On behalf of the joint committee I welcome Mr. Pat O'Rourke, President of the ICMSA. This is the first time he has met the committee since his election as President of the ICMSA. Before asking Mr. O'Rourke to commence his presentation, I draw his attention to the fact that, while members of the committee have absolute privilege, the same does not apply to him. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such way as to make him or her identifiable. I call on Mr. Pat O'Rourke to make his presentation.
ICMSA: Presentation.
On behalf of the association, I sincerely thank the Chairman for the opportunity to address the committee. Farming, by its nature, is always going through a process of speculating to accumulate. That is what farms are about. We sow in the spring to reap the harvest in the autumn. However, of late, we seem to be doing a great deal of investing with very little harvest for our efforts on the basis of income. A document has been circulated to the committee, but I hope in my presentation to concentrate on three areas: the importance of the agricultural sector, the problems we have at present and where we see some of the solutions to those problems.
Why should we as a sector encourage others to invest as we do as farmers in our farms and in the industry? Agriculture is very important to this economy. It accounts for more than €7 billion in exports annually, 10% of the total workforce, 27% of net foreign earnings and 37% of the productive sector is involved in agriculture and food, which is significant and unique if looked at on the basis of the 15 EU member states. If for no other reason than its importance to the economy, agriculture needs to be supported, invested in and to have its problems addressed where they exist.
I could go on all day identifying the problems, but the key issue for the farming sector in the context of family farms being involved in agriculture relates to income. Our costs are increasing at a time when the market price for our product is falling. That is our difficulty and we need to deal with that on the basis of clearly addressing costs and also concentrating on a mechanism whereby the market price reflects the additional costs it takes to produce the product.
We have seen recently that a considerable cost is involved in complying with EU and national regulations. No later than last week we saw a difficulty in the beef sector where, for example, it was suggested that the disposal of meat and bonemeal would have to be borne by the industry which, based on past experience, would have meant that additional costs would be transferred back to producers. I am happy and want to acknowledge the Government's response on the basis that it will continue with this subsidy, but it clearly shows that costs are beginning to be introduced on the basis that they must be put on the producer sector with no recognition or effort to ensure that it should be the marketplace where those additional costs need to be recovered.
One can either look on the problems in the agricultural sector as becoming permanent or an opportunity to address them. It has been suggested that part of the problem we have relates to the mid-term review. There is unprecedented turmoil in the farming sector. Confidence has been eroded and an unprecedented situation exists now where people with young families who need to plan for the next five to ten years in farming if the enterprise in which they are involved, be it beef or dairying, is to support the family farm are asking if there is a future based on what the mid-term review suggests, which is to reduce product price and to give a greater share of the European market to non-European countries in the context of the World Trade Organisation.
I suggest that what we need on the basis of the negotiations that are commencing at European level on the mid-term review is a change in emphasis. The mid-term review for reforming the Common Agricultural Policy should be about how we can plan for the next five to ten years so that the production of food in Europe and especially in Ireland operates a system whereby the primary producer is able to continue producing that product. The way in which that is done is to guarantee that there will be an increase in the producer's income, certainly in line with inflation. Whatever regime operates, it should be index-linked so that the individual farmer has a standard of living equivalent to other sectors in the economy based on the same output and the same compliance with the market and whatever regulations are in place regarding food.
In the mid-term review, we concentrate on what Europe can do, but there is an enormous amount we can do ourselves from a national perspective. As we speak, there are considerable questionmarks about the national perspective on agriculture. For example, in respect of the partnership talks in which we have been involved for the past 15 years and in which agriculture played its part in contributing to the development of the economy, as far as the ICMSA is concerned, and I speak with full unity in the farming pillar, we have been excluded from the new agreement ratified by other sectors on the basis that the national and Government policy on agriculture is to increase our costs and reduce supports. The document that was negotiated presented the farming pillar with an additional cost of approximately €50 million, with no quantification of what we were going to receive. I note that at a number of public meetings where Government Deputies attended it was suggested and reported in the press that the figure is €300 million. I hear more recently that it has increased to €380 million. If €380 million is available could confirmation be forwarded to us in writing so that we can recommence negotiations in relation to a new partnership agreement?
Government needs to invest in agriculture. At a time when we accept that there is Exchequer pressure in relation to moneys available to various sectors, agriculture needs to be invested in today so that it can contribute as it has in the past and so that employment in the sector can be maintained and increased. Let us compare the attitude taken to agriculture in Europe with that in America. The US continues to invest in agriculture. Leaving aside the economic argument, one of the reasons it is important, from a European as well as an Irish point of view, to invest in agriculture is that we all need food that is safe and in continuous supply. America sees the merit of that argument. Food security must take precedence over military, financial or any other security. I fear the policy that is being adopted at European level, which is not sufficiently resisted by Government representatives. Europe must continue to be able to feed its citizens and Ireland should maintain its agricultural output and ensure we maintain our share of European markets.
It is not long since I made a presentation to a select committee on the Nice treaty and European enlargement. Farmers supported the Nice treaty on the basis that it was good for Ireland and for Europe. It was also good for farm families because it provided market opportunities. It is difficult for me to meet farmers at public meetings who ask where are these opportunities and the increased market share. At European level, negotiators are willing to trade those opportunities and market share under the mid-term review and the WTO.
Agriculture will continue to develop in Ireland and to contribute to the Exchequer on the basis of its net foreign earnings. When the success or failure of Governments was judged on the basis of the balance of payments agriculture was one of the major net beneficial contributors in relation to net foreign earnings.
We are at a crossroads. We can, by our determined efforts, manipulate the change that is going to take place and that change needs to be addressed in a way that will create opportunities for Irish farmers. The European consumer market is our preferential market and offers the best return we can get. The European consumer is in a better position to pay but he is also very demanding. He demands high standards of food production, continuous supply and environmental care. That rule applies to all European farmers. That is our opportunity. How can we take on that challenge and maximise it to our advantage? No other European country produces food in as environmentally friendly a way as we do. In our beef and dairy herds 90% of the diet consists of grass produced in the fields of Ireland. This presents us with a marketing opportunity and the European consumer is prepared to pay the additional price required to continue that method of food production.
Our standards of food safety are second to none. We have complied with every EU and national regulation and we have never had a difficulty with complying with them, because food safety is a must and is not negotiable. Irish producers will comply with the highest scientific standards but in order to make sure that our product is supplied to the high standard that is now the market norm we must, in return, get a fair price which justifies what we do best in Europe, that is producing safe food of the very best standard in compliance with the highest environmental regulations.
At our last meeting I had to leave before the representatives of the IFA responded to my questions. I thank them for their responses, which I read in the official report. I wish Dr. Patrick Wall well. He did an excellent job as chairman of the Food Safety Authority.
I thank the ICMSA. Since I took over my current role I have found that organisation most helpful on many issues. For a group that is smaller than other farm organisations its members make their presence felt. They seem to have the power of bilocation.
At our last meeting Mr. Berkery expressed surprise that I had raised the issue of farm incomes. I do not recall raising the issue and when I checked the report I found I had not done so. However, I will raise it today. The ICMSA has sought a commission on farm incomes. Can Mr. O'Rourke elaborate on this demand? Is he not satisfied that we can establish where farm incomes lie from the information we already have? A part of me supports this demand. I have been trying to find out how many full-time and part-time farmers we have. I have read the booklet on this subject but I am no wiser. I have inquired from the Department and various organisations but the figures cannot be pinned down. I also note that some figures are given in today's report. Why is a farm income commission necessary when much of the information is already available?
Can the delegation elaborate on the nitrous directives? What changes in EU policy would assist the industry? I do not know if the delegation was in Brussels last week for a briefing for media and farm organisations. Concern has been expressed that the Irish position has been undermined by pressure from France. We had hoped to work on the coat-tails of the French in opposing the Fischler proposals but a report in at least one newspaper today suggests that we are coming under pressure due to our position on Iraq and that we are not seen to be as pro-French as we should. This may be outside the delegation's remit but I urge it to seek information on this matter. It would be a pity, irrespective of the perception of our position on Iraq, if our negotiation position on the Fischler proposals was undermined by other states on that basis.
