JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Wednesday, 7 Jun 2006

Future of Agriculture: Presentation.

Acting Chairman (Deputy Ó Fearghaíl)

I welcome the delegates from LTO Noord. Included among them are the organisation's president, the chairpersons of the LTO dairy and pig sectors and the chief executive officer, Mr. Ton van Vuren. This committee is comprised of Members of both Houses of the Oireachtas, namely, the Dáil and Seanad. It has 15 members but when dealing with legislation it sits as a select committee, in which case it is comprised only of Members of the Dáil, including the Minister for Agriculture and Food or her Ministers of State.

I invite the chief executive officer to make his opening remarks, on which I am sure members of the committee will have some questions and comments.

Mr. van Vuren

I thank the Acting Chairman. It is an honour for us to meet a delegation of the Parliament of the Irish Republic. We are in Ireland for four days to study its agriculture sector. This is the second day of our visit and we are trying to obtain a very good picture of the sector in this member state. As is the case in the Netherlands, the sector in Ireland is export-orientated. Both countries have topics and problems they must address, including the reform of the Common Agricultural Policy, environmental guidelines from Brussels, the WTO negotiations and the consequences of all these for the future of agriculture.

Yesterday there was an overview of agriculture in the United Kingdom and Ireland and we spoke to a delegation from the Department of Agriculture and Food. I spoke to the editor of the Irish Farmers’ Journal, Mr. Dempsey, this morning. We had a meeting with our sister organisation, the IFA, and spoke about the state of agriculture in the Netherlands and Ireland, the WTO negotiations, the reform of the Common Agricultural Policy, the nitrates directive, milk prices and the future of milk quotas, the outlook for pig farming and the reform of the sugar industry.

Our organisation, the Dutch organisation for farmers and horticulturists, is very proud that this committee has allowed time for us to address it on relevant topics. We want to make some comments and hear the members' opinions and questions on the Irish position in the WTO negotiations. It is a hot topic, as is the reform of the Common Agricultural Policy, including cross-compliance and the future of quotas. We can make a small speech on these topics or give the floor to the members to ask questions.

Acting Chairman

Perhaps our Opposition spokespersons would like to contribute first, after which we will hear the contributions of members on the Government side.

Deputy Upton

I welcome the delegation. I am glad to see there is a good gender balance. It is very welcome because women, particularly in Ireland, did not always have an important role or such a high profile in agriculture. This has changed very much and there is now great emphasis on the importance of women in farm management.

I am the Labour Party spokesperson on agriculture and food. I represent an urban, Dublin-based constituency with no farming community and therefore do not have to deal politically with the nitrates directive, for instance. In my area much emphasis is placed on the consumer aspects of agriculture, which we now know are very important. Consumer pressure will become a great driver in the agriculture sector because the emphasis, in respect of single farm payments, for instance, has shifted towards environmental management, animal welfare and the question of quality rather than quantity. These have become really important to the consumer.

We are mostly interested in hearing the delegates' particular concerns regarding the WTO talks and I am sure we share many of them in Ireland. Mr. Mandelson's approach is one that has given us all some cause for concern. It seems he will not give up his stance easily. How can this be best addressed and what combined efforts could be made to ensure farming and rural enterprises are not swamped by other enterprises to alleviate the requirements of Mandelson in these trade talks?

Deputy Crawford

By profession I am a dairy farmer, so I have some knowledge of the situation faced by farmers. I was also a member of the senior executive of the IFA for many years and was the chairman of the EC beef and veal advisory committee from 1981 to 1986. I welcome the delegation. I have had many discussions with the delegation's colleagues and had a good relationship with them in Brussels.

