at meat export plants has increased by 14 per cent and considerable progress is being achieved in clawing our way back onto the EU markets we lost following the BSE problem.

As regards market access generally, I have gone out of my way in every possible situation to provide access to markets. It is a matter for the industry to make the most of those markets once they are opened up. The Department is continually providing veterinary requirements for Irish cattle and beef to ensure we get into those markets and stay in them.

I expect Deputies will join me in welcoming the lifting of restrictions on beef exports to Russia from five counties – Cork, Tipperary, Limerick, Clare and Donegal. Cavan, Meath and Monaghan are still subject to restrictions, a position which will be reviewed again next year. I would like to pay tribute to the veterinary experts in the Department of Agriculture, Food and Rural Development who have built up a tremendous degree of liaison with their Russian counterparts. That confidence has allowed the ban on those counties to be lifted.

I now turn to live cattle exports. When I came into office we did not have live cattle exports, we did not even have a ship to provide live exports. I had to go to Government to provide leasing of The Purbeck to resume live exports. I am glad live exports to date this year amount to 325,000 head, more than a ninefold increase on 1997. The trade this year includes almost 260,000 head of younger animals to continental markets and over 55,000 head of adult cattle to Lebanon. While it is unfortunate that the trade with Libya has not yet resumed, the significance of this market has to be viewed against the major improvement in live cattle exports generally.

I reiterate that agreement was reached with the Libyan Government. We went through the process of signing an agreement and it was ratified by the people's authority in Libya. I visited Libya earlier this year and it is clear that despite the intergovernmental agreement, there remains a blockage to the resumption of trade. We continue to make every possible effort to reopen that market. The Libyans have reneged on a solemn agreement between the two Governments. However, I am glad that 325,000 head of cattle have been exported from Ireland and I intend to maintain that momentum. From a situation where we had no ship on the high seas, we now have 16 dedicated ships and three with roll-on/roll-off facilities.

I am aware of the difficulties facing sheep producers and I am aware that they have been through a tough time. There is over-production here; we have in excess of 8 million sheep. There is also over-production in the UK. We used to sell live sheep to Spain and Portugal but there is also over-production there and they are now exporting. The low price stems from increased supplies of UK lamb to the French market. We supply about 70 per cent of sheep exports to the French market and anything which happens there has a knock-on effect here. Another factor is that French lamb is perceived by French consumers to be superior to imported product and, as a result, they are willing to pay premium prices for domestically produced lamb.

However, I have taken a number of measures to help address the difficulties in the sector. In response to my representations, the European Commission introduced aids for private storage last month to take 130,000 lambs off the market in Ireland and the UK. There has been strong interest in the scheme in Ireland and it has now been fully taken up. More importantly from our point of view is the fact that 115,000 lambs were taken off the UK market, which can only benefit our market. I am satisfied that this scheme has helped to alleviate the position in the sector to some extent.

Mr. Connaughton

It did not raise the price.

Mr. Walsh

As far as the EU sheepmeat regime is concerned, I have made the strongest representations to Commissioner Fischler over the past number of years to have the regime modified. These matters were raised by Deputy Connaughton and I am well aware of them. One of the deficiencies which has been identified is the failure of the ewe premium system to take account of the fact that prices vary considerably from member state to member state. Another deficiency in the ewe premium is the non-payment of an extensification premium on ewes despite the fact they are included in the calculation of stocking density. Despite raising this at every possible opportunity, I have received no positive response from the Commission and, worse still, no support from any member state.

I have been reminded that, in spite of all its defects, the ewe premium system provides important income support to Irish producers amounting to approximately £110 million per annum with a further £22 million coming from the headage payments under the Structural Funds. This is a substantial amount of money and, while I am fully committed to securing improvements in the system, we have to acknowledge that the regime is seen by the Commission and other member states to be relatively expensive.

There has been a recovery of about 19 per cent in pig producers' incomes since the start of the year. That shows how bad the situation was at the that time. Nevertheless, it is clear that there is plenty of scope for further improvement. The main reason for the drop in market prices for pigmeat is over-production. Following an outbreak of classical swine fever in Europe, supplies shortened and prices rose encouraging increased production which continued long after the disease was eradicated. Another factor which contributed to the difficulties was the under-performance of traditional pigmeat markets in Japan and Russia. In Ireland, further difficulties were encountered in Border areas due to a fire at a pigmeat plant in Northern Ireland which created a backlog of pigs awaiting slaughter on some producers' holdings in the Border counties. I took swift action in that regard and ensured that the backlog was dealt with quickly.