Is Mr. O'Rourke happy to take all questions together?
Perhaps I could respond to those direct questions while they are fresh in my mind. In relation to a commission on farm income, we have suggested that for some time on the basis that the current level of income would be clearly established. As we note, considerable difficulty arose in arriving at the exact figure in that the Department of Agriculture and Food had one figure and farm organisations had another. If the exact level of income could be established, it could then be decided whether it was satisfactory and, if not, we could decide on the measures to be put in place to move it to an acceptable level. I will give an example of that. We have been analysing both the dairy and beef sectors. In 2000, a 40,000 gallon dairy farmer generated the average industrial wage. That is a benchmark, but how does that same farmer rate today relative to the average industrial wage? It has gone in reverse, and we want to stick to the key figure of 40,000 gallons because we do not subscribe to the idea that output must be increased to maintain one's income. That does not make any sense. It is the same as asking Deputies and Senators working 80 hours per week, or whatever number of hours they work, to double their hours for the same salary. That does not make any economic sense and it is not a wise or sensible long-term strategy. The average dairy farmer generated the average industrial wage in 2000 but that has been reversed. His income now would be between €7,000 and €8,000, and heading in the wrong direction.
To finish my point on the farm income commission, there have been many debates about farming, its reaction to crises at European level, food scares or whatever but we need to have our own strategy and decide on the number of farmers we want to see in operation in 2006 or 2010. Will they earn the average industrial wage and will their living standards increase with other sectors in the economy? If we set the plan in place we will at least plan to succeed but currently there is no plan in agriculture, which is perhaps an indictment of all of us. If there is no plan, the plan is to fail. A commission on farm income is the first step in addressing the existing problems.
We have major difficulties with the nitrate directive as the Government has proposed that it will be introduced on a whole country basis. While the Department has been unable to come back to us with figures on the cost implications of designating the whole country, we estimate it would cost in the region of €0.5 billion to comply with the directive.
By way of explanation, there is an EU nitrate directive which we have no choice but to implement. The only discretion given to a member state is that it can either decide to have the entire country designated or it can select areas in the country where the problem arises. Our view, which is supported by the scientific experts, is that we should designate the regions experiencing the problem and provide resources to rectify it. If a problem does not exist, why designate that particular area? This has implications for areas of the country which do not have a nitrate problem. For example, there is no nitrate problem in Donegal, but if Donegal is designated a nitrate vulnerable region it will create an additional cost whereby farmers in that area may have to have winter storage facilities of up to six months. That is a huge cost and there is no reason for it because the area does not have a problem.
Also, and this is where the real crisis arises, we fail to understand the reason the Government has taken this approach. Four years from now we will have to comply with the EU directive and rectify the problem and strict audits and monitoring will be in place to ensure we are making progress. If we do not comply with it, after four years we automatically move into a more stringent regime. That would mean that if Ireland does not achieve compliance with the directive, every farmer here will be forced into compulsory REPS type farming, and there will be no choice in that regard - it will be automatic. We all know the consequences of failing a breathalyser test. The same will apply in relation to this European regulation. If we fail to comply in four years time, the entire country will be automatically designated into a compulsory REPS type farming regime.
If the nitrate directive is applied on a national basis, up to 5,000 dairy farmers will have to reduce output even though many of them are not contributing to any environmental problems, but the regulation as it applies means that the stocking rate per acre farmed has to be reduced. In the current circumstances, Teagasc and everybody else would suggest that in order to survive we must avail of opportunities to expand. We have a policy whereby output will have to be reduced to comply with a regulation to deal with a problem to which we are not contributing.
In terms of the future, we would like the EU to guarantee a price per gallon on the basis of compliance with the various standards we would have to achieve. Such a guarantee is built into the US farm Bill. Regardless of market returns, the American dairy farmer is guaranteed an equivalent of €1.35 per gallon. If the markets achieve their targets, there is no need for Government support but if they do not, the farmers have that guarantee. The American regime has given that clear commitment to ensure it has an industry to feed American citizens.
Europe has taken the other line. As far as it is concerned the key is to reduce the supports but that will affect many farmers throughout Europe, particularly dairy farmers here. If the proposals are implemented we will not see vast areas in dairy production in the west and the south west in future because they will be unable to produce, comply with the regulation and then try to weather the market return, which will be world market price. European policy must be to maintain the family farm structure and the ability to produce dairy beef, etc. in the regions instead of operating a system whereby supports are reduced with the consequences I have outlined.
On Ireland's position in the negotiations vis-à-vis the French and what will happen in terms of the current diplomatic crisis over the war, the agricultural concerns of French and Irish farmers are similar and will be reflected in the negotiating stance of the various Ministers for agriculture. We all know that regardless of what the French do, they are very supportive of the agricultural sector, rural development and rural communities. I have no doubt they have identified a common approach that the mid-term review will not help rural communities either in Ireland or in France.
I thank Mr. O'Rourke for his presentation. I would like to comment on Dr. Pat Wall's resignation from the Food Safety Authority of Ireland. As Deputy Timmins said, he was before the committee recently and it would be fair to say he has made a huge contribution to food safety and its progress in this country. I hope he continues to work in that general area.
I have questions arising from Mr. O'Rourke's presentation. I am interested in what he said about the farming commission, on which there are some positive views, but does he see scope for a consumer voice in the commission which would add to its overall perspective?
Commentaries were made by two sources last week, one by Bord Bia and the other by Commissioner Fischler, on our lack of investment in value added products, particularly in regard to diary products but also beef products. Against the background of a cutback in the budgets of Teagasc and Bord Bia, does Mr. O'Rourke have views on that and whether we should move more towards adding value to our products rather than merely producing commodities? Are there any positives in Commissioner Fischler's commentaries? Does he have a view on the impact our production of commodities and their subsidisation might have on developing countries?
I will ask Mr. O'Rourke to reply to the questions put by the party spokespersons and then I will take two or three further questions.
In relation to the consumer being part of a commission on farm income, I see no difficulty in that because ultimately the consumer is king on the basis that if we produce a product, it ultimately has to be sold to a consumer here, in Europe or outside Europe. Therefore, I see no difficulty in regard to how that could be structured. The key from our point of view is that a commission on farm income would state that it is farm income on which we should concentrate and the consumers' role in that would be on the basis of their ability to be able to respond to and accept the principle that if there are increased costs in producing in order to comply with a regulation, that cost must be borne by the market and ultimately by the consumer. However, the reverse has been the case. Consumers and retailers would say that they would not pay an increase, but yet they want higher standards. Therefore, we need to examine how we can match those elements.
As to whether there is anything positive emerging from the mid-term review, it presents an opportunity to harness or focus the change that will come about to our advantage. That is what we must do. There is no point in ignoring the mid-term review and burying our heads in the sand, which would be to our peril. It presents an opportunity for change. We need to make sure such change recognises the difficulties Irish producers have on the basis of our grass base. We are environmentally friendly and we need to export all our product to Europe or outside it. There must be a recognition of our problem in that regard and a mechanism put in place to deal with it.
My response to the idea that the Common Agricultural Policy and the subsidisation of agricultural production has been to the detriment of developing countries is that the WTO operates a strict regime on the basis that it does not allow dumping of product to the detriment of developing countries. I take this opportunity to remind the committee of how important European food surpluses have been in providing for the hungry of the world. Food aid, in the form of skim milk powder etc., has been used to save the lives of many thousands, and perhaps millions, of people who due to political, environmental, climate change or resource issues were not able to feed themselves. It is suggested that due to AIDS, other illnesses, epidemics, political turmoil or climatic problems many millions may face starvation. In that context I cannot understand how it would be sensible or wise to adopt measures to reduce food production in Europe. If there are starving people in the world, surely the sensible and logical approach is that food should be produced in the regions that have the ability to produce it. We need to continue that approach while recognising - this has been recognised and adhered to under the WTO - that if some developing countries need to develop their agricultural industry and to be given opportunities to export, that is fine and such provision has already operated on the basis of concessionary imports. However, how can one suggest that a Third World developing country needs an opportunity to export when the first priority must be its ability to feed its own citizens? We would not support or encourage at European level a system whereby food production in Europe would be reduced. If that were to happen, I can say with certainty that many thousands of people would lose their lives because the food in terms of food aid would not be available elsewhere. Therefore, I do not accept the argument that the Common Agricultural Policy has contributed to the increase in the number of starving people, particularly in developing countries. On the contrary, we have fed them and will continue to do so under the food aid programmes operated under the WTO, which does not allow dumping of product.
