Since the Minister has already spoken on this Bill, would it be possible for us to have a copy of his Second Stage speech circulated?
Dairy Produce (Miscellaneous Provisions) (Amendment) Bill, 1979. [Certified Money Bill]: Second Stage (Resumed) and Subsequent Stages.
Question again proposed: "That the Bill be now read a Second Time."
It was circulated.
Could copies be circulated today?
The Official Report is available.
I welcome the Minister of State to the House and I hope we will have a happy relationship with him. We are a little disappointed on this side of the House that the Minister for Agriculture is not here. I am sure he has other business to do but we would have liked him to be here today so that we could direct our remarks to him. I am sure what we will say will be conveyed to him by the Minister who is present.
We welcome this Bill. It is a very important Bill as far as the agricultural industry and the dairy industry are concerned. It provides for an amendment and an extension of certain provisions in section 6 of the Dairy Produce (Miscellaneous Provisions) Act, 1973. We can speak about the functions of An Bord Bainne and the dairy industry as a whole. The future prospects for An Bord Bainne and the dairy industry are good. There are many pessimists who preach the gospel of doom but, as a person deeply involved in the industry, and in the production end of the industry, I feel we do not need pessimists now but optimists.
We have been fighting our case in Europe and while we are trying to negotiate price increases for our farmers we must be optimistic. The pessimists are endangering the case we can make in Europe and I hope my contribution today will help our case.
We have a case to make in Europe and encouragement must be given, not alone by Members of the Oireachtas but by the farming organisations, for the promotion of the future development of our dairy industry. The producers—and they are the farmers—must be satisfied that, if they produce more, they will be compensated for doing so and they must be satisfied that there is and will be a market for their produce. I believe the markets are there and not enough is being done to seek out the markets that are there. I will elaborate on that later.
Bord Bainne have a major part to play in the development of our future markets. That is obvious. Bord Bainne have been playing that part since their foundation in 1972. They have made very little use, if any, of the intervention scheme. Recently some butter has gone into intervention, but the amount is so small that it is not worth talking about. We would hope that our butter would be sold. World production of dairy produce will increase. With greater selling power within the producing nations, especially within the EEC, total production can be sold at a profit, which is the important thing. There is no use in selling something if we cannot make a profit. Any profit we can make out of the sale of our produce comes directly back into the national kitty and, through the national kitty, into the farmers' pockets.
Agriculture in Ireland accounts for 20 per cent of the gross domestic product and about 23 per cent of the working population. The general work force does not understand how vital it is that the agricultural industry should expand. The message should be told and told again to all concerned, all those people who are knocking agriculture at the moment, that nearly a quarter of the working population work in agriculture. It accounts for about 40 per cent of the total Irish exports. People should think about the value of agriculture to the economy because of the exports which are generated by the development of agriculture. It is time people realise that 40 per cent of total Irish exports are agricultural exports.
Any downward trend in production in agriculture would have an effect on the total Irish exports because extra production in agriculture is exported. Sixty per cent of Irish agricultural output is exported. Forty per cent is consumed at home That is a message for those who are doubtful about the value of agriculture to this country. Any increase in agricultural production will be exported. It is very important that we should encourage more and more agricultural production. We can see our balance of payments and the effect that increased production in agriculture would have on that and we must try to strike a balance. Every day as we take up the papers we see that the balance is going against this country. If we produce more agricultural produce that must be exported; the only way we can get rid of it is through exports, and this will help our balance of payments. It is very necessary that we give confidence back to the industry.
There is a lack of confidence among the farmers and a lot of the blame can be put on the Government. They are not encouraging agricultural production sufficiently. The introduction and threat of extra taxation on farmers do not give encouragement. Whatever section they come from, whether it is Government, trade or a trade union, people must think again of the effects that any downward trend in agricultural production will have on the country as a whole and on employment in the agricultural industry. Of the working population 23 per cent are involved in agriculture. Any downgrading of agriculture will hinder its development.
Dairying is more important in this country than in any other country of the EEC and I will give figures showing that later. It is easier for the other eight countries to bear the cost of a reduction in milk supply than it is for Ireland because of our dependence on milk production and in the way the dairy industry operates in Ireland. Many of the farmers, because of land structure and climatic conditions, cannot change from milk to any other form of agricultural production such as beef, cereals or beet. They are committed historically to milk production and the real example is the development of the creameries and the co-operatives. The creamery industry developed mainly in the areas of high density in Munster, where 68 per cent or two-thirds of our milk supply to creameries is processed, giving employment to over 10,000 workers and a way of living to small and medium farmers.
Famous creameries come to mind and Senators will understand that I am naming them to show where they are situated, the type of land that is around them and the type of development that is taking place in those areas. In those places very little of any other type of agricultural production can take place. The creameries that come to mind are Mitchelstown, where I have worked, Golden Vale, Centenary, Drinagh, Bandon, Ballyrowe, Newmarket and North Cork. Those are all in Munster. An examination of the situation of each of those will show that it is of the utmost importance that further development takes place in those areas. In Leinster we have Avonmore, Wexford, Kilkenny, Callan and Westmeath creameries. In Connacht, there is the North Connaught Farmers Co-operative, a recent development which is an amgamation of small creameries in that area. I am sure many people here have read about that. It is a result of the encouragement given by farmers, industry. Government and other people who had an interest in the development of the west of Ireland. In the west also are Kiltogher and Killasnett. Then we go to Ulster where we have Lough Egish, Killeshandra, Bailieboroúgh and Donegal; again the picture is the very same. The same type of area is involved and if you are going to allow the non-development of that area by the reduction in milk supply then we will get no respect from future generations. It is necessary that further development within the industry through the development of the co-operative movement continues. If the people are to be encouraged to stay in rural Ireland then rural Ireland must prosper. It will prosper through the co-operative movement and the dairy industry.
It is known worldwide that the demand for milk and dairy products will increase, but the main areas in which the increase will take place are in the countries of the Middle East and the USSR, who at this time pay a lower price for dairy products than is required to compensate for their production. One product for which demand will increase and which should bring a reasonable income is cheese; the production of cheese is very important. The present Government made a mistake when they removed the subsidy on cheese on the home market because we should develop a taste for cheese at home as well as encouraging it internationally. Cheese is wholesome and a good basis for a meal. It is a full product. The highest demand for it at the moment is from western Europe but it is expected that demand will develop in North America, Eastern Europe, Japan and the USSR, and if we take our expertise to the oil exporting countries we may get a good return. Perhaps a deal could be made for the sale of our dairy products—cheese, milk, dried milk, skim powder and so forth—in return for the importation of oil into this country. The Department of Agriculture and the Department of Industry, Commerce and Energy might come together to do something about it. Demand is expected to decrease from countries which have a developed market economy. There should be some demand for milk powder, condensed and evaporated milk powder especially in the oil producing countries.
Bord Bainne should now and in the future be actively involved in the sale of such products in those countries. The countries that should be explored are: Algeria, Iraq, Saudi Arabia, Kuwait, Mexico, Peru, Cuba, Brazil, Syria, the Phillipines, Malaysia, Thailand, Singapore, India and Egypt, which cover a vast section of the globe. If we carry out a survey within those countries, if we go and speak to the people concerned there with exports and imports I am told the products can be sold, that their markets are wide open to development because these products can be used as raw materials. Speaking as somebody involved in the dairy industry I am aware there is an expanding market in those countries for the re-processing or recycling of milk products. In this regard the EEC should set aside some portion of its expenditure for the support of dairy products and the development of the relevant markets. Ireland alone can do very little without the help of the other eight member countries from whom finance might be made available for the type of survey to which I have referred in those countries. Such money would be not alone well invested but everybody in the EEC would benefit therefrom.
