I start by taking the opportunity to thank you, Chairman, and the rest of the joint committee for the kind invitation to address you. As the newly elected president of the ICSA, I am pleased to get this opportunity so early in my tenure. This also applies to my colleagues, many of whom have been newly elected to their posts.
I intend to discuss the ICSA's views on the topic of "agriculture moving into a post-decoupling environment". I hope we can use this opportunity to share with you some of the thoughts and ideas that we have on this important subject. It is significant that we are here at all to discuss the issues relating to a post-decoupling world. The last time ICSA representatives addressed this committee was in January 2003, when the ICSA's focus was on the reasons decoupling was the way forward. At that time, the then ICSA president, Mr. Charlie Reilly, was out on a limb as many members of the joint committee will recall. That meeting was just over a year ago but when we consider the developments since that time, it almost seems to have taken place in a different era.
The ICSA stood alone in arguing that full decoupling was what farming needed and what farmers wanted. A short year ago all other farm organisations pledged that decoupling had to be opposed to the very end, that it would be the ruination of livestock production and that farmers would end up playing golf. Many criticised the ICSA at the time but there were a few exceptions. I acknowledge the fact that a number of members of this committee supported our views and we have not forgotten their contribution.
In the subsequent months, the ICSA was able, through a campaign of lobbying, to build up a much greater wave of support from elected representatives. By early summer last year, the logic and accuracy of the ICSA's position was beginning to be accepted. Teagasc's FAPRI analyses continued to show that decoupling made more sense economically. The first FAPRI report, announced in January, was criticised - wrongly in our view. However, a further report issued in May, which took account of WTO threats, still came up with the conclusion that decoupling was the way forward. As the summer progressed we watched as other farm organisations moderated or completely changed their anti-decoupling views.
The ICSA was represented throughout the CAP reform negotiations in Luxembourg in June, and I was fortunate to be present at the meeting when the deal was finally struck after three weeks of apparent stalemate. The outcome allowed EU Ministers the flexibility to opt for varying levels of decoupling. The ICSA was pleased that the Minister for Agriculture and Food, Deputy Walsh, opted for full decoupling in October, in line with the ICSA's submission made to his Department at the end of August.
My reasons for recalling the synopsis of this recent history is to establish one key point: I am here as the leader of an organisation that has earned its credibility the hard way, against all odds. I am proud to put forward the ICSA's views in the knowledge that committee members know, and the evidence is clear-cut, that the ICSA has earned its right to represent farmers, is in touch with the grassroots, is not an organisation of theory but of practice, is economically literate and, above all, that the ICSA understands Irish agriculture and Irish farmers.
At this time, while our strengths, credibility and economic literacy is clearly evident to farmers, Department negotiators and Members of the Oireachtas, the ICSA should no longer be outside the social partnership and, accordingly, no longer excluded from every committee set up to discuss and evaluate the future of farming. This matter will have to be addressed immediately because the ICSA deserves parity of esteem.
I will now move to the topic of agriculture moving into a post-decoupling environment. We note that other EU member states have made different choices and that is their right, but we are pleased that Ireland has gone for full decoupling, and I believe that the Minister has made the right decision in this regard. We still need to think carefully, however, about what strategy we put in place to ensure the future of farming in this country. The new decoupled environment requires a complete re-think of many of the old practices and ideas. It requires that we get the details of implementation correct and so a new strategy is required.
The ICSA believes that the key components of this strategy must be as follows: 1. getting the single payment details right and optimising its benefit for as many farmers as possible; 2. being innovative with the modulation money with a view to targeting vulnerable sectors; 3. ensuring that the CAP reform is properly recognised at WTO level and fighting the wrong notion that the poverty and misery of the least developed nations is due to the support of the EU model of multifunctional agriculture; 4. stimulating a revolution in the relationship between meat processors, farmers and retailers; 5. market development; 6. creating a level playing pitch in terms of the regulatory environment; 7. minimising costs and maximising efficiencies relating to every facet of farm production; and 8. ensuring that the rural economy is diversified, while being realistic about the limitations of part-time farming as a solution.
This is an arduous challenge and I would not pretend that it will be achieved easily, but the difficulties must not be allowed to prevent us from trying to meet the challenge. First we need to maximise the benefits of the single payment and this means trying to ensure that everybody gets a fair crack of the whip. From an ICSA point of view, the key issues are: young farmers, farm inheritances and transfers, matching land availability to entitlements/stacking, forestry, compulsory purchase orders,force majeure cases, and de-stocking in the western counties.
