JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Wednesday, 26 Feb 2003

Vol. 1 No. 6

Irish Farmers Association: Presentation.

Chairman

I welcome everybody to the meeting. I welcome Mr. John Dillon, president of the IFA, Mr. Michael Berkery, general secretary, Mr. Con Lucey, chief economist and Mr. Ruaidhrí Deasy, deputy president. I wish Mr. Dillon well in his presidency. I know from working with him over the years that his heart is in agriculture and that he works in its best interests. It has been a pleasure working with him. I first worked with him when we went to Northern Ireland to look at the system of social welfare assistance there, which involved getting assistance for farmers to improve their incomes. His co-operation has continued since and I am glad to have him here today.

I draw to the attention of those attending that while Members of the committee have absolute privilege, the same privilege does not apply to them. Members are reminded of long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of the House, or an official by name, in such way as to make him or her identifiable.

Mr. John Dillon

There has been an income crisis in farming for the past five or six months and it goes back long before September or October of last year. I would love if a general election were held tomorrow or at least within the next week or ten days because we might make some progress.

Chairman

Is Mr. Dillon thinking of standing?

Mr. Dillon

No, I am not and I never will.

I welcome this opportunity to address the Joint Committee on Agriculture and Food. I am pleased to have this chance to set out the facts in respect of the social partnership negotiations and the reasons participation by IFA in a new national agreement has been made impossible by the Government to date. I also wish to outline the major challenges facing Ireland's agriculture and food industry, arising from the Fischler CAP reform proposals and the WTO negotiations.

First, I must remind Members of the farm income situation and the major spending cuts and increased charges imposed on agriculture by the Government in the past three months. Most of these cuts and charges have now been voted through the Dáil. Members will recall that, in response to the farm income crisis, we held two rounds of meetings last autumn with our public representatives to gain recognition of the problems facing farmers and lobby for some support from Government. Our case has since been proven by the CSO figures. National farm incomes fell by 13% in 2002, when inflation is taken into account. The average farm income in the previous year was only £15,800.

Instead of a supportive response from the Government, the Book of Estimates and the budget delivered disproportionate cuts to agriculture. There was no recognition of farmers' problems and the farm income situation was totally ignored. When all the cuts on agriculture and increased charges are added up, the total comes to over €300 million. The commitments in the national development plan on REPS, farm investment schemes and forestry have been undermined, disease levies have been doubled and the agreement on the roads CPO payments has been broken. Now we find that a further €44 million charge to dispose of meat and bonemeal is being passed on to farmers. We have published the detailed breakdown in the national papers and a copy has been circulated to the members of the committee.

Our industry is facing major changes from CAP reform and the WTO, which I will outline later. Clearly, the IFA wished to work closely with the Government on a "change agenda" for Irish agriculture to prepare for the future. We presented a detailed submission last November in advance of the partnership negotiations. However, the €300 million clawback from agriculture was the worst possible background to the new partnership negotiations.

The Taoiseach has said he regretted that the farming organisations did not recommend the proposed partnership agreement, including a section on agricultural issues. The reality is that IFA has not left social partnership. We were pushed out when the Government negotiators stated that they could go no further than the very general paper on the table containing no specific commitments. They told us that no budget cuts could be reversed and that they had not one extra euro to spend on agriculture. During our "tractorcade", the Minister for Agriculture and Food called on IFA to come in and talk to the Government. We had weeks of talks, but the cupboard was bare. It seemed to have nothing at all in it.

As the ICTU and IBEC pillars are taking up to 26 March to ratify the proposed agreement, I still see an opportunity over the next few weeks to reopen negotiations. I am prepared to again put on the table our proposals for a change agenda for agriculture. However, just as the public service unions are being paid 25% of the benchmarking agreement up-front as a statement of good intent by the Government, the farming pillar cannot progress the negotiations until we receive a commitment from Government to reverse two of the most abrasive recent budget decisions, namely, those on the doubling of disease levies and the abolition of roll-over relief on land purchased under CPOs.

The change agenda I am proposing to Government includes a number of key elements. First, we need an agri-environmental package - including a workable agreement on the implementation of the nitrates directive, a substantially improved REP scheme and a more comprehensive scheme for on-farm investment. Second, we require re-negotiation of the special areas of conservation scheme, including proper consultation with the individual farmers affected and realistic stocking levels for farmers with commonage land. We require a commitment that, in the crucial mid-term review of the national development plan taking place this year, the original budgetary commitments relating to agriculture and rural development will be respected and that there will be a serious effort made to meet the targets on REPS, early retirement and forestry.

The need for innovative measures to accelerate structural reform in Irish agriculture is an obvious key element of a change agenda. With an average farm size of 78 acres in Ireland, how can farmers be expected to compete with their US counterparts, whose properties are then times that size, or with those in Australia, New Zealand or South America? The IFA has put proposals to the Government to achieve a rapid and effective enlargement of farms through an incentive package for land leasing. This was rubbished by the Government in the partnership negotiations, but it put nothing better on the table. We need a real response on this issue. We need a commitment that if we were to sign up for partnership, the Government would not impose further spending cuts or increased charges.

The fact that we were involved in the PPF did not prevent the discriminatory cuts in agriculture in the 2003 Estimates and the recent budget. Already we hear rumours that cuts on higher education grant entitlements to farm families are being planned, by introducing an "asset test" into to the assessment of income. This would be totally unfair as the farm is only the means of producing an income.

I am saying to the Taoiseach that I would prefer to be working closely with the Government within the framework of social partnership in addressing the change agenda arising from the major challenges of the WTO, CAP reform three and EU enlargement. However, the agreement must be based on firm commitments backed by financial resources, not vague aspirations. The agreement on benchmarking of public service pay is backed by an annual resource commitment of more than €1 billion. The proposed programme, as it now stands, is essentially a pay deal for unions and employers and a very expensive one because of benchmarking. I regret to have to say that, in the several weeks of negotiations with the farming pillar, not one euro was put on the table even to redress the cuts. I hope that the Government will re-assess the lack of balance in the proposed new partnership agreement, which is now only a pay deal by another name, and make an offer which would allow farmers to continue in genuine social partnership.

The negotiations on a new world trade round are already advanced, and recently the chairman of the WTO agriculture negotiations, Mr. Harbinson, presented an alarming set of proposals. These include a 50% to 60% cut in EU import tariffs, elimination of export subsidies and a 50% cut in CAP direct payments. Even the EU negotiating offer includes a commitment to cut EU import tariffs on agricultural products by 36% over six years starting in 2006. The two main food-exporting regions of the world, the US and the CAIRNS group of countries, have proposed large cuts in tariffs and have launched a major attack on the CAP. The final outcome of the WTO remains to be negotiated, but even in the best case scenario the EU appears prepared to hand over a large slice of the European food market to the US, South America and other low-cost countries.

I am critical of the Commissioner for Agriculture, Mr. Franz Fischler, because last July he proposed a further major reform of the Common Agricultural Policy, the third in a decade. His timing was wrong and it should not have been reform but a review. The Agenda 2000 decisions were in place to the end of 2006 and there are no serious market or budgetary problems. Farmers deserve a period of stability in the Common Agricultural Policy following the Agenda 2000 reforms. Mr. Fischler was wrong to show his hand to the rest of the world in advance of the WTO negotiations. He has fatally weakened the EU case in the WTO.

In January the Commissioner re-launched his Common Agricultural Policy reform proposals with the intention of pushing them through the Council of Ministers this year. This CAP reform goes much further than the earlier MacSharry reform and the Agenda 2000 reform. Clearly the Commission anticipates a negative outcome from the WTO. The Fischler proposal involves decoupling of direct payments from production as an easy way of winding down farm production in the EU in order to make way for increased imports. It involves degressivity, which is euro-speak for cutting farm supports. Taken together with the WTO agenda, it means that the cornerstone of the Common Agricultural Policy would be dismantled by the end of the decade. The role of Common Agricultural Policy price supports and market management was to provide reasonable incomes to farmers and stable prices to consumers.

Furthermore, as the CAP budget up to 2013 has been fixed by the EU Heads of Government last October for an EU of 25 countries at little more than the current budget for an EU of 15 countries, there is no possibility of compensation for the WTO cuts. Even the existing level of direct payments in the future will be dependent on environmental audits of farms - a new form of red tape.

The implications for Irish farm families and the Irish economy from CAP reform and WTO are clear. Total farm income will fall and the level of farm production will fall. Agriculture will be able to support fewer farmers at acceptable living standards. Decoupling will have a more negative impact on Ireland than on other EU country. The economy will lose in the region of €1 billion in export earnings, costing jobs in the food industry and leading to rural decline. Many more farmers will be dependent on off-farm jobs, if such jobs are available in rural Ireland. Those who survive in full-time farming will require increased scale and investment, including investment to meet the ever-increasing environmental demands.

The Government has a duty to address this changed environment in agriculture, as it would for any other sector of the economy, including measures to promote competitiveness and diversification. The Minister for Agriculture and Food should be working closely with me to lead this change. I regret to say this is not happening.