Our dependence on Britain for the purchase of our dairy products should remain in the future. But because of the reduced consumption of dairy products, because, like ourselves, Britain will also gain from the sales of agricultural produce to the EEC, farmers in Britain will produce more if they are paid to do so. In itself this will cause us many problems, if they are to be self-efficient in production and have a remainder for export. Our greatest problem will be future negotiations with New Zealand in regard to allowing their cheese and butter into Britain. This will be of great importance. The quota must be eliminated or severely reduced. Let us all acknowledge that New Zealand had to be allowed time to find other markets. I believe they have been afforded sufficient time now, with quotas ceasing by 1980, thus affording us breathing space to develop new markets within Britain.
Bord Bainne will have a major part to play in this development and I am sure, as in the past, will come up trumps in the future. Bord Bainne's priority in the development of our export dairy products must be in finding out where are the best possibilities, product by product, market by market. They must show that the Irish dairy industry has something unique to offer. Our dairy produce has been well received anywhere it has been offered; Bord Bainne should have no difficulty in getting that across. Bord Bainne must improve Ireland's image as a base of high quality food. Their executive staff have been in the market place selling our products and emphasising their very high standard. They must continue to do so.
Obviously, the more milk that is consumed within the EEC the less need there will be for its sale in other markets. The consumption of liquid milk within the EEC absorbs only 25 per cent of the total production of milk. It is essential that some Community promotion campaign be agreed to promote the sale of extra liquid milk. To this end some portion of Community expenditure should be set aside for its promotion and publicity, so that milk and cream will carry the same weight in advertising products as beers and soft drinks. The media data for the UK in 1978 shows an expenditure ratio of six to one in favour of soft drinks and alcoholic beverages. In West Germany the corresponding ratio is an extraordinary 12 to one in favour of soft drinks and alcoholic beverages. In the whole EEC the ratio in favour of soft drinks is in the region of ten to one. Therefore, it is necessary that something be done in that regard. It is wrong and is defeatist for the dairy industry of the whole EEC to sit and watch its major markets slowly being eroded by those competing products.
I am sure Bord Bainne and their counterpart marketing organisations within the other countries of the EEC have sufficient marketing skills and the EEC sufficient finance available to permit the right type of advertising of dairy products. We have sufficiently bad advertising from a campaign organised by the section that wants to get rid of milk and introduce soft drinks into the production end. The consumption of soft drinks and of milk cannot be compared. Milk has something to offer; it is a full food. Soft drinks have nothing to offer except the quenching of thirst. That type of ratio to which I have referred, ten to one, in favour of the advertising of soft drinks is definitely wrong. The necessary money must be made available and, if it is, I am sure Bord Bainne will engage in the appropriate advertising. Bord Bainne cannot do anything without finance being made available. If the necessary finance is there I am sure Bord Bainne will not be found wanting and I am sure that the necessary finance would be made available if we sat down and thought about the problem, if we thought about the situation whereby because of advertising, soft drinks and beverages can command that type of market while milk can command only one-tenth of the same size of market.
We have heard about the co-responsibility levy. It is necessary to say something about the effect the co-responsibility levy will have in this country in terms of production. The enthusiasm has gone from the agricultural sector. There is concern about the future of agriculture. Some injection must be made in that industry to encourage the farmers to develop agriculture. In this context I shall refer only to one aspect. I will not refer to the local levies: the farmers themselves have referred to those but I will try to make my case on the basis of the co-responsibility levy as it affects Ireland more than it affects any of the other countries. If we examine the amount of milk produced in the other member countries of the EEC vis-á-vis our own production we find that our production levels can have only a minimum effect on the overall picture. In other words, our country has not really developed its potential in milk production. We are only half way there while the other countries are at their maximum. Therefore, to stop our production by putting a co-responsibility levy on our farmers is wrong and whoever is responsible for it must see that that is righted. I could go back over a long period of years to show the development of the dairy industry and of milk production in Germany, France, Italy, Holland, Belgium, the UK and Denmark. Any such examination would show that this co-responsibility levy now being imposed in Ireland is wrong.
I have here the figures for production in the various countries in 1978 and I understand these will show an increase for 1979. The figures were supplied to me by Bord Bainne. In 1978 the production of milk in Germany was 5,000 million gallons. In France 5,400 million gallons were produced. In Italy, the figure was 2,100 million gallons; in Holland, 2,400 million gallons and in the UK, 3,400 million gallons. In Denmark, which is a small country, the figure was 1,140 million gallons and Ireland produced 990 million gallons. If we compare two of the countries, Germany and France, we will be talking about 10,000 million gallons of milk while our drop in the ocean is 990 million gallons. Over a period of years those countries have developed by reason of their having been members of the EEC for much longer than Ireland has been a member. We are only recent members of the EEC. With the kind of money that was paid for milk products during their time in the EEC, these other countries were able to develop their industry. They developed it to the extent that the average cow in Germany and France produces 1,300 to 1,500 gallons of milk a year whereas the average yield of our cows is about 700 gallons per cow or only 50 per cent of the development that has taken place in Germany and France. In that situation it is not right for the EEC to impose a co-responsibility levy on Ireland. We have not been able to develop the production of milk as we would have developed it had we been in the EEC as long as those countries are. The price of milk before we went into the EEC was so low that farmers were not encouraged to increase production. Were it not for the encouragement the dairy industry gave to the production of milk we would have been a very poor country. Unless we are allowed to develop further now the production of dairy produce, our country will be worse off. Our farmers are very worried at the moment and I do not have to tell anybody that. We all know it. Unless we do something to help them and encourage them to develop the dairy industry, not alone will they suffer but every person in this country will suffer also because the dairy industry is giving employment to up to 20,000 people. The dairy industry is giving employment in areas where employment is needed. That is in parts of rural Ireland where there are not any other sources of employment. If we want to maintain the population of rural Ireland, especially of the west of Ireland, and of the west of Munster, of west Cork and parts of Kerry, of Limerick and of Clare, we must allow the development of agriculture.
Bord Bainne inform me that no matter how much we develop and how much we produce in dairying they will sell it. The proof is there. They sold it already. The intervention system was not used by Bord Bainne until very recently. They have assured me that if they get the necessary encouragement from the Government and our EEC representatives they will seek the markets they believe are available. What is necessary is finance to allow the development of the markets abroad and to advertise our products abroad. In my opinion, what is not necessary is the levying of the farmers in this area. We are talking now about the co-responsibility levy. If the other Ministers of the EEC are shown the make-up of the dairy industry, in the areas where the industry has developed, they will be convinced that the co-responsibility levy is wrong for the development of milk in those areas.
Ireland will be worse off if milk production is downgraded. There are thousands of people in this country who do not understand that, but they should be made understand it. They will suffer if the population is not kept in the west. If the population is not allowed increase in the west and in Munster, they must go somewhere to find work, and that will be to the major cities. There will be an influx of people into Dublin from those areas. Who will pay to house these people? The city taxpayers. We heard that PAYE marches have taken place and we realise the people in the PAYE sector are paying too high a price already. If we do not allow the development of agriculture, the PAYE sector will have to pay more. This will lead to chaos and confusion in the cities.
It is necessary to encourage Bord Bainne to go out and do the job they were appointed to do. We have very efficient people involved in the sale of our dairy products. The personnel are willing and able to do more at very little extra cost, but we must encourage farmers to produce more, to increase their cow yield. Our average cow yield is in the region of 660 gallons per cow whereas the average yield in the countries I mentioned is in the region of 1,200 to 1,500 gallons per cow per annum.
