JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Wednesday, 7 Feb 2007

Sheep Strategy Review Group Recommendations: Discussion with IFA.

Chairman

I welcome Mr. Padraig Walshe, president of the Irish Farmers Association, Mr. Henry Burns, national sheep chairman, Mr. Michael Berkery, general secretary, Mr. Michael Silke, Connacht chairman and Mr. J. J. Kavanagh, south Leinster chairman. I also welcome other members of the delegation who are in the Gallery.

Before I proceed, I draw witnesses' attention to the fact that while members of the committee have absolute privilege the same privilege does not extend to them. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses or an official, by name or in such a way as to make him or her identifiable.

I understand that the president, Mr. Walshe, will introduce the matter before the committee and the chairman of the national sheep committee, Mr. Burns, will then make a presentation. Before Mr. Burns speaks, can Mr. Walshe outline his concerns regarding avian flu. A few words from him on this subject would be very helpful to the committee.

Mr. Padraig Walshe

Thank you, Chairman, for inviting us to speak to the committee. I thank members of the committee for coming to hear this very important presentation on behalf of the sheep industry and the 37,000 farmers who are involved in the sheep industry throughout the country.

We are satisfied that the Minister and her officials have taken all possible precautions to prevent avian flu coming into the country. It highlights once again the importance of the strategy with regard to food imports into the EU and the dangers posed by that. In Brussels last week I met Commissioner Kyprianou, who is responsible for animal as well as human health and I pointed that out to him. The Commission's policy on imports was discussed at this committee last year when John Bryan and Kevin Kinsella reported on their visit to Brazil. We must continue to highlight the dangers inherent in allowing into the Community imports that are not produced to the same high standard as that expected of farmers within the Community. With regard to avian influenza, we are satisfied that every precaution is being taken and that the risk to human health is extremely low if not negligible.

I turn now to the subject matter of today's agenda. The sheep sector is Ireland's third most important farming enterprise. It is worth more than €400 million annually of which approximately €250 million is accounted for by foreign earnings generated from exports. There are 37,000 farmers involved in the industry and approximately 3,000 jobs in processing and service provision to the sector. It is a significant industry in terms of its input into the economy. Sheep production is particularly important in the western counties of Donegal, Galway, Mayo as well as Roscommon, Kerry and Cork. Lowland production is a major farm enterprise in counties Wexford, Wicklow, Meath and Tipperary. Appendix A sets out the number of flock owners and the number of sheep per county, based on the December 2005 national sheep census from the Department of Agriculture and Food. This gives a breakdown of the number of flocks and sheep by county.

Sheep numbers expanded in the 1980s to reach 4.75 million ewes in 1992. In recent years, because of profitability at farm level, production has come under intense pressure with ewe numbers now back at approximately 3.3 million head nationally. That is a significant drop. If it drops much further Ireland will lose critical mass in the industry and the efficiency of the processing sector will be under pressure. We currently have only a small number of factories. Pressure on labour, increased production costs, stocking rate restrictions, a low level of direct payments and stagnant lamb prices have all combined to erode farm incomes, and the ultimate measure of profitability is lamb prices.

The sheep sector is now at a crossroads. The people who are with me today are committed to the sector and want to have a future in it. The Minister set up a strategy group under the chairmanship of John Malone which sat through most of last year and reported in the autumn of last year with 37 recommendations for the maintenance and development of the sheep sector in Ireland. This was the subject of the partnership negotiations we had with the Government last year and there is a commitment to fund the recommendations of the strategy group.

The Minister for Agriculture and Food, Deputy Coughlan, stated at our AGM recently and on numerous other occasions that she is committed to funding the sheep sector and to doing what she can to develop it. We have put a number of proposals to the Minister. The main reason we are here today is to persuade this committee to support the Minister in her efforts to support the sheep industry and put decent funding in place that will ensure a future in the industry for the people we represent. There will be change in the future but without funding and commitment it will not happen.

We have made several proposals. I will ask Mr. Henry Burns, chairman of our sheep committee, to go through those proposals, after which we will gladly answer any questions the members of the committee have.

Chairman

Before I call Mr. Burns, I apologise to Mr. Fallon. I did not realise he was here. I welcome him to the top table, as we call it.

Mr. Henry Burns

Thank you, Chairman. The president has laid out the background to this sector very well. Anybody who has been reading the agricultural press over the past 12 months cannot but remark on the negativity running through the sheep industry. We are confident that, with a positive input from the Minister, it can be turned around. We have been working very hard with the Department of Agriculture and Food and the strategy group to try to do that.

This is a good report. It contains 37 recommendations, much too detailed to go into here. If 25 of those recommendations were implemented there would be a very good future for sheep farming. We should always strive for 100% implementation but I accept,that, for various reasons, it may not be possible to implement some of the recommendations. No one needs reminding that we have lost the sugar beet industry. In the Carlow area sheep were traditionally kept alongside involvement in sugar beet. We have lost the sugar beet industry and now the sheep industry is under threat. Appendix B shows figures from Teagasc which do not make for pretty reading. There are 84 farms involved in the e-profit monitor programme. The figures show that the average sheep producer is losing €2 per ewe, without taking account of the single farm payment. The average sheep producer makes approximately €20 per ewe with the single farm payment added. I met a sheep farmer this morning who has 600 ewes, which is way above the average. He is trying to make a living out those. His total income from sheep is approximately €12,000 per annum. One wonders how he lives on that but, in fairness, he is in receipt of a single farm payment and REPS, but therein lies a problem. He could get those without having sheep. There are other enterprises in which he could more easily be involved. He could drift into one of those, but they do not add anything to our export earnings.