The IFA has been in social partnership for 15 years, through good times and bad. We are not lightly walking away from social partnership, but we can only sign up if there is something worthwhile in it for our members. It is a voluntary arrangement and a threat of exclusion will not influence our decision. Any balanced assessment of the facts will show that the problem is not on our side of the table. With or without social partnership, the Government in our democracy has responsibilities to our sector, including responsibility to vigorously represent interests of our farmers in Brussels and Geneva.

Mr. Michael Berkery

Having this audience with the committee is timely. We appreciate having the opportunity to engage with the committee on the domestic front in the area of social partnership. Along with my colleague, Con Lucey, I have been involved with that for 15 years. It is with some sadness that we find ourselves in the position we are in at this point. It looks almost impossible at this stage to be part of that. We believe inclusive partnership requires all strands. We represent production agriculture but through our mechanisms and structures and as an organisation with 950 branches in every parish in the country, we also bring a rural balance to social partnership. Farmers, particularly those engaged full time in farming have very low incomes. There has been a significant turnabout in the numbers of farmers who have had to augment their income with alternative enterprise and find an off-farm source of employment.

There is the other agenda in Europe. We have an active engagement there through our European network of farm organisations. We were at a meeting of our umbrella organisation last week. With the exception of two organisations, one our nearest neighbour and the other an Italian organisation, the other member states, including the Austrian farmers' unions, view with deepest concern the implications and importance of the Fischler proposals. When the concept of multifunctionality was at the core of the Common Agricultural Policy, there was a social dimension clearly providing a continuous supply of safe food at consistent and reasonable prices as well as environmental services, etc. However, if we decouple the food production component of the Common Agricultural Policy from the agricultural policy itself, there is concern that the first reaction will be that a large share of the European food market will be handed over to imports. That has implications for consumers in terms of traceability, reliability and oscillations in price because the spot price on world markets, not the internal European market, will determine European prices. That price can be very low, but at other times it can be quite high.

The attempt to dismantle the Common Agricultural Policy is of similar historical and economic importance to the repeal of the corn laws. For the first time since about 1910, the European continent will rely on imports to supply its food market and determine the price of food products in that market. It is a time of immense change and pressure on farmers and farm families. I appreciate the opportunity to engage with the committee in this regard.

Mr. Dillon

I would like to see a general election in the morning - though not an IFA election - because of the system.

Chairman

I have to agree with Mr. Dillon.

Mr. Dillon

Before the budget and the publication of the Estimates, it was clear that farmers had income problems. The IFA met groups of Deputies - on two occasions - the Ministers for Finance and Agriculture and Food and even the Taoiseach. It was made clear to them where the IFA stands, but they seemed to totally ignore us. Instead of doing something about income, another €300 million cut was imposed. It is outrageous that farmers are €300 million worse off when it was already known that there was an income crisis prior to the budget. This is a problem in the context of the partnership negotiations and is the straw that will break the camel's back if progress cannot be made.

Mr. Ruaidhrí Deasy

Every parish in Ireland is under severe threat because of their reliance on the rural economy. The proposed levies and cuts on cattle will equate to taking one animal out of a load of 12 to pay for disease levies and to compensate for the special beef premium that the Minister for Agriculture and Food gave away last year. Nobody is making money on cattle. To consider taking one animal out of every load to pay for the meat and bonemeal subsidy and various other items is not sustainable. Anyone who looks at a sheeted factory return will see that the price of one animal is deducted. The small levy to the IFA is the only one that the farmer can voluntarily decide not to deduct.

As part of the negotiating team on the PPF, I do not understand the logic of cutting the money provided for agriculture by €300 million while we are told the partnership is worth €300 million to agriculture. The IFA has identified where €300 million has been lost, but has not been told from where that amount will come in the PPF deal. There may be a war of words, but people are suffering and feeling the cold winds of the budget cuts in every parish and outside every church. I do not believe the cuts have reached the level that they will. There will be mass outrage when the first of those levies is deducted from farmers.

Chairman

I thank the IFA for its presentation. I would like to see the organisation return to the negotiations because that is in the best interests of everyone concerned and of agriculture, in particular. The committee will make every effort to make that happen and hopes it will.

We have discussed the mid-term review, but the WTO issue is worse. The farming organisations and the IFA, as the largest farming organisation, will be behind the Minister and the Taoiseach in these vital negotiations. They deal with the major issues that will affect agriculture and if some of the proposals are implemented, we will be saying goodbye to agriculture as we know it. As a Deputy who, like most committee members, represents a rural constituency - I realise that Deputies from urban constituencies also have agriculture at heart - I know the importance of agriculture to rural areas. It is one of the few things that will keep rural areas alive and no committee member will be found wanting in that regard.

Deputy Upton

I thank Mr Dillon and his colleagues for a very clear presentation and particularly for separating the different strands. We are dealing with three separate issues: the budget and the Estimates, the partnership talks and CAP and the WTO. It is important to look at those issues as separate entities.

I represent an urban constituency, but I have a considerable interest in the protection of agriculture and, in particular, the development of rural areas. It would be of great concern to the committee if the standard and style of living in rural Ireland were to be affected negatively by any of the developments under discussion. It has been an unfortunate budget for farmers against the background of a particularly bad year for farming last year. It is acknowledged by all that there were significant budget cuts.

I would like the IFA to comment on the removal of €12 million from Teagasc in the context of the importance of research and the development of advisory services. Will the delegation elaborate on where it thinks research programmes should be directed and what will be the impact of the cut?

The CAP and the associated risk of job losses in the food industry is an important area. I say that in the context of my role as an urban Deputy because people in all constituencies would be significantly affected by that. The delegation might comment particularly with regard to the meat industry and the risks of job losses there.

There has been an attempt to deal with the issue of disease levies, but that has had little impact so far and there has been no positive reaction. I would like to hear the delegation's views on the amalgamation of Bord Bia and Bord Glas. I realise that horticulture is not one of the key industries with which the IFA deals, but it has been neglected and there will be implications if the two bodies amalgamate.

Mr. Dillon

It is important that there is good research in agriculture. The cut of €12 million in the funding of Teagasc, to which Deputy Upton referred, has not been thought out by the Minister. It will not help Teagasc to do the job with which it is charged. Production research, which seems to have been ignored, should be targeted. The decrease shows the Government's interest in the future of agriculture in a bad light.

The IFA believes there will be a 30% reduction in production as a result of the decoupling provisions in the Common Agricultural Policy. Such a reduction will lead to a 30% decrease in the produce going through the meat factories. It is quite obvious, therefore, that there will be job losses - one does not need to be a bright spark to know that.

As far as the IFA is concerned, an agreement was in place with the Government in respect of disease levies. It was agreed that the disease levies would not be changed if farmers paid for the round test. If the agreement that all sources of infection would be dealt with had been kept, there would be far fewer incidences of disease today and costs would be lower as a result. The disease levies would not have to be doubled if the job had been done at the beginning.

The changes in Bord Bia and Bord Glas are unfortunate, as Bord Glas was doing an important job in regard to horticulture. It is possible that Bord Glas will be smothered up by a large body such as Bord Bia, which I would not favour.

Mr. Berkery

The IFA appreciates Deputy Upton's interest in and engagement with agricultural affairs. Bord Glas has been a dedicated, domestically focused, capacity building board. Its remit has been totally different to that of Bord Bia. There appears to be some merit, in the interests of simplifying matters, in the proposals that have been made. As somebody who has worked closely with Bord Bia, however, I have to make clear that field vegetable, fruit and mushroom growers have an entirely different focus to that of the export-oriented meat and dairy industries. I refer, in particular, to the meat industry, which comes under the remit of Bord Bia. I have thought this through and I am opposed to it, not simply because of an attachment to the status quo or to the old ways of doing things, but on the basis of objective analysis and evaluation. I speak with the universal approval and support of growers, particularly in County Dublin, who favour the retention of a dedicated and committed State service. As the budget of Bord Glas is less than €2 million, it has provided good value.

I wish to draw the committee's attention to a problem that has evolved in respect of Teagasc. All pension entitlements and retirement costs are drawn from Teagasc's annual Vote. The demographic pattern among the staff of Teagasc, which is a consequence of a bulge in its recruitment at a particular time, means that its resources face increasing pressure and demand from those who have retired. They are perfectly entitled to the moneys that have been committed to them. The Government should ring-fence Teagasc's operational Vote so that its pension commitments can stand alone. The Vote is large and impressive and the IFA has no argument with it, but a greater proportion of it will have to be spent on meeting Teagasc's pension requirements. This will mean that fewer resources will be available for the organisation's other activities, not only research but also education, training and the extension service. The remit of Teagasc contains four components. Mr. Ruaidhrí Deasy is the IFA's representative on the board of Teagasc.

