I thank the Chairman and the committee for this opportunity to address the Oireachtas Joint Committee on Agriculture, Fisheries and Food and to update it on the WTO negotiations. Monday, 21 July is D-Day for Irish farming and the food industry. As trade ministers from all over the world gather in Geneva our farming industry is at grave risk. Our president, Padraig Walshe, informed the committee of the damage Commissioner Mandelson's WTO offer would do to Irish agriculture when he addressed the committee last March.
At that time, there was a view in Government that this meeting would not take place. Nevertheless, it is taking place, largely due to Mr. Mandelson's persistence. The present state of the European Union's position in the negotiations in Geneva and the proposals made by the WTO agricultural chairman Crawford Falconer on 19 May are the most fundamental threats to the viability of Irish farming, the food industry and employment in rural Ireland in our generation.
Members of the Oireachtas are well aware of the solemn commitment given in June 2003, when a major reform of the Common Agricultural Policy was undertaken by the then Commissioner for Agriculture, Franz Fischler, that this major reform and reorientation of the CAP was the European Union's contribution on agriculture in the WTO Doha development round. The EU Commissioner for Trade, Peter Mandelson, has shamefully and blatantly reneged on this commitment by his predecessor and the Council of Ministers. We are not only facing further reform of the CAP, we are facing the destruction of the European Common Agricultural Policy. The IFA's assessment is that Mr. Mandelson is offering to sell out the beef industry in Ireland to get a deal at any cost. He is engaged in a race to the bottom to the lowest standards of food safety, animal welfare and the environment.
The food industry is the largest Irish-owned manufacturing sector, accounting for more than 50% of exports from Irish owned manufacturing. Ireland's food and drink exports were worth €8.6 billion in 2007, representing 17% of Ireland's net export earnings. Farming, the food industry and the service industries depending on agriculture provide 300,000 jobs, which accounts for 25% of all jobs outside the greater Dublin area.
I was pleased to see the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, talk up the importance of agriculture in his speech in Portlaoise last Monday, when he stated that farming and the food sector are Ireland's most important indigenous industries. Farming and agriculture have stood the test of time in rural Ireland. We are one bright spot in today's difficult economic environment and we have no intention of relocating to Bangalore.
The WTO deal on the table in Geneva threatens our exports and the 50,000 jobs in rural Ireland. The IFA has calculated the cost to the economy at €4 billion per annum, 50,000 jobs lost in manufacturing and services and a further 50,000 farmers put out of business. Furthermore, the EU set out to achieve a so-called "balanced deal" involving non-agricultural market access and services, as well as agriculture. I challenge anybody in this country, Government, Opposition or business interests, to demonstrate the tangible benefits to Ireland of the proposed deal on the table. They cannot even demonstrate potential gains to offset the certain losses in agriculture and food from the present deal.
The greatest threat to Irish agriculture from the WTO comes from the major cuts in import tariffs. For beef and dairy products, the two major sectors in Ireland which account for 65% of agricultural output, EU import tariffs would be cut by 70%. For other products, including lamb, pigmeat, poultry and cereals, tariffs would be cut by between 55% and 70%. The IFA's assessment is that a 70% cut in beef tariffs would severely depress cattle prices in Ireland to a completely unsustainable level of €2/kg or £0.70/lb.
When account is taken of the increased volume of imports after a WTO agreement, when the EU would become the dumping ground for South American ranchers, the likely price for Irish cattle could be as low as €1.80/kg or £0.64/lb. These prices would not remotely cover the cost of production, resulting in 100,000 cattle farmers being redundant and 1 million suckler cows being slaughtered.