As far as the Fine Gael Party is concerned, the agriculture situation is frightening. The environmental regulations together with the fall in product price are having a serious effect on farm incomes. The Cavan-Monaghan constituency has the most intensive pig and poultry producers in Ireland. Farmers there are having to deal with the nitrates directive. The issue of single payment and cross-compliance must be watched carefully. Many farmers will have to spend much money on improving their farm units to deal with the nitrates directive and other environmental controls. If they do not, the single payment will no longer be available to them. How are Dutch farmers dealing with the nitrates directive? Ireland still has not reached a final agreement with Brussels on its implementation. As Holland has many intensive farms, what do Dutch pig and poultry farmers do with their manure? Some call it waste but it is a valuable fertiliser. How does the delegation view the future for dairying under these regulations?

Mr. Mandelson's comments that he will give whatever is necessary to get agreement on the WTO talks is a cause for concern. There is a great need for the Irish, Dutch and other EU farming organisations to work closely together to minimise the damage that man can do.

The importation of poultry from non-EU countries, coming through Holland to the Irish market, is another cause for concern. We are seeking to have such produce properly labelled so it will be known from where it originated and if it was prepared to the same high standards we in Europe must attain.

As far as Ireland is concerned, the reform of the sugar industry is now over. We have lost our sugar industry. It is now a question of getting agreement on how the former producers will be compensated. Many women are involved in agriculture. Unfortunately in many cases it is because there is no sufficient income from farming for the family to live off the farm. As a result, many farm husbands are part-time farmers because they must work off-farm. I met one female farmer recently and was very impressed by her ability to cope. It is a group of which to be very proud.

Deputy Wilkinson

I welcome our guests from the Netherlands and hope they will have a pleasant stay in Ireland. As I am a Government Deputy, I am not as downbeat about the future of farming as some Members. I accept Ireland is facing challenges in the agricultural sector. There is not much of a future in the way we used to farm. We must change and meet the challenges. There are many issues including the single payment and the WTO talks. Already the effects have been seen with the loss of our sugar beet industry. Sugar beet was a vital crop in the tillage cycle. We are not fully finished with compensation talks for beet growers. Many farmers would like to see ethanol produced from sugar beet. The costs may not allow this but many angles are being examined.

The Irish Farmers’ Journal, the official organ of farming, recently predicted if milk quotas were abolished, milk production in Ireland would rise by 40%. I do not know how one can reconcile that with some of the doom and gloom we hear about milk production. Our problem in agriculture is linked to the strides the general economy has made. We are dependent on immigrants to work in the economy. Ten years ago that would not have been foreseen when there was mass emigration. More of our young people now go on to third level education. There are better jobs with good working conditions and shorter working hours. The emphasis in the future will be on quality. Ireland is an island nation with high transport costs. We export 90% of what we produce which leads to added strains. Irish agriculture has become more efficient. With the single payment and the nitrates directive remedial work on farm units must be done. Good grants of up to 60% to compensate for the work done are available. The remaining moneys must be secured by the farmer. I welcome the lady members. There is a book they should buy before they leave Ireland, entitled Women Drive Tractors Too.

The delegation is very welcome. People from the Netherlands came to this country in a previous era. There is a long historical link going back 1,000 years. We had to remove some of those people, but many stayed and became more Irish than the Irish themselves. The delegation is very welcome and I hope its members enjoy their stay.

Mr. van Vuren

I will ask Mr. Schenk to respond, and Mr. Bisseling, our representative in Brussels, will deal particularly with WTO issues and milk production.

Mr. Siem Jan Schenk

I am grateful for the invitation to speak. It is quite interesting to visit Ireland. We saw a lot yesterday, and talked a lot, and have heard many opinions from the Irish side. I will provide some information on the Dutch agriculture sector, especially regarding dairy farming and cattle.

We have 22,000 dairy farmers producing 11 billion kg of milk quota. We have 1.3 billion cows for field production, a history similar to that of Ireland. The sector is very important. We are export oriented, with 60% of our production exported to other countries, while 20% goes to third countries outside the European Union. Some 50% is cheese, 20% is liquid milk and milk products and 30% is industrial and special products. Our structure is that we have two big farmer co-ops, which produce and export 80% of the dairy products and have good market positions. On average, farms in the Netherlands produces 0.5 million kg of milk daily. That would be one of the bigger productions in Europe, but Denmark is growing quicker per farm every year. The average farm is producing 20,000 kg of milk in the Netherlands.