At EU level, with my colleagues in the Council of Agriculture Ministers, I strongly urged the European Commission to take action to improve the difficult pigmeat market. As a result, the Commission substantially increased export refunds and introduced aids to private storage. In addition, a food aid programme for Russia, which included 100,000 tonnes of pigmeat, was put into operation. To date about 50,000 tonnes of pigmeat have been sent to Russia under this programme. The European Commission has indicated that pig supplies in the last quarter of 1999 are expected to decrease. This means that market prices should recover further, especially with increased demand over the Christmas period. Nevertheless, I have recently written to Commissioner Fischler, in advance of the next meeting of the Council of Agriculture Ministers, urging that the food aid programme be concluded as quickly as possible. I have also asked him to urgently bring forward proposals on longer term measures to assist the pigmeat market.

I asked my senior officials to meet the processors last week to discuss the market. The processors were urged to do everything possible to improve the prices paid to their farmers. My Department has also met representatives from Enterprise Ireland and has asked them to examine the pigmeat sector, including the issue of slaughtering capacity and whether there are other aspects of the industry requiring attention and possible investment. In the Border counties and the north-west especially the level of slaughtering capacity must be addressed. I will meet with Dan Flinter of Enterprise Ireland and Michael Duffy of Bord Bia tomorrow in that regard.

At a time when the pigmeat sector is experiencing great difficulties, I find it incomprehensible that farmer related organisations import such a high volume of pigmeat. Some 35,000 tonnes were imported this year in a market where about 135,000 tonnes is consumed. It baffles me that 35,000 tonnes is imported when our industry is under such pressure, especially when farmer related organisations are importing that bacon.

The quality of Irish pigmeat is renowned worldwide. Bord Bia is doing tremendous work in this regard. The board has a statutory function to promote, assist and develop in any manner it considers necessary or desirable the marketing of Irish food and livestock. The board's budget for 1999 is about £21 million with £7 million provided by way of grant-in-aid. I know Bord Bia remains fully alert to the competitive pressures emerging in the marketplace for the Irish food industry and will continue to implement programmes to support and sustain the excellent development of this important industry.

The scheme of installation aid has been a very important instrument in assisting young farmers embark on their careers. This scheme is a clear indication of my commitment to securing the future of young people in agriculture. I was pleased to reintroduce the scheme in 1998. To date, almost 800 applications have made under the scheme, of which 290 young farmers have been paid a total of £1.6 million. Proposals for the scheme under the National Development Plan 2000-2006 are being formulated by my Department and will take account of young farmers' requirements within the context of the funding available.

An additional £25 million from Exchequer funds was provided for the reintroduction of on-farm investment schemes. This funding has enabled the Department of Agriculture, Food and Rural Development to meet all outstanding commitments under the schemes and to reintroduce nationally funded schemes for the control of farmyard pollution and dairy hygiene schemes. Both schemes were approved earlier this year by the European Commission and are now in oper ation. The reintroduction of these on-farm investment schemes has been a high priority for me and the Government. I am keenly aware of the continuing need for structural improvements on many farms to maintain the greatest number of families in farming. The schemes as introduced will provide smaller scale farmers with the necessary support to improve pollution control on their farms, to upgrade or construct new dairy or milking premises, to engage in more sustainable farming practices and to protect the environment.

I established the Agri Food 2010 Committee in May of this year. Its objective is to map out the future strategy for agriculture and the food industry. With the Agenda 2000 agreement, the Irish food sector now has a favourable framework for development over the next several years. However, our significant achievements in the negotiations on Agenda 2000 should not lead to any sense of complacency about the future. There are challenges ahead and the committee is closely examining every aspect of the agri-food sector to ensure it is sufficiently strong and competitive to meet these challenges and to grow and prosper in the future. In completing its task, the Agri Food 2010 Committee has sought the widest possible input from interested parties. The members of the committee are all leading figures in their own right drawn from throughout the agri-food sector.

In setting out its task, I made it clear that the committee should adopt a no-holds-barred approach in its deliberations and I have every confidence in its ability to do so and to come up with a guiding strategy for the future of the Irish agriculture food industry. I expect to receive its report early in the new year and I expect it to signpost the way ahead for Irish agriculture and food in the context of an enlarging EU and the next WTO agreement, negotiations for which should commence at the end of this month and should conclude in a few years' time.