Mr. Dolan
I wish to respond to Deputy Upton's question on value added produce. This issue has been the subject of discussion among academics and consultants for the past 30 years. I will deal with the sectors individually. With regard to the dairy sector, there will probably be no change in regard to a 70:30 divide with 30% going to value added products and 70% of the total milk output going to the traditional mix of skim milk powder and butter. There are climatic reasons for that in terms of distance from markets and seasonability. We should be slow to move away from that divide unless the case is proven that we can get from the marketplace a greater return that would cover the increased costs of production, processing and marketing. We have progressed a good deal from the position when we subsidised butter exports to Britain in the mid 1960s. With skim milk powder, there are food ingredients in respect of which there is a differentiation. A product is being made that is specific to a particular customer. The view of the industry is that we produce milk as cheap as possible in terms of the seasonal pattern of production and we add technology to it in terms of being able to supply the food ingredient for skim milk powder.
In relation to butter, we can still sell Irish butter at a premium of about 10% in the German and Dutch markets and it is viewed as superior to the local product. Therefore, we will continue to monitor market developments. We have the necessary technology, management and marketing skills in this area. I read the commentary to which the Deputy referred. I believe Commissioner Fischler was simplistic in his approach. To take the example of the Kerry Group, it has world class and worldwide experience. That view is also shared by the Irish Dairy Board and other co-ops. If there are markets, we will secure them if they are profitable.
In relation to the beef sector, we have gone from having 23 outlets to a core group of six geographic markets. Therefore, there is a focus on a number of markets. The beef sector will always be one where there is very little value added to produce. We should face the reality that there will be some scope for some additional value added, but I point out to the legislators that the sector is going through a massive change at production and processing levels. What might be viewed as appropriate in terms of competition policy for the United States may not be appropriate here. If there is a rational upfront approach by the sector, supported in part by producers to examine a rational restructuring of the beef sector to make it more competitive within the European Union, why should we be in a straitjacket in terms of legislation? As representatives of producers, we are conscious that lack of competition in the beef sector can be harmful to our interests. If scale is important and more economic units are required, there could be a counteracting measure in terms of transparency and return from the marketplace. We have made proposals here and to the EU Commission in regard to a system that operates in the United States where there is full transparency and a database on the return from the marketplace to which all individuals, consumers, producers and processors have access.
We are aware that we should opt for value added if it makes economic sense. We have the capacity to do it when it makes economic sense. However, bear in mind that it cannot be a marginal approach because one has to take both production and processing costs into account. It would be useful if we put in place an Irish solution to an Irish problem in the beef sector and not get hung up on some aspect of competition policy that may have been imported into Irish legislation but which may not be appropriate. I am not suggesting that there be a free for all in relation to the rationalisation of the beef sector.
Is Deputy Upton happy with that response?
Yes.
I am grateful for the opportunity to attend this meeting although I am not a member of the committee. I welcome Mr. O'Rourke and Mr. Dolan. I wish to return to the issue of farm incomes. Last Monday week I attended the public meeting held by the ICMSA in my constituency. I thank the organisation for how it conducted that meeting. During it I made the point that the Minister's hands would be tied if it was seen by Europe that we were not participating in partnership talks and that the farm organisations did not see much profit in becoming involved. I suggested that if the farm organisations were to participate in talks, a figure of approximately €300 million would be on the table. That came as a surprise to the top table. I asked Mr. O'Rourke if he had heard that previously and he said he had not.
The fundamental question is whether that figure is real. If it is, it is a poor response on the part of the organisation not to participate further. It gives a bad signal to the farm organisations. I posed the same question to the Minister some days later and he confirmed that the figure was real. I am not a farmer but I am from a rural constituency. If there is an amount of money available but the organisation is not participating and cannot give a reason for not doing so, the overall effect of non-participation on farming must be resolved. This committee does not have the power to resolve it. However, if we are awaiting the farming organisations' participation and they have some doubt about it, that issue has to be cleared up. It is a fundamental issue, not just with regard to discussing what has been taken from the farming sector or added to it but it also gives a poor signal abroad if the organisations are not working within the partnership when our Minister goes to negotiate on their behalf. Perhaps Mr. O'Rourke could discuss this further.
I welcome the delegation and thank Mr. O'Rourke and Mr. Dolan for their refreshing presentation. I agree with most of it. I agree with the proposal of a commission on farming. It is necessary. As I have said to other delegations, we are at a stage in farming history when decisions have to be made for the longer rather than the shorter term. The delegates mentioned 40,000 gallons with regard to establishing a farmer's income. Much also depends on borrowings and other factors. It is not easy to do it but I agree with the thrust of what was said.
What are the ICMSA's views of the Fischler proposals? Many farmers in my constituency are in favour of them. I cannot give a precise percentage but the opinion seems to be 50:50 at this point. Another question has not been addressed. Why are well managed, well financed farms being abandoned by young people? Is it due to the better job opportunities and the shorter working hours in the Celtic tiger economy? Deputy Maloney made a key point. I will not delve into the reasons for what happened but a resumption of partnership talks is vital.
I compliment Mr. O'Rourke and Mr. Dolan on their presentation. I come from west Limerick where there is large involvement in the ICMSA. I have never seen so much concern among the public for farmers as I have in the last 12 to 18 months. I am not talking about big farmers, of whom there are a number in my constituency. Large farmers are well able to take care of themselves. That is not to say that they have not had better times. However, I am referring to small farmers who are on the breadline. As I said recently to the Taoiseach, these people should be helped.
I am glad Deputy Moloney raised the partnership agreement. Rumour has it that the other farming organisation is due to participate in the talks. I would like to see the ICMSA participating too. One of the reasons, as I mentioned earlier, is the large number of small farmers in my constituency.
The lack of competition was mentioned. That is most important. For example, I met a farmer recently who wanted to sell three cows. He usually sells to a buyer but he thought the buyer was not offering enough at €1,000 for the three animals. He thought he might get more by going to the factory. He sent the three cows to the factory and was paid €385 for the three cows. A sum of €100 was deducted for transport. How can a farmer exist with that carry on? It is the result of lack of competition. I do not have as extensive a knowledge of farming as other speakers, such as the former Minister of State, Deputy Ned O'Keeffe, whom I welcome despite what has been said about him. The ICMSA and other farming organisations will have our support. Should they need help, we will not be found wanting.
I agree with the comments on the nitrates directive. It is common sense. Has the ICMSA had discussions with the Minister about it? We are hearing that the entire country will be included. I am also anxious to hear the delegation's views on special areas of conservation and the special protection areas. I attended a meeting recently in the Devon Inn, Templeglantine, which was attended by 800 farmers. The meeting was held by another farming organisation. There was grave concern about SPAs.
The week before last I attended a meeting of the Committee on the Environment and Local Government at which Dúchas was present. We heard one story here but heard another from its representatives in Templeglantine. Deputy Moynihan and myself left the meeting as wise as we were going into it. Representatives of the farming community will be welcome at an environmental meeting on 3 April at 10.30 a.m. I mention that meeting in case you do not know about it. We would like your organisation to be present as well. We have also asked Dúchas to attend and to listen to the people who have concerns and to come back with positive answers, if it is not prepared to participate.
You said the ICMSA made a submission on the SAC review in November 2000 and that little progress has been made. Did you meet the Minister or Dúchas? Will you send us a copy of your submission because it would be very helpful? This committee wishes to help farming organisations. We have asked the Chairman to convene a meeting with the Taoiseach. That is how serious we believe the problem is in farming. We know there is a problem - you are speaking to the converted. If we can give you any help, we will not be found wanting.