Across Europe people are getting out of sheep production. There is a message in that for us. I was in France for two days last week. We currently supply lambs to France, although not as many as in the past. One in eight lambs eaten in France is Irish and the perception of Irish lamb on the French market is very positive. It is not my job to argue for or against meat factories because we have our own problems in that regard. We have five exporting plants, two in the west, one in the midlands and two in the east. We have 3.2 million ewes. If that were to slip to 2 million ewes we would lose two to three of those plants. The industry would become uncompetitive and the sheep exporting business would fail. We would be back at the stage we were at years ago, supplying only a domestic trade. In effect, we would not have a sheep industry. As matters stand we have the bones of a sheep industry.

I will run quickly through our proposals. Lest it come across as such, what we are proposing does not amount to asking for a hand-out. It is not a hand-out, but a payment for breeding according to animal health and welfare requirements. It encourages improvements we farmers can make to our industry. We are clear that we can make improvements. Most of the 84 farmers on the profit-monitoring list are probably doing the job very well already. There are people doing the job in worse circumstances given that recording the figures and carrying out profit monitoring at all implies that one is a very good farmer. That means even good farmers are in trouble.

With a small bit of help and a little restructuring, the industry can stand on its own feet again. Trends in sheep supply in the European Union indicate that there will be price rises in future. The recommendations in the Malone report focus on co-operation between processors and farmers to deliver an average of €15 more per lamb over the next four years. It will not be easy and will take time. If we could achieve €15 more per lamb over six months, we would have done it long ago. It needs to happen. Our worry is that in the meantime, ewe numbers in the sector will have decreased below the required critical mass. Since 2000, ewe numbers have decreased from slightly more than 4 million to 3.3 million. Members can see the pattern in that statistic.

The Minister has said clearly that any action she takes in this area must be linked to the Malone report. I represent farmers on the IFA's sheep committee which looked at the report's recommendations on improvements in breeding, greater participation in Teagasc discussion groups and improved presentation of lambs at factories. Costs and time and labour inputs are associated with adopting the recommendations. Improvements in breeding and animal welfare involve a slow, laborious process which provides little return to farmers currently and must therefore be incentivised. From discussing the matter with officials of the Department of Agriculture and Food, it appears there is room to implement such incentives in place of a simple one-off payment for keeping sheep. While the opportunity for the latter approach no longer exists, there is an opportunity to reward farmers for the time they put into improvements in animal health and welfare and breeding.

Some recommendations for funding have already come forward from the strategy group. While one might ask why funding should go to the Irish Cattle Breeding Federation given that we are talking about sheep, it is proposed that the sheep breeding improvement programme which the Department of Agriculture and Food has run up to now be put under the auspices of an independent organisation. The ICBF is such an organisation and could establish a sheep section to absorb the funding under the proposals. There are also proposals to provide extra funding and resources to Teagasc. The Minister is already providing Teagasc up to €130 million per year. While I do not have a problem with providing more money for Teagasc's sheep section per se, it should be noted that the section has been badly eroded in recent years. The current Teagasc proposal serves only to put us back in the position we were in two years ago. There is also a proposal for more funding for Bord Bia and €50 million was announced before Christmas for processors. The pattern that emerges is notable for its absence of any mention of the farmer, which is a real issue. With the funding, we will have breeding, advice and everything else bar the sheep themselves. That is the problem.

The industry requires resuscitation and a message of confidence from the Department of Agriculture and Food. Over the years, there has been a perception among sheep farmers that ours is a neglected industry from a departmental perspective. We have been seen as people who merely run sheep out to eat grass. It has been described to me as the seeking of funding for lawnmowers. That view is incorrect. Ours is a commercial industry with commercially oriented farmers who want to farm properly and export sheep. While many farmers do things properly already, they have begun to lose heart due to the price of sheep and poor returns. Perhaps some jobs are starting not to be done as well as they should be. If we create an incentive through the Department of Agriculture and Food, we can place the sector back on the footing it was on when we were making money from our sheep.

Part of our plan demands that farmers appraise their economic efficiency properly and consider production models. Farmers will draw up five year plans for sheep flocks with Teagasc which will involve finances and production costs. We have long heard that our main competitive advantage is our grasslands, on which there is a great deal that can be done. We know what is happening in the world grain trade and that the USA will use 40% of maize this year for bio-fuel production. These trends will weigh heavily on anyone producing lamb meat from grain, like the French and Spanish, the majority of whose output is farmed that way. The ball will, therefore, be pushed back into our court given the competitive advantage grass will represent.

While we are in trouble and need some help, we have the basis of a very strong industry. As the president, Mr. Walshe, explained, we seek support from the committee to move matters along with the Department of Agriculture and Food. The farmer must appear in the report somewhere if progress is to be made.

Mr. Michael Berkery

I commend the detailed proposals Mr. Burns has so enthusiastically presented. He mentioned confidence earlier, which is a quality he epitomises. He is eternally confident with a view to making progress and leading the industry on the sheep side. There are observers in attendance from all over the country. Theirs is a great and important industry which, in parts of the country, is the only land-based activity that can function. The moral of Mr. Burns's contribution is that if we tip below a certain point, the industry will lose critical mass and be reduced almost entirely to producing for the domestic market only. There is a very viable trade in France which we wish to sustain. Taking all the components of a sheep, the product is one where a great deal of value can be added. It is a natural product. The industry wishes to leave no stone unturned to maintain maximum stock numbers and a viable trade.

The committee will know that the IFA is a house with many rooms. While there are many interests in the association, the organisation as a whole is committed 100% to the proposals from the sheep sector, which, I note, have been distilled through the study group appointed by the Minister.

Chairman

The chairman of the Meath branch of the IFA rang me last night to say he could not be here, but was sending a very good deputy in Mr. Paddy Macken. As Deputy Naughten must leave shortly, we will take his contribution first.

Deputy Naughten

I apologise but I must speak in the Dáil on the Finance Bill. If I do not, Eddie Downey will string me up. I have a couple of points and a couple of questions to ask.

