Other Questions. - Pigmeat Sector.

Brian O'Shea

Question:

51 Mr. O'Shea asked the Minister for Agriculture, Food and Rural Development the steps, if any, he is taking to ensure that the difficulties which pig farmers are experiencing are addressed; and if he will make a statement on the matter. [5049/00]

John Moloney

Question:

79 Mr. Moloney asked the Minister for Agriculture, Food and Rural Development the plans, if any, he has to examine the adequacy of pigmeat processing capacity, particularly the regional imbalance in the north-west; the plans, if any, he has to ensure the orderly disposal of finished animals and the marketing of pigmeat to best advantage; and if he will make a statement on the matter. [4699/00]

I propose to take Questions Nos. 51 and 79 together.

At my request, Enterprise Ireland has undertaken an examination of the current structure of the pigmeat processing sector to establish whether further investment is necessary. This study will examine the adequacy of the current slaughtering and processing capacity of the sector nation-wide. The study will also assess the suitability of this capacity and its adequacy in terms of the location of pig production in the Thirty-two Counties. Following agreement with the Northern Ireland authorities, the study is being carried out in conjunction with the Northern Ireland Development Board to ensure a full picture of the all-Ireland situation is established.

The number of EU export approved slaughtering plants has increased in recent years, offering additional outlets to pig producers for their animals. Pig slaughterings last year were nearly 8% ahead of those in 1998. My Department is monitoring the slaughtering situation and there is no evidence that producers are encountering backlogs in having their pigs slaughtered.

Marketing of pigmeat is a matter for the industry supported by an Bord Bia. I have asked An Bord Bia and the pigmeat processors to spare no effort in developing and exploiting new markets and also in ensuring that the home market is sup plied where possible by domestically produced pigmeat.

I have taken a number of significant measures to help pigmeat producers since the difficulties began. I, together with my colleagues in other member states, sought and obtained increases in export refunds on a number of occasions in both 1998 and 1999. In addition, agreement was secured from the EU Commission for the introduction of an aids to private storage scheme. This scheme removed more than 428,000 tonnes of pigmeat from the EU market. The Commission also introduced a Food Aid Programme for Russia, and nearly 60,000 tonnes of pigmeat was sent to that country under the programme. I will continue to press the Commission to increase export refunds, with a view to getting more product off the market. On the supply front I, along with many of my colleagues at Council, have been pressing the Commission for some time now to bring forward proposals aimed at curtailing production in the pig sector.

On the home front, pigmeat prices increased by nearly 18% in 1999, and while this increase is welcome, I consider that many producers are still in difficulties. I have held discussions with the pigmeat processors to discuss the continuing difficulties in the sector. I have also met the banks and feed suppliers, who expressed their support for the pig producers during this difficult period.

I recently introduced an aid scheme for Border pig producers, who suffered financial losses as a result of getting lower prices for their pigs following the destruction by fire of their main slaughtering outlet in Northern Ireland. The scheme will enable eligible applicants to restructure their bank loans on the basis of a restructuring plan agreed with their bank, and is aimed at enabling them to return to viability as soon as possible. Applications for the scheme are currently being processed, and every effort is being made to make early payments under the scheme.

The outlook for the pigmeat market is good. The EU Commission has forecast an increase in pigmeat prices around the middle of this year. The forecast is that overall EU production this year will fall compared to last year. In addition, export markets for Irish pigmeat are predicted to perform strongly this year, which will offer opportunities for Irish processors to increase their exports, and this in turn should lead to higher prices for pigmeat producers.

Is the Minister aware that the pig processing plants could be the next target for farmers' protests? Is he aware that has been indicated?

In relation to discussions the Minister had with the banks, can he tell us what they said? Were they prepared to give a six-months' moratorium? Is the Minister aware that pig farmers have incurred £54 million worth of additional debts in the past two years, that 1998 and 1999 in particular were the two worst years on record for pig farmers? How does the Minister propose to help farmers whose debts have increased by that amount? Has he carried out any study on the differential between what is paid to pig farmers for their product and what the consumer pays for pork in the shops? Such a study might be very revealing. Is there any solace for pig farmers in the recently negotiated new Programme for Prosperity and Fairness?

In Northern Ireland the number of pig farmers is effectively halved, while here the number remained static and farmers accumulated debts. Will the Minister agree that following the 7% increase in the price of pigmeat in the USA as a result of a reduction in breeding herds, there is an opportunity for pig processors in such an environment to export more pigmeat products from Ireland because of the product's acceptability in the US market?