I want to refer now to the financial development of Bord Bainne since 1973. In 1973 Bord Bainne borrowed £43 million from the bank. There was a guarantee of £20 million which covered 47 per cent of the borrowed money. In 1974 they borrowed £45 million, the guarantee was for £20 million, 44 per cent. In 1975 they borrowed £73 million, the guarantee remained at £20 million, 27 per cent. In 1976 they borrowed £79 million, the guarantee was increased to £40 million, 46 per cent. In 1977 they borrowed £103 million, and, under the new system introduced in 1976, they got additional credit from their suppliers. That was the right move. That year they got £28 million credit from their suppliers. which totalled £131 million. The guarantee remained at £40 million, only 31 per cent of the total. In 1978 they borrowed £151 million and £47 million additional credit, which totalled £198 million, and the guarantee remained at £40 million, 20 per cent. Today we are increasing the guarantee to £90 million. If Bord Bainne continue developing as they are and if they and the farmers get the right encouragement, that is all that is needed. Bord Bainne will then have to borrow more from the banks. This year that £90 million will guarantee about 50 per cent or 47 per cent of their loan, taking in the additional credit from suppliers. If we allow a situation to develop where that guarantee will be reduced from 47 per cent to 27 per cent, up to 46 per cent and down to 20 per cent over a period of three or four years, that is not the right way to go about it. If we feel it is necessary that the cover should be 47 per cent or 50 per cent in a certain year, then it is necessary, in my opinion, that the cover should be around 50 per cent every year. Some system should be introduced to allow the additional guarantee over the years. Bord Bainne asked for more than £90 million. I believe the request was in the region of £120 million and the idea was that 50 per cent of the percentage cover would be guaranteed. That is very good business and something should be done in that regard. There should be a set coverage, maybe 50 per cent, which would engender more confidence in Bord Bainne. There is always worry about borrowing money from banks because of the escalation of interest rates. It is necessary to have some substantial coverage to guarantee borrowers.
I have said enough on this Bill, but what I have said was necessary, I hope it will be accepted by the Minister. I hope he will allow the development of agriculture to take place and the dairy industry to expand. If that is done and the co-responsibility levies, and the other levies that are now being imposed on farmers who are only making a mere living are removed, there is no doubt that encouragement will be given back to the industry. We will all benefit, whether we are Senators, Ministers or people on the dole. Every section will benefit from the development of agriculture and the dairy industry.
I support the Bill before the House. Its purpose is to increase from £40 million to £90 million the level of guarantee to An Bord Bainne. I am particularly pleased that the Minister of State at the Department of Agriculture is here to listen to the debate, because his interest, dedication and commitment to his Department and to agriculture are widely known and recognised.
The provisions in the Bill are the practical recognition by the Government of the success of the board in their task of marketing the produce of our dairy industry and an awareness by the Government of the need to improve and to expand our existing marketing arrangements. As Senator Butler in his very constructive contribution rightly pointed out, dairying represents a major proportion of the agricultural industry. Its success or failure reflects itself not only in farm income but also in our balance of payments, balance of trade and also in our job creation programme.
It is an established fact that three out of every five jobs created in this country have a direct or slightly indirect relationship with the argicultural industry, either in the processing of agricultural produce or in the servicing of the industry itself. Our valuable livestock exports are, of course, completely dependent on the dairying industry. Therefore, it is obvious to all, I am sure, that any threat to the industry will have to be courageously and firmly defended by the Government.
We give a lot of lip service to agriculture saying it is the backbone of the economy. It is something that is said and commented on by a cross-section of the community. I find that very often this lip service is not backed up by any kind of practical action. At the present time there seems to be a greater emphasis on talking about, for instance, farm tax than the benefit to the nation of a progressive, expanding agricultural industry. I say this honestly and sincerely, and I hope I am not considered biased because I am a farmer: any action by the Government or the EEC which will inhibit or restrict farm development will in the long term be to the detriment of every sector of our community. Senator Butler developed that point very well.
Dairy exports have increased from £50 million in 1972 to £450 million in 1978. The figures speak for themselves. It must be obvious that our economic survival as a nation is dependent, not only on the maintenance of that level of exports, but on increasing them as far as we possibly can. It is in that context that I support the Bill which strengthens the resources of the body responsible for these exports.
Tributes have been paid to An Bord Bainne by the Minister and Senator Butler. These tributes and comments are richly deserved. The board have fulfilled their obligation and commitment to the sale of our agricultural produce. Positive proof of that is their ability to find new markets, and their ability to sell produce outside of intervention. This latter point is relevant.
This Bill comes before the House at a time when there are strong threats from the EEC of action to cut back on dairy production. As mentioned by Senator Butler, it comes at a time when farm profits are at the lowest for some years, and when the benefits of EEC transitional prices have come to an end. It comes also at a time when farm morale, at least in the short term, I hope, is at a low ebb. Some of this is justified, but much of it is created by an overemphasis by agricultural spokesmen on gloomy forecasts for the future. This kind of talk is defeatist. I would prefer to reflect on the more progressive and more optimistic forecast of our new director of AnCOT, Dr. Walsh, who indicated that the future for agriculture was good and that the current stabilisation of prices presented a challenge for farmers to maintain and improve their incomes through greater efficiency and greater production. I believe, knowing the agricultural industry, as I do, that Irish farmers will respond to that kind of challenge. They have responded to it in the past. The very fact that we are talking here today about surpluses, if such exist, is an indication that farmers have responded to that challenge.
After encouraging farmers to specialise, as we have through our various agricultural policies, encouraging them to improve their efficiency and encouraging them to invest heavily and to borrow for the industry, there is a serious obligation on the Government and on the EEC to protect that investment. Not more than 12 months ago even the banks were encouraging farmers to take more than they actually needed for investment. It is a sad state of affairs to find that those same banks are now taking those farmers by the throats and asking them to reduce their overdrafts drastically overnight. It is regrettable that such should happen to the agricultural industry at the present time.
I want to make the point as firmly as I can here today, and I know that I am making it to a willing listener when I am making it to the Minister of State, that there can be no going back now as far as the dairying industry is concerned. Farmers cannot be left, in my opinion, carrying the can for bad economic forecasting or inadequate marketing regulations, most of them outside the control of our own Government and within the EEC. It needs to be made clear that we cannot tolerate or accept any move by the EEC to restrict the expansion of our dairying industry. We should resist any such attempt by using our power of veto, if necessary. That is a strong statement, but I think the threat to the industry would be so serious from the national point of view that our Government would have to take drastic action if it was necessary. I campaigned vigorously when the proposal was put before us to join the EEC, and I would like to think that I played as prominent a part as any ordinary worker could play in that campaign.
One of the motivating factors in regard to EEC membership as far as I was concerned was that there would be unlimited markets for our agricultural produce and farming would benefit considerably. In fairness, it must be said that Irish agriculture has benefited—there is absolutely no doubt about that and I hope the same situation will continue into the future.
Having said that, there is marked insensitivity at EEC level in relation to the individual problems of member states, and it will have to be brought home clearly to the Community that there is a marked difference between the economies of the countries constituting the Community itself, for instance between us and the large industrialised, full employment economy of West Germany. That must be contrasted with the small family-sized agricultural holding in this country, where 60 per cent of our holdings are below 40 acres. We are dependent, as Senator Butler rightly pointed out, on that kind of farm structure to maintain the balance between the rural and urban communities, and also to ensure that as many people as possible are employed in the agricultural industry. It is our most important industry, and even though we are making considerable progress on the industrial side, agriculture will continue to be the main industry on which our economy is based.
It is also important to realise that as far as earning an economic livelihood from the small farms—and I have indicated that 60 per cent of them are below 40 acres—the enterprise carried on on those small holdings is a viable enterprise which will give the highest level of economic returns to the farmers themeslves. The Agricultural Institute and everybody associated with farm management in the country have clearly indicated and proved that the only worthwhile viable enterprise for that size of family holding is a progressive dairying industry or enterprise. Therefore, anything that would interfere with the progress and development of that will interfere immediately with farm structures and with the livelihood of thousands and thousands of our smaller farmers.