I welcome the delegation. Fine Gael supports fully the proposal put forward and would support the Minister in adopting the suggested approach. Hopefully, a positive response will be forthcoming. The president of the IFA mentioned avian flu, which it is critically important we are vigilant against. However, that is all we can really do at this stage while making the public conscious of what they need to look for and report to the Department of Agriculture and Food.

I hope we can keep this virus out of the country. The delegates made a very valid point on imports from outside the European Union, a point to which I will return later. It is critically important also that we take a consistent line on the high quality of our product. The industry is in difficulty and we need to try to promote the quality of poultry produced in Ireland. There is no risk with Irish poultry and we must ensure the public is conscious of that. I hope we can build confidence in the sector.

The number of sheep has dropped significantly — by more than 1.5 million in recent years. Farmers talk about the doom and gloom in the industry. That is a pity when there is a significant potential market because of the deficit of sheepmeat in the European Union. Profits in the sheep industry have collapsed in recent years. Spring lamb is a labour intensive product and is costly to produce; however, the price of spring lamb has collapsed. The reason put forward by the industry is poor market returns on the French market. Will the delegates elaborate on the causes of the price collapse as it has had a detrimental effect on the production of spring lamb?

The WTO agreement between New Zealand and the EU on the importation of only premium cuts of chilled lamb rather than whole carcase has had the effect of depressing the price of the whole carcase product. Is it possible to renegotiate that agreement in tandem with promoting distinctive labelling for EU and Irish product and marketing that product? We must make sheep farming viable and as someone from a sheep farm in County Roscommon, I know at first hand the difficulties faced by the industry. The 37 recommendations are all well and good, but if the industry is not viable, their implementation will not make a difference because farmers will not get a decent return for their product. The kernel of the issue put forward by the IFA is that if farmers are not getting a decent return at the farm gate they will not be there.

The introduction of the suckler cow scheme must be warmly welcomed. However, is it not the case that if one is incentivising the improvement of the suckler cow herd, this is a disincentive to the development of the sheep industry, especially in County Roscommon? If farmers are to be paid to produce a quality animal for the suckler cow herd, they will reduce the number of sheep they produce. From the point of view of balance, it is critically important that there be a scheme to incentivise the production of quality sheep.

Mr. Burns was critical of Teagasc. I agree that more needs to be done by Teagasc. The sheep sector has become a very low priority. We can see the effects of the lack of investment, as no research is taking place in Athenry. Have the delegates identified the key priorities to develop the sheep industry and make it profitable? Must Teagasc change its attitude to the sheep sector?

Deputy Upton

I welcome the delegation. Last autumn I published a document entitled, A 21 Point Plan for a Quality Future for Rural Ireland. One of the paragraphs sets out our support for the sheep industry development strategy. Delegates should be reassured of our support by our broad approach.

I welcome the emphasis on quality, quality assurance and labelling. Once again, labelling is critical to identifying the origin and quality of products. There are advantages for Ireland if our label is on products that access export markets that are very conscious of quality. France, for instance is very conscious of accessing quality products and that market must be exploited.

A press statement from the Irish Farmers’ Journal states that Irish processors have the potential to process an additional 100,000 units per year. That is very significant. Will the delegates comment on the major constraints to increased processing and how the issue should be tackled? I know that is at the heart of the question of quality production. From the statistics on outputs and costs, my attention is drawn to the one third of producers who make a profit of only €5 when the premium is included. Clearly the premium is very significant for the one third of producers at the bottom.

Mr. Burns referred to a stock level of 600 units as being well above the average. Will he indicate the average number of stock?

To recap, we support the broad principles of the points made by the delegates.

Deputy Wilkinson

I welcome the president and delegates from the IFA and thank them for their very good presentations. My read of the situation was not gloom and doom, but optimism, enthusiasm and a request for aid. The sector needs aid. I met a delegation from the Waterford IFA, whom I found to be reasonable when spelling out the problems in detail. If sheep numbers are allowed to decrease beyond the present number, the industry will face enormous problems. I conveyed the views of the Waterford IFA, which were broadly in line with the recommendations of the IFA, to the Minister for Agriculture and Food and she assured me she would help. Timing is critical but the Minister is acutely aware of the situation in the sheep industry and I have every confidence in her. As a member of the committee I will convey the views of the IFA to the Minister.

Mr. Walshe

I thank the members for their comments and I will ask Mr. Burns to deal with some of the issues raised. In response to Deputy Naughten who referred to the importation of prime cuts of New Zealand lamb, we raised the WTO negotiations with the Trade Commissioner, Mr. Peter Mandelson. Similarly, prime cuts of beef are being imported from South America, so this is not just an issue for sheep farmers. He also noted that the introduction of the suckler cow scheme was a disincentive to the sheep industry. From our viewpoint, the suckler cow scheme was introduced to address the problem of profitability in the beef sector. When we negotiated that package, the strategy group was in operation and agreement was reached with the Minister and her officials that the recommendations of the strategy group would be funded. As Mr. Burns stated, there has been talk of money being allocated to the processing industry, ICBF, Teagasc and just about every facet of the industry including, An Bord Bia. We are here to try to copperfasten some commitment for the farmer. There will be no need to assist any of those already mentioned if there is no sheep farmer on the ground producing raw material. This is the main thrust of our argument.

Deputy Upton referred to the profitability of the sector based on the figures in appendix B. They are real figures produced by Teagasc, not the IFA. They set out the reality. As Mr. Burns pointed out earlier, one does not have to own sheep to draw down REPS or the single farm payment. People will move to other sectors. Everyone here today is committed to the sheep sector and wants to remain in it. However, if commercial reality forces them out of it, so be it. These people must feed and educate their families. We want to ensure they can remain in the sheep industry and make a living from it.