Mr. Deasy

The fact that I am on the board of Teagasc means I know the implications for that organisation of recent developments. I do not agree with the decrease of €12 million in Teagasc's funding. Teagasc's pension commitments are about €26.9 million, although I do not want to be held to that figure, and another €44 million, approximately, is spent on wages. Some €70 million is accounted for immediately, which means that very little money is left for areas like research and development. The committee is probably aware that the board is planning to deal with the cut of €12 million by selling Teagasc's headquarters in Sandymount. Permission will have to be received from the Minister to use the moneys received from the sale for current spending, which is what Teagasc needs to do. Even if the shortfall of €12 million is met by the sale, it will probably cost €2 million or €3 million to relocate the 120 staff to new locations. The decision to sell the headquarters has been taken. Some 30 people working in the rural development office will be moved to Mellows College, near Athenry in County Galway. It is hoped that the rest of Teagasc's staff will be moved to Oakpark, County Carlow, which will cost money.

When one tries to save money, there is a danger that only one in every three workers who retire will be replaced. Contract workers, who are mostly involved with the REP scheme, will lose their jobs even though they are self-financing. Such people are mainly young and are vital to Teagasc and the agriculture industry. It is a shame that such people will be removed from the sector and that Teagasc will lose the benefits of having young employees.

The fact that both Bord Bia and Bord Glas are involved in food is the only similarity they share. Bord Glas has operated at the centre of the vegetable marketplace without subsidy. It will become subsumed when it becomes part of the larger Bord Bia, which does not know anything about the activities of Bord Glas. It is a crying shame that Bord Glas will be swamped in this manner, as it provides the only assistance that the horticulture industry receives. It is wrong.

Deputy Timmins

I thank the president of the IFA, Mr. Dillon, as well as Mr. Deasy, Mr. Berkery and Mr. Lucey, for attending this meeting. I would like to make some comments and ask a few questions. I will have to leave this meeting shortly to prepare for a debate in the Dáil, but I will be able to access the replies at a later stage.

The Minister for Agriculture and Food indicated in the Dáil that about €300 million has been offered to the IFA as part of the new partnership agreement. I could not find any indication in the Minister's comments of where that money is located. Can the IFA indicate from where it might have come? I thought the Minister might make some concessions in early January. When a few measures were introduced in late November or early December, the Exchequer returns looked like they would be at a certain level, but the out-turn proved to be more positive than had been anticipated. I thought changes would be made to the proposal to increase disease levies at the very least, as it sent out a bad signal. It is regrettable the Minister did not do it and, even at this late stage, I call on the Taoiseach to rectify the situation as a gesture of goodwill.

We are all familiar with the submission made by the IFA, which shows that farmers have suffered many kicks in the teeth. Not much has been put on the table for the IFA and I have a few questions for the delegation. Is the reversal of the disease levies and the roll-over relief essential to get the IFA into partnership talks? Committee Stage of the Finance Bill is being debated in another committee room from which I have just come. The Minister for Finance has clearly indicated that the roll-over relief will not be reversed. If €10 million was given for the disease levies would the IFA enter partnership without a reversal of the roll-over relief or is it definite that the association will not join?

The education acid test mentioned by the Minister was featured in one of the newspapers. I hope this is only a matter of a kite is being flown because it is important that people from rural and farming backgrounds have access to third level education through the availability of grants. If the acid test was applied across the board in urban areas, no one would qualify for a grant.

Mr. Lucey mentioned the rapid and effective enlargement of farms and described proposals that had been made to the Government with regard to leasing. The rapid and effective enlargement of farms indicates that the number of farms is being reduced. Can Mr. Lucey outline the present number of farms and of full and part time farmers? What are the projected numbers for ten years' time and what is regarded as sustainable? The policy of successive Governments has been to maximise efficiency, on one hand, while maximising farm households, on the other. However, these goals are not compatible in many respects. What is the cut-off in terms of acreage and milk quota? A quota of 70,000 gallons has been mentioned, but what are Mr. Lucey's views? Can we successfully attain our goals while operating the same number of farms?

It is pleasant to put a few questions to the IFA for a change as opposed to being questioned by it. What are the association's views on the meat and bonemeal provisions and what proposals, if any, does it have with regard to disposal? The issue has been put on the back burner by all concerned, but it will have to be addressed. I do not have any answers.

In terms of rollover relief, taking land from someone is very contentious. I am in favour of the development of infrastructural projects, but I acknowledge that, in psychological terms, putting a road through someone's property can be difficult. It is particularly problematic if the compensation received is inadequate. How does the IFA think the decision on roll-over relief will affect future infrastructural development? There was much controversy when a deal negotiated by the association last year turned to clay.

I cannot understand why the Taoiseach decided to take responsibility for rural development from the Department of Agriculture and Food. Right across the EU, these matters are tied together and during the term of office of our last Administration they were closely related. I have tried to elicit information from the Department with regard to this matter, but I have received nothing to date. These matters go hand in glove and I cannot comprehend why they have been separated, particularly in light of the possible introduction of modulation and investment in rural development. Money will be taken from one sector, but it will not necessarily be reinvested with the same people since a different Department will be in control. What are the views of the IFA on this?

The IFA believes that the Department should have responsibility for agriculture and food, but could not consumers and producers benefit from the creation of separate Departments to deal with these areas? What is the merit of keeping agriculture and food under the remit of one Department? I am happy to get the answers from the transcription of the debate as I must leave to prepare for something. I hope the Chairman does not mind.

Chairman

I appreciate that.

Deputy Blaney

I apologise for being late. I welcome the IFA delegation, in particular the president, John Dillon, whom I have not met before. I know him to have close connections in Donegal. I have connections with the same people and I will talk to him later about that.

I speak in terms of small farming, which predominates in my area of Donegal. Small farming is finished and the Nice treaty is responsible to a large extent, given that 12 applicant counties are seeking to enter the EU at the same time. It would be better to introduce these countries on a phased basis which would give us a better chance to cope. However, it is water under the bridge. Over the next ten years, small farms of between ten and 50 acres will disappear unless something drastic is done. At present, 30% of farmers take 70% of subsidies, but the survival of small farms is dependent on a fairer distribution. I ask the IFA to take that on board and to raise it with the Minister.

I have never understood the nitrates directive, particularly in view of the fact that the BMW region does not have a nitrates problem. It is ridiculous to force this directive upon us, a point I have mentioned to the Minister at a meeting of this committee. The IFA should place this issue on its agenda as I have said to its officials before. If a subsidy were available to encourage farmers to spread lime, we would not have a nitrates problem. As far as the farmer is concerned, it is easier to reach for a bag of fertiliser, but the nutrients are not in the ground and much of what is spread goes to waste. It is a common sense matter. If the two issues I mention were dealt with, the small farmer would have some chance for survival.

Deputy Wilkinson

I welcome Mr. Dillon and his team to the committee. I may have slightly different ideas on some of these issues to those of the delegation. Even if some of the budget cuts were reversed, Irish farming would still find itself at a crossroads. You do not need to look at figures to tell you that, you need only stand in any parish to see what has happened and what continues to occur in farming.

An issue that has not been touched on is that the young people growing up today are making their own decisions as a result of the Celtic tiger. The lure of a shorter working week and time off is having a detrimental effect on farming. Rapid enlargement will mean our farms will get bigger and that an increasing number of smaller farmers will leave the sector. Without the additional income provided by many farmers' wives, the process would have started sooner. We have reached the stage where we need to have a fundamental debate about the whole direction of farming here.

The WTO and the Fischler proposals would make significant changes. Many of us who come from farming stock regularly listen to farmers' diverse views on decoupling and the Fischler proposals. I meet many farmers who favour the Fischler proposals and quite a few others who do not. It is a major issue. Those in favour of them appear to be strongly influenced by the hope that they could eliminate red tape.

I do not know what the Minister's final position will be on roll-over relief. Until now, he has taken a firm line on this issue and disease levies. Yesterday, I met a farmer who will lose 18 acres or 20% of his total holding as a result of these decisions. This has caused him considerable stress and created many problems for him.

Other Members have already asked many of the questions I wanted to raise. Farming is probably in a more serious state than we are admitting. Any short-term decisions taken now will not reverse the current trend in the sector. The time is right to establish a major commission on farming to hold wide ranging discussions on the future.

Mr. Dillon

Many questions have been asked. Deputy Timmins asked about the €300 million to which the Minister for Agriculture and Food referred in the Dáil. The media has stated this is the figure farmers were offered during the recent negotiations. I assure the committee that no sum of money - not a single euro - was offered during the negotiations. Since the talks, the Minister stated in the Dáil and elsewhere that €300 million was offered. He has not explained what he means by this and I am still awaiting an explanation as to the nature and purpose of the €300 million. As I have said, it may be just monopoly money.

We have made our point on levies. The Minister must reverse his decision as a matter of principle. It breaches an agreement in place during my predecessor's time, whereby farmers agreed to pay for the lung testing in return for disease levies remaining static. This is a matter of principle.

Our position on roll-over relief also hinges on a matter of principle. The deal on this was implemented 12 months ago by my predecessor. Since then, a 20% tax was imposed on roll-over relief in the budget. The agreement relates to land covered by compulsory purchase orders. In reality, CPOs mean the confiscation of land. Now, having confiscated it, the Government wants to tax income received from it. We do not accept this tax as it breaks an agreement.