Senator Butler made the point that we differ from the other member states because of our later entry to the EEC. Germany and all of the other major economies had been building up their agricultural industry from the moment that the Community was established. We in Ireland have been making progress. Irish farmers have responded magnificently to the opportunities provided by EEC membership but we are still only in the process of building up the industry and, therefore, because we are now expanding at a faster rate than the agricultural economies already established, any introduction of a levy or a cutback would immediately hit us more seriously than any of the other member states. That would be a serious situation for our agricultural industry.
In regard to surpluses, because of the size of our agricultural industry in relation to the larger member states we are only producing 5 per cent of the total dairy produce of the European Community as compared with 25 per cent for Germany. That must be a strong bargaining and arguing point for our negotiators when they sit around the table to fight the case for our developing agricultural industry.
There is another point that I want to refer to. In the larger agricultural enterprises in the other member states—I quoted Germany as an example—the milk is virtually produced in factories. It is produced from cows that are very often housed all the year and being fed on imported concentrates from outside the member countries, and there is no difference between producing milk, from concentrates that are imported, and we are importing the products—of which we are very critical as far as New Zealand is concerned—directly from outside the Community. The net result is the same: milk is being produced from resources imported from outside of the Community.
I will conclude with the observation that we have been assisted in this country through grants from the EEC to improve the efficiency of the industry, and I am proud and pleased to come from a part of the country where we have one of the most modern processing plants in Europe, and that is the new Avonmore plant. That plant has been established with the initiative of the amalgamation of smaller creameries in the area, but also with excellent grant assistance from the EEC. The economics of that new modern processing plant are based on an increased and expanding milk intake and, therefore, in that context any attempt to interfere with the expansion of the industry in the Avonmore area, or elsewhere in Ireland for that matter, will militate against the thinking and the planning behind the establishment of such efficient plants. If the unit cost increases in these plants arising from a reduced milk intake, in addition to the levies which have been referred to, the producer will have to carry that increased cost.
From the point of view of milk processing and the modernisation and the streamlining of the industry in general, we cannot tolerate or accept any restrictions imposed from outside the country in relation to that kind of development. As Senator Butler pointed out, there is a need for Bord Bainne to explore and to do some market research into new products. Somebody shopping in a large supermarket recently was amazed at the number of dairy products there which are not produced in this country. Here is a challenge to An Bord Bainne to do some market research into new products and to enable the industry to diversify further. I conclude by saying that we have merely laid the foundation stone for an expanding industry and it would be disastrous to the national interest if any action at present were to restrict its development.
I shall not detain the House at any great length. Most of my points have been very ably made by Senators Butler and Hyland, both of whom were remarkably at one from each side of the House, in welcoming the Bill and in reinforcing the House's confidence in An Bord Bainne as an agency for the promotion and development of the dairy indsutry. One point that was not touched on is worth referring to, particularly at present. The Minister referred to the present threat to the dairy industry, of continued price restraint and, much more important and serious, proposals in Brussels aimed at restricting increases in milk production and at reducing the cost of the Community budget of support for the milk sector, which proposals must be resisted. The necessity of resisting them has been reiterated by the two Senators who have spoken before me today. The reasons they put forward are cogent and convincing ones. First of all, the importance in terms of employment and the importance of the demographic distribution of the dairy industry through the country, very often giving support to some of our most neglected, depopulated regions. Then there is the very important argument that a certain momentum has been built up in individual farms and in cooperatives throughout the country over the past decade, which momentum should now be beginning to produce substantial results and the threat to which at the moment would be disastrous for our farmers in terms of morale.
All these and other arguments put forward are extremely important, but it is also important to note that we live in a world where huge areas of the world population are starving. The EEC, when they came together, were probably motivated, in the first place, by economic concerns but many who supported the EEC—I was not a strenuous supporter myself, being sceptical from the beginning—saw them also as the centre of enlightened thought with regard to the world and its economy. One of the scandals to emerge in our times is, not the production of a great deal of food, which is a very good thing, but the failure to achieve equitable distribution of that food throughout the globe when so much human suffering meets our eyes every time we switch on a television set, and there are famine-strickened communities in the Middle East, the East and all over the Third World, while the EEC have mountains of beef, cheese, and butter and lakes of milk and wine. The worst possible argument is that the answer to an increasing butter mountain is to stop producing butter. The answer to it is to thank God to be able to produce it, to find ways of distributing it equitably and selling it and even, if possible of giving it away.
That is one of ways in which the EEC have failed us. They have a co-operative development plan, which has gone a certain distance, and a food aid plan. One of their great achievements is harnessing enormous potential for production. But that vision will be absolutely negatived and destroyed if at this stage the enormous potential for production achieved in Europe is cut back, dissipated, frustrated, destroyed because the mechanisms for distributing that food, so miraculously produced, cannot be found. In other words, the challenge—not just the national or the Community but the global challenge—to the EEC at the moment is not to stop production but to bend their unique energies to finding means of distributing what is best in what is produced.
Senator Butler says the advertising of beer and soft drinks bears a terrifying relationship of ten to one to the advertising of something as wholesome and salutary as milk and cheese. That is a moral scandal and that is where the emphasis of our thoughts should lie, particularly as we approach Christmas and see the unequal distribution of our own nation's wealth—we walk along O'Connell Street and see all the begging children, and the great deal of poverty that we have. To say that the answer to food surpluses is to stop production is a most selfish and perverse manner of thinking. The moral case must be argued. You cannot tell farmers to stop producing when people are starving. All the arguments put forward by the Minister, Senator Hyland and Senator Butler are there, but there are very obvious moral considerations and that is one of them which I add to the arguments already put forward. It is extremely depressing to hear economists speaking about economics as if it were science with the same implacable laws as, say, physics, or the law of gravity; if something is let go, it falls to the ground and that is a law. They say that there are laws of economics which really make it impossible for us to distribute meat mountains or butter mountains among starving people. That law is of human making; it is not like the law of gravity, which is a law of nature. If that law has been invented by humans, surely they can harness their ingenuity and change it to make things different. I have not that ingenuity, but there is something wrong in a world where there are mountains of food and, at the same time, millions of women and children are starving. To stop producing would be a way back to chaos. Means of distribution must be found.
I find myself in very close agreement with Senator Martin. There is no doubt about it that, no matter how one looks at the entire EEC policy, whatever else is the answer to our problem, to stop farmers from producing is not. Once that happens, not alone will it remove a remote chance that a lot of starving millions will get our food, one way or the other, but it will also mean that you will have a lower standard of living for the farmers than at present. So, in fact, you hurt two sections with that policy.
I am delighted to get this chance to speak this evening on this Dairy Produce Bill because like the Minister of State I represent an area which would be hardest hit if the confidence in farming and milk production was eroded. Unlike Senator Hyland, I believe that there is a complete lack of confidence in farming. No amount of criticism by the so-called farm leaders and others will get it across to the farmer who lost money in 1979 that 1979 was a good year for farmers. He is paying 19 per cent on money borrowed for a development project based on milk. He is unable to repay the bank manager or to fulfil his commitment to the ACC, because 1979 was a bad year for many reasons, apart from economic reasons. No farmer big or small will believe it was not a bad year. I want to put it on record that 1979 was a disastrous year. I certainly speak with authority. I am a farmer, and probably a smaller farmer than Senators who have spoken. I understand the figures involved and I will come to them at a later stage.