Deputy Upton also spoke about labelling. I attended a conference in Brussels earlier this week on that very topic. It is an issue on which we must remain focused. Unfortunately, the labelling system introduced here is not properly policed. However, that is an issue for another day. Deputy Upton also stated that sheep are a low priority within Teagasc. Members have heard the enthusiasm with which Mr. Burns speaks about this matter. We are positive about the sheep sector into the future. If we can get a commitment from Government and the Minister to encourage people at farm level, we can, in time, change the direction within Teagasc. What is happening within Teagasc is disappointing. Nevertheless, we are positive and committed to the future of sheep farming and I believe we can change that going forward. I will now ask Mr. Burns to address the question on spring lamb and marketing.

Mr. Burns

Deputy Naughten raised a very good point. People have been pushed out of the spring lamb market during recent years as a result of a breakdown in the system between processors and supermarkets. The power of the supermarkets and weaknesses of the processors are to blame. Deputy Naughten asked that priority be given to development of the industry. What matters at the end of the day is price. Price is crucial. If we could get an average of €15 more per lamb we would not coin it in but we would make extra money. An increase of €15 per ewe would result in the average flock owner receiving approximately €40 to €45 per ewe. A sheep farmer with five ewes per acre would receive €200 while a farmer with 100 acres would receive €20,000. That is not exactly coining it in but many would remain in sheep for that type of money.

Chairman

It is hard work.

Mr. Burns

Yes. The Teagasc plan also seeks to remove some of the labour and drudgery from the industry. We should not dwell too much on the past. What is happening within Teagasc is sad and we have resisted it all the way. The sheep sector has been eroded. There is a positive proposal on the desk which, if acted on, could be useful. It is based on a system used in New Zealand. We have talked the talk and must now walk the walk. We will ensure that the sheep sector receives an appropriate level of funding from Teagasc. It must ensure a proportion of its budget is earmarked for the sheep sector.

The spring lamb issue is a complex one. The UK is our biggest competitor and its ever-increasing season has affected us. However, 30% of our lamb is taken up by the home market. This year we will have so little spring lamb we will not be able to meet the demands of the market. This could result in supermarkets and processors having to contract for lamb. This is what needs to happen.

We are here today to find out what members of the committee, as politicians, can do for us. In fairness, politicians cannot sort out the problems to which I have just referred. They are a matter between us and the processors. We will fight the fight in that regard. We are engaging in talks with the processors and can move this issue forward. One could look on the suckler cow situation as a negative though I tend to look at it as a positive. Typically, most farmers would have 30 suckler cows. Deputy Upton asked what the average flock size is. It is approximately 120 ewes. That is the structure of the industry. There are 37,000 producers in the industry, 28,000 of whom have 150 ewes or less. Some believe many farmers have 400 or 500 ewes but that is not how the industry is structured though there is nothing wrong with that. Those involved are providing good quality products. Sheep production is the nearest thing to nature one can get given sheep are hardly ever in the shed.

This structure can deliver the lambs needed. It has done so in the past. It is obvious a farmer cannot make a living from 120 ewes. However, he or she might take a part time job or have 30 cows as well as 120 ewes. A payment of €80 per cow for 30 cows would provide an income of €2,400. If he or she can also get €15 for the 120 ewes, the two amounts added together may be sufficient to allow him or her to stick with farming.

The issue of quality assurance and processors was also raised. I will not go into detail on this matter now except to say there are proposals in place in that regard. We are open to doing whatever can be done.

Deputy Naughten

I have one point to make and one question to ask. Mr. Walshe stated that the British season has been extended. In that regard, was he referring to hoggets being left in the trade? On the point I raised in regard to suckler cows, I was not looking at this as a negative. What has transpired in the suckler cow scheme is positive. The IFA and all those involved must be commended in that regard. However, many of the farmers in Roscommon who are involved in sheep production are also involved in suckler cow production. While there is an incentive to maintain or increase ones numbers in regard to suckler cows no similar incentive is provided in terms of sheep. Many farmers are reducing their sheep numbers as a result of poor returns. Some equilibrium will be required if we are to maintain this sector. The suckler cow scheme is a positive scheme which will do a great deal for the industry. I accept it is a separate industry but the two are intrinsically linked.

Mr. Berkery

It would be better to achieve equilibrium by increasing the number of sheep rather than giving greater consideration to the cow.

Deputy Naughten

That is the point I am trying to make.

Mr. Burns

There is no one in the UK getting involved in sheep. The UK has recorded its lowest ewe flock for many years. There are positives in all areas. In terms of sheep consumption, the English home market increased by 3% to 4% this year. That is very positive. We all know where the good EU/UK market for beef took us. It is possible that we will be able to get lamb into the UK market as early as April or May. We never thought we would see that day. There are many positives on the supply side but we must focus more on price.

The processors have a responsibility in this area. Two major groups are killing 68% of lambs here. They have a major responsibility to sell responsibly on our behalf while achieving the maximum price. Last season, lamb prices increased on average by €6 per head but that increase was not passed on to sheep farmers. That is an issue on which we intend to focus. I never thanked the committee when I began my presentation, but I thank it for inviting us here today and hearing us out on this matter.

Chairman

It is always a pleasure. I invite Mr. Silke, Mr. Kavanagh and Mr. Fallon to say a few words. Deputy Naughten must go to the Dáil to speak on the Finance Bill so I told him I would let him go, which is why I wanted to bring in these three gentlemen now. Is Senator Scanlon under pressure?

Senator Scanlon

No.

Mr. Michael Silke

I come from the west of Ireland where sheep are unquestionably an integral part of farming life. The amount of sheep we have lost in recent years is quite frightening. We have lost in the region of 1.5 million ewes from our industry. There is no question that our industry is dying on its feet as we speak and we desperately need to do something.

As we all know, sheep are very environmentally friendly, do not affect the environment in real terms and have much going for them. However, the price of sheep is the main issue driving farmers out of the industry. I will give one example. I have been involved in sheep farming since I was a child. From January to February 1977, the period we have just dealt with, I sold my sheep all over the country and averaged a price of £77 per head. From January to February of this year, when I sell the same sheep and given all the input costs, I get between €72 and €75 per head. This is the reality of what is happening to farming and sheep farming in this country. This situation needs to be addressed in a fundamental way.