Deputy Moloney asked about our participation in the partnership talks and said that we are sending the wrong signals to Europe if we cannot sit down and do business. In regard to this infamous €300 million, during the partnership talks that comprised at least seven or eight meetings which went on late into the night, the €300 million or €380 million was neither spoken of nor written down in any of those discussions. However, what was quantified at those meetings were the additional costs our sector would have to bear because the Government would no longer continue some of the support measures which had been in place, in particular those relating the BSE problem, including meat and bonemeal, the Enfer testing, etc. The Department quantified the reduction in that support would add up to somewhere in the region of €45 million in a full year. Following those negotiations, there was going to be a reduction in supports at a cost of €45 million and the nitrate directive was going to be introduced throughout the country, the cost of which we calculated because neither the Department of the Environment and Local Government nor the Department of Agriculture and Food were able to quantify the cost of going for either option one or option two. Option one was to designate particular regions, while option two was to designate the whole country.
The agriculture sector is in difficulty and cannot afford the luxury of refusing €380 million in additional supports. In any agreement, there is give and take. The agreement must be of mutual benefit, otherwise there is no point participating. The difficulty in relation to the proposed agreement was that nothing was quantified at those meetings. If, as we have been told by members representing the Government parties, there is €300 million or €380 million, then it warrants additional meetings and we will sit down with the various Departments and to see how we can progress the issue.
I already raised the issue with the Taoiseach at a meeting. The same political enthusiasm for an agreement between the unions and the employers where the Taoiseach successfully intervened was not exercised in relation to our sector. The agriculture sector is as important to the economy. There is probably a greater crisis in the agriculture sector which warrants intervention by the Taoiseach to give political direction whereby we can be part of the partnership approach which will help to resolve the problems.
Based on the proposals in the Book of Estimates and in the budget, it is our understanding that €620 million will be left behind in Europe because we failed to come up with matching funding. At a time when we are told the economy is in difficulty and, as has been said by members representing rural constituencies, there is a problem in rural Ireland, surely it does not make sense to deprive the Exchequer and the rural economy of €620 million agreed under Agenda 2000. Why will we not be able to draw down this money? For every €1 the Exchequer comes up with, Europe will respond by matching it with €3. If one wanted to get a return on investment of 3:1, one would not get a better offer. Because of the changes as a result of pressure on the Exchequer, it is our view that €620 million will be left behind in Europe. That is one of the reasons the partnership negotiations broke down and we were not able to complete them. We did not walk away; the process excluded us.
Our organisation hopes the Taoiseach will intervene and discussions will take place. If the amount which will be on the table is quantified, we will take it to our national council and will decide whether to participate. At present we are not in a position to submit a document to our national council which we could recommend because no quantification has been done. The only quantification which has been done was in regard to additional costs.
I am not an expert on the pay talks but I hear most of the pillars have signed off on the agreement. I take it there must be a signing off date for everybody. I am not contradicting you but I find it incredible that you have said the amount has not been quantified, while I have heard other leaders refer to it as Monopoly money. There is an agriculture group in this House. We discussed this issue last week and many members are genuinely concerned and are not playing the political game of trying to say the right thing in front of you. I find it incredible that funding has not been quantified and that it has to be notified to you and the other leaders. I specifically asked the Minister about it at a meeting last week attended by members of all parties and the figure mentioned was between €300 million and €380 million.
I attend few meetings of the Joint Committee on Agriculture and Food but as someone looking in from the outside, I see this as an issue which could be resolved by talks. I get the impression from you that you are waiting for the Taoiseach to intervene. I would have thought it would be your business to tease out the background to the €380 million rather than to wait for a time when there may be no turning back. By not allowing that funding to be evaluated, I see a greater problem further down the road. It will be said that the farming organisations did not participate locally and at the mid-term review, and the question will be asked, given they could not participate locally, how they will be able to participate on the European front. The matter is so serious that it is up to you to try to elicit how this funding will be made up.
To the best of my knowledge, the first time the Minister mentioned €300 million was in a supplementary reply to a parliamentary question I tabled for oral answer. He just threw out the figure of €300 million and did not say from where it came or indicate the specifics involved. I understand that the Minister for Finance informed the Minister for Agriculture and Food that the €300 million was not available from him and that he would have to find it from within his Department's current Estimate. It is an issue that I intend to follow up with the Minister for Agriculture and Food. Is this money being taken from one section of the agriculture budget and moved to another to act as a fig leaf? My understanding is that the Minister for Finance informed the Minister for Agriculture and Food that he did not have €300 million for him.
I agree with Deputy Moloney. The Minister gave the committee an undertaking last week that the money was available. After the meeting with the IFA, I made contact with the Department of Agriculture and Food and the Department of the Taoiseach to try to get the negotiations back on track. I understand the effort being made to do that and I hope it will happen. That message will go out from this meeting and an attempt will be made with both Departments to progress matters.
The ICMSA wants to be involved in the new partnership agreement, but that can only happen if our national council ratifies it and decides that there is merit in being involved. If there is one positive to come out of the discussions, it is that the figure of €300 million referred to last week has now become €380 million. If we continue with this, perhaps it will increase further. It is encouraging to see the figure increase rather than decrease, but the key point is that, as Deputy Timmins said, this money should be additional. There is no point playing with the existing budget.
The ICMSA will not be found wanting in regard to the discussions. We met the Taoiseach and suggested that he should intervene and he indicated that, if that would help, he would do so. When that invitation is issued, we will certainly be involved in discussions to try to move this forward. Europe watches how agriculture operates at national level and the type of commitment that a particular Government or member state gives to agriculture. If it appears that we cannot agree at national level, it will make our negotiating position a little more difficult at European level.
It was said that, based on the committee's experience, some 50% of farmers are in favour of the Fischler proposals with the other 50% opposed. We first need to find out what are the Fischler proposals and what they are supposed to achieve. We will then be in a better position to decide whether it will be a good deal for Ireland.
The Fischler proposals will decouple payment from agricultural production. A beef farmer will be a paid a ten or 22-month suckler cow premium, decoupled from production. He will receive a cheque in the post and can then produce in whatever other sector in which he is involved. The difficulty with the deal is that it is not known for how long the cheque in the post will continue, whether it will be index-linked or whether the proposals will address the red tape issue, which is a major problem. On top of that, there is a built-in mechanism whereby there will be a reduction annually on the basis of modulation.
Those are the key areas. There will be no indexation. Whatever figure the individual farmer qualifies for, with inflation running at 5%, over ten years the value will reduce by 50%. A farmer must buy into something that he or she knows will be worth less as time passes.
There are major difficulties with regard to the inspections that farmers have had to live with to receive their current payments. A remarkable recent figure shows that for every 25 farmers, there is one Department official employed to watch, audit and monitor. This comes at a huge cost to farmers because if a farmer makes a mistake, part of the payment will be lost. That issue will not be addressed. The audit will be changed in regard to the counting of animals on farms in the context of the premia and there will also be an environmental audit under which an army of auditors will arrive on farms, counting and monitoring the environment. If farmers do not comply with environmental controls, the cheque in the post will be lost.
Of greater concern is the fact that the European taxpayer has to be satisfied that the current supports in regard to subsidising agricultural production are justified. I can put up a strong argument that they should continue in that the existing subsidy - the ten or 22-month premium - is really a food subsidy for European consumers, allowing them to have their sirloin steak at the current subsidised price. If farmers will be paid to produce nothing, how can it be justified that the European taxpayer will continue to pay for that?
The European Parliament will have a greater say in the future with regard to how the Commission spends its money. At present, 20% of the European Parliament is made up of rural representatives. That figure is declining because of population changes. People from urban areas may not understand the problems in agriculture and it will be difficult to justify that someone should receive a payment for producing nothing and feeding nobody.
It must be remembered that the payment is not index-linked and will reduce in value year after year. It is, as described by one farmer, a redundancy package. It reduces our ability to produce and to feed European citizens. From a farmer's point of view, I cannot see anything positive in the Fischler proposals. It will be to the detriment of many thousands of farm families if we go down that road and I hope we do not do so. This is a review, not a reform. I hope that the current system will continue and improve on the basis that premiums will be index-linked to reflect increased costs.