I will refer to the WTO with regard to exports support, market access and internal aid. Exports support will disappear by 2013 and we accept that. Regarding market access, import levies are decreasing after every round of WTO talks. We do not know what will happen at the WTO next month. Some of the committee members raised the problem that these concerns are not on the WTO agenda. Our problem is not that products cannot come to the Netherlands but that we have to accept only products which are produced to the European standard. We are concerned about that and must do something about it. We need some protection on the border against cheap and poorly produced products. Why should we eat in the European Union what we cannot produce there? This is an important question for the European agriculture sector.

With regard to internal aid, decoupled premiums, we are not sure the WTO accepts them, but we need them for the next ten years. In the Netherlands there is much discussion about them. We have the historic model for premiums, as does Ireland, and they will be phased out by 2013. The perspective involves European financing from the agriculture sector for what we need, and what systems we can use.

There is a lot of discussion on cross-compliance — how it is to be controlled, and on what basis the premiums are to be cut. There are problems involved. This morning we talked with the farmers' union and yesterday we talked with the Government. What is important is that we have the same rules throughout the European Union. It is interesting to hear the Irish approach. There are some differences between that of Ireland and the Netherlands, as we take a stronger approach.

The quota issue is sensitive. We talked in the Netherlands with our WTO members about the future of quota, and we have said that when there is no export support in Europe, one must abolish the quota system. We do not need it when there is no export support because when world prices are equal, the quota system will be unnecessary. The European Union decided in 1999 to abolish the system in 2015. That should happen and will be necessary when there is no expert support. The question is not whether it should be abolished in 2015 but how we can have a sustainable dairy market without a quota system. Someone spoke of a 40% production increase in Ireland. In the Netherlands we speak of a 10% or 20% figure. The marketplace is very important in terms of what one can produce. When one can arrive step by step to a more liberal situation, the farmers, the industry and professors can manage it, and then we can see what we can produce in Europe.

Our view is that sales of produce in central and eastern Europe are decreasing because they are not competitive in terms of dairy production. Coastal countries and areas of Europe can produce more, such as Ireland, the Netherlands, the UK, the north of Germany, Brittany, Normandy and so on. This is one of the problems of EU policy. We have always said that dairy production goes hand in hand with rural management. Now, the subsidies are decoupled which means that production of milk in the long run will be an open situation, and other instruments will be needed for development in the EU. We talk about this in the Netherlands but do not have a solution. It will be one of the main issues over the next ten years.

Our rules on nitrates are the same as those in Ireland. We had another system but it was not acceptable to the European Union. We have now developed an acceptable nitrates action plan. We may use more natural manure than in other countries in the European Union but there are strong rules involved. The main problem in the Netherlands is that we may not use more manure but can use more chemical fertiliser. Over the past ten years we have used 40% less chemical fertilisers and used more manure. Now we have to return to manure, and can use more of it. This is under European Union rules and has nothing to do with sustainable production or environment. It is a political choice. We are a country with many animals. It is possible to solve the problem in a very sustainable production manner. We hope a new discussion will take place with the EU in 2009 that will provide more production possibilities for us.

There are many points to make about environmental issues. Major environmental initiatives which affect us include those relating to the nitrates directive, groundwater directive, national emission ceiling directive, Intergovernmental Panel on Climate Change strategy on sustainable use of pesticides, bird habitat directive and soil directives. These have been largely implemented in the Netherlands but we will continue to have discussions in coming years on sustainable production and environmental policy with the Commission and the Dutch Government.