Confidence in the dairy industry is at an extremely low ebb. Farmers are the first people to recognise how well or how badly their industry is doing. They are the very first people to respond to any type of progress or any opening which will give them a reasonable living for themselves and their families. At this time of the year there are in-calf heifer sales all around the country. This is the life-blood of the dairy industry. Most farmers buy in their replacement stock at this time of the year. At some of the sales in the past month or two you could hardly give away in-calf heifers. Nobody can contradict that because I was at them. People in that trade are selling those in-calf heifers for between £200 and £300 less per head than they got last year. Ask any of those farmers what sort of a year they had in 1979.
The Agricultural Institute produced a figure a fortnight ago as a projection of the type of incomes farmers would have for the full year 1979. The finding is that, on average, there will be a drop of 9 per cent in their real income. I am not talking about their ordinary incomes. I am talking about the real income of the average farmer in the Twenty-Six Counties.
I certainly agree with the previous speakers who talked about how important the entire milk question is to Ireland. Ireland is primarily a milk-and beef-producing nation. There is a very good reason for that. We have the climatic conditions which enable us to beat any competition from anywhere under certain conditions. It is very important that at the Council of Ministers meetings we hang on to the advantages we have. If there is any meddling with milk production and the future for milk production the Minister should go on bended knees to extract sympathy from his colleagues. If that does not work, I suggest he should hammer the table—a very famous statesman did that once at the United Nations and it did not do him any harm—and use the veto. The very life-blood of the Irish economy is at stake if they try to fiddle with the common agricultural policy in so far as it relates to us and, in particular, to our milk production.
Every country joined the EEC for different reasons. There were a few common aims but basically each country decided to join because they believed there was a better future for them in the EEC. We joined primarily because we thought we would get away from the clutches of the cheap food policy of the British market which had damned us for years. We joined because we could see a new horizon for every farmer in Ireland, big or small. We joined because we believed that the extra income that ensued from our accession would mean we would keep many more families on the land or at least stabilise the population of the underdeveloped areas. In the first four or five years it appeared that that would happen.
While we can blame the EEC Ministers and the EEC Parliament for deciding to revamp the entire EEC budget in relation to the Common Agricultural Policy, it is only fair to say that because of Government action in the past two or three years—certainly in the past year—any Minister for Agriculture arriving in Brussels to negotiate for and on behalf of Irish farmers would find that his hand was tied. There would not be much point in trying to convince the Ministers that we objected strenuously to the co-responsibility levy being increased at the same time as the former Minister for Finance slapped a levy of 2 per cent on most agricultural products. I can understand how difficult it would be for our Minister to fight our case and say: "We do not think the co-responsibility levy should apply to Ireland," but a few days previously he and his colleagues decided to place an indiscriminate levy of 2 per cent on most agricultural products, with certain variations. Immense publicity is being given to the revamping of the CAP. When most farmers talk about the Common Agricultural Policy being changed, they think of it invariably as being changed against their better interests. They have good reasons for thinking that way.
We have a very proud record of being able to sell our milk products in markets far away from the EEC and in nearly every corner of the globe. It is remarkable, particularly in the beef business when intervention was its saviour on a number of occasions, that we did not put dairy products into intervention. If one can believe the rumour emanating from Brussels at the moment—and I stress that it may be only a rumour at the moment—it is proposed to ensure that for the 1980s milk supply there will be an over-production levy. This levy on over-production would be an absolute disaster. As Senator Butler said, there is no doubt that with rampant inflation, as we have it at the moment, wages depreciation and so forth, the processing industry in this country will have to ensure that 15 to 20 per cent of the total cost will have to be obtained somewhere to keep the industry viable and the only place to get this is on each gallon of milk as it is sent into the creamery. From that point of view, every management committee of every creamery in Ireland expect that the 1980 milk intake will be up by between 5 and 10 per cent. If this ruling from the EEC comes into effect, any person who produces more in 1980 than he produced in 1979 will be penalised severely on every gallon of milk and I understand that it is possible that that levy could apply to even the smallest farmer in Ireland. If that comes true, we will be doing the Margaret Thatcher on the EEC Summit.
We will not endure this on any account and we will upset the meetings if we have to because this means so much to us. An extra special fight would have to be put up to ensure that the small farmers will have an open licence to produce as much milk as is possible on whatever number of acres they have.
If somebody comes out to the farmers, particularly the small farmers, and says, "Look, we are stopping your milk production at this level and you cannot increase it", considering, as Senator Butler said, the vast potential that is in the dairying industry for more high yielding cows, more cows to the acre and so on, in a very short time a great number of people will certainly find themselves having to get out of farming employment. I can see terrible social problems arising from that.
As most of the Senators have already said, should any type of shrinking occur in the dairy industry, it is not only the farmers who will suffer. It is a well-known social problem and a worry for all persons engaged in agri-business of one type or another and all the industries that are related to agriculture in any shape or form, because a lot of jobs will be in danger. It is amazing that when the Minister for Industry, Commerce and Energy, Deputy O'Malley is flying around the world doing his best to attract foreign industries to this country, we are presiding over a situation whereby we might let slip between our fingers the very traditional type of industries based on home-grown products. No Minister for Agriculture, Minister of State or Taoiseach will want to allow that to happen to our people.
Significant too is the conflict in this country between the rural and urban communities. I would be first to admit that there are certain minority groupings of farmers in this country who are well able to pay farm tax, provided that it is structured in the proper way. We will not go into that today. I would also like to bring to the notice of everybody concerned that the recent farm management survey showed that of the full-time farmers in this country with under 50 acres, almost 40 per cent earned £2,000 a year or less. That is £40 a week for a whole section of farmers and it can be assumed on those figures that the majority of that 40 per cent certainly would be from the disadvantaged west or the north-west. The only hope for that type of farmer is in dairying and that is acknowledged freely by the institute, the advisory service, the committees of agriculture, the Minister and everybody involved. If they find that there is no room for any extra production, what will happen to them? This year the Government were less than good to the agricultural community with the 2 per cent levy, the 30-day test, the speculation over the farm tax, not to mention the resource tax which is supposed to be £3.50 per £1 valuation. That kind of thing takes the confidence out of farmers.
The Minister of State will be aware of the great anxiety in the minds and the hearts of many western farmers at the moment in regard to their future. How could any farmer be very confident at the moment with the low price of store cattle, the sheep trade not going so well and the whole business of our milk production under severe attack? I appeal to the Minister of State here, and to the new Minister for Agriculture. The Minister has a huge job on his hands. I wish Deputy Mac Sharry very well in his new post because after the Taoiseach's his is one of the most important Ministries there is. I would be less than fair to the farmers of Ireland if I did not say here that the former Minister for Agriculture did not stand in the best interests of Irish farmers or, if he did, his success rate was not what I would have expected of him. I hope that the new Minister will make a vigorous fight over this milk problem. He represents a western constituency, he knows the problems of the small western farmer and when he will sit down at the table with his colleagues, the EEC Ministers, I hope he will go out for what he believes is right. I understand that in the very near future there will be a very important meeting of the Ministers for Agriculture in the EEC on this subject. We wish the Minister well, but whatever else happens, he must come back with the result we want. Nothing less is any good.
It must be remembered as well that in this country our milk production is our oil. It is as simple as that. As far as the Irish nation is concerned, nothing is more important to us than our milk. If one were to ask whether the Ayatollah would allow the Iranian oil to be plundered, I know well what his answer would be. Will the Minister allow our so-called influential colleagues, our EEC partners, to wreck our economy? After all, the reason we joined was to ensure that our economy be kept on an even keel. There has been great talk about our windfall, or the gravy train, the great monetary reward our farmers received for joining Europe. If one took the late sixties or early seventies as being the baseline, certainly then it could be contended that Irish farmers did quite well from the EEC. But it must be remembered that that baseline was a low one and that over the years any financial progress made by farmers had to be ploughed back into the development of their holdings. That is why this talk about our milk production is causing so much concern. Many millions of pounds have been invested, millions of pounds borrowed; great expertise built up; people have been undergoing 100-hour EEC courses to arm themselves for good milk production only to find that the powers that be are now deciding they should not be in milk production. This is something which our farming population will not stand for.