Some 50% of farmers are in favour of the proposals because everybody would like to get a cheque in the post and receive money for doing nothing. However, that is a short-term approach. The long-term strategy should be to recognise that farming is a profession, like any other, and farmers' professionalism lies in their ability to produce a product. They need to make sure that they continue to do that and not move to receiving money for doing nothing. In our view, it is a redundancy package.
Deputy Collins referred to the difficulties in west County Limerick and the huge concerns at farm level. Every day, those on family farms must make decisions about the future, whether in regard to investment, deciding what crop to sow, the purchase of animals, their quota or otherwise. That has always been the position and is the challenge of farming. Farmers sometimes make the right call and sometimes the wrong one. At present, however, many factors have come together to create what the committee described as utter disillusionment among progressive farmers who need to take further strides forward.
The nitrate directive is one example. Should farmers invest or borrow money to comply with the directive when, at the same time, the mid-term review on the Fischler proposals will ensure that the product price for farmers will reduce? The product price is reducing while costs are increasing. How can one sit down and make a business plan? That is the real frustration. If one could quantify the challenge and the difficulty, one could operate on that basis by focusing on the problems. A good and focused farmer should be able to overcome such difficulties. We are unable to do so, however, as there is so much uncertainty in the industry. There have been difficulties in relation to the WTO, as well as the Fischler mid-term review proposals. The Government has introduced a new nitrate directive and there have been huge demands on investment in agriculture, on the basis of the environment, etc. Such a level of disillusionment exists because farmers cannot make decisions.
The EU has a responsibility to immediately act to bring about a conclusion in relation to exactly where they are planning to go. The Commission's proposals for the dairy sector will mean that the income of a west Limerick dairy farmer will be reduced by up to 45% - this has been confirmed by various farm organisations and experts. Where is the future for small and medium sized dairy farmers if the prospects are so bleak? I am not conceding that that will happen, because we will negotiate and defend our position. Farmers who are reading about the Commission's plans are wondering how they can plan for the next five years. Surely it is not a luxury, in any business, to want to plan for five years or more, but farmers in west Limerick, west Cork and elsewhere are encountering the problems I have outlined.
The difficulties in relation to SACs and Dúchas have been mentioned. The huge anger of farmers has been expressed at meetings that have been held about these matters. It seems a day does not pass without the introduction or invention of a new directive which makes survival in farming more difficult. The anger I have mentioned results from such measures. I ask the general secretary of the ICMSA, Mr. Ciaran Dolan, to reply to a number of specific questions that have been asked about meetings and submissions.
Mr. Dolan
The ICMSA's submission will be circulated, with the permission of the committee. If I plan to designate 40 acres of land in west Limerick for forestry, I will receive a premium over a 20-year period, as well as a capital grant. The market value of my land has to take account of its forestry potential. If I do not allow it to be developed in that manner, I can sell it to someone who will. It is nonsense that Dúchas has said it will not compensate for a potential loss. If I grant a way leave through my land to the ESB for high-tension cables, or to Bord Gáis for a gas pipeline, after my land has been developed for forestry, I will continue to receive a sum of money to compensate me for the income lost on the strip of land that cannot be planted.
Irish land law has not properly taken into account the obligations of landowners as a result of SACs. I recall the first meeting with the Office of Public Works about 11 years ago, before that office was legally compelled to seek planning permission. The Office of Public Works designated areas without reference to the landowner. There is very poor communication with land owners. I fully empathise with Deputy Collins who, as a legislator and public representative, is confused about this matter. If he is confused, he can imagine the confusion of others who are suffering as a result of the lack of information. Although I accept that Dúchas has a role, the power and authority it has assumed needs to be examined. Many of the rights of individual landowners, including constitutional rights, have been diluted. It is clear, if one adopts a common sense approach, that there are implications in terms of future income streams or the value of property if one says land cannot be used for forestry. This area needs to be looked at and placed on a proper footing. The Templeglantine experience, which was mentioned by Deputy Collins, has been repeated throughout the country. The fact that 15% of the State's land area will soon be designated represents a massive reclassification of the rights of individuals.
The ICMSA is keen to raise the issues of notification and full consultation. If Dúchas cannot meet its responsibilities, it needs to use its resources in a better way to ensure it can outline a clear and rational position to landowners. This is necessary to ensure that landowners are able to appeal, if there is a valid reason or justification for it. We also need to look at the format of appeals and the factors that can be taken into account. While I accept that the main thrust of an appeal should be scientific, I do not agree that social and economic reasons should be disallowed in all cases. I do not suggest that such reasons should have primary status, to the detriment of scientific argument. Decisions on compensation should take into account potential income loss and should have regard to the changing pattern and projection of land use. I would like clarification after this meeting in relation to the meeting on 3 April, in which the ICMSA is keen to take part.
I welcome the deputation and thank it for its presentation. Deputy Collins stole my thunder by referring to SACs, which will have serious effects in County Mayo, especially in the Moy and Robe catchment areas. Dúchas is a faceless organisation, in so far as its members do not seem to want to meet anybody. As a legislative body, the House should do more to ensure that Dúchas officials meet the farming community and the various bodies in the public domain.
I welcome the deputation and I thank Mr. O'Rourke and Mr. Dolan for their presentation. The submission they have provided will make good bedtime reading and I look forward to going through the information in it. It is important that efforts are made to encourage farming organisations to participate in the partnership talks. Mr. Dillon, the leader of the ICMSA's sister organisation, left the door open for the IFA's return to the talks at a meeting of this committee on 26 February. He said he had not received a call, on his mobile telephone or to his home or offices, in relation to a possible return to the talks or as regards the figure of €300 million that has been mentioned. It is important that I point out that the Government has said that the farming organisations left the talks, but the ICMSA has said that it was excluded from them. The IFA used similar language when it said it was forced out of the talks. It may be a good idea to place an advertisement asking about the missing €300 million. Most farmers hope the Ministers for Finance and Agriculture and Food will be successful in Cheltenham, so that there will be no problem with the €300 million next week.
I welcome the reintroduction of the meat and bonemeal subsidies, but it needs to be clarified if they are part of the €300 million that has been mentioned. Although the reintroduction is to be welcomed, it is somewhat like the resourceful alcoholic who meets a friend and asks for a loan of €10. When the friend starts prevaricating, the alcoholic asks for €5 now and the friend can give him the other €5 later. As this will mean that he owes his friend €5 and he will be owed €5 by his friend, he says that they are quits. I do not doubt Deputy Moloney, but the Government should clarify the situation in respect of the €300 million. It is high time that details of the money are put into the public domain so that we know where we stand. I ask the representatives of the ICMSA to briefly outline what they need to convince them to return to the partnership talks.
There is widespread concern about the Fischler proposals. Many economists have said they would drive a large number of farmers, including dairy farmers, from the land. It has been suggested that, if implemented, they would cause the number of dairy farmers here to decline from 28,000 to 10,000 by the end of the decade. Moreover, many farmers would hold on to their decoupling payments and sell off their production rights, which would be a worrying development. I ask the witnesses' opinion on this.
In his opening statement Mr. O'Rourke stated there was unprecedented turmoil in the agricultural community and confidence in the sector had been eroded. This is a robust yet accurate criticism of the manner in which the agricultural community is being treated by the Government.
At the weekend I read other critical comments, this time from the Commissioner for Agriculture and Fisheries, Mr. Fischler. When he stated, "the best producer in Europe is out of touch with what the consumer wants," he was referring to farmers here. He gave the example of this country producing milk in order to place butter, a product in decline, on the European market and said we had failed to grasp the challenge of diversifying into more profitable products such as yoghurt and milk deserts. How does the delegation respondto these comments on Irish farmers and producers?
I wish the Irish Farmers Association well. Irrespective of whether one is from an urban or rural area, it is vital we have a vibrant agricultural and farming community.
I welcome the ICMSA delegation. Many of the issues have already been addressed. I concur with Deputy Collins's comments on special areas of conservation and special protection areas and the fears people have about what Dúchas is trying to do. The information we received from it last week is flatly contradicted by its officials on the ground who have been telling farmers what can or cannot be done in special areas of conservation. It is vital we receive correct information on this issue as the information provided for the committee by members of Dúchas is contrary to what is being implemented on the ground.