Mr. Penrose

I welcome the opportunity to contribute to this important debate on agriculture, especially the future of farming as an industry in Ireland over the next decade. I compliment Deputy Connaughton on tabling this motion.

We must be clear about the direction in which we want to go because there are numerous ways to progress. From the Labour Party's point of view, they must be predicated on the central, underlying objectives of taking measures to ensure and secure the survival of family farms in rural Ireland. In order to achieve this optimum objective, we must pursue unashamedly focused and targeted policies which will increase the income of farm families and maximise the potential of Irish agriculture. This may well necessitate a fundamental review and analysis of a kind not undertaken heretofore on the agriculture industry at national level. Instead of bemoaning and replaying the litany of disasters which have befallen the farming industry over recent years, we should have the capacity to be proactive in our response to change and keep pace with the new opportunities and trends emerging in the wider field of agriculture.

Following the Agenda 2000 proposals and discussions, we now have a settled environment in which it is unlikely that there will be major changes in CAP for the coming eight years or so. However, we must be especially alive to the impact of the changes and competition which will undoubtedly arise from decisions which will be made in the not too distant future by the World Trade Organisation. Policy must be formulated in such a way as to ensure that the Irish farming sector will be profitable. It is important that the Government supports innovation, efficiency and quality but that, in doing so, it does not alienate and further marginalise small farmers who have had to contend in the past with policies, often promoted by organisations of which they were members, which, when followed through, resulted in their numbers being severely depleted.

I take the Minister to task about the manner in which he decided to allocate the additional milk quota available on foot of the Agenda 2000 agreement where he indulged in the old style Fianna Fáil tactic of trying to assuage everyone. He promoted Gay Byrne's philosophy of providing a little for everyone in the audience rather than taking the difficult decision to target the extra gallonage at those most in need where it would be more effective.

The number of active milk producers has reduced from 64,000 when the quota regime was originally introduced in 1984 to 31,000 today. Approximately 24,000 producers are producing 35,000 gallons or less, many of whose incomes are just above subsistence level. Some earn very paltry incomes of less than £6,000. The Minister's decision will not assist in achieving the fundamental objectives of preserving the maximum number of farming families on the land. It is expected that the 31,000 figure will decrease by a further 15,000 in the next six years. That is a frightening and damning statistic.

We all agree with the allocation of the five million gallons for younger agricultural producers who have commenced milk production since 1993. That was a positive decision. There are eligibility criteria relating to attaining the 90 per cent quota usage level, namely, being under 35 years of age at the date of commencement of milk production with the necessary educational qualifications and the holding of a maximum quota of 35,000 gallons. The maximum allocation to producers in this category is in the order of 5,000 gallons which is good as far as it goes. Why did the Minister not target the 15 million gallons available to him on this occasion, bearing in mind he did not deal with the further 11.5 million gallons which will be available in 2001, to a priority category of approximately 5,000 active small and medium milk suppliers, all of whom would have quotas less than 35,000 gallons? Had he done so, the Minister would have used the discretion afforded to him under Agenda 2000 in the best long-term interest of the dairy sector and would have ensured the attainment of what should be an important national social objective for the country as a whole.

While I do not want to sound overly pessimistic, a great opportunity to be really radical was missed in this case. Having faced down the nonsensical proposal advocating a pro rata allocation of 2.86 per cent to all producers, the Minister should have gone the extra mile. Instead, he bowed to political expediency and attempted to spread the largesse when his overall objective should have been selective and meaningful targeting. The Minister should have learned from the farming organisations. There was no unity in their ranks on this issue, indeed, they were deeply divided on it. The Minister ended up giving eligible applicants less than an additional half cow per annum in production terms when he could have given the targeted group, about which I have spoken, the equivalent of four extra cows per annum. That would have made a considerable difference to the priority group – from an income perspective, it would have represented the difference between survival and extinction.

It would be remiss of me not to acknowledge and welcome the decision made by the Minister to deal with the distribution of the national envelope for the beef sector. Any criticisms I make are intended to be constructive. I was extremely concerned that the Minister might have been tempted to top up the deseasonalisation premium which doubtless would have been gobbled up by the factories, as happened in the past. I am glad he resisted that and took on some of the farming organisations.

I am proud to come into this House on many occasions and advocate policies promoted by the Irish Cattle Traders & Stockowners Association, policies which some IFA people do not like. I am glad the Minister recognised that heifer producers were left out of the equation – indeed, some people still wanted them left out when the extra money was being allocated – and I support him every step of the way. I welcome the fact that the £8.2 million will be used to top up the £21 heifer slaughter premium which will be introduced on 1 January 2000. I understand the top-up will be approximately £18 per head and will be confined to beef heifers in line with the requirements of the suckler cow scheme in order to encourage quality heifer beef production.