Bord Bainne have been one of the most spectacular agencies we have had in this country. They have been spectacularly successful in selling our products on foreign markets. Indeed it is fair to say that they are about the only Irish salesmen who were able to convince the Eskimoes to buy ice lollies, and that is going fairly well. I believe that whatever type of money is involved, or whatever type of expertise is required, it is important that Bord Bainne be given every facility to continue their good work because, if there is any type of cutback in our milk production every single member of the entire population will know about it to his or her cost within a year or two of its happening.
It is very important also that these facts be brought home to the other sections of the community people who are not involved in agriculture, people who know absolutely nothing about it. After all it is their country and future that are at stake as well and if anything happens the agricultural sector, in particular the dairying business, certainly everybody will be the worse off.
Most of what needs to be said on this subject has already been said. I do not think I can add anything to the eloquent words of praise given to An Bord Bainne and the dairy industry generally. Perhaps, however, there are a few ideas we could contemplate. The first thing to be said about the dairy industry is that there are two sides to it: one is the whole question of our ability to produce the product and sell it. The other is the effect on our industry here by any and every decision taken in relation to the common agricultural policy at European level. The one taken at European level is one in which we can have an input, in which we have a voice perhaps even stronger than would be expected from a country of our size and its people, so proportionately small in European terms. There is then the whole question of the world market for dairy produce. Over and above that we have in our hands the means of production, the shaping and guidance of the industry in the direction we want it to take. The first thing I would say about that is that we should not embark on organising a dairy industry until we have a clear indication of what are the world markets, until we come to terms in our own minds about what we think is the future in Europe; not what we would like to see, not what we think can be or what should be, but what it is likely to be. We must be realistic in our approach to that. The other objective is that of looking at our resources and asking ourselves what we can achieve. I do not often quote myself but many years ago I said to a group of young people, "I will not let Mansholt tell me where I can or cannot make a living", and I did not. I say that to Irish farmers today: they do not have to listen to Mr. Gundelach or anybody else telling them where they can, or cannot make a living. Where they can make a living is more a question for the farmers themselves than for European policies or anything else. If we decide that we are going to compete, if we make up our minds that because this industry is so vitally important not only to the 80,000 people, approximately, involved in it today, but to the people dependent on the industry and to the social and economic welfare of our people then it is important that we consider it in that context. We should not have any false opinions about the ability of our industry, our natural resource, our climate and so on. The truth is that whatever advantages we have from a climatic point of view we have disadvantages from a structural point of view. Certainly a lot of our partners in Europe have gone so far ahead of us that we will experience difficulty in catching up with them. If we are to catch up, we should fully realise and appreciate the problems involved.
Those people interested can get the figures and check out what I am maintaining. They will find that our performance is hopeless in relation to the Dutch. Even if one excludes meal from the calculation, which we normally do because we maintain that the amount of cheap concentrates is grossly exaggerated, and reflect on the quality of herd management, grass, livestock and the way they preserve their winter feed, it will be found that they could still beat us on their use of grass and the way in which they manage their herds. Therefore we must consider carefully the industry and the resources at out disposal.
I know we have never prepared a plan for the development of our dairy industry at national level. We have expressed hopes and set targets but we have never laid down a blueprint or a plan, or taken the necessary steps to execute that plan in the long-term. I have always said we should set our targets at national level. We have done that but, having done that, we have to look at the structure and see what needs to be done to put it right. We must look at the expertise involved, reflect on the two per cent of farmers who have received any sort of training in the industry and ask ourselves what we can do to provide training for more of them. We must consider the number of people involved in the advisory services and ask ourselves how many are required, how many dairy specialists per county, or per electoral area, breaking it down, giving them targets as well. We must approach the farmers and ask them to participate in a plan. That is not being done and has not been done. I do not think that even the co-operatives have done that. Some of them are starting now to work out projections on the basis of surveys and so on. But the vast majority of the co-operatives went ahead with their buildings and developments—or did not—without carrying out the sort of surveys that were necessary, without consultation with the agricultural advisory services or the committees of agriculture. Therefore, I say no plan has been made and even at this late stage we should proceed to do so. For example, take a look at the plan prepared by Mayo County Committee of Agriculture. It is worth looking at. They have set targets, appearing almost to be out of reach taking into consideration the national targets set. They have set targets of 20 per cent per annum and they have made their advisory services in the different areas aware of this. That is the way to approach it and the county committee of agriculture in Mayo are to be congratulated on their ambitious targets, the way in which—even in the face of all the pessimistic talk—they have resolved that that area cannot be developed without a healthy dairy industry and have set in motion the plans and the movement to provide themselves with the necessary increases in milk production. That is one side of it, a side we should not ignore.
We should remember also that only two years ago a survey carried out by the Agricultural Institute showed that the low-yielding cows were to be found on the small farms. Furthermore they found that 75 per cent of the people in the industry had no thoughts whatever about the level of yield they were achieving, no idea about how those yields could be improved by the improvement of fodder and no idea of whether they were doing a good job or a bad job. They had no conception of the effects of meal feeding on their overall results and neither had they any breeding plans. But we did not take any notice of that. We did not say "Let us train graduates. Let us train technicians".
In China, after the revolution, when they found themselves without doctors they took in people, trained them for two weeks and then sent them out to treat the sick. We could even have approached our dairy industry at that level but we have not. We have not even considered it or thought about it with the result that 75 per cent of the people engaged in the industry are not in a position to compete. Those people have not got a price increase for the past two years. I am not going to blame either the Government or the Community for that situation but the truth is that these producers have not got a price increase in two years. We say that we must preserve the small family farm, that we must preserve dairying in the areas that need it. But the truth is that the people who can survive are in those areas in which it is possible to diversify by, for instance, going into beet or wheat or barley. The most vulnerable people are those in the areas where we cannot do without the dairy industry and where a living cannot be got on an average sized farm from any other agricultural activity.
For that reason we must consider the dairy industry not only in terms of the number of gallons of milk produced and the increase we get on that but in terms of the number of farmers we can actually retain in the industry, and that is important in the present situation of unemployment and considering that there is no other place for them to go. The British, because their steel industry has failed to compete, are to let go 50,000 people within the next two years, and they appear determined to do that. So we need not think that our people are going to find ready employment in Britain, as happened in the past. We need the dairy industry and we must preserve every job that is in it; but this can be done only by increased production, by learning to compete. All of us here have an obligation to make this fact known to the people in the industry. We must not tell them blindly that we will continue to demand a living for them from the people of Europe and that they will be kept in their jobs regardless of whether milk is going to cost £1 gallon or £1.50 a gallon. That sort of reasoning will not get us any place; it will only lead us further up the blind alley, the cul de sac that we are travelling at the present time.
There are a number of points on the whole question at European level. The first point is that the average consumer in Europe does not realise the benefits that the common agricultural policy has brought them. The average consumer in Europe does not realise that the common agricultural policy had more than the aim of retaining the maximum number of people in agriculture but that it had also the aim of making available adequate supplies of food at reasonable prices. Though it has succeeded in doing that, nobody has taken any notice of it in that sense. They have had regard only to the benefits which are going to sections of the agricultural community. They fail to realise that the actual prices of farm produce in real terms has dropped in the last ten years and that food prices have not risen as rapidly as has the price of clothing, energy or transport or almost any other commodity or service that one cares to look at. Even butter competes favourably with any of those I have mentioned in so far as increase in prices in the last ten years are concerned. Therefore, we have done a poor job in educating the consumers and the taxpayers of the European Economic Community on what they have got out of the common agricultural policy.