The issue of increasing farm size was raised. A large number of farmers aged over 55 years lease out land. We want to create certainty for this group by establishing a long-term basis for leasing land through tax incentives. Our proposal relates only to those who want to lease land, not farmers who intend to continue farming. We want to provide every possible help to farmers to continue farming. Our proposal is to increase the length of time a farmer leasing can lease land from the current period of one year to a minimum of ten years. This would at least provide one area of certainty for farmers.

On the issue of educational grants, the Government has shown a lack of understanding or respect for farmers by indicating that they will be assessed on asset value as well as the profits they make. This would force farmers to sell some of their assets in order to educate their families, thus leaving less for the future. It would be a downright disaster for young people taking up farming. Proposals to assess farmers' eligibility for grants through asset value shows a lack of respect.

Deputy Timmins asked where we will be in ten years. Radical change is needed if current trends are to be stalled. The Common Agricultural Policy is the political policy on agriculture in Europe and at home. If it does not provide for a long-term future, we will get nowhere. There is no point in me making proposals if the European Union and Ireland are not willing to change at the political level. Without such change, we have no hope. Politicians here have much to answer for in this respect and will have even more to answer for in the future if they do not take a much more serious view of what is happening both here and in Europe.

Farmers have a huge problem. They are professionals and most of them are very efficient. They are also transparent about their business right up to the gateway. However, this is not the case beyond the gateway, where other sectors, such as co-operatives, deal with the product the farmer sells. Having incurred First World costs, farmers are paid Third World prices. Everybody else involved in delivering the product the farmer produces to the consumer receive First World salaries. Even the lorry driver delivering the milk receives a First World salary. The farmer gets the thin of the edge of the wedge, namely, less than 30% of the consumer price. This is a major problem. We should have a bigger share of the consumer price.

Deputy Timmins asked how farmers are proposing to deal with the issue of meat and bonemeal. We are professional farmers. The Government pays consultants to come up with such ideas. We are doing our job inside the farm gate and will continue to do so to the best of our ability with the advice available to us. The consultants should have done this long before now, rather than cut off the subsidies as it has been proposed to do from Monday onwards. This is another sign of disregard for our sector of the community. From now on it will cost farmers €16 per head for every animal they kill. This is not acceptable to us and is indicative of the lack of respect shown to us.

Rural development is still within the remit of the Department of Agriculture and Food, and we do not believe there is any need to hive it off from the agricultural area. It would not be a positive step to separate such an intrinsic area from the responsibility of this Department.

Deputy Blaney referred to small farmers going down the Swannee. I do not accept that at all. There are many ways of dealing with the problems of smaller farmers, as there are ways of dealing with those of bigger ones. We all need to get a larger share of the consumer price of our product. Diversification is another possibility although it is not an option in all cases. The Government should help farmers in this regard. As long as they are able to produce in an efficient manner it should be possible to diversify. Having a slurry spreader is one option which allowed a farmer to do work for his neighbours, but the regulations on the licensing of contractors does not allow a farmer to spread slurry from one farm to another if he gets paid for it. That type of regulation is destined to put some small farmers out of business, which is a scandal. The bigger farmer can only go so far with a family farm and then he will have to employ people. There is a need for industry to be part of rural areas where very small farms exist. If the industries are not there what is a small farmer to do? We need help but there is no proposal from the Government on how to deal with these issues.

I do not accept that 30% of farmers are getting 70% of the subsidies. Premia coming from Europe is compensation because the Minister of the day went to Europe and negotiated a cut in our product price. It is also a contribution towards the cost of production. Payments are made on the basis of size.

I will leave the matter of the BMW region and the subsidy for lime for Mr. Lucey. There are areas in Donegal and along the west coast of Ireland, and even Wicklow on the east coast, where there are special areas of conservation. These SACs are designated without any scientific proof, yet if a farmer wants to get out from that designation he has to show scientific proof. We asked the Minister with responsibility for this area to re-negotiate the SAC scheme prior to the last general election. She said this would be done if the Government came back to power but when we met the Government after the elections it was not prepared to re-negotiate any of the parts to which we objected. A farm worth €6,000 per acre before it is designated as an SAC is only worth €3,000 per acre following designation. That loss has to be accounted for by somebody. If the Government is going ahead with these designations then farmers must be compensated. The same should be true for loss of income. These are huge issues for farmers.

There are issues in regard to commonage along the entire west coast. Farmers own the commonage and they also own the green land. The same basis of calculation is made for both commonage and green land in regard to destocking. That is not acceptable, we want each case individually assessed. Although there would not be any real cost to the Government it is not prepared to do it.

Deputy Wilkinson commented on the need for a major policy direction. I agree that one is needed but the Department of Agriculture and Food should give the lead. We are prepared to consult and get involved in where we are going. We do not want to be cut off in mid-stream such as has happened in regard to forestry grants. There are young trees ready for planting in forests and nurseries but there are no grants available for planting. Planting has just finished for the year. All the 2003 applications have already been issued although it is only February. What will happen to the other nurseries? Surely if there is to be a reduction in forestry it should be wound down gradually rather than all at once. This is an irresponsible approach from the Government.

The subject of decoupling came up. This issue should be clearly explained. Premia payments are based on compensation for price reduction and contribute to the cost of production. The new proposal on decoupling moves away from compensation to that of income supplement. It is not imaginable that anyone will get an income supplement of €30,000, €40,000, €50,000, €60,000 or €200,000. What will that mean to the taxpayer when one can stay at home and do very little for it? How long will this last? It will last only a short time. It is only fair that people are made aware of what exactly is involved in this.

There are 38 new regulations, such as in regard to animal welfare, with which to comply. This adds considerably to the red tape and bureaucracy with which we already have to deal. I can imagine what that will be like. A pig will now have to have a doll to play with in the piggery. Animal welfare regulations will probably result in a major reduction in the number of animals kept. It is not sufficient to state this will be good for farmers because they will get X amount from it. Most of those in favour of it are in the 55 year age bracket and see it as a retirement scheme.

Chairman

Thank you Mr. Dillon. Mr. Berkery wishes to make a comment.

Mr. Berkery

Just one brief comment to Deputy Timmins. I was surprised about the number of questions he raised in regard to farmer numbers and the level of farm incomes. A fact guide on farming has been published by the IFA. It is a comprehensive document produced by our chief economist and includes details on the number of farmers, farm incomes, distribution of income, demographics, age profiles etc.

Chairman

Will Mr. Berkeley send 20 copies to the Clerk of the Committee, who will circulate them to the members?

Mr. Con Lucey

In response to Deputy Timmin's point about the number of farmers and the viability threshold, there was a full census of agriculture in 2002, which resulted in a book of figures. It makes sense only when compared with the one carried out in 1991. The total number of farmers in 1991 was 170,000 and that in 2000 was 140,000. There is a definition of full-time farming based on whether a farmer spends 0.75 or more of a labour unit on the farm. The figure pertaining to 1991 was 130,000 and that for 2000 was 90,000. There was an overall reduction in the number involved in farming but an even a more rapid reduction in the number of full-time farmers. The numbers in the future will depend on two factors, namely, the level of income in farming and the number of job opportunities outside farming. There are push and pull factors, as economists might describe it.

Regarding the viability threshold, most farmers aspire to a similar living standard to others in society. Maybe the average industrial wage is a reasonable benchmark to use. This was about €26,000 in 2002 and therefore one can divide the income from any sector per acre into €26,000 to see how many units of production are required. For example, a farmer with 40 cows this time last year felt that he was just about viable. Then prices fell by 8% and costs went up by 5% or 6%, meaning that he is no longer viable. Such a farmer would be aware that Commissioner Fischler is proposing a 25% price cut with about 50% to 60% compensation. He has to do his sums on that basis and it is clear that the figure in the future will be much higher.

For one group of farmers the total income threshold will be based on a combination of income earned both on and off the farm. For full-time farmers it will be based only on income from farming. To guarantee the future of commercial farming and the food industry, everybody agrees that there needs to be a core of full-time farmers in the business.

There are two related threats facing farmers, and it is worrying that decisions could be made on these this year. The first concerns WTO, and the compromise proposal in this respect involves a 50% cut in EU import tariffs. The EU has not agreed to it; it is offering a 36% cut. However, it is likely that the solution will be between those parameters. This will destabilise the EU market and lead to more imports. We do not have intervention or internal supports anymore, which will lead to both lower and unstable prices.

The two main proposals regarding the CAP agenda involve decoupling, which will make decisions to leave the industry easier for elderly or part-time farmers and afford them a short-term perspective on the matter. They will be quite logical in making a decision. Second, direct payments to many farmers will be cut over time, which is what the EU agenda involves. However, other groups aspire to have compensation for inflation.

We all know that, over time, the number of farmers in every economy declined somewhat. The combination of two proposals means that the pace of change will be at a rate to which most farming families could not adjust. One needs time to adjust and plan. Therefore, unless the Government, in conjunction with other Governments around Europe, is effective at policy level in slowing down the pace of change to rates at which we can live, we could face the doomsday scenario to which some Deputies have referred.