The milk quota limit for the suckler cow premium has been increased by 5,000 gallons. Had the Minister not done that, some people who would normally qualify for the suckler cow premium would be disqualified under the extra allocation in the milk envelope. I note he has also increased the 90 head ceiling for the special beef premium to 180 head. When the Minister is replying, perhaps he will outline how that might affect the extensification calculations in regard to some matters I will raise in relation to sheep.

Irish farming will undoubtedly require substan tial investment to remain competitive and to meet new requirements, especially in the area of environmental protection. Farmers are now reinvesting approximately one third of their farm incomes in their farms which means that over a five year period, approximately £3 million was invested by farmers in their farming businesses and that approximately £850 million has been invested in farm buildings over the same period. The Minister reintroduced the control of farmyard pollution scheme and has received more than 3,000 applications to date. The average investment cost per farmer is approximately £20,000 while the average grant payable per applicant is approximately £7,900. Has the Minister provided the £24 million required to fund this scheme until the end of the year?

It is high time, in the context of the forthcoming budget, that the capital allowances for on-farm investment are increased to 100 per cent and that the mechanism of free depreciation are allowed to apply, especially as farmers are upgrading their facilities to ensure compliance with EU milk hygiene and animal welfare regulations. The current grant schemes are somewhat restrictive and may not be adequate to cater for the future level of investment required.

I strongly advocated the reinstatement of the installation aid scheme for young farmers and I understand that there have been approximately 800 applicants since 1 January. It is taking an average of approximately three months to process these applications. Is it not clear that insufficient money is provided in the Estimates to deal with the number of applications on hand, not to mention the number outstanding prior to the scheme's suspension in August 1997, which I understand was in the order of 350? Some of the applications are being deliberately delayed as adequate finance is not available for all the applicants. Sufficient levels of staff are not available to deal with the administration of the scheme. Although I understand that some of the forms may be incomplete, significant delays are being experienced.

A 26 year old farmer, who applied under the previous scheme, contacted me today. His father retired after taking up the early retirement scheme. This young lad came back into the scheme and his number was 2001 which meant he was the first farmer in in County Westmeath but, to date, he has not been paid. He has had a plethora of requests from the officer in charge looking for a variety of things. It is high time we ensured this young farmer, who could derive a livelihood from something else, is paid the £5,600 he is due. Indeed, I have a question for the Minister in this regard.

The Minister is no doubt aware that a major structural characteristic of Irish agriculture is the unbalanced age structure where about only 12 per cent of farm holders or about 17,000 in total are under the age of 35, while about 22 per cent are aged 65 or over. That means that of the 146,000 farmers, almost 33,000 are now aged 65 years or over. We spend about £14,000 per job through tax incentives and grants from the IDA, Enterprise Ireland, etc., and we are glad to do so and fully support that policy but surely we are now living in an age of financial affluence which should permit us to pay an equivalent amount by means of the installation aid scheme to each young farmer who is 35 years of age or less and has the necessary educational qualifications to take up the profession of farming. It makes good socio-economic sense to do so and it is important to consider a substantial increase in the amount of grant payable in the forthcoming budget and in the context of the recent White Paper on rural development.

In common with other EU countries, sheep production in Ireland is mainly in the disadvantaged areas. Over 40 per cent of the flock is on the hills but this proportion is likely to fall due to environmental measures to combat over-grazing. In 1998, 43,341 farmers were paid ewe premium and of these, 80 per cent were located in the disadvantaged areas. Basically, we are reflecting what is going on in EU sheep producing countries where most of their breeding flock is located in the disadvantaged or less favoured areas. There has been a huge and, indeed, complicated change in the extensification system which has recently come into play. We will now take into consideration all animals on the farm over six months of age, regardless of whether they qualify for premium. These animals will obviously include sheep. Farmers may opt for a simplified scheme which will involve making a declaration to remain under their chosen stock and density for the full year and be open to random inspections or apply under the normal scheme which will be extremely complicated and will include up to possibly five census counts a year in order to calculate the average stock and density for the year. The Lord save us and bless us, have we gone mad? There will be five visits to a farm to calculate the average stock and density. More money will be used on bureaucratic administration and travelling costs than will eventually go to the farmer. That is what is wrong with those schemes. Too much money is wasted on administration and too many bureaucratic hurdles are placed in front of farmers rather than trying to get the money into the pockets of the farmers who need it. Let us face reality.