I believe a proposal has been made to give €50 million to the processing industry. We all know what this industry is and it has not helped us in recent years. As farmers, we feel it has taken a considerable amount of money from us which it should have passed back to us. We feel the money we are looking for to substantiate our industry and keep it alive is relatively small in comparison with what that particular sector is getting.

I will not go on because I know the committee is probably constrained by time. We have come here today to plead for this committee to support us and our proposals because our industry is in dire straits and dying on its feet. If we do not get the support we are looking for, we will have no industry in a few years.

Mr. J. J. Kavanagh

In respect of this product, we spoke about a deficit within the EU which has always been there and is dropping right across Europe. Mr. Silke correctly outlined how lamb prices have dropped in the past 30 years. Like Mr. Silke, I am a sheep farmer. I left the shed this morning to travel here.

In respect of the price of wool, shearing a sheep roughly costs €1.50 to €2, depending on the contractor one uses. This contractor is entitled to every penny of this money for shearing the sheep. One will get approximately €1 for the wool, which is disgraceful given that wool is a natural product. This shows where the industry has gone. If we drop below the critical mass of lambs, our export markets will be in jeopardy.

We have seen the loss of another industry. I am from Wexford in south Leinster. We have seen the loss of the sugar beet industry and what this has done to the area. The last thing I need to see is another industry in trouble. I thank the Chairman and the committee for their time, but I would like to see the Government giving a clear signal to sheep producers that there will be support for them. It is imperative that this signal goes out sooner rather than later.

Mr. Laurence Fallon

I thank the Chairman for giving me the opportunity to address it. As a sheep farmer, I think the future of the industry is at stake. The Fischler reforms gave us the opportunity to farm. We no longer have to keep animals to draw our single farm payment. The reality is that, based on Teagasc figures last year, in order to be a sheep farmer, the average sheep farmer paid €240 in respect of 120 sheep and lost €2 per sheep. This is not going to continue and unless we can turn this around, we are going to have a serious situation.

Sheep are critical to large parts of the country when it comes to properly maintaining its vegetation. Perhaps the committee might take a look at the section of the Teagasc website dealing with a part of its farm in Leenane which has been grazed. If we take sheep off certain parts of Ireland, we will have serious problems with over-vegetation. In the same way, many parts of the west of Ireland are not fit for anything other than sheep. There is a critical necessity to maintain sheep both for economic and environmental reasons. It is important that we recognise that hill sheep play an important role in preserving the environment.

It does not take much money and we are not asking for a huge amount of money to improve the quality of our stock to sell a better product and maintain a viable industry in the country. We also need to look at the employment of meat factories and the people involved in supplying the services to the industry. The contribution of sheep farmers is fairly important to the entire economy of the country, particularly the poorer regions of the west of Ireland. I very much appreciate the support we are getting here for a viable industry.

Deputy Callanan

I welcome the president of the IFA and his team, especially the representatives from the west of Ireland. Quite a few of them are from County Galway because it is the largest producer of sheep in the country. I hear enough about sheep and if one only travels a few yards in either direction, one will meet a sheep farmer. I was a sheep farmer until I entered the Dáil. Naturally, because of labour costs and the amount of labour involved in it, I could not manage and keep both sides going. Deputy Naughten has left the meeting but it is only a few years since I purchased sheep from his late father. Believe it or not, they were very lucky sheep, but that is beside the point.

I agree that numbers have dropped significantly and was surprised by the figures because I thought they had dropped to a greater extent in some areas. The Malone report is a very fine report which contains good recommendations. Any monetary incentive in respect of sheep needs to be tied to this report.

We all understand better breeding, quality, animal health and welfare issues at this stage. We have already spoken to the Minister about this and she is very committed to trying to do something for the sheep regime. We all know that at the moment, profits are too low in sheep farming. Unless something is done about it fairly quickly, people will get out of sheep farming and the numbers of sheep farmers will fall. As other speakers have noted, we have a very high quality product but the uncertainty surrounding prices is another significant problem.

I have one question for the delegation. We are told that France is our largest export trade and that young French people are not eating as much lamb as before. Is this because we are not promoting it as well as we could for this type of market? What can we do to make it more attractive? The delegation has my full support in respect of any help we can give to the sheep industry.

Senator Scanlon

I welcome the delegation and thank it for giving its opinion to the committee. I received a visit from some of the Sligo representatives, including Colm O'Donnell, who is here today, and Eddie Davitt. I was a butcher before I entered the Houses of the Oireachtas. Back in 1980, we were buying and slaughtering a considerable amount of lambs and paying £80 per head for hoggets in the spring of that year. We paid £1.25 per pound for spring lambs and in the summer, lambs very rarely fell below £60 per head. That was 25 years ago. There is no doubt that Irish sheep meat is the best quality meat in the world. One sees New Zealand lamb in supermarkets, which consists solely of legs of lamb and tastes more like rabbit than lamb. I fully support what has been said here today.

There is a shortage of lamb in France and I cannot understand why factories are unable to pay more for their lamb. A serious mistake, which is my hobby horse, was made in this country a number of years. Small butchers and abattoirs in this country were buying 25,000 lambs per week, taken from around the mart ring or out of the farmer's field. We now have a situation where we have no competition and if one wishes to get a lamb killed for the freezer, one has to take it from the factory. This needs to be changed but I do not know how this can be done. We had a national organisation at that time and I know the IFA came on board at the time. I believe Michael was there at the time. We tried to resolve it but we did not have much success. Competition is needed because there is none at the moment. A slaughtering facility could, for example, be provided on a premises owned by the IFA to ensure a fair price.