This leads me to the widespread fear in the agriculture sector. The industry is at a crossroads and needs a commission on its future. Many farmers who took over viable farms ten or 12 years ago feel their futures are melting before their eyes. Many of them are now in their late 20s having decided to stay on the farm after completing the leaving certificate at 18 years. This is a serious problem.
I accept Deputy Wilkinson's contention that decoupling and the Fischler proposals in general have been welcomed by some sections of the farming community, particularly farmers aged over 55 years who regard them as a pension or redundancy payment. Will we still have a functioning, full-time farming sector for the raft of people who want to get into agriculture? The number of young people attending agricultural college has increased this year and many of them are examining the potential of agri-business beyond the farm gate.
There is widespread negativity among farmers about the future of the industry. Their concerns would be overridden if the sector provided sufficient income. We face difficult times. Farmers have traditionally told their sons and daughters that farming is a hard way of life, which they stuck with because they liked it. Nowadays, as previous speakers said, people are walking away from farms with 50,000, 60,000 or 70,000 gallon quotas and no debt.
I was a farmer before entering the House in 1997. I am aware of the income that can be made from milk, particularly when one is debt free and has a quota of 70,000 gallons or thereabouts and provided it is run properly and efficiently. Farmers made good incomes in such circumstances in recent years. This year, however, I expect many will be happy to walk away with their compensation.
I want the ICMSA to rejoin the partnership talks. Last week the Minister told the Fianna Fáil policy group meeting on agriculture that the money was on the table. Agriculture and, in turn, the future of rural Ireland are dependent on a viable farming community. The talks need farming representatives.
The issue of farm inspectors was raised. When one talks to a group of five or six farmers, invariably one of them will mention having been visited by an inspector or other official in the previous week. Prior to the collapse of the Berlin Wall in 1989, the communist countries were riddled with red tape. The number of regulations issued by the European Union makes me fear for the agriculture sector. I am concerned we will regulate other sectors out of business also. Last night the issue of cross-checking paperwork and similar matters were discussed. I am at a loss to understand how society here survived 40 or 50 years ago. Politicians and farming organisations will have to come together to take serious action to address the over-regulation of the sector.
The new special protection areas are creating more regulation and red tape and will require the recruitment of even more officials to administer them. I encourage members of the delegation to keep up the good work they are doing on the ground and in various bodies.
I hope there is no Berlin-type wall around Kiskeam.
Like other members of the committee, I am pleased representatives of the ICMSA have attended the meeting, although I would prefer if the association took part in the partnership talks. I will be straight with the witnesses, the organisation should be in the talks and should never have left them. It will have a different viewpoint on the matter. I regret to remind the president that he said something similar on the television news recently. My humble advice to him is that, in the interests of farming and farmers, his role as the leader of the ICMSA is inside the talks addressing issues of importance to the country and, more importantly, agriculture and the interests of farmers generally.
While I do not intend to furrow the ground covered by my colleagues in their excellent contributions, I wish to put a question on demodulation and decoupling. I recently came across information compiled by the Central Statistics Office which showed that 82% of farmers received 43% of the overall grant payments averaging €3,300 per farmer. The remaining 18% receive 57%, averaging €20,000, but the top 10% receive an average €27,200 per farmer. Does the President of the ICMSA consider that fair play? Is it just? I ask because I do not think it is. Reference was made to this issue in the excellent presentation by the ICMSA. I contend with Mr. O'Rourke that there is no such thing as an average farm income. There are farmers who make a lot of money and farmers who do not. The best of luck to those who are making a substantial income. We need such farmers but we have to recognise that there are farming families at the low end of the scale. There are also part-time farmers crossing the range of farm size from big to small.
How does Mr. O'Rourke feel about the spread of the financing coming into this country? What is his view in regard to decoupling and modulation? There is a role for farm leaders to deal with this and other matters. Reference was made to the management of the meat and bonemeal issue and we cannot shy away from it because it is a waste product of our industry. I speak as a farmer; waste is produced and we have to dispose of it properly. We cannot rely on sending it to the Rhine or elsewhere. We have to look at the issue on a national basis. As a farm leader, what is Mr. O'Rourke's proposal in this regard and how far is he prepared to go in giving a lead in finding a proper resolution to it?
I accept what Deputy Collins said. What is Mr. O'Rourke's position in regard to REPS and waste management, which are important issues? REPS is playing a role and I would like to see farm leaders being more positive. Our negative comments are preventing young people from going into farming. It is a tough way of life but it is a good one. I have spent longer than anyone else around this table at it and I intend to continue with it.
I thank the president for his overview and response to the questions. My colleagues have raised many of the issues I wish to raise. The proposed commission on farm income is fascinating. How was that received in the partnership talks? Is the proposal being taken on board by the Department? When could we see such a commission being set up and who would be the participants?
I also have some queries for Mr. O'Rourke. I compliment him on his submission. It is a good document which contains an enormous amount of helpful information. It is a credit to whoever drew it up.
I agree with the comments in regard to Dúchas. Neither Dúchas nor An Taisce appear to want anyone other than the birds and the bees living in rural areas - that is how I perceive their policy. I would like both of those groups to appear before the committee. We are all suffering, particularly young couples, in regard to planning permission, which is vital in keeping young people in rural areas. This is true of every county but particularly so in my own county. If there is a hill or a mound near where somebody is looking for planning permission they have to get a report from Dúchas and numerous visits from it and in the vast majority of cases they want them to move although there may not be another site available. The policy of An Taisce appears to be to keep people completely out of rural areas and not allow any houses to be built there. It is deplorable and we should invite both of those groups in here.
I am informed by the committee Clerk that we cannot invite Dúchas to the committee because it comes under the remit of the Department of the Environment and Local Government.
I suggest that the Chairman uses his good offices to hold a joint meeting with them.
We could do that as well.
We can supply all the members with the submission made by Dúchas to the Joint Committee on the Environment and Local Government. I will give a copy to the president of the ICMSA.
I still think we should invite An Taisce here. I am sure the ICMSA and every farming organisation is very concerned by the tactics of these people.
Senator Callanan made reference to the problem in regard to meat and bonemeal and the rendering plants. What is your view on incineration, Mr. O'Rourke? It is costing a fortune to export it to other countries to be incinerated. I could be affected in my own area in regard to incineration. I am not afraid to say that in the past I supported incineration. This is a serious and costly problem. Is there a way in which the money that is spent on it could be ploughed back into farming and the promotion of it, rather than what is happening?
There are many questions and I will deal with them as a group. The first issue that was raised was in regard to SACs, which has really been covered. It should be remembered that farmers are property owners and are under the impression that they have property rights. What has caused the greatest disturbance to them is that without consultation Dúchas advertised and notified that it had made a decision in regard to designating certain areas. If an individual farmer's land comes under that classification, it will have serious implications. The basic principle is that this interferes with property rights.
There are tens of thousands of farmers who will rightly defend their rights to their family farm on the basis that they either bought it or inherited it and want to hand it on to the next generation without its value being undermined. We can get into the details of the justification for this but the key is that the farmer should have the right to be consulted and have adequate compensation if the value of the property is reduced, either on the basis of restrictions that are put in place or that farming activity restrictions are introduced. Farmers are entitled to compensation and that is a fair and reasonable approach. Dúchas needs to look at it on the basis of the farmer being the customer. The co-operation of farmers is required rather than having diktats imposed on them.
Dúchas maintains that it will compensate for actual loss rather than potential loss. Was this decision made by the Minister or by Dúchas? We are passing the buck. As legislators we must take the blame. I am sure that criteria and guidelines were laid down for the operation of Dúchas. We are not playing politics with this issue as it is too serious. We have to put our heads together on this one. As I said to Dúchas representatives last week, it has the power but the politicians are getting the blame for what it is doing. It is time we stood up to it.
Mr. Dolan has 30 seconds.