In the previous CAP reforms there were compensating factors, including direct payments. As some members of the committee stated, we now know the budget is fixed until 2013 at a level only slightly higher than that for the 15 countries. Clearly, the expectation of any compensation for future WTO-related cuts is not pronounced. We are facing problems and we need strong Government action in Europe, as well as a domestic agricultural policy to reshape agriculture.

Chairman

Thank you Mr. Lucey. I ask members not to repeat questions that have been asked already because it is not fair to the delegates.

Deputy Ferris

I apologise for having to leave during the presentation and I heard only the beginning of it. There are two separate sets of negotiations, one involving the Government and a wider one between the EU and the Government in partnership with farming bodies. Unless the Government is prepared to accept these bodies as equals in partnerships, the second round of negotiations will not do justice to the country, particularly the farming community. It is important that the Minister and his officials accord to the IFA the equality of treatment it accorded to other groups in the partnership process. The current attitude represents an injustice against the farming community and it is disgraceful.

The decline in income is alarming. The farmers are receiving just about 50% of the average industrial wage, whereas civil servants are receiving one and a half times that wage. The figures speak for themselves. It is a testament to rural Ireland that it has survived against the odds. Furthermore, it demonstrates the sincerity of the people involved, who are close to nature.

Has going to the courts been considered in terms of the roll-over relief issue? I do not understand how land can be taken from a farmer using a CPO when that farmer is not allowed roll-over relief to buy the same acreage of land that he has lost at the same price. This should be addressed by the Equality Commissioner, who might discover an avenue of redress.

The doubling of the disease levies is a major problem. The average size of a farm is 78 acres. The forthcoming negotiations regarding the CAP, the WTO negotiations and the reduction of import tariffs will have a significant effect in terms of our ability to compete with South America and the USA, which have ten times the amount of land. If there is no protection in this respect, it will put an end to Irish farming and decimate rural areas. People in authority have not thought through the matter. Obviously, the delegates have because they are working on the ground. It is important that the organisation has an agreed strategy with the Government as it enters the CAP review and WTO negotiations. This strategy must take into account the viability and survival of the family farm. The survival of the family farm is key to the survival of rural Ireland.

Regarding the issue of leasing land, I know of a number of small farmers in my area that came together to buy a 60-acre farm that was for sale locally. They were blown out of the water when a big land owner bought the land. Has the IFA explored the idea of asking the Government to put in place a statutory body, similar to the Land Commission, to purchase land and offer it on a long-term lease to farmers in need of additional land to remain viable in business? Alternatively, it could be sold to the farmers at cost price. This would allow farmers to maintain a viable income and their position in rural Ireland. This is something that needs to be looked at.

Does the president agree that while CAP has been largely beneficial, it has not prevented tens of thousands of farmers leaving the land? Does the president see merit in any of the Fischler proposals? If there is merit in some of them they should be used to the benefit of farmers. The CAP has been of enormous benefit to the viability of the farming community but tens of thousands have left the land.

Is there a relationship between the IFA and other farming organisations with farming organisations in the Six Counties? Are there any 32-county initiatives on farming? I have met farmers in the six counties and their position is, if anything, worse than that of farmers here.

I know the IFA has difficult days ahead and I wish it every success. The association has done a brilliant job in bringing this issue to centre stage. It deserves all possible support from elected representatives of all parties to help it gain the entitlements its members deserve.

Senator Coonan

I welcome the president and his team to this meeting and thank them for the submission they made. The submission clearly shows that agriculture is currently in crisis. The door has been left ajar to the social partners and the Taoiseach to invite the IFA back into the partnership talks. I support Deputy Timmins' call on the Taoiseach to take up this offer. While wearing his congress hat, Senator O'Toole has said it would be unwise of farmers not to enter the agreement, even with what they are currently being offered. What is the IFA's response to this?

I understand that €2 billion in co-funding has been set aside by the European Commission for Irish farmers until 2006 for on-farm investments and the REP scheme. I am concerned that a portion of that money might be lost to farmers, particularly at a time when farmers are being forced by local authority by-laws to protect the environment. "Force" may be the wrong word to use; farmers are as interested in the environment as any other group. If EU funding were available it would be economic madness were the farmers not in a position to draw down the funding.

I know an agreement has been made on the issue of motorways. I am also aware that the IFA supports the development of such infrastructure. What is the association's position now that the agreement has been broken? Will the IFA advise its members to co-operate with the relevant bodies? This development will put many farmers out of business and obstruct many other farmers. I agree with Deputy Ferris that an agency should be established to look after the land that has been compulsorily purchased from farmers. Perhaps the land of those farmers who are leaving the sector could be made available to local farmers who wish to continue farming.

The ICSA has met this committee. It is in favour of some, if not all of, the Fischler proposals. Does the IFA see any merit in the Fischler proposals? What is the position of the IFA on the Veterinary Medicines Bill?

Senator Callanan

I welcome the delegation from the IFA. Deputy Wilkinson hit the nail on the head. Changes are taking place in farming, some of which have occurred rapidly and others are quickly approaching. Changes will occur at global and European level irrespective of whether we are on the train. We should board the train and work together for the betterment of farming, the agriculture industry and society in general. Farmers are interdependent at all levels from a local societal level, through European level to world level. The world is getting small; it is only a global village.

The figures bandied about may not be entirely correct. We may disagree, so we will not bother wasting time arguing. Some €190 million has been allocated in this year's Estimates for the REP scheme and some €173 million was utilised last year. Some €26 million was spent last year on farmer investment and €31 million is provided for in the Estimates this year. These are pointers towards what is happening. It would be easy for us, from the Government parties to pay lip service to the IFA's presence, but it would be disrespectful if we did not acknowledge the tough times which are causing everybody to feel the pinch. Everybody must involve themselves with what is happening, accept there is a world decline and that there are economic difficulties at European level too, which have impacted on our small open economy.

Meat and bonemeal disposal is a critical factor because it is such a huge budgetary issue at national level. We will have to find a better way because we cannot bury our heads in the sand and presume it is someone else's job. It is a by-product of what we produce and we must deal with the disposal of offal particularly in the context of BSE. Members are aware of how much was spent by Government two years ago when it worked together with farmers. I appeal for that measure of co-operation again. I am not playing politics but, as a farmer, I am concerned for farming. I am a grain grower who uses the grain that is imported.

Chairman

We are not dealing with that today——

Senator Callanan

I will bow to the chairman's ruling but the committee knows what I am talking about. Nobody in O'Connell Street in Dublin or Patrick Street in Cork uses the cheap imported grain that is putting us out of business. An old Irish phrase, which needs no translation, states "muna bhfuil gabhar agat, is i lár an aonaigh is fearr". I appeal to the IFA to join the talks because it is vital we face the challenges of the WTO talks together. If we are divided, we will not get the result we want.

The Minister for Agriculture and Food has clearly said that there is €300 million available. The IFA should talk to him about how he would like it spent. The IFA should be part of the social partnership team. Mr. Berkery said he has been involved for 15 years. He should spend another few years on it because there is no use in being outside. If the Minister stayed outside in 1992 and 1997 when he was negotiating on behalf of Irish farmers and agriculture, would he have achieved what he did? The IFA is sensible as are the farmers it represents and it should join the partnership. Farmers have protected the economy over the years, seldom getting industrial wages out of our year's work, although there have been times when we did.

Chairman

I ask the Senator to give other speakers a chance.

Deputy Carty

I welcome Mr. Dillon and his team. Most of what I wanted to ask has been covered. However, the meat and bonemeal issue will become increasingly important. A great deal of money has been spent on the rendering and destruction policy. This must be examined carefully and the farming bodies will have to discuss it in conjunction with the Minister and the Department and achieve a solution, otherwise the next generation will have a problem.

I appeal to the IFA to return to the talks. Given the state of agriculture, it is vital the organisation is involved. Everybody must move in the same direction.

Deputy Kelleher

I welcome the IFA delegation and apologise for missing the beginning of its presentation.

Mr. Dillon referred to the average size of family farms as being some 78 acres. I know the IFA has looked at models of partnership farming. This has occurred to me when I have seen two farmers with adjoining farms and small holdings having to milk their cows every morning before going to off-farm work each morning - there are two milking parlours and two tractors running. Have we ever explored the possibility of farmers coming together in an equal manner? Two farms which are close together could enter a partnership where both farmers could be farming, but whose man hours are freed up with just one parlour operating. I understand there are difficulties with the mixing of herds, but these issues must be explored if we are to keep as many farming families on the land as possible.

I have spent long enough milking cows to know that quality of life is also an issue. Many young people are driven from farming because they have other competing employment opportunities. There are many factors involved in trying to keep people on the land. If we do not seriously and coherently try to bring about partnership arrangements, the present system is unworkable. The system allows one farmer to get larger and puts another out of business for ever. Instead there must be equal partnership. The pressures of upgrading milking facilities are such that regulations should be changed to allow two herds to be brought together so they could be milked in one facility. That would be a worthwhile exercise and should be explored. Mr. Lucey has given us figures of farmers leaving the land. This is abundantly evident from merely driving through the countryside where we see empty farm yards.