The fact sheep are still included in next year's extensification calculations without any changes in the ewe premium system following Agenda 2000 will lead to sheep being a non-viable enterprise on the majority of dry stock farms. The fact sheep have been excluded from extensification payments means they are no longer a viable option for the majority of farmers. As Deputy Connaughton said, the method of calculation of the ewe premium is also a problem. If Irish prices were utilised as a basis of calculation of ewe premium, farmers would receive about £8 per ewe more on the premium which would be about £38 million extra to the Irish sheep farmers. As Deputy Connaughton said, this method of cal culation used since 1992 has cost Irish farmers in the region of £240 million to date. It should also be noted that of every £5 which goes into a sheep farmer's pocket, £4 is spent locally which is important to the local economy, particularly rural shops. I recall that after I became a Member of the Dáil in 1992 sheep farmers were told by the then Minister for Agriculture not to worry as there would be a sheep price convergence across Europe, but this never happened.

Another matter which impinges on the viability of sheep farmers is the level of imports of lamb from New Zealand amounting to about 227,000 tonnes, which is equivalent to five times the level of our exports. This has helped the EU to become 103 per cent self-sufficient in the process. This is also costing the EU more money in premia. It is vital the Minister fights a strong battle to oppose any further increase in sheep meat imports from New Zealand under the next World Trade Organisation round.

The breaking of the land quota link has, for the most part, been broadly welcomed. Will new legislation be required to give effect to this proposal? Will it be in place before the start of the milk quota year on 1 April 2000? The fundamental overhaul of the milk quota regime with a proposal to ban private milk quota leases and private land and quota sales will require legislative underpinning. For example, what will happen to land and quota sales entered into between now and 31 March 2000? Has the opinion and the advice of the Attorney General been sought? Since the breaking of the land quota link will have the cumulative effect of putting all available milk quota into the restricting scheme for the redistribution to active milk producers, how will this work? Will the small farmers benefit in the way I proposed above? These and numerous other questions need to be addressed as time is of the essence.

If we really want to help the farming population, the Minister should ensure that no impediments or obstacles are placed in the way of farmers when they apply for participation in the various schemes. What is happening to many farmers now, particularly elderly farmers, is the equivalent of an administrative nightmare. Farmers, many of them elderly, find they are disproportionately penalised for minor errors of a clerical nature which have clearly no fraudulent intent. The Minister should not tell me about the appeals system. I seek the implementation of a truly independent agricultural grants/ premiums/ subsidies appeals system chaired by an independent person which would facilitate more submissions by the appellant. I will settle for nothing less as the Minister does not appear to be prepared to simplify the forms used for applying for participation in these scheme and to try to reduce the number of forms required.

Another issue the Minister will have to face up to sooner rather later, otherwise there will be a few wealthy barristers and solicitors, is that raised by the milk rights group. Those people are entitled to a milk quota and compensation for loss and damage in line by the principles laid down in the Duff case, which has already been decided by the Supreme Court. As the Minister will appreciate, there was a mistake in an Act introduced by the Minister of the day and the Department in the method employed to introduce and implement the 1984 milk quota regulations. I hope that, no more than with any others, the milk rights group will not have the blunt instrument of the Statute of Limitations Act used to deprive them of their just rights and to deny them justice. They based their plans – I recall it very well being involved in agriculture consultancy – upon advice proffered by State agencies and had a legitimate expectation, which is an important principle in law at European level and in the European Court of Justice. It is an extremely important and fundamental law and is like Article 40.3 of the Constitution dealing with fundamental rights. They had a legitimate expectation that they would be accommodated from the national reserve but we never created this reserve for the exclusive use of these development farmers, most of whom are members of the milk rights group which has about 1,200 or 1,300 members. They were deprived of what is effectively a legal right. We should own up when we make a mistake which causes hardship and heartache and we should do so immediately. In the new restructuring which will take place under the milk quota scheme as outlined by the Minister earlier, we should ensure their claim is accommodated.

Will the Minister do something with the farm retirements scheme quickly? We have been waiting a long time for the income criteria and for the enlargement clause to be sorted out. We are still waiting for final Commission approval. Farmers who got £20 extra in disability benefit over a whole year five or six years ago are deprived of participation in the farm retirement scheme. It is absolute nonsense.

Debate adjourned.