Mr. Dolan
I will dig out the reference. It is my understanding that it was agreed that there would be compensation for reduction in the market value. If there is a reduction in terms of the stream of income from land, it manifests itself in the value that one will receive for that. As far as we are concerned there was never an agreement that there would not be compensation for future income loss. In fact, our view is that it was agreed that there would be compensation for the reduction in the market value of the property which is in the same assessment as future income loss.
I will return to the question from Senator Callanan. A question was raised as to whether we are going back into the partnership talks. There was no agricultural chapter in Sustaining Progress as circulated to the employers and unions, with which the committee is familiar. We understood there would be ongoing discussions in respect of the agricultural chapter and we are waiting for them to recommence. There has been much reflection since the talks concluded and an additional €300 million would certainly create the right atmosphere in which they could resume.
We are prepared to talk to the Department of the Taoiseach or other Departments until such time as we reach agreement. It is not that we are walking away without leaving our telephone numbers behind. We will respond to any invitation and discuss how we can move forward.
A practical example of how the partnership approach worked in the agricultural sector in the past was in respect of foot and mouth disease. Everybody involved - farmers, employers, unions and workers - came together to focus on the issue. I hope we do not have to confront that problem again but we are fully——
It is not the first time the ICMSA walked away from partnership talks——
Senator, have some respect for the Chair.
To respond to Senator Callanan's point, the association did not participate in partnership agreements in the past on the basis of its council's May Day decision. A process of consultation was engaged in. However, we will now participate in the talks and will make our ultimate decision when the document is finalised. There is currently no agricultural chapter in the document to present to any agricultural organisation for ratification. Work is still ongoing in this respect.
A number of members referred to the fact that the Fischler proposals will reduce the number of dairy farmers from 28,000 to 10,000. That prediction is made on the basis that the present proposals will go through without amendment. If that happens, it will not be progressive. One can imagine the devastation that would occur in rural Ireland.
Let me quantify what is being proposed because there are many proposals. Let us consider young farmers. A young son or daughter who started farming after 2000, perhaps through the farm retirement scheme, may find himself or herself without any decoupled payments in the future. How can anybody justify a policy which writes out the next generation of farmers if they are interested in developing agriculture? That is what is being proposed but we are not accepting it.
The difficulties in the dairy regime are the same as in the beef regime. There is no indexation or guarantee that payments of any kind will be income-proofed. Worse still, it is being proposed in the dairy sector that if there is a reduction in supports of 50%, for example, the compensation for the loss of income will be matched by only 50% at best. Therefore, based on the Commission's own proposals, one will take a hit of over 50% in year one, with no compensation. I do not know of any other sector that would accept that. However, that is the proposal and we will have a fight on our hands to change it. It is clear that there is turmoil, which is caused by uncertainty, and I have given examples of it.
The issue of red tape must be considered. We accepted that there is Exchequer pressure in respect of the partnership talks. We felt that progress could be made on the basis of what we would call a complete audit of value for money being spent by the State in relation to the various audits that are being carried out. Surely a review is warranted to see if there is a more efficient way in which that can operate. We have seen various consultants' reports on the meat inspections that made very strong arguments that there should be a review. That review was never carried out, yet the agreement reached between the employers and the unions means that benchmarking will be introduced. We thought benchmarking would introduce a change of attitude in respect of the flexibility and value for money within the various Departments. However, there was no difficulty in the Department proposing that the cost of the disposal of meat and bonemeal would be transferred in whole to the producer. I accept that there is Exchequer pressure, but instead of transferring the costs to the producer greater savings could be made within the system if it were to operate more efficiently in relation to inspections.
Senator Callanan and others asked about our proposal on meat and bonemeal. Should there be a "polluter pays" system which would ensure that the person who generated the meat and bonemeal would be responsible for its disposal? We are putting forward proposals and we have a three month window of opportunity to deal with them because the Government is continuing, at least for the next three months, to pay for disposal. First, we need to bring about changes at European level whereby we can have greater use of meat and bonemeal. One should remember that, prior to the BSE issue, meat and bonemeal had commercial value. However, the Commission decided as a result of BSE that it would ban its use in pig and poultry ration etc. That needs to be reviewed. It is crucial that further use of meat and bonemeal, whether for cement production, electricity generation or feed, needs to be dictated by science.
The difficulty we have is that the EU has decided there is no commercial use for meat and bonemeal. In Ireland we cannot burn it because the EPA will not allow it. Therefore, we have many regulations imposed on us and every avenue of commercial use that we explore is shut down. I hope the Government, aided by us, will examine the options for the disposal of meat and bonemeal in the next three months. For instance, it can be used to generate electricity. When the options are examined, we will be able to determine whether we will still need Government subvention or if there is a commercial use. Progress should be made on that basis.
It was suggested that the EU would not allow member states to continue supporting the disposal of meat and bonemeal for 2003. We have had it confirmed at European level that each member state can continue to support, through subsidy, the disposal of meat and bonemeal for 2003. Our Government can continue to do so for the rest of the year. Thereafter, it is felt that it will contravene regulations regarding State aid.
Anomalies exist in respect of the Fischler proposals, modulation and how the payments from Europe are distributed. The system that operates in relation to supports was based not necessarily on the family farm's need but on the farmer's ability to produce. The greater one's level of production, the greater the amount of support one drew down. However, the Fischler proposals do not address that aspect in terms of moving resources within. Modulation will take from farmers who have supports of more than €5,000. They will not be redistributed to farmers in west Cork or west Limerick, but will be moved completely under a separate measure termed "pillar two", which deals with rural development. Having had some experience of rural development in my county, I can say that it is not the answer to the agricultural crisis. The suggestion that somebody who has spent ten, 15 or 20 years in farming should turn their back on it and become a boat builder or a provider of bed and breakfast accommodation will not solve the problem.
We believe that the distribution of current payments needs to be refocused and we have always maintained that those most in need have the strongest argument to get the maximum support. That has not happened in the past.
We fully support the REPS programme. It has been well implemented in Ireland. We are the best in Europe at operating it. However, there are difficulties in terms of participation. With regard to the smallest producer receiving maximum support, we believe that the REPS payment should be skewed in favour of the maximum payment, with an increased payment for farmers with a smaller acreage, which should then be phased up. Farmers should receive €330 per hectare for the first 20 hectares, €170 per hectare for the next 20 hectares and €50 per hectare for the next 50 hectares. This would represent a clear example of how payments would be skewed in favour of the small to medium sized producers. They need the greater assistance.
The commission on farm income was presented to the partnership talks and was noted. However, while it is recognised in the draft documents, the start up and completion dates have not been agreed. We will explore that aspect.
I hope that I have addressed most of the issues raised. It is not often that I would have to agree with Commissioner Fischler, but I agree that we are the best producers in Europe. However, on the question of pursuing value added, if everybody involved in the agri-sector in Europe pursued it, it becomes an over-supplied commodity. While the market is the key and there may be a gap in the market, is there a market in the gap? Investment in this area may lead to little or no progress.
Mr. Dolan
With regard to the question of leadership on the issue of meat and bonemeal, it should be recalled that we are a voluntary organisation and we must deal with many issues. We have a relatively small staff and have people who are elected but who give their time on a voluntary basis. There is a problem with meat and bonemeal. We produce approximately 160,000 tonnes annually. Commissioner Fischler expressed the wish that each member state deal with it and not be involved in shipping it from member state to member state. It will probably be three or four years before it is reintroduced, if at all, as an animal foodstuff in some restricted manner. On a purely commercial basis, it probably has a value of approximately €20 million in terms of a pure fuel relative to low quality coal. From a purely scientific basis, it should not give rise to any production of dioxin. Until recently it was a harmless product, both in terms of the normal meat and bonemeal and the properly rendered material.
What is required? The president referred to a window of opportunity of three months, which is a relatively short period. Two things are probably required. In respect of Ireland's position at European level, the sooner we get a feed opportunity for the meat and bonemeal the better. Until then, however, the current provision which prohibits State aid, and which expires at the end of the year, should be extended. The Department of Agriculture and Food and other State agencies have a role in terms of finding a solution to this problem. We will take a proactive role in that regard. However, in fairness to us, as a voluntary organisation, and other farm organisations, we cannot bring together the EPA and all the various agencies that are required to deal with this. There is also a problem with the question of incineration.