Deputy Finneran

I welcome the delegation and I am particularly impressed that the association's president is present. I appreciate his support for a sectoral industry within the farming community. The Fallons will be well aware of my family and personal interest in the sheep industry. I come from Dysart, County Roscommon, and my family engaged in mixed farming. We prided ourselves on having three or four score of second crop ewes every September for the market. Producers in east Galway and County Meath bought many of them. As a child, I recall ringing ewes on the greens in Athlone, Ballinasloe and Roscommon. One would not see a half an inch in the difference between the score of ewes in the ring because of the way each was placed and my father took pride in that. If one looked at them from a distance, one would not see a difference.

My brother is a full-time farmer and I am conscious the sheep industry is in crisis. It has been on a slippery slope for a number of years and the sheep population in my area has reduced by 40% from 5 million to approximately 3 million, which is very sad. This raises two issues. Practically all our sheep are exported and, therefore, a major export opportunity could be lost and the national interest is at stake. Second, local communities are disintegrating. Almost 2,000 sheep farmers in County Roscommon produce 250,000 sheep. It is a way of life in my county. The land in south and mid-Roscommon is limestone country and is most suited to sheep farming. The hardiest lowland sheep are produced there and if the farmers in the area are not supported, that way of life will be lost.

I have spoken to the Minister about this issue and she is listening but the IFA and the sheep industry are asking for a pittance. Investment in the industry is needed. If public representatives or officials visited Japan or America to seek foreign direct investment, millions of euro would be spent to set up 40,000 people in business. The IFA submission refers to 3,000 processing jobs in the industry but that figure should be doubled. What about hauliers, other workers and extended families? I am glad the Chairman has taken the issue on board and the committee is at one that there is a crisis in the sheep industry. The committee will recommend the proposals for the industry, although they are quite limited. However, the IFA and the committee are at least identifying that the situation must be addressed. I fully support the IFA's campaign.

I am conscious of what happened under Agenda 2000. I was driving home from Dublin when the agreement was reached and I will never forget the list of initiatives reported on radio with no mention of the sheep industry. I was annoyed that the focus was elsewhere and this significant industry was not mentioned. Let us hope the meeting will be the foundation for re-igniting interest in the industry. We should keep our noses to the grind stone on this issue and ensure the industry supports the proposals.

Senator Moylan

I welcome the deputation and support its demands. Mr. Walshe referred to a payment of €15 per ewe and that if such a payment is not introduced immediately, few farmers will remain in the industry. An incentive should be provided to attract young farmers into the industry and the payment, therefore, should be higher.

Mr. Burns is a neighbour of mine and he is a good sheep farmer. My son-in-law has had ewes yeaning over the past month and it involves a great deal of work. The farmer must spend his or her time in the yard or in a field full time or else he or she will only produce one lamb per ewe rather than 1.8 lambs per ewe. Sheep farmers must produce more lambs to ensure their business is economically viable. The number of sheep farmers in County Offaly has reduced by at least 50% over the past few years and more will leave the industry if an incentive is not provided.

The payments to farmers by factories and from live exports can be debated but, at the same time, people are well paid to promote and create markets for farmers. An incentive should be provided to ensure sheep farmers remain in production. As Deputy Finneran said, this is a significant industry and we must ensure it is supported. I support the IFA's demands and we will do what we can to lobby the relevant Ministers to ensure something is done quickly.

We cannot continue to refer to a proposed payment. Farmers must make decisions now for the coming year and if something does not happen quickly, few will remain in the industry. The IFA submission lists the number of sheep and flock owners in each county. If these were compared with the numbers five years ago, the difference would be frightening. While a number of producers expanded to survive, many have left the industry. I support the IFA's demands.

Deputy Nolan

I thank the Chairman for permitting my contribution even though I am not a committee member. However, this issue is important and all Members representing constituencies where sheep farming is a pivotal part of the rural community should make a contribution. I welcome the delegation and I have been well briefed by the IFA organisation in Carlow regarding the difficulties encountered by sheep farmers. Anybody with a cursory knowledge of the sheep industry can see the reduction in the number of sheep farmers. The case is well made and we support the delegation's demands. Proportionately, Carlow is not the county with fewest flock owners. It is more important to Carlow, particularly the southern part, that this matter is resolved to the satisfaction of sheep farmers. Genuine concern exists in the farming community at the plight of sheep farmers. I hope we can convince the Minister for Agriculture and Food and the Government of these difficulties and establish a scheme to alleviate what I hope is a temporary problem.

Deputy McEntee

I congratulate the IFA for its work in highlighting serious issues in agriculture. I am pleased to see my neighbour Mr. Paddy Macken who is one of the most progressive sheep farmers today. Some 20 years ago Mr. Paddy Bradley, a man who lived near me had a system under which he would bring six lambs to the mart every Monday. He had 300 lambs every year and from them he provided for the weekly shopping and for his children's education. One cannot do that now. I started by purchasing one sheep from my father, having left school at 15. By the time I was 21 I had 17 cattle but at 22 I had spent all my money on a car.

The farmer must make a stand and take back control of sales. I regret the day I drove to Kilkenny as a dairy farmer and signed up to the plc system. I knew I was making a mistake but my father asked me to do this. The number of farmers through the country is decreasing. I was in Achill Island in January and saw many healthy sheep. No matter which party farmers support, they should all come together and make a stand to the effect that farming is about producing food. The thrill from it was to produce food and get a fair price. If we do not make a stand, soon, Europe will not be able to produce food. The Irish dairy and sheep farmers have done everything asked of them and complied with every regulation but we are not allowed to produce food.

Regardless of party differences, we must support Irish farmers to return to producing food. If we do not do so now, there will be no farmers left in five years' time. I wish the organisation well and will give any support required from my party.

Deputy Moloney

I apologise for not being here for the presentation. I am involved in health committee meetings and have just stepped in to support the presentation. I am aware of these issues because Mr. Burns is a neighbour and has regularly briefed me on the issue. I have read the presentation and I offer my full support. I am glad that this issue is getting cross-party support, as the Deputy indicated. I hope we can go further and can arrange to meet the Minister to impress upon her the concerns voiced here today.