What will it take to get the IFA back into partnership talks? What document can we put our hands on that will bring them back? When we leave this room, we need to know exactly what is required by the IFA leadership in order to return to talks. The past 15 years of partnership have been beneficial to the farming community as well as the economy at large. It has been the basis for much of our success and I would hate to see the IFA outside of what has been a positive initiative. Can we get our hands on a document outlining in detail what is required to get farmers back into the partnership talks? If the IFA and others were in the partnership talks, there would be a window for negotiation on an ongoing basis because of the world trade talks and other reforms. I would like to see that document if possible.

Senator Scanlon

I welcome the visitors from the IFA. It is good to have the opportunity of listening to the other side of the argument. Does the IFA leadership see any benefit in the Fischler proposals? I agree that work needs to be done in the area of SACs. I recently raised the issue of a farmer who bought land, worked on it, drained it and so on, only to find when approached by a courteous man from Dúchas who read him his rights, that the land was a designated SAC. Nobody had known this, not even either solicitor. The man who owned the land lived in Germany. This will have to be addressed soon.

There must be some system we could use to encourage the leasing of land for young farmers. If we sit down together to discuss this I am sure something can be done. The question was mentioned of land being an asset taken into consideration where grants were concerned for children going to school. I cannot agree with that. Land is not like any other business. It is a fixed asset - the farmer uses it and then passes it on to the next generation. It would be unfair to consider in the context of grants. I agree with other speakers that the best way forward is for everybody to sit down together to discuss things.

Deputy Ó Fearghaíl

I welcome the president and his team. It is helpful for us that he sets out his stall in clear and blunt terms and that we are under no misapprehension about where the IFA stands on the issues, about many of which we share the concerns he has expressed.

I agree with my colleagues that the IFA should go back into the partnership talks. We must accept that the partnership approach, more than anything, is responsible for the wonderful economic advances the country has made in recent years, and the IFA is better off inside the tent than outside. Whatever compromises must be made - on all sides - to achieve that should be made. We cannot underestimate the importance of the world trade negotiations and the CAP negotiations. Whatever differences we have among ourselves, locally, we must leave them behind when we go to Europe to participate in these negotiations. The Minister has taken a strong stand and he should have absolute support from all of us. It should be clear to everyone that he has that support.

The question of producer price versus consumer price was mentioned. Would it be the studied view of the IFA that processors and retailers are profiteering at the expense of Irish farmers? Perhaps Mr. Lucey would comment on how we can obtain for farmers an increased share of the consumer price. What practical efforts can Government make to help the IFA and the farmer? Politically, there would be little support on any side of the House for any moves that would disadvantage farmers or discourage young farmers from participation in third level education or any form of education. While, from time to time, the situation of farmers is compared with the disadvantage those processing third level grants think is suffered by the PAYE sector, it must be remembered that if assets are being taken into account, a house in certain parts of Dublin could be worth more than a small farm in many parts of Ireland. We should investigate the issue of asset tests carefully.

Deputy N. O’Keeffe

I welcome the IFA president and congratulate him on making the country aware of the difficulties of agriculture. The "tractorcade" was successful and the fact is that it was necessary. I welcome also Mr. Rory Deasy and the executive of the organisation.

I am at a loss because I was not here for the presentation, but I did read the article in The Irish Times yesterday Partnership talks are important and at last week’s party meeting I raised the issue with the Taoiseach, who was conciliatory towards the IFA. Of course, our Taoiseach has always had a soft spot for the farming community and for rural Ireland. I am aware that the last hardship talks did not meet the requirements of the farming community. During the first two years they were much in our favour but as they progressed we became the losers. I would advise the IFA to pay close attention to that situation. I understand that €80 million will get the IFA back in. I do not think we have that kind of money at this side of the table, but there may be middle ground somewhere.

The current crisis in farming, apart from the Fischler proposals, the WTO or anything else, must be addressed. I am conscious that the loss of income to farmers in rural Ireland over the last 12 months compared to the previous year has been substantial and it is having an effect on rural villages and towns and on business generally. I do not know how we can address this issue. The Book of Estimates was not generous, but whether farmers can make up the shortfall in the partnership talks I do not know. I know they represent a productive sector of our economy and when other sectors have been going badly, agriculture has been there as a stabiliser. For that reason I would like to see farmers generously looked after.

The Fischler proposals are also an issue, but the farmers I meet are not as concerned about them as they have been made out to be at this table. We must look historically at everything: if one has a bank account and the overdraft is up for review, the bank manager reviews one's history. At the time of the MacSharry reforms, we had public meetings across the country at which hundreds of people turned up and I thought it was devastation for rural Ireland, but everything came out fine. When Agenda 2000 was agreed in Berlin, Mr. Dillon, the chief executive, met the Taoiseach in a pub to agree some of the issues. That also worked out well for Ireland. I am not so alarmed at the Fischler proposals, nor are many of my farming colleagues. At the end of the day it will again work well for Ireland.

What is the biggest issue I see facing me in my constituency, which is in a vibrant and strong agricultural area? The disease levy is a fact of life; it cannot change much. An Bord Bia was one issue about which I was concerned because if we are to sell a product we must have the funding to market and promote it. It was a retrograde step to have to adjust to the changes. There was also a proposal for an amalgamation of agencies. I would support that, having worked on both sides of the table. I suggested an agency known as the food co-operation council, encompassing all the agencies dealing with agriculture. The three wise men came along and picked just three agencies, but other agencies are also relevant in the training area and the international food area. What this country needs is a national food agency, on a statutory footing, to service the Irish food industry outside the farm gate. There is too much fragmentation in that area for an industry worth €6 billion. To the Bord Glas people, who are lobbying me in my own constituency, I say that we need some rationalisation - some tidying up - to bring common sense into the area of marketing and promotion.

I do not want to delay the meeting because I am only here in substitution for Deputy Collins and the Chair can rule me out any time he likes. The IFA has my sympathies. I mentioned some of its problems at another meeting dealing with roll-over relief, but at the end of the day it is about tax take, and we were not successful with the Minister. Other agencies have come in to talk about this issue - the regional sector was piggybacking on that issue - which made it more difficult and complicated. However, we did expose the position of the farmer at the meeting of the Select Committee on Finance and the Public Service based on making a case for roll-over relief and in the context of the current crisis in farming.

Chairman

I have had difficulties today with Cork Deputies asking a lot of questions, but that is what we are here for. Senator Coonan made the point that other farming organisations who have given evidence here had different views on the Fischler proposals. Is there a possibility that all the farming organisations could get together and present a united front with the Minister to fight this? It would be bad for Irish farming or agriculture if different views emanated from different organisations. I call on the president to respond.

Mr. Dillon

I will respond to the Chairman's comments first. You are probably aware that up to now we were in partnership with three other farming organisations, all of whom are of one mind regarding Mr. Fischler's proposals and the WTO. There is another organisation whose views are different.

I will move on because there have been many questions and comments and I want to try to touch on as many as I can. Deputy Ferris referred to the determination of the farming community. There is no doubt that this organisation is determined to make progress on all the issues at home and in Europe. Otherwise we would not be here making these points.

In regard to strategy within the EU, at the moment the Minister for Agriculture and Food is on line and we are supportive of his stance on the Common Agricultural Policy proposals and his attitude to the WTO. My only concern is whether he and his advisers have the political stamina to last the pace and see the negotiations through to the end. We will be keeping a close watch on the body language and on departmental officials to see how they deal with WTO and the Common Agricultural Policy proposals.

Some members of the committee have said there are good points in Mr. Fischler's proposal. Let me state clearly, however, that we cannot divide the Common Agricultural Policy from the WTO because they are interlinked. If Mr. Fischler gets away with his proposal to de-couple them, there will be a reduction in production of around 30% which, in normal terms, would mean an increase in the price of the product that remains. However, that will not happen in this case because of Mr. Fischler's proposal to the WTO that there should be a 36% reduction in import tariffs. That means that the vacuum created by the reduction in harvesting, which will probably be about 50%, will be filled by imports from such places as Brazil and Argentina. I attended another meeting before I came here today where I was informed that Argentinean beef being sold at one particular steak counter is half the price of European beef. That is what we will be up against. The vacuum created will be totally filled with imports from the ranches of Brazil, Argentina, the US and so on. The 50,000 cattle feed lots will be supplying Europe with food which will, of course, contain hormones and other things. That is why we are clearly stating that there is nothing in Mr. Fischler's proposals that we can support. He talks about de-coupling. We cannot do it. Deputy Ferris attended a meeting in Kerry where I explained that in detail. I also explained the fundamental argument relating to premium payments. I will not go into that as I have already mentioned it.

The issue of controlling the purchase of land was mentioned. We have not yet examined that because it would interfere with the right of free sale and we are conscious of the dangers of interfering with such a right in a democratic society.