We will take part in any proposal to try to find a solution to this difficulty. In Northern Ireland, meat and bonemeal is disposed of in landfill sites. We do not advocate that. However, it is no good for the Department to say it is disengaging from this because it takes the view it is a problem for the sector. There are two aspects to this. The first is the financial disengagement, while the other is a resolution.
I am not a member of the committee and will declare an interest in that my son is very active in the IFA. According to The Sunday Business Post, the Minister of State at the Department of Finance, Deputy Parlon, and I are supposed to be getting €90 million for the organisation's members. I was unaware of that.
Farmers face an incomes crisis, which is having a devastating effect on rural areas. The sooner that is recognised the better. Milk prices fell substantially in the past 12 months and a further substantial drop is imminent.
I would like to participate in the partnership talks, but if there is nothing on the table it is impossible to talk. I have discussed this at party level and with the Taoiseach who informed me that it is difficult to obtain the financial incentives to include farming organisations because of the demands of other sectors. That is the reality.
This is the last time we will see winter finishing of beef cattle on the island of Ireland if something is not done and corrective action is not taken in the monetary area. I recently attended a funeral in County Roscommon and I was alarmed by the number of farmers with suckler herds and winter finishing who approached me. They asked what they could do, especially in view of the cost factor and income crisis. Some had sucklers involved in an integrated operation.
It is not boast to say we have six markets for beef. I recall the time when we had a substantial number of markets and we sold beef as far afield as Indonesia. Today we have only a limited number and are very dependent on the United Kingdom market. Given the trends there, it is neither lucrative nor profitable.
The import situation is above and beyond what is necessary. The country is taking more than its fair share of imports per head of population. The sooner corrective action is taken the better it will be for Irish farmers. It is fine for importers and meat barons to sponsor a few races or a few greyhound tracks. It is the way they conduct their public relations. However, they are huge players and are disrupting the entire market and removing farmers' livelihoods. At the same time, the retailers are charged with imposing exorbitant prices on foodstuffs. This at a time when 20,000 tonnes of beef and 40,000 tonnes of pigmeat are imported. In addition, practically all our chickens and eggs are imported. There is exploitation in this area and it must be addressed.
A study on dairy farming is under way and, according to a report I read recently, proposals in this area would devastate the western seaboard. Mr. O'Rourke would have an environmental interest in that. I would not like to see ring-fencing discontinued. That would be very serious.
On decoupling, I sympathise with the Fischler proposals - and many will be surprised by that. The situation must be examined historically. If one goes to the bank the manager will always take one's past record into account. The record here where heads of Government have been involved is good in terms of Agenda 2000 and in terms of the MacSharry proposals. At the time of the MacSharry proposals, we thought the whole world would fall in on us but we did well out of them. I believe we will also do well out of the new proposals.
I would like a view on milk quotas. Aside from the money for rural development, it is just a joke. Leader programmes around the country are just codology, jobs for the boys and expenses for politicians.
There is much one could say about agriculture, but I will not say much more. I have sympathy with the farming community. Deputy Collins, who comes from west Limerick, the home of the dairy industry in the past and the area where this organisation was founded, put his finger on the problem today. The situation must be addressed. The Taoiseach has sympathy for the case. If we got the €80 million it would be a step in the right direction.
On the question of offal, farmers cannot and should not be expected to carry the cost of disposal.
Education grants is another issue. According to this brochure, only 141,000 qualify. If the asset value of farms is taken into account in deciding eligibility for education grants, God help farmers and their sons and daughters. Only a small percentage of farmers qualify for education grants and they are put under a microscope to a much greater extent than is normal. That must be watched. I compliment the organisation on coming in here today and on this wonderful brochure. It has the makings of many good speeches in Dáil Éireann on agriculture should we get the opportunity.
There is a major problem with winter finishers and a question over whether they can continue because of the present crisis. At least the meat and bonemeal issue has been deferred, and that would have cost winter finishers an additional amount of approximately €18 to €20. At least there is progress in that.
In regard to imports, particularly third country imports, it is very difficult for me as a producer to square the current difficulty. I subscribe fully to traceability from farm to plate. That is what the consumer wants, and that is what we must comply with. However, I invite those at European level and importers who import meat from third country markets to explain the traceability from farms in Argentina and Brazil to the retail outlet where it is being sold.
In relation to the milk quota regime, I am sure Deputy O'Keeffe will be happy to hear that ring-fencing continues. While the debate on that may have taken place, it is now over and done with and milk quota will remain in west Cork, north Cork and the west as in the past in terms of ring-fencing. The key issue on the quota regime from this year on in Commissioner Fischler's proposal - I stress as it is being proposed at the moment - is that the quota year 2003-04 will be the base year for whatever compensation or additional compensation is agreed. On that basis, farmers will hold on to their quotas to qualify for future entitlement. Quotas will continue, based again on the proposals, until 2013. However, if supports are taken away, in the context of what Commissioner Fischler is saying, the value of the quota regime is open to question. There is no point in having a quota regime that restricts production if it does not guarantee a price. We lived with quotas in the past because they restricted production and the logic was that it would guarantee a price. In general it did over the years.
I agree that the solution to current problems in the farming sector will not be found by transferring traditional agricultural supports into rural development - the point was made earlier about modulation. That would not be progress. In the past, because of the partnership approach between the Department, the Minister and the Taoiseach, together with the farm organisations in an agreed strategy at European level, Ireland has always been able to agree a strategy and has been relatively successful in getting that strategy implemented, under the MacSharry proposals and under Agenda 2000. I have no doubt that, in relation to the Fischler proposals, we will make sure the amendments introduced are to our advantage. We have done it in the past and I hope, for everyone's sake, we are successful in those talks.
Thank you, Mr. O'Rourke.
Mr. Dolan
In regard to the point raised by Deputy Ned O'Keeffe about third level education grants, this issue was dealt with over a decade ago and we thought it had been resolved. We have no difficulty in farmers being dealt with on a similar basis to any other sector, that is on the basis of reckonable income as defined and legislated for in the Income Tax Act. If the Minister decides to bring in a regulation which deviates from that, and takes account of some aspect of land value, we will be left with no choice but to contest it. Would the public sector unions tolerate a situation where the market value of the pension entitlement of a civil servant or a public servant is assessed? When one look's at the figures, a middle ranking civil servant's entitlement on retirement could have a market value of up to €0.5 million. Like must be compared with like. What we want is the implementation of the legislation which has been accepted by everybody, which defines income and applies both to income tax, health contributions and PRSI. There should be no deviation from that.
Thank you, Mr. Dolan.
May I make a point?
We have exceeded our time. The Deputy may ask a brief supplementary question.
If the asset value of a farm is taken into account, it will totally disrupt the scheme. In fairness to the Minister, expenditure on the higher education grants system has gone through the roof, but that is not to say that farmers get all the grants.
Is it agreed that An Taisce should be invited to a future meeting of the committee to discuss the problem of single houses in rural Ireland? Agreed.
I also suggest that we write to Dr. Patrick Wall on behalf of the committee to wish him well in the future. Anybody who witnessed Mr. Wall here will agree that he was very interesting. We had a terrific meeting and we would like to wish him well in the future.
Regarding today's meeting, we will forward a submission to the Minister and seek information on what might bring the farming organisations back into the partnership talks. I am aware that the farming organisations are anxious to come back in, provided there is something on the table for them. I will contact the Minister and the Taoiseach regarding this.
Once again, I thank Mr. O'Rourke and Mr. Dolan for the way they responded to our questions. It was a very interesting meeting. I wish them well in the future. If they or any of their sub-committees would like a meeting, they should not hesitate to contact the committee at any time. They would be more than welcome.
As there is no other business, we will adjourn until 3.00 p.m. on Wednesday 26 March 2003. It is hoped that we will have representatives of the Irish Meat Association before the committee. I also understand that some documents on the EU scrutiny process are being circulated for consideration at our next meeting.
The joint committee adjourned at 5.20 p.m. until 3 p.m. on Wednesday, 26 March 2003.