Chairman

After meeting Mr. Macken and his colleague from north Dublin in the Headfort Arms Hotel, Kells, I approached the Minister and her officials. The Minister is committed to the delegation's stand. Each member will continue to seek resolution of this problem. I compliment the delegation on its positive approach to the strategy review group. There are not many committed farmers in Ireland. As Deputy McEntee is aware, it is difficult to attract young people to sheep farming. It is a young man's game. It is a tough job. It is not easy working with sheep. Sheep will not move as easily as cattle will unless one has plenty of dogs.

I was approached by farmers in my constituency who suggested that a new quality scheme should be introduced for farmers with a few hundred sheep. I would like the views of the delegation on this, as I believe schemes such as this should be applicable to all sheep farmers. Some believe that restricting it to those with smaller holdings will keep the smaller farmers in business. There will be a scarcity of meat in a few years, as predicted by Deputy McEntee. We must encourage every farmer to remain in sheep farming.

Senator Scanlon

We should stop talking down the cost of lamb on the radio. I heard a genius talking about the profit butchers are making on lamb. He referred to paying €25 for a leg of lamb and said there were four legs on a lamb. There are two legs of lamb per animal and the other two are worth €2 each if one is lucky enough to get someone to buy them. We must talk up the price of lamb.

Deputy Upton

Perhaps I can ask a consumer question. What happened to good, old-fashioned mutton?

Mr. Walshe

I thank the Chairman and members for their positive comments. I did not realise there were so many sheep farmers in the Oireachtas. I know Deputy Moloney does not have many.

Deputy Moloney

They are upstairs.

Mr. Walshe

Some relevant points have been made and the point made by Senator Scanlon is relevant, but at this stage it is historic with regard to the butchers around the ring. I recall every butcher's stall being closed on Mondays because the butcher was buying lambs for the week at the local mart. It was important for sheep farmers to go to the mart and to set the price for factories for the week. The enthusiasm of the Department of Agriculture and Food for implementing EU regulation is responsible for closing down small abattoirs throughout the country. This enthusiasm is now being applied to inspections and cross-compliance but that is a discussion for another day. Regulation of small abattoirs is totally over the top. Countries such as France and Italy have not closed small abattoirs. The same regulation is interpreted differently in different countries. If it can be rowed back, it will be very important in terms of providing a market for lamb. If the Department had followed the labelling legislation with the same enthusiasm as it followed that type of legislation, perhaps we might not be here today.

Mr. Burns referred to the majority of animals killed in these months being sold on the home market. We depend on the French market only for those killed during summer. Deputy Finneran made the point about industrial jobs. Our figures are standard but do not take into account the number of farmers, which may be 3,000. The Deputy asked what the IDA is investing in bringing high-tech jobs into the country. It is spending in the order of €60,000 to €100,000 per job. Here we have jobs we wish to hold on to and we are not seeking €60,000 or €100,000 per job. Even if spread over the next 20 years what we are seeking would not come anywhere near that amount. We seek a small payment in the region of €15 per ewe which, as Mr. Burns said, would make a difference.

Deputy Brady raised the issue of numbers. It would have to be for everyone. We are not seeking this money for nothing. I am sure there will be some strings attached whereby people will have to do something, such as improving quality and improving consumer confidence in the product. That has to be part of it. We are positive and are committed to the future of the industry. We want young people to be involved in this industry. We want to send a message to the consumer that we have home produce to the highest standard, in which they can have confidence. We want to drive home that message at EU level in regard to imports and strive to get the same standard across the board.

I welcome the committee's support. I hope Deputy Brady can push this issue forward. In fairness, the Minister has been positive on this issue but she needs the Deputy's support to drive home the message. We are at a crucial stage not because an event is taking place which concerns all members of the committee and all of us, but because it is decision time for these farmers. Whether there is an election in the offing is irrelevant to them. What matters to them is their economic future. From that point of view I ask Deputy Brady to push this issue as hard as possible and get it in place as soon as possible.

The volume of spring lamb has reduced substantially because there is no margin to produce the higher-cost product. If we head into another summer with a price structure the same as for last year and no guarantee of a commitment in the future, these people will decide to get out and we will regret it. As a country, we will not be in a position to avail of the opportunities that will arise in the EU for sheep, because the numbers are dropping in other countries also. Because of our grass-based production system and, as Mr. Burns said, our organic production system, we are in an ideal position to capitalise in the future but we need that commitment to keep the structure for the industry in place.

To respond to Deputy Finneran, there is no reason I would not be here as president of the IFA to support the sheep industry. It is part of the responsibility I took on when I took the job. There are a few lads in the Gallery who would not forgive me if I were not here.

Mr. Burns

To respond to Deputy Callanan, Mr. Kinsella and I were in France last week as a tripartite with the UK and the French, which is unusual, trying to work on selling lamb in the French market. That has never been heard of before. The French are concerned about their own lamb consumption. Due to foot and mouth disease we lost 30% of lamb consumption in France. Given the number of sheep destroyed in the UK the price spiralled. It is clear there is a limit to what we can get for our sheep as there is a limit to what people will pay. As farmers we always think there is no limit. We know what we need and we think lamb can be sold at the price we need. The reason for this problem is that our consumer base is dying and we are not creating a new one. That is an issue.

I was encouraged last week by the fact that our UK counterparts, with whom we do not work often on selling sheep, gave an inspiring and innovative demonstration on different ways of breaking and presenting lamb which involves almost no waste. One can have it home on the plate and it does not have to be processed. It merely has to be boned, which involves a cost. Earlier, we mentioned grant aid for the factories. I accept a cost would be involved to put in place the facilities to do that work. However, one can have lamb with no fat on the plate cooked in the minimum of time.