It is fair to say that, in general, Irish farming is being well served by the efforts of capable key officials in the Department, who are negotiating these details at EU level. Their expertise is acknowledged and their co-operation and efforts are much appreciated by the ICSA.
Having dealt with the immediate issues, the next task will be to use the modulation money effectively. The ICSA is currently debating how best this might be achieved. One of our key concerns is to promote quality breeding in the suckler herd, while securing the livelihoods of suckler farmers. Our suckler committee is proposing a number of uses for the modulation money. This involves improving breeding in the suckler herd. One idea is to support a programme of breeding improvement in conjunction with the Irish Cattle Breeding Federation. In this scheme, farmers who participate in the recording of animal events and have their herds assessed on a visual scoring basis would be given a grant. The second idea is to reward farmers who breed calves that eventually are graded E or U, or R for Angus and Hereford specialist producers, by means of a grant paid to the breeder as identified on the cattle identity card.
We are also concerned about the future of sheep farming and we will be devising schemes to help sheep farmers get some modulation money as well. We are especially concerned to help hill sheep farmers who are a valuable asset to us. It would be appropriate to consider a special extra REPS payment for hill farmers who were de-stocked. I know that REPS has been reviewed recently, but that review took place in a different context and we need to ensure that we maintain farm families in hill areas.
On the World Trade Organisation, the issue is hanging in the balance. Members of the committee will be aware that WTO talks held in Cancún in September failed to reach agreement. I am concerned that EU agriculture has been held up as a sort of whipping boy. The reality is that some development and charity aid groups have been led astray by the multinational business interests who just want to source food raw materials wherever on the planet they find it cheapest to do so. However, if one looks deeply enough at what they are saying, one will realise that nothing short of putting EU farmers out of business would placate them. The EU has already made offers to reduce substantially the level of import tariffs by an average of 36% and export subsidies by 45%. It has de-coupled direct payments, which means that the principal component of EU farm support is non-trade distorting. In practical terms, the EU is already the world's largest importer of agricultural produce, importing €60 billion in 2002, the majority of which came from developing countries. Its "Everything But Arms" initiative means that all produce, except arms, from the 49 least developed countries can come into the EU tariff free.
What I want the members of the committee to understand clearly is that they, as members of the Oireachtas, must defend EU agriculture. They must encourage the Minister for Agriculture and Food to continue to take a strong line, as he has done, on the fact that the EU has made many concessions on agriculture and that there is no more room for manoeuvre.
While it is easy to blame agriculture for Third World problems, the fact is that it is South America, Australia and New Zealand who stand to benefit most from any concessions on beef and lamb. In countries where malnutrition is a major issue, it hardly makes sense to suggest that they can solve their problems by exporting food. This food is badly needed in their own countries. The least developed countries have far greater problems relating to AIDS, debt relief, access to medicines, etc.
We all know of the problems of the past in the relationship between meat processors and farmers. ICSA has always put forward the analysis that the old premium system simply facilitated the exploitation of cattle and sheep producers, but in a post de-coupling era there will be no compulsion on farmers to produce and this is good in our view. It is now high time for retailers and processors alike to realise that if they want beef then the farmer must be paid for it, and paid a price that will ensure profitability in its production.
In this context ICSA has had discussions with a number of players in the processing industry. There are some positive points emerging. First, Europe is no longer 107% self-sufficient in beef, as it had been traditionally. In fact we are now entering a period of a slight shortage of beef in Europe. This means that farmers will be in a somewhat improved position. However, more heartening is the fact that processors are telling the supermarket chains that they will have to pay more for beef if they want to buy it.
ICSA believes that farmers need more security. This requires that in the future meat factories will have to enter into contracts with farmers with guaranteed minimum future prices for beef. In a post de-coupling era, farmers will not tolerate large losses as a result of sudden price slippage. Critically, suckler farmers will not calve cows for peanuts and they simply will not produce high merit beef unless they can be assured of prices similar to those to which they have become accustomed. This means that the days of 90p benchmarks for beef are over.
As for winter finishing, this high cost business will have to be supported by extra price bonuses in the spring, if we are to avoid a return to the seasonal production of beef. While seasonality could be managed in an era of intervention, APS and a high dependence on international markets, it simply will not work if we want to build a secure future on the shelves and tables of Europe. We need continuity of supply to build a presence on EU markets.