I accept that pig producers have gone through unprecedented difficulties in the past two years and that on this occasion the cyclical depression was more pronounced and lasted longer than virtually any of the previous ones. The reason for that was overproduction throughout the EU. During that time, both at EU level and here at home, I did everything possible to alleviate the situation, including the use of export refunds, aid to private storage and food aid to Russia. On the home front, on many occasions I met the banks, feed suppliers and processors. The banks reaffirmed their commitment to see this depressed situation through, along with the pig producers. They discussed the aid scheme for the Border counties with the pig producers' representatives and agreed to process that loan operation and to stick with the industry.

The Minister's minute is up.

It is incredible. Will someone hold a symposium outside the House so that we can discuss these matters?

I have to agree with the Deputy, but that point is for another time. On three previous occasions I heard the Minister say he thought the recession in the pig sector was over, or would be shortly. What factors does the Minister see at the moment that would influence the market so that pig producers could have confidence that their hour in the sun is about to come? We are now down to a figure of about 600 pig producers and the so-called help the Government has given them over the past two years has been out of all proportion to their needs – in fact, they have received none whatsoever. Of the numbers applying for the loan scheme the Minister introduced, what percentage will receive grant aid? Some of them are cross-subsidising their pig production with dairying or off-farm employment just to keep the pig business going. My understanding is that the Minister has nothing for that category. Will the Minister indicate how the market has improved so that he can now say pig producers will be back in profitability very shortly?

I base predictions concerning the outlook for the pigmeat industry on the European Commission's forecasting system.

They have been very wrong so far.

At the moment, its forecasting system is based on the numbers in different member states. As the Deputy will recall from my reply, the processing of pigs in Ireland was up by 8% last year, despite the difficulties. It was also up in Spain and in Denmark to some extent, but in the other member states the numbers were down.

They are picking up.

As a result, there will be a greater balance in the market which should help prices from the summer onwards. At the last pigmeat management meeting in Brussels there was a proposal that when the upturn occurs, which we all hope will be very soon, a solidarity fund will be provided for Ireland and the other member states. In other words, a voluntary levy would be paid by each milk producer during good times and the fund would be availed of during difficult times in the pig cycle. There has to be a degree of supply control if we want to get out of this upwards cycle and depression.

I thank the Minister for his detailed reply, although I do not agree with all of it. There is still a major backlog in pig slaughtering. Will the Minister agree that the qualifying conditions for the rescue package, as he calls it, are extremely tight? Is it a fact that unless they are supplying directly to Christmas and Lovell, pig suppliers in the Border region will not qualify? Does the Minister accept that because of that disastrous fire, we had a collapse in the Border region which was greater than anywhere else in the country? The fact that other plants had a glut of pigs has been directly attributed to the fire at Christmas and Lovell. The Minister must bear in mind that farmers were decimated as a result.

I have met farmers who used their hard-earned savings, accumulated over many years, to keep their pig business going. This is not reflected in the returns from the bank or the miller but, nevertheless, the savings for their families were used up. This concerns brothers and sisters who had long left the family home. Will the Minister say when the first part of the rescue package will reach these hard-pressed people? It is an extremely important question.

Deputy Crawford may put a brief question.

Will the Minister reply to me?

He will if there is time.

Does the Minister accept it is totally unrealistic to ask people for dockets from agents who supplied factories, showing exactly the price the agents received? We are living in cloud cuckoo land. A sizeable number of farmers will get no aid from this rescue package. Does the Minister also accept that a pig farm with 100 sows that had £120,000 of debts, either to the banks or jointly to the banks and meal companies, could no longer be in business? Therefore, the criteria the Minister has laid down cannot be met by many of these people who deserve the minimum £12,000 figure. Does the Minister accept that the sum of £1 million represents less than 20% of what is needed?

Some 169 applications have been received for this aid, which is a sizeable number from the Border region.

Is that about one quarter?

Yes, there have been 169 applications. I expect that the bulk of those will qualify under this scheme. The qualifying criteria were drawn up with representatives of the pig producers, the banks and the Department of Agriculture, Food and Rural Development. There was agreement on that.

As regards the adequacy of processing capacity, I have regular meetings with the pigmeat representatives – mainly the IFA pigmeat committee – and the processors. I have not been made aware of any difficulty in recent times, although there certainly was a difficulty before Christmas.

That is only five weeks.

We got a schedule of processing through the Christmas period which ensured that did not happen. Following the fire, Enterprise Ireland, the Department of Agriculture in Northern Ireland and the Northern Ireland Industrial Development Authority have been examining the situation in the Border region to see if there is an adequacy of processing in the area. Four tenders have been received to carry out that study which should be undertaken in about two months' time. If the study shows there is a requirement for an additional processing plant, it will be provided.