One need only have regard to those areas where the common agricultural policy does not apply to realise how beneficial that policy has been. For instance, for some years past the situation in respect of potatoes has been one of scarcity and of exhorbitant prices. People in that end of the food business will realise that the exclusion of potatoes from a common agricultural policy has not given any benefit either to the producers or to the consumer. Similarly, you could say the same has been true of lamb and sheep generally in respect of which there is alternation between depressions and high points. You find this situation in markets that are not regulated.
The importance of the common agricultural policy has been undersold to the taxpayer in Europe. The other problem is that the whole business needs more realistic looking at from a European level. If the Irish attitude is to be that we must preserve the common agricultural policy, that we will not allow any readjustment, then I think we are adopting a very foolish approach and in the end I think it can backfire on the whole agricultural economy and on farmers. We cannot lead farmers to believe that it is just as simple as demanding this, that and the other from the Community. The first problem is that as long as the budget of the Community stays the size it is, as long as agriculture uses 8 per cent of that budget, and as long as dairy produce absorbs such a high proportion of it, we are going to create the impression in Europe that farmers are the only people who are getting any benefit from the European Economic Community. We will have to get out of that log jam some way or other, and the way I would like to see us getting out of it is by means of a bigger Community budget. That is the point that should be pushed and stressed by our Ministers because there are other areas of need and I do not thing that we can continue to pit the regional policy, the social policy and third-world aid and all these other things against the common agricultural policy and expect it to survive, because it will not. That is quite obvious and is an area which we should look at.
The other point is that the same common agricultural policy will not serve the ten-cow farmer in County Cavan, County Leitrim or County Mayo as it can serve the 40-cow farmer perhaps in the midlands or the 100-cow farmer in the south. We have to take that into consideration and adjustments in the policy will have to be made in favour of the smaller producer, particularly from the point of view of retaining employment when alternative employment is not available. That is a case that must be put and must be put by our representatives who have the real power naturally in the Council of Ministers to negotiate alternatives to the present policy. We must not go as the blind advocates of the common agricultural policy. We must be prepared to readjust ourselves to new thinking and to working out solutions in the light of the fact that the dairying industry is so important to Ireland, a point which I think will be considered at European level. In Holland I have seen family farms on which there were 200 cows and with yields of over 1,000 gallons per cow. If the question is one of price alone, it is obvious that producers in the West of Ireland will be put out of business long before their counterparts in Holland if the freezing of milk prices policy continues. I think we have to readjust our thinking and consider what can be done—if special cases can be made for Ireland—while at the same time allowing the whole question to be looked into in a realistic manner.
On the question of food for Third World countries and so on, of course it is a shame to say that food should be put into storage or that food should be dumped or sold to countries who are spending their money on re-armament and so on while people are starving in the world. That sort of naive argument is very easy to make and any of us who want to make that sort of argument must be prepared to pay the price of following it through to its logical conclusion. If farmers are saying that they are entitled to produce food as long as there are hungry people in the world, then farmers must be prepared to make their own contribution in money just like everybody else to a solution to that hunger problem. Similarly, as a country we should bear up to our responsibilities in this regard. The European Economic Community actually proposed to cut the amount of money available for the assistance of developing countries and they have done that. In view of the fact that there is a limit to the amount of money available to the Community under the present legislation, we would need to be realistic in our approach to all these things. Merely proposing solutions because they sound pleasing to the ear of people in the industry will not solve the problem. We have a lot of thinking to do about all this but I believe that, since the dairy industry is so vital to the welfare of our economy, to the whole question of employment and our position within the Community, we can point to the fact that we lost 5,000, 6,000, or 7,000 jobs as a result of our membership. There are many good cases to be made on behalf of Irish farmers and in favour of giving special concessions to Irish agriculture.
We should remember that, while Irish agriculture has not got an increase for two years—apart from a 1½ per cent increase in prices last spring—British farmers, in spite of the fact that they talk about the common agricultural policy, got three 5 per cent price increases this year arising from the Green pound devaluation. This puts them in a much more competitive position compared with us than it did last year. This is designed specifically to encourage greater production in Britain and to add to the butter surplus which is in the Community at a stage when British policy is that production should be reduced.
We must balance these things against each other. In my view there is a good case to be made for Ireland, a case which will not fall on deaf ears. I am confident that, if Irish farmers produce the milk and milk products, Bord Bainne are organised to sell them. That organisation has grown and developed with the market and I am confident we will not find ourselves in any log-jam as far as marketing is concerned. On the other hand, I would like to warn Irish producers that they must consider their competitiveness at all times. As long as we have an industry in which 75 per cent of the people involved are not conscious of the importance of competition and the factors governing profitability and progress, then we have reason to be nervous about the future of that industry.
I welcome this Bill. If this Bill is welcomed by this House it demonstrates that we believe increased production of milk is necessary for the economy of this country. We heard recently comments made by certain farmers that they would reduce milk production and possibly go into cattle or tillage because by doing so, and for the same net gain to them, they probably have less work to do. That is a very short-sighted policy. To increase milk production is a necessity for our economy. For the good of the farmer it is necessary that the country is prosperous in the long term. We all know there is big scope for increase in production here. Some people have said that we can double it quite easily if we get down to it properly. The only way we can get productivity is by increased production. The only way we can get competitiveness is by increased productivity. This is what we must get.
We must visualise that the day can come when we will be dependent on our milk producing industry. They must be competitive and they must be able to sell at a price which may not suit our competitors. That is the position we must get into. We must use our benefits of climate so that if the day comes when somebody has to get out of milk production it will not be the Irish producer. I am glad some of the co-operatives are making moves to encourage suppliers to keep up their production because they realise the number of other jobs that come from milk products. Bord Bainne have done a very good job up to now and will continue to do a good job. We must at all times think of the other products that can be made from milk—in west Cork they are making alcohol from milk. Other things can be made from it. This is what the farmers should think—keep up the production. The only way a farmer can get security in farming is by carrying out that procedure.
I welcome this Bill which shows we believe this can be done and that this is the right road. If everybody looks to the long-term rather than to the short-term all milk producers will agree that this is what should be done.
I notice this Bill is being taken by the Minister of State. I avail of this opportunity of saying I am happy he has been re-appointed to his position and I wish him well. Deputy Hussey is a man who will genuinely, within the constraints of his position, represent the interests of agricultural producers, and certainly the smaller producers in the west.
I am glad to have the opportunity of saying a few words about this Bill. I am conscious of the bad press that seems to be associated with milk and butter mountains and so on. People outside the industry misunderstand what is involved in the success or the non-success of the dairying industry. The purpose of the Bill is to extend the State guarantee to Bord Bainne Co-operative to the extent of £90 million, covering a period of three years-up to the end of 1983. The Minister, in his speech last week, stated that the dairying industry is of central importance to the whole agricultural industry in Ireland and that its continued expansion is vital to the overall economic and social development of the country. I totally agree with that. The dairying industry in the past decade has shown an amazing capacity to expand and to develop its production. It has shown a capacity that is unrivalled and certainly not exceeded by any other section of our business community. The guarantee to An Bord Bainne is to enable them to finance an increased volume of dairy products.
The Minister stated that the present Bord Bainne Co-operative was first established in 1972. They took over from An Bord Bainne, a State-sponsored body that came into existence in 1971. The success of Bord Bainne—I would date its time of existence from 1961—has been outstanding. It is only reasonable that we should pay a tribute to the people who led that pioneering effort by Bord Bainne in the early sixties—men like Tony O'Reilly, Joe McGough, his successor, and to the present chief executive, Mr. Brian Joyce. Those men, and the teams who worked with them, had a high degree of marketing expertise and a very firm commitment to the successful functioning of the board. Perhaps the measure of their success can best be judged by the fact that, when Bord Bainne were established in 1961, our total production of manufacturing milk was about 210 million gallons. By the end of 1979 it is expected that the quantity of manufacturing milk will be something in the region of 900,000,000 gallons. The value of dairy exports in 1961 was about £12 million and for 1979 will be almost £500 million. That is successful marketing and, having had successful marketing, that gave confidence to the producers and they responded by expanding production on their farms.