Another aspect of the Common Agricultural Policy about which we are concerned is an agreement in Agenda 2000 that was to run until the end of 2006. If that is broken, what subsequent agreement will last longer than two years, particularly since payments will be in the form of an income supplement? How long will €100,000 or €200,000 last when it is paid as an income supplement? We are suspicious of that. Agenda 2000 was to run until the end of 2006. A mid-term review should mean adjusting the parts of it that were not working as they should, for example, the red tape and bureaucracy. That could be cut by 50% or more were it not for the hardliners within the Department - I do not believe they are politicians - who are not prepared to simplify the existing system. One clear example is the system of sheep tagging. One official in the Department insisted that we must adopt a system of individual tagging although we know that is not being done in UK or in Northern Ireland. That proposal came from Europe but it has not been implemented and will not be implemented for some time. Our problem is that we have a system that could be simplified but for the interpretation of EU regulations and rules by officials here.

The committee also asked whether there was a possibility of working with the Six Counties. We have worked together and are making an effort to work together as an island on the issue of animal health.

Most of the members of the committee asked why we remain outside the partnership talks and have not come back in. As president of the IFA, I never decided to leave. I was pushed out of the partnership talks. The assembly came to an end on 1 February. It sat until maybe 9.00 p.m. The then chairman of the negotiations said we had come to the end of the process and at that stage there was no chapter in the proposed agreement relating to agriculture. We did not say we were leaving. We were pushed out. There was nothing we could do but go home. We were willing and are still willing to return if we are asked. I have not been asked verbally by the Taoiseach to come back, nor have I received a telephone call or a letter. I want to make that quite clear. We are willing to explore every possible way to get involved in and be a part of the new partnership but it should be remembered that if we are not there it will not be a partnership. If we are not there it will be only a pay deal. We are keen on the partnership and we want to be in it. We were in the partnership for 15 years and we do not want to be outside it. We were pushed out and have not been asked in other than by the media through comments such as, "Why not come back in?" and so on. I have had no letter or comment, official or unofficial, from either the Taoiseach or the Minister for Agriculture and Food. That is our stand.

Mr. Lucey will deal with the co-funding of REPS. We have been asked about the roads deal and where we stand in regard to co-operation. We are still available for talks within the partnership. We have not yet indicated whether we will co-operate as that is not an issue at this stage. The issue is still out there to be discussed and discussion should take place. I have commented on the merits of the Fischler proposals.

I told Senator Callanan I was prepared to engage in discussions. We want to be in the partnership. We want to be part of the new change in agriculture. We want to be in the partnership but we cannot participate if we are pushed out. On the question of trainees leaving, if we went on the training at present we would be going to the gallows. Prior to starting our negotiations in the new partnership talks we had an farm income crisis. Coming out of the negotiations, we were €300 million worse off. Mr. Lucey will explain where the €300 million came from. REPS was referred to. A national plan was put in place by this Government to run to the end of the next six years. A certain amount of money has been allocated to that national plan. We are concerned about the proposed cuts to the national plan which is to run for the next six years. We are still talking about that. This means there would be a cut of €400 million for REPS rather than €190 million. I accept that not all REPS payments were taken up last year but there were various reasons for that. It would never be taken up on the basis of the old REPS because REPS has run its course. When REPS was introduced it was worth £50 an acre or a maximum payment of £5,000. Due to inflation REPS has been reduced by 30% and compliance regulations reduce it by a further 30%. That REPS has run its course. Unless a new and improved REPS is introduced, we cannot expect to meet the Government target.

Senator Callanan said we should face up to the economic difficulties. I suggest the Government should face up to economic difficulties. Did it face up to them by giving €2 billion to a sector already well looked after with nearly three times the income of the farming community? The additional amount allocated to that sector is equal to half the total dairy budget in the EU. We are facing up to the difficulties but nobody else is facing up to them. We have been members of the partnership for the past 15 years and we want to continue our membership. We are ready to come in and talk, as soon as we are asked. I am waiting for that call. I have a mobile telephone in my pocket but I did not receive any call or message. Deputy Carty asked if we would come back to the talks. I have already responded to that question.

To respond to Deputy Kelleher, 78 acres is the average farm size. The Deputy also referred to partnership. Partnership is a way of working but if we do not get a fair share of the consumer price of the product. Recently I was in an hotel not far from this building where I bought a glass of milk. If I was to buy that one glass of cow's milk over the counter for one year it would cost €20,000. The consumer is prepared to pay for a product but we are not getting a fair share of that price. We need a better share of the consumer price.

The Competition Authority established by the Government is well able to chase the IFA. We would also expect the Competition Authority to work on behalf of the consumer. If it was really interested in the consumer there would be a regulation to allow it to pursue those who are ripping off the consumer, those who take the high profit which is mainly from supermarkets and retail outlets. I agree with Deputy Kelleher that partnership is a good idea but a greater share of the consumer price is our first request. The Department's rules and regulations on partnership do not allow the farming industry to be a partner, particularly in regard to herd numbers and so on.

I have already replied to the point raised by Senator Scanlon who asked if there were any benefits from the Fischler proposals. In regard to the SACs, I think I know the man referred to and that particular issue. It was a case in the Sligo region. It is a disgrace that Dúchas can designate land without compensating the farmer and will only make a verbal comment to the effect that if one suffers an income loss, one will be compensated. However, one has to prove that, all of which results in more costs. It is outrageous that Dúchas can do as it wishes and impose a charge on one's land, similar to a bank charge.

We believe in the long-term leasing of land. That land should be taken into account as an asset for educational advantage is certainly not acceptable. Given the political undercurrents, it appears the Government is proceeding with taking the asset value of the land into account when assessing a family for educational grants.

To respond to Deputy Ó Fearghaíl I have already commented on the question of returning to the talks. I said that WTO and CAP must be linked. The Deputy said a house in Dublin could be worth €1 million or €0.5 million. While I am not sure, I hope that area would not have a tax on the price.

Deputy O'Keeffe said partnership talks are the way to get back in. I have made my views clear on that issue. We have clearly stated in the media, and to the joint committee, over and over again, that we are prepared to come back in but I have not received a telephone call. The Berlin Agreement worked well for farmers. It is a good agreement for farmers if it runs its full course to the end of 2006. If that does not happen, it will not be a good agreement. I emphasise, irrespective of what happens, that any agreement must last the full term. That is the bottom line and I would not accept anything less. A mid-term review should be a review rather than a reform. The Deputy referred to a national food agency. We have An Bord Bia and An Bord Glas and the Government is proposing to bring the two organisations together. We referred to this issue earlier and are in favour of keeping the two separate. I am not sure about the merits of a national food agency. We will have to look at it to see what can be done in this area.

Mr. Lucey

I wish to respond to Senator Coonan on the co-finance funding in the NDP for REPS and on-farm investment. I shall answer the two separately because they form two separate parts of the plan.

The REPS is part of the full development plan for which there is a budget of co-funded money from Brussels over seven years. As was pointed out already, the spend in 2002 was €170 million covering about 36,000 farmers. A total of €190 million was allocated in 2003, but the important point to be made is that there is a considerable underspend in the funding. The mid-term review of the national plan will take place this summer and obviously we are preparing for that. We have done the calculations and I will outline those to the committee. If we take the amount of money in the envelope originally, take off our spend in the first four years, including the budget for this year, there are three years left and if we divide the remainder by three years, there is enough money remaining to provide approximately €300 million per year for REPS for the remaining three years. We can send those calculations to the committee.

Provided the Government takes certain actions, there is no need for money to remain in Brussels. We propose that there would be substantial improvement in the rates and some increase in the uptake would have to be factored in to make sure the money was drawn down over the remaining three years. The money is there and there is no reason it should be lost, provided the Government improves the rates which, in turn, will increase the uptake. Being realistic, however, we will never hit the original target of €70,000 but I am sure we could bring it up to €50,000 or thereabouts by 2006 at least.

To digress for a moment and be a little bold, in the spirit of Cheltenham I thought I would wager a bet with you, Chairman, that the €100 million per year that will be reproduced from the mid-term review of the Structural Funds could be the same €100 million per year that the Minister for Agriculture and Food is promising us in the context of partnership. Perhaps we will meet after Cheltenham to see whether one of us owes the other a pint.

Deputy Kelleher

Or €100 million.

Mr. Lucey

On-farm investment is a different issue because there is an annual allocation for each year and, to give the committee an idea of what is happening, the allocation for 2002 was about €54 million, of which €26 million was spent - we all know it was not a great year for farmers to make investment - and €31 million for 2003. The difference with this scheme is that a Brussels rule states that each year's money must be spent within the following two years, in other words, if it is not spent within a two-year period, it will be lost. Clearly the formula of our response would be the same. Certain parts of that scheme are out of date. First, the viability threshold is going up and, second, grant rates or, more practically, standard costings need to be increased to match inflation. There may be small amounts of money remaining because of this two-year rule but at least for the remaining three years we can ensure that money will not be left if the grant rates are improved.