Ms Annechien ten Have

I will make some comments on the Dutch pig and poultry sector and answer questions members have asked about this sector. We are pleased to have this discussion with the committee because it allows us to inform members of the situation in Holland and to learn of developments in Ireland. I will deal particularly with the implementation of the nitrates directive in the Dutch pig and poultry sector.

Under the directive, the Dutch Government demanded that all manure shipped out from farms must be weighed, sampled and analysed. Farmers must use the global positioning system, GPS, and all produce must be traceable. These are difficult demands to meet and the pig and poultry sector has developed an input and output system that allows farmers to keep track of how much manure they must put away. Farmers must also adhere to animal quotas. We have had problems this year in particular because it is the first year we have worked with the new measurements under the new law. Pig farmers who previously sold manure to dairy farmers experienced some difficulty because the latter can no longer accept pig manure. Pig farmers must seek new means of disposing of manure and that will take time. This is the main problem we have with the new rules.

A member raised the issue of the importation of poultry from Brazil and its availability on the Irish market. Dutch farmers also have problems with such imports and there has been much discussion of this issue in Holland. The Dutch poultry sector has called for a labelling system that would provide separate labelling for products from outside and inside Europe. This is not currently a problem in regard to pig meat because certain veterinary issues mean that Brazilian pig meat cannot come into Europe. In the next several years, however, we believe such produce will be allowed onto the EU market. A labelling system would be a good development but it will not be the solution to all our problems.

In regard to the WTO, we are arguing that there must be four or five sensitive product tariff lines within the pig and poultry sector. Like Irish farmers, we are concerned that our Government does not seem to be aware of the need for these four or five tariff lines although we have communicated that need to it many times. We believe they are very necessary for the pig and poultry sector. The EU has high levels of control in terms of animal welfare, the environment, nitrates concerns and other issues. That is why it is good to have sensitive tariff lines. We recommend this approach to the committee and suggest that members might ask the Irish Government to introduce such tariff lines.

Deputy Carty

I welcome the delegation. Mr. Schenk observed that Dutch farmers are not permitted to spread natural manure but are allowed to use greater quantities of chemical manure. Are there any plans to dispose of the natural manure through incineration, drying or some similar process?

Acting Chairman

In terms of the Dutch agri-food sector in general, are people confident about the future? To what extent are young people becoming involved in the industry? We have a problem here in that declining numbers of young people are opting for a career in agriculture.

Mr. Schenk

In regard to other uses for natural manure, there have been developments in terms of producing bio-gas and developing other types of bio-systems that may provide better output than the original manure. We have discussed with the Government a system for using the minerals from manure as a fertiliser. This is not yet developed but it is one of our main objectives for the next ten years as we attempt to get the problem under control. It is one of the solutions to the problem.

Ms ten Have

In addition, poultry manure can be burned for energy.

Mr. Schenk

Yes, most poultry manure is burned.

Deputy Crawford

Are Dutch farmers already burning poultry manure?

Mr. Schenk

Yes, but I do not have figures as to the quantity and so on.

Deputy Crawford

The United Kingdom has at least three major power stations solely fired by poultry manure and it has not encountered any difficulties in this regard. Do the delegates have any concern about marketing products from Holland if a biomass plant is in place? Do Dutch farmers use incinerators for domestic waste and, if so, does this cause any difficulty with exports in terms of toxins? Some people do not want anything to be done or will state that the presence of a biomass plant or an incinerator would indicate the presence of toxins and that, consequently, one could not export one's products.

Mr. Schenk

I do not know.

Ms ten Have

We do not have biomass installations in Holland. We only have biogas installations, although we want to build a big factory for burning poultry manure.

Mr. Ivar Bisseling

We do not yet have the licences.

Ms ten Have

However, we expect that it will be ready in one or two years' time. The market for manure will be launched when we acquire the factory for burning poultry manure. At present, we export some poultry manure to Germany, but this is sometimes difficult to do because it depends on legislation in several states there.

Deputy Crawford

Although a licence exists for a biomass plant in my constituency, there have been many objections from people who have refused to even consider the idea. Consequently, there are still difficulties with regard to planning and the matter has gone before the courts.