Post de-coupling, we need to re-double our efforts on marketing. We have a desperate need to sell our beef and lamb at top price across a variety of EU niche markets. More support should be directed at initiatives taken by Hereford and Angus breeders to sell their beef as a specialist product. I am convinced that we need to squeeze more return from high priced markets such as Italy and Spain. More attention should be paid to Scandinavia and Holland. All of these outlets are critical to ensuring the viability of the suckler farmer.
Above all, we must fight for the right to sell stock to the entire EU as live exports. I want to make one point in this regard. Live shippers opened up many markets, in Spain, in Italy and right across the EU with very few requests for public money, but at present they are hindered by the uncertainties and insecurities of shipping direct to the Continent. It is time to push to allow Irish stock transit the UK en route to the Continent. This would offer many safeguards that would allow the sale of stock to other member states. There is a market for Irish weanlings and we must protect it. Crossing the UK is a much less weather dependent route and need not be a problem in this era of traceability.
In addition, we remain concerned about the EU mindset that tried to abolish staging posts. Fortunately Ireland makes a strong case that staging posts are actually pro-animal welfare and tie in with driver restrictions. We continue to be vigilant against ill thought out pandering to the animal welfare extremists. Nobody is more pro-animal welfare than the suckler farmer. Nobody who gets up in the middle of the night to calve a cow or tend to a sick calf wants to see animals treated badly. One needs to remember that.
Apart from shipping restrictions, we are concerned about many things in the regulatory environment. It is the case that Irish food production, especially at farm gate, is heavily regulated. This is as a result of EU regulation, to which the Irish have taken a particularly rigorous approach. In a post de-coupled environment we need less, not more, red tape. In a post de-coupled environment we need greater streamlining. I accept the need to ensure absolute consumer confidence but I am concerned that the playing pitch is not yet level. For example, we recently met the Department for a briefing on animal medicine controls. This was against a backdrop of tighter EU controls being proposed by Commissioner Byrne.
Broadly there are two points of concern on medicines. First, if antibiotic resistance in humans is a worry, then effective measures must take account of the fact that the consumer is eating products imported from countries which have far less stringent standards. Second, on routine animal treatments such as worm doses Irish farmers are paying far too much and far more than their international counterparts.
There is then the nitrates framework. The focus of debate under the nitrates directive is around the nitrogen application limits. However, for most cattle and sheep farmers the bigger potential problem is minimum storage capacity for animal manure. The implementation of the nitrates directive, as planned, will result in a fall in livestock numbers possibly greater than anything envisaged as a result of the introduction of decoupling.
In order to maintain cattle numbers at current levels, the ICSA estimates that the vast majority of the 65,000 farmers with slatted tanks will need to increase their manure storage capacity by over 20% in order to achieve the 16 to 24-week storage time. Other farmers will have to build new facilities to come into line with the directive. Under the directive, most farmers will also have to erect a separate area to act as a dungsted because farmyard manure and waste cannot be stored on land between 1 October and 16 January. Yet modern efficient farming practice is to move towards extended grazing. This will be all the more important in a decoupled era. In view of the fact that farmers are to be allowed spread slurry from 15 January, there is no need for 20 to 24-week storage. It is inconceivable that farmers who built modern slatted units according to the best advice could now be deemed to have inadequate storage.
All these issues bring me to the next point, namely, that in a decoupled environment farmers must maximise efficiency. How can costs be reduced when new regulations threaten to drive them sky high? Farmers are continually being exhorted to reduce costs. We can only do so much; the rest depends on the decision-makers.
I want to make a few comments about part-time farming. Decoupling offers some farmers the leeway to opt for lower intensity farming, while others may see it as possible to expand with less hassle. Part-time farming has been over-emphasised as a solution to all ills. Many part-time farmers pay a very heavy price, working 77 hours per week. So much for the balance of life and work. What we need to work towards is a viable full-time income for an optimum number of commercial farmers, while ensuring that the smaller, less intensive operators have a good range of employment opportunities within easy commuting distance. Long commuting times are not ideal for anybody, but they are worse again if one is rushing home to start a second day's work. In this regard, I believe that the decentralisation programme is to be welcomed as it offers the possibility of more job opportunities, both directly and as a result of spin-off, throughout Ireland. This will be beneficial to rural development. As a national organisation which has its headquarters in Portlaoise, I know that it can be a success in practical working terms.