Vol. 561 No. 3
13 Mr. Penrose asked the Minister for Agriculture and Food his views on the extent to which the agriculture and food sectors have recovered from the foot and mouth disease crisis; and if he will make a statement on the matter. [3875/03]
The foot and mouth disease outbreak could have had a devastating effect on the economy and on the agricultural sector in particular. I commissioned a study by the independent economic consultants Indecon to establish exactly the economic effects of the outbreak of foot and mouth disease and the potential effects had a major outbreak taken place in Ireland.
The Indecon report indicated that the effects on the agriculture sector would have been very severe given Ireland's reliance on agri-food exports. The loss of export markets in particular could have brought losses anywhere between €1 billion and €5.6 billion. This would also have led to major job losses and would have impacted on our GNP by between 0.96% and 5.41%, with potential longer-term damage to our reputation as a source of food exports. This loss pertains to the agriculture sector alone and excludes economic damage to other sectors such as tourism. The losses in this regard were estimated at €200 million by a similar study conducted by Professor Alan Matthews of Trinity College.
It is clear that the actions taken to restrict foot and mouth disease in 2001 were effective both in eliminating the disease and in protecting the agri-food sector from massive economic loss. One of the great achievements of the time was the confinement of the problem to County Louth. It took the brunt of the problem, but this allowed the rest of the country to continue trading. As a result, the impact of the foot and mouth disease crisis in 2001 was that Irish agriculture benefited from higher prices on EU markets and increased exports to the UK to the tune of €107 million.
A fact that is often forgotten when discussing the foot and mouth disease crisis in 2001 is that the country was also dealing with the impact of the discovery of BSE throughout Europe and the shock that this sent through the beef markets. This occurred at the end of 2000. To deal with this crisis, I put a range of measures in place to support the beef market.
Cattle destruction schemes were implemented throughout 2001 and into 2002 and under them 513,000 cattle were withdrawn from the market. That supported the market price. The total cost of these schemes came to €426 million of which the Exchequer contribution was €217 million. State supports towards the rendering of meat and bonemeal, the need for which arose from the prohibition on the use of meat and bonemeal as animal feed, amounted to €66 million in 2001 and €45 million in 2002.
I thank the Minister for his detailed reply. According to a recent Bord Bia report, lamb sales are down by nearly 40% and total beef exports for last year were significantly reduced. There are further concerns in the beef market in terms of labelling product with the country of origin which will skew the market negatively for Ireland. Has the Minister comments on how the market can be recovered?
Ironically, we gained from the fact that Britain suffered a severe outbreak of foot and mouth disease, particularly in terms of its withdrawal from the French market. That proved valuable for Irish lamb exports and the price of lamb was at an all-time high during the 2001. It has, of course, returned to previous levels. The fact that 513,000 cattle were taken out of the market in 2001 meant that supplies for 2002 were lower. There are proposals in Brussels for decoupling whereby people will get their cheque in the post once a year without a need for production. Farmers are bewildered by this change of direction and the impact of foot and mouth disease and BSE. On top of that comes the WTO negotiations, the papers on which were released yesterday. These negotiations will have the effect of further liberalising trade.
It is very difficult to make precise judgments while all these things are in the melting pot. Through Bord Bia we continue to promote the fine image of Irish food, particularly of our beef and lamb in the French market. Last there was an all-time record in the export of beef to the UK market. The tragedy of that record of 240,000 tonnes was that 75% of it went into the lower end of the market in the catering and wholesale trade. Given our prime beef, the industry should be more professional and aggressive in getting that product into the upper end of the value chain to give a better return to the industry and to Irish beef farmers.
I agree we did a good job during the foot and mouth disease crisis, during which period agreement was made to look at curtailing the movement of cattle. Does the Minister accept that there is an enormous rate of farm to farm movement through dealers rather than through marts? Will he agree to allow marts to do the job through their much safer structures? We are regressing rather than going forward.
I am a great advocate of traceability and I find it very difficult to bring the industry with me from time to time. Dealers have a job to do, but I have heard too much argument even in this House that these are men of outstanding integrity who should get their way. It has been said that changes should be brought about to suit them even though a year earlier everybody was down on the carousel arrangement.
They have found a way around the new provisions. The Minister need not worry about them.
Under that arrangement cattle were changing hands up to seven times between birth and slaughter, which is completely unnecessary, especially if there is as little margin as we are told there is. How can everybody make a euro? I am anxious to help the marts and I want to ensure that there is full traceability. It is good for trade and for animal disease protection. I am very pleased that brucellosis and TB figures are coming down in part due to the restrictions imposed during the foot and mouth disease crisis.
Written answers follow Adjournment Debate.