Ms ten Have

The Dutch Government is working to make it easier to establish the biogas installations and the process is making reasonable progress. However, we do not have biomass plants in Holland because it is not economic.

Mr. Schenk

There were two small questions regarding the position of the food industry and the future of the agricultural sector. I refer in particular to the dairy sector. We can use the next eight years to make a competitive dairy sector for farmers, as well as a competitive industry. With good market positions, it will be possible to make the change to a more open market. At present, one can see that milk prices are falling slightly. However, the difference between the world market price and the European price is very small.

In the Netherlands, we have a special problem with quota prices. Members may be aware that quota prices are very high in the Netherlands. We told farmers that we should take our time and that it will be possible to make better farmers and farms until 2015. Moreover, from industry's perspective, it is important that we export 20% of our production to third countries. One may have two strategies. While one can concentrate on one's home market, that is too small for the Netherlands. Hence, we must produce special products for the world markets in special niches. We need a competitive sector and a competitive industry, which is possible to achieve.

As for the position for young farmers, I do not know the exact figures for the Netherlands. However, 50% of the farmers are more than 50 years old and lack successors, which is the same as in Ireland. On the other hand, many young farmers from the Netherlands go to Denmark, the United States and New Zealand to start farming. The problem in the Netherlands is that while opportunities to produce milk are very good, land, quota and the other factors are very expensive. This constitutes a bigger threat to farming success than the prospect that young farmers do not like it.

Mr. Bisseling

I am a lobbyist for LTO in Brussels. Members might be familiar with the IFA's representative in Brussels, Michael Treacy. I am his colleague and his office is located one floor above than mine, probably because he has been there for a long time.

I want to make a contribution regarding the WTO negotiations. I must stress that the coming two months will be extremely important for the entire WTO negotiations and I want to tell members what will happen.

The WTO process has already been extremely long. Mr. Schenk has already informed the committee about market access, aspects of competition and about domestic support. However, the negotiations began with three topics, namely, agriculture, industrial goods and services. Everyone keeps saying there should always be a balance between them. Even Commissioner Mandelson states that there must be a balance between those three areas, as does our Minister.

The negotiations are still devoted exclusively to agriculture and time is running out because the deadline is the end of July. Otherwise, we must wait two or three years. Hence, my prediction as to what will happen is that agriculture will continue to be discussed in the coming weeks and the EU will continue to push for a deal. Subsequently, however, there will not be sufficient time to discuss adequately services and industrial goods, in order that we make sufficient gains on those subjects.

What will we obtain? We will obtain a deal because Commissioner Mandelson definitely wants a deal and it is all he talks about. We will get a deal whereby agriculture will either fall behind or deliver a great deal, particularly regarding market access. However, we will not gain anything on services and industrial goods. Hence, we have spoken to our Minister of Economic Affairs who is negotiating on our behalf and have asked him what he thinks to gain from this agreement. However, his main priority is services and he does not care about agriculture. The way things are going, while the negotiators continue not to care greatly about agriculture, they are also not making gains on services.

Consequently, in the coming months we, as a farming organisation, will be pushed to support our Government and the Commission, particularly Commissioner Fischer Boel. They will assert that without an agreement now, there will be another reform in three or four years' time, when another WTO agreement will be reached. In other words, the absence of agreement now will lead to a worse agreement in three or four years' time. Hence, they are trying to frighten us into giving in to a WTO deal now. They do not, however, discuss what must be conceded for that or what the EU will receive in return, which is a strange way to negotiate. There are three pillars and although one might give way in respect of one pillar without making gains on the other two, one must still have a deal and be happy with it. It appears that this is what will happen. It will only make matters worse.

I also wish to discuss a point which was raised by Mr. Schenk and Ms ten Have, namely, sensitive products. They are also very important to us, particularly pig meat and sugar and some fruit and vegetables. We are lobbying for very hard in respect of them, as well as for beef and butter. These are the points I wanted to stress with regard to the WTO.