I want to respond to Deputy Ned O'Keeffe who was more optimistic about Fischler than ourselves. I mentioned the point earlier before the Deputy came in that, in fairness, there are now two differences. First, we have to look at what used to be called the GATT, which is now the WTO. The MacSharry reforms coincided with the first GATT round and there was a 36% cut in import tariffs but in general we started with high levels of tariff. The first 36% cut was not too painful in that we were able to accommodate it within the MacSharry cuts in the CAP but the second round of tariff cuts, which comes much closer to the EU internal price and much closer to the bone, will impinge more on the internal price. Europe has put that figure on the table and at a minimum it appears the cut will be 36%. However, if other players like the United States and the CAIRNS group have their say, the referee, Mr. Harbison, will come in and he will go for something higher than that. That is one difference.

The second difference is the budget. In previous times we had some budget headroom to switch from price supports to direct payments but that will not be the case in the future. We had a budget of about €44 billion per year for an EU of 15 member states. After the summit decision last October we will have approximately €48 billion per year for an EU of 25 member states. We can be fairly certain, therefore, that there is no possibility of compensation or future price cuts.

In his proposals, Mr. Fischler made it clear that he intends to claw back some money through what he calls modulation and degressivity. Originally, all of that money was to go to rural development proposals of a type but he is now saying only some of it will go to rural development with the remaining going towards giving some compensation to sectors not yet reformed. A case in point would be sugar beet. The sugar industry is facing a major cut or threat as a result of the WTO and if there is a direct payment in the sugar sector in the future, it will come essentially through this degressivity formula or, to put it another way, from mainly grain and livestock farmers. To answer Deputy O'Keeffe, unfortunately the situation is different now in that the constraints are real.

Chairman

Thank you, Mr. Lucey. Mr. Berkery wants to come back in.

Mr. Berkery

I will be brief, Chairman, because I am aware that we have indulged on your time. We greatly appreciate the interchange, which perhaps is overdue and is something from which we could have benefited. When we talk about Dúchas, for example, the difficulty is that legislators signed off on what may have appeared at the time to be rather innocuous and fairly general, banal legislation. However, in the hands of a quango operating its implementation on the ground, it is an incredible encroachment on the constitutional rights of individuals because of the powers it has and the way those powers are exercised. I say that with the greatest respect for the integrity of everybody in the room and in the way in which the legislation went through the Houses. I am talking about the way the legislation is operated outside these Houses. We have a lot of information to exchange and we can benefit from the way it impacts on individual farm situations. However, it is a significant imposition on the constitutional rights of individuals in the way it is operated because the designation works on the basis that individuals have to prove that their case should be excluded. There is no reasonable right of procedure that assumes that. It works on the basis that the State, which has all the power and resources, has to prove that there is something unique or special about a piece of land, a farm, an area or a region to warrant its designation but it works the other way. I am sure it was not the intention of legislators that the individual, with limited resources, would have to prove himself or herself innocent, so to speak. I am sure the intention was that the State had to prove the scientific or other reasons a region was designated.

The same applies in regard to the nitrates directive. The nitrates directive appears to be general legislation we are merely implementing on behalf of the European Union but that directive can have the most serious implications for the livelihoods of individual farmers.

I want to come back to roll-over relief in the context of farm consolidation. Deputies and Senators, as members of this committee, are at one in identifying the pressures of change and the changed environment in which we now find ourselves. At the same time we are now saying we can do nothing about the question of roll-over relief. I want to put an individual case to the committee where somebody's farm has been dissected by a roads network, or even by a single road, and that person is left with several non-viable pieces of land. That individual now has to pay a 20% tax and a 9% stamp duty should he or she try to consolidate that holding into a single farm. That is a 30% tax. It has been clearly demonstrated that farming is not profitable yet that individual will have to pay a 30% tax. That is wrong. Multinational corporations who come to this country from around the world pay only 12.5% tax on their profits. I note Senator Coonan's recognition of the positive role we played in coming to terms with the infrastructural deficit and the land take that was necessary to meet what was required. However, having led in that regard, we now find ourselves on the back foot as a result of this. Roll-over relief is a key issue and it will have to be addressed.

We appreciate the commanding and seductive way Senator Callaghan wants to lead us back through the door of partnership. There is the concept of farm consolidation. Roll-over relief need not be the issue, this can be done through farm consolidation, which would meet the criteria of avoiding the difficulty we have on partnership, consolidation, the scale element, and the change agenda, the addressing of which we have all agreed is essential.

The partnership process has played a role in the fantastic and phenomenal growth of our economy over the past 15 years. As a generation, we have witnessed a doubling of the national wealth within ten years. That is an unprecedented achievement in any country in the OECD. I do not believe there is an example in economic history of the national wealth of a country having doubled within ten years.

I was part of the negotiations process in winter 1986 and spring 1987 when I sat around a table with the Taoiseach of the day, Mr. Haughey, and a number of other people. We all left those negotiations sharing pain, but the pain suffered was to result in a reduction of interest rates from a peak rate of 18% or 19% and a reduction the rate of inflation from a peak rate of double digit figures of 20% or 22%.

Senator Coonan, who has probably left the meeting, asked why are we not signing up to this partnership like Senator O'Toole. Senator O'Toole promised this partnership would deliver an ATM machine effect for for his members. He has bagged €2 billion under that measure, which will be paid out not over three years but over 18 months. The accumulative effect of this measure will be €2 billion over 18 months.

Part of the earlier discussion between our president and some members centred on communication, whether by telephone, e-mail, letter or verbally. The communication aspect can be arranged, but the key issue is the logistics of cash that will be required to make this happen. In the appendix at the back of the documentation reference is made to €14,800, €26,370 and €37.400, figures which have been referred to time and again. It does not seem logical, fair or impartial for the Government to say to one sector that it will take €300 million off those engaged in it between starting and ending the process and that it will give €2 billion to another sector, the members of which are earning almost treble the income of members of the other sector. There is an unequality about that into which we cannot buy. These are not decisions made in Brussels or in the marketplace by multinationals, but by Government, and they are all spelt out in precise detail in the appendix. Therefore, we have to strike an appropriate balance.

Deputy Ferris touched on the relationship with Northern Ireland. We have excellent relationships with the North. We are disappointed about the suspension of the internal arrangements in Northern Ireland. When they were functioning effectively they allowed local engagement with Minister Rodgers, ourselves, the Minister, Deputy Walsh, and the representatives in the North. Immediately prior to the suspension of the arrangements, we were at a round table forum in Downpatrick, which I believe would have been the beginning of the putting in place of a practical arrangement, particularly regarding animal health and a common health status for the island of Ireland. Island status in terms of animal health would afford us certain advantages in a European context.

My colleagues and I appreciate this opportunity. Members will note the number of our members from around the country in the gallery who have travelled here to witness this exchange and to be part of this process of engagement. I thank the members of the committee for this opportunity and I appreciate the time they have given us.

Mr. Lucey

One question to which we did not respond is whether food prices ranging from farmers to consumers could be dealt with by way of legislation. There are two issues involved, one is the major imbalance of power in the food chain between large retail multiples and large processors on the one side and individual producers on the other. It is well recorded that the Competition Authority has made it difficult for the IFA to do its job. When two or three farmers get together to try to improve the price of grain or milk or to try to secure a reasonable price, they can be brought before the courts. This area needs to be reviewed. The groceries order, which bans below-cost selling and is being renewed, impinges on this issue. We would like that regulation to be extended to cover other sectors. Those are the legislative measures that come to mind which impinge on this issue.

Chairman

I thank the president of the IFA, Mr. Dillon, the vice-president, Mr. Deasy, Mr. Berkery and Mr. Lucey and the IFA's members from throughout the country for being with us. They are all more than welcome. I hope we will have more of these meetings and exchanges of views. Members of the delegation are always welcome here, and at short notice we will try to facilitate them. We met representatives of one of the IFA's sub-committees a few weeks ago. Representatives of any of its sub-committees are welcome to bring their views or concerns to members of this committee. I thank all the members for coming to this meeting. Does Mr. Dillon wish to speak?

Senator Callanan

Perhaps you, Chairman, and the president should exchange telephone numbers.

Chairman

The Senator does not have to tell me to do that because the president and I have worked together in the past and we will work together in the future.

Mr. Dillon

The two of us were in the back seat at that time.

Chairman

That is right.

Mr. Dillon

We are now in the front seat.

Chairman

We did not know whether we would get back alive.

Mr. Dillon

We have made our comments in good faith. The issues are clear. They are political issues in all cases. These problems can be dealt with if the will exists to do that. I impress on the Chairman and the committee the need to bring our proposals back to Government to establish what is possible to solve these problems. The Chairman is aware that there are problems. They can be addressed if the will exists to do so. Our general secretary made the position clear as regards the €2 billion that will be provided for the public sector while €300 million will be taken from farmers.

Chairman

I thank the president.

As this is the only item of business to be transacted today, I will adjourn the meeting until 11 a.m. tomorrow, Thursday, 27 February, when we will hear from representatives of the Irish Pharmaceutical Union on the proposed animal health regulations and we will also consider two proposals from Dáil Éireann and Seanad Éireann.

The joint committee adjourned at 7 p.m. until 11 a.m. on Thursday, 27 February 2003.