Sensitive product status for beef is not viable. Peter Mandelson is now stating beef will be a sensitive product and a 70% tariff cut will not apply. Sensitive product status would mean 270,000 tonnes to 403,000 tonnes of imports at zero tariff and a 23% cut on the remaining import tariffs. The EU Commission accepts that beef imports will rise by at least 700,000 tonnes. This includes large volumes of prime steak of which Ireland produces 31,000 tonnes per year. New South American imports will be at least ten times Ireland's output of prime steak, wiping out Irish beef exports on European markets. For Ireland, beef and livestock are vital national interests. Ireland is the fourth largest exporter of beef in the world. Beef is three times more important to Ireland than wine is to France.
Butter is the most vulnerable of the main dairy products. Following a 70% tariff cut, the imported price would be 16% below the EU price. This price fall, combined with lower skim milk powder prices as a result of the 70% tariff cut, would reduce the milk price in Ireland to about €0.24/litre, which would have devastating effects on confidence and development in the Irish dairy sector.
The EU already imports 283,000 tonnes of lamb annually, including 228,000 tonnes from New Zealand at zero import tariff, under previous trade agreements. These preferential imports, equivalent to 26% of EU consumption, will be increased further in a new WTO deal, particularly with Australia, which has millions of sheep, coming into the market. In addition, the normal import tariff on lamb would be cut by between 55% and 70%. Oireachtas Members will be aware of the income crisis in the sheep sector in recent years. As regards pigmeat and poultry the import tariff, which is already relatively low, would be cut by between 55% and 65% depending on the product.
To aid economic growth and progress in developing countries, the unilateral agreement by the EU, known as the Everything But Arms deal provides for completely unrestricted imports of all products from the 50 poorest countries in the world. We believe this is an enlightened and liberal strategy to lift the economies and people in the poorest countries, particularly in Africa. By destroying the European food market, Commissioner Mandelson is also destroying the opportunity for these poor countries held out in the EBA agreement.
No other wealthy country in the world, the US, Canada, Japan, Australia or New Zealand, has made such a tangible commitment to the 50 poorest countries in the world. The winners in Mr. Mandelson's scheme are not the poor countries of the world, they are the agriculture super-powers such as Brazil, and even in these countries the poor and landless will never benefit, as wealth and agricultural property is concentrated in the top 5% of the population.
If Mr. Mandelson gets his way Europe will be flooded with beef from South American ranches where landless labourers are paid only subsistence wages. Produced with lower costs, lower standards, and on enormous ranch scale units, dairy products, lamb, pork and chicken will be shipped to the EU from all over the world. The European model of agriculture based on the family farm structure will be destroyed. Corporate ranchers, multinational traders and shippers and international supermarket chains will reap huge profits, and once they have control, consumers will pay the price they set for food. There is no evidence that jobs will be created in industry or services in Europe to offset the massive €17 billion losses in European agriculture.
Mandelson is a failed negotiator. For all his concessions, the US and other countries have offered nothing. Both candidates for the Presidency of the United States are committed to protecting their farm and food industry as a vital national interest. They have stated quite clearly that food is a security issue for the US.
The US Congress recently passed a new Farm Bill worth $307 billion over the next five years. This is a very strong statement from US politicians, both Democrats and Republicans, that they are putting American farmers first. The Representatives and Senators voted by a two-thirds majority in favour of the $307 billion package, and not even the President of the United States can undo this. This is in sharp contrast to the hostile attitude of EU Commissioner for Trade, Peter Mandelson, who insists on selling out Irish and European agriculture in the WTO to the detriment of Irish farmers.
On Tuesday, 1 July, the French Presidency of the EU took office. Immediately, President Sarkozy signalled his determination to stop Mr. Mandelson's destruction of the Common Agricultural Policy. I very much welcome the strong defence mounted by the French. It makes sense. They will not throw away their food security and become dependent on South American countries to feed the French nation.
Mr. Mandelson will not give up lightly. He responded to President Sarkozy's reprimand with his typical arrogance. He flew to London and gave a press conference berating the French. By the middle of July, the fate of Irish agriculture and farming will have been decided. The WTO destroyed our sugar beet industry. We have to make a stand and I know the Taoiseach and the Government will take the lead.