Yesterday, the delegation discussed non-trade concerns with the Irish Government. The Minister stated that non-trade concerns are extremely important in the negotiations. We asked her what would happen if the non-trade concerns were not on the agenda or were not part of the WTO negotiations or a deal. Would one lower the standard of animal welfare within the EU? Would one lower the EU's environmental standards? What would one do?

While the Minister will not lower the standards, what will happen then? We come to the situation, already mentioned by Mr. Schenk, whereby goods will be imported from outside and our consumers will buy them. However, we will not be able or allowed to produce in Europe. This means that the whole world will be turned upside down.

We have heard that labelling is under discussion in Ireland. We have some experience with labelling in Holland and, as an exporting country, it is not working for us. We do not have high hopes for a solution to the problem of labelling.

Acting Chairman

Is labelling putting Dutch producers at a disadvantage in respect of their export trade?

Mr. Bisseling

Yes. Our beef must be labelled with a national logo. Given that it is an exporting country, one would think this provision would benefit the Netherlands because we can then show people that they should buy goods because they are good quality. However, it does not work like this. When we export goods, it becomes clear that it is a different ball game. A producer might have an advantage in a national market but when it comes to exporting to other countries, labelling does not make a difference.

Ms ten Have

When poultry is imported from Brazil and then marinated, it is then possible to put a different label on it. This also represents a problem. Labelling is not the solution to non-trade concerns because problems can arise when national labels are placed on goods. It is possible to place such labels on fresh meat products but problems arise if national labels are applied to processed meat products.

Mr. Bisseling

We will continue to produce sugar and may increase production. Investing in the future is the best option for the sugar industry.

In respect of the nitrates directive, the substitution of chemical fertilisers for animal manure is not as simple a matter as has been described. We are still exploring this option because chemical fertilisers have a negative energy balance and are, therefore, bad for the environment. It is better to use animal manure, which has a positive energy balance. We are tackling this problem because it is strange that we cannot put more animal manure on our land but we are allowed to import more fertiliser. We are also dealing with it at an environmental level.

Acting Chairman

I thank Mr. Bisseling, the president, the CEO and the rest of the delegation for meeting with us today. It has been an interesting exchange of views and it is a pity that the meeting cannot go on longer because we could learn much more from the delegation. I hope the remainder of the delegation's visit to Ireland proves fruitful and enjoyable and I hope members of the delegation get the opportunity to sample some Guinness because it is a very important part of the whole experience. I am aware the delegation has a busy schedule and will travel on to Kilkenny. We wish the delegation well. Does Mr. van Vuren wish to make some concluding remarks?

Mr. van Vuren

We have obtained a good picture of the agricultural sector in Ireland. We have a considerable amount of theoretical information but by talking with interested parties and witnessing matters, the picture becomes complete. We have learned about the perspectives of many individuals and institutions, including both Houses of the Oireachtas. We are very pleased with our experience. Having the opportunity to discuss matters with the committee has been a unique experience and we thank the committee for inviting us to appear before it.

At the beginning of the discussion, Deputy Wilkinson spoke about how the agricultural sector needs to change, an argument with which we agree. However, for such change to be effected, time is required. This means that, in particular, the WTO negotiations must lead to an acceptable result. We are familiar with the liberalisation of world trade markets but even as our picture becomes clear, this process must proceed step by step. We believe the critical factor is giving farmers time to change.

I thank the Chairman and members and, on behalf of the delegation, offer the committee a present from our beautiful country. During the rest of the week, we will visit farms, discuss the future direction of Glanbia and visit a bioenergy plant. By the end of the week, we hope to know a sufficient amount about Ireland.

Acting Chairman

Members of the delegation will be welcome back.

The joint committee adjourned at 3.05 p.m. until 11 a.m. on Wednesday, 14 June 2006.