Somebody mentioned the small New Zealand lamb leg. That has given New Zealand farmers an advantage, since there are many one, two and three person families. Our cuts are perceived to be too big. The reason the New Zealand lamb caught on is that it has a smaller leg. One might ask what can we do. That is simple — cut the leg in half. It is not rocket science but we have been slow to do it. We can deliver on all those issues. It was suggested some of the €50 million should be used on that plan. If this project comes on stream we will not be found wanting in terms of funding; that is the vibe I get from the Minister. To fund that plan we need the sheep. We can turn the tide. It is all about making lamb more convenient. In Ireland lamb consumption has increased by 3% during the past year, some of which is attributed to the growth of the Muslim population, but it is also linked to income. We have good incomes and a successful economy and we should clap ourselves on the back.

Lamb is viewed as a luxury purchase. Senator Scanlon is right that it is expensive and we should not apologise for that. It cannot be produced cheaply and, at the end of the day, we should not talk it down. There is no problem in selling lamb in Ireland now, even though it is expensive. When people have the money to spend they do not mind. Last summer it went a bomb on barbecues because the weather was good. There are many innovative ways of presenting it.

One of the reasons for the problem in the French market is that the imports are undercutting our trade and also the French consumer is not as wealthy as heretofore. The French economy is not in the same condition as ours which is a drawback but let us not worry about that. Somebody said earlier that New Zealand imports are a problem as is the WTO. We have had our problems with Mandelson who is not doing us any favours. We had a system where sheep tonnages were capped. If that system operated in the future and the tonnage remained at the same level we could make good money out of sheep. If he gives more tonnage to Australia and so on, that would not help us. There is a message here at the same time. The New Zealand industry would spin back to the Government that everything was fine in New Zealand. There are many good things in the New Zealand industry that we could adopt. However, there is one thing we do not want — its average lamb price is approximately €32. Not many people are getting into sheep farming in New Zealand. That there is no one getting into sheep farming the world over must be seen as an opportunity.

On the issue of mutton, some boys in England are trying to revive the trade. We have a problem in getting people to eat the nice juicy quality young lamb. Senator Scanlon — if he was still butchering — and my two butchers in Mountmellick who kill their own meat, would probably say they can sell all the steak they wish and they can charge as they wish but selling some of the worst cuts is an issue. We have high grade consumers who look at high-quality meat and want convenience. I took encouragement from France last week in regard to the way in which the necks and the lower quality cuts can be boned out, made into mince and burgers and made convenient. We have not been innovative enough on lamb which, from the Minister's point of view, would be important for the strategy implementation body. It needs to be followed through for the next four years. We had a sheep forum report ten years ago, long before my time, on young farmers and sheep. I still consider myself young although I am losing my hair and have all the problems that go with that. I took on this job a year ago and it has caused me to lose much more hair than sheep farming ever did. Nevertheless, I have attended meetings throughout the country in the past year and I have met many young farmers who are still interested in working with sheep. The skills are still there and sheep farming and breeding is a way of life and a tradition, as Deputy Finneran said. Deputy Nolan mentioned Tullow, where John Murphy is trying to talk the industry up. I will be in Tullow next Thursday night and will meet guys who are still proud of their sheep. There are still sheep farmers in Blessington and Baltinglass trying to keep going and plugging away.

However, they are not making money and they cannot stay in sheep farming forever. They need some incentive and encouragement. As Mr. Walshe, the president of the IFA said, time is of the essence. We have been working on this strategy for almost a year. We have been talking the talk; we must now walk the walk.

Chairman

Thank you, Mr. Burns. I apologise for Deputy Crawford who had a meeting with the Minister for Community, Rural and Gaeltacht Affairs at 4.30 p.m. The clerk of the committee will inform the Minister and her officials of today's debate. I will also inform her myself. Our party committee will meet next week and this matter will be on its agenda. I know Opposition parties will also do their part. We all work together in the best interest of the country's sheep farmers.

I thank the delegation for attending and for its responses to the queries raised. We have an annual get-together with the Irish Farmers Association but I am not sure if we will have time for it this year. However, if you are anxious, Mr. Walshe, to attend the committee to discuss farming issues with us in the next couple of months we will try to facilitate you. It is always a pleasure to meet the leaders of the IFA.

Committee members' futures hang in the balance and if we do not have an opportunity to meet you again I thank you and your predecessor for the IFA's co-operation with this committee. It has been first class while I have been Chairman. I also thank you, Mr. Berkery. It is always a pleasure to work with you. I first met Mr. Berkery in 1998 when he and I, with Mr. John Dillon and Deputy Ellis, travelled to County Tyrone for a very successful meeting. Deputy Ellis and I missed a vote that evening and had our knuckles rapped by Deputy Séamas Brennan, the then Chief Whip. Despite that, we are still here. The farm assist scheme and other measures of that nature resulted from that meeting. I also remember Mr. Kevin Kinsella, Ms Elaine Farrell, Mr. Gerry Gunning and Mr. Jim Devlin, who has left the IFA. It was always a pleasure to work with the association and with the chairmen of its various groups and bodies. If you feel, Mr. Walshe, that there is a need for an overall review, as we have every year, please inform the clerk and me and we will arrange it, even if it means holding an extra meeting. I thank you for coming.

Mr. Walshe

Thank you, Chairman, for your kind words. I am sure we will see the members of the committee many times between now and the election. There are some issues which, I have no doubt, will raise their heads.

Mr. Berkery

Thank you, Chairman, for the access you have granted the IFA. Access is one of the most critical and valuable facilities for a non-governmental organisation such as the IFA. Every case must stand on its merits and we are never afraid to defend the substance of a policy or presentation, but the opportunity to plead our case with this committee is very important. I thank you, Chairman, and members of the committee for the time you have given us to plead cases.

Chairman

Is it agreed that we now go into private session? Agreed.

The joint committee went into private session at 4.40 p.m. and adjourned at 4.50 p.m. until Wednesday, 21 February 2007.