There were three major factors responsible for that success story. There was the decision by Bord Bainne in the early days to convert milk into products other than butter. Products such as cheese and chocolate crumb, milk powder, casein, evaporated milk, frozen cream and fresh cream were products into which milk was diversified. Having achieved that diversification, the board then succeeded in establishing markets throughout many parts of the world. When we look at the marketing picture it reminds me of the attitude of people in our neighbouring island in the early years of this century when they used to say with a certain measure of pride that the sun never set on the British Empire. Today we can say with a measure of pride that it is doubtful if the sun ever sets on the markets in which the produce of Irish dairy farms is consumed. Not alone are Irish dairy products marketed and sold throughout Europe and the United Kingdom but from Canada down to Mexico, to Brazil and Peru, the Carribean, the Mediterranean, from the Middle East to Japan and the Phillipines, in 54 different countries throughout the world Irish dairy products are consumed. That is perhaps an aspect of the success of the Irish dairying industry that is not fully recognised. The third and equally important factor in the success story of Irish dairy marketing was the establishment of the brand name Kerrygold as a symbol of quality.
These are the factors that led to the success. The response of the producers was amazingly good. We have reached a situation today where, on the results of the increased production that we have had over the past 17 years or so, we can be satisfied that if the encouragement and the conditions are there the capacity of the industry for further expansion is still quite large. We can provide badly needed exports for this country. Irish dairy produce is a low cost export article because the raw material we require for it is in large part the grass. The cost to the economy of producing milk is relatively low and the advantage to the economy from the export of our dairy products quite considerable.
By continuing and ensuring an expansion of the dairying industry we can maintain additional people on jobs on our farms. We can ensure that a native industry using native raw materials can continue to provide additional jobs in processing. I understand that the number of people directly employed in creamery milk production at present is something like 90,000 and there are several other thousands indirectly employed in servicing that industry.
If there is one aspect of the story of the Irish dairying industry from 1961 to 1979 that I would express concern about it is that when we produced more than 200 million gallons of milk in 1961, something like 110,000 milk producers were involved in producing that quantity. Even though we had increased substantially that quantity of milk by 1979, the number of dairy farmers engaged in it had been reduced to 72,000. That is a reduction that we should be deeply concerned about. We have reached a downward trend among people engaged in milk production below which we cannot afford to let figures drop much further.
I would like to comment very briefly on a report from the ESRI published in The Irish Farmers Journal on 30 November 1979 and commissioned by the Irish Co-operative Organisation Society. This survey covered quite a number of creamery areas in this country. In that survey there was a clear indication that there was a lack of confidence among a number of milk producers and particularly so among the larger herd owners. The causes were identified as uncertainly with regard to taxation policies and considerable uncertainty about proposals emanating from the European Commission with regard to the curtailment of milk production. Fear was expressed in that report that people engaged in milk production were contemplating taking two steps. Some were contemplating leaving milk production, and alarmingly they were among the people with the bigger herd. There was also an indication that others were contemplating reducing herd size.
In common with other Senators I would deplore the realisation of these fears. I would Find it disastrous that there should be a lack of confidence within the dairying industry. It is too vital to the success of the economy, and there is an obligation on all who are in a position of responsibility and authority to ensure that the confidence of the Irish dairying industry is fully restored. In view of the weeks that lie ahead, this uncertainly with regard to taxation and levies should be disposed of in a manner that will give confidence to Irish milk producers.
The other factor that caused concern among our milk producers was the European Commission's proposal to reduce milk production within the EEC area. The method the Commission propose to achieve their objective is that, where to any creamery or manufacturing plant the supply should exceed 99 per cent of the 1978 supply, a duty or a tax of 3 per cent would be imposed.
That proposal is contrary to both the spirit and the letter of the Treaty of Rome. What many of us voted for was the commitment that treaty conveyed that one of its objectives would be to ensure successful development of the agricultural industry within the European Community. During the seven years of our membership, Irish agriculture and Irish dairying have benefited. I would like to see the confidence which our producers have had over the years being restored to them. I therefore say that there is a very firm obligation on the Minister for Agriculture and indeed on the Government to ensure that whatever is the eventual outcome of the discussions on the Commission's proposals for the reduction of milk production that outcome will not depress milk production on Irish farms.
Considerable publicity has been given to a so-called butter mountain—some people have described it as a milk lake—but let us briefly try to assess how large this so-called mountain is, how urgent is the need to dispose of it, and perhaps more important still from the point of view of this country, who has contributed most to creating it. My understanding is that the present supply of butter in intervention stocks in Europe represents no more than 60 days supply for the Community. We have been told and directed that in relation to oil it is necessary to maintain 90 days stocks and why is there such alarm when the total stocks of butter in intervention in Europe represent only 60 days supply to the Community?
I wish to quote from a table published in a magazine called Food News of 30 November 1979, by the Food News Company of Blackheath Village, London. There is a table showing that the total stocks of butter in cold storage, or in EEC butter stocks, at the end of October, amounted to 297,000 tons; 177,000 tons, or 62 per cent, of that total is West German butter. That quantity of Irish butter in the stocks there is 2,946 tons, or something less than 3 per cent of the total stocks. The second largest quantity of butter is from the United Kingdom, more than 51,000 tons.
Therefore, we have not contributed to any degree to the building up of these stocks. In fact, the total creamery milk production in this country could be described as only a drop in the ocean where European production is concerned. The nations who have put the largest quantities of butter into these stocks are West Germany and Britain.
Perhaps we should look at the situation with regard to the butter that has originated in the United Kingdom. We should bear in mind that at the time Britain was putting 51,000 tons of butter into European stocks, it was importing 120,000 tons from New Zealand. The New Zealand butter that does not go directly into European stocks displaces a quantity of British butter that would be consumed in the British market otherwise and which is put into the building of the European butter mountain. We have not contributed to the building of that mountain, and I do not think, in view of the special conditions that obtain with regard to farm size and so forth in this country, that we should be asked to pay the penalty for dismantling that so-called butter mountain.
It is also interesting that there is in the same magazine from which I am quoting a table showing the stocks of skim milk powder. There is a total of 291,000 tons there, and of that 277,000 tons have been put there by West Germany. Our quantity of skim milk powder in the European milk powder stocks is less than 3 per cent. I would, therefore, suggest that we should not lose any opportunity to emphasise that through An Bord Bainne we have successfully marketed through many markets throughout the world the vast proportion of our milk production, and we have only leaned to a very small degree on the European intervention fund for a tiny proportion of our total production.
I welcome the Bill and support it. I believe that anything that will restore confidence to the dairying industry is necessary and desirable. I would hope that by our contribution here this evening our dairy farmers will get the message quite clearly that with proper direction and proper commitment from the Government the outcome of the common agricultural policy talks will be such as not to interfere with increased production on Irish dairy farms. If we can get that message across we can continue the success story of the Irish dairying industry, we can again move into a situation where we can have increased production on our dairy farms, where through An Bord Bainne we can continue successfully to market practically all our production on markets throughout the world that give a good return, and that if we continue to produce an article of quality we will not have to depend on intervention to any greater degree than we do today.
If we can continue the expansion that I am satisfied our dairy industry is capable of, we will maintain those who are already in employment in our industry. If we can succeed in increasing production we can increase the number of people the industry can employ and we can ensure that quite a number of people from rural Ireland will not be put in a position of having to chase expensive jobs in an already overcrowded labour market in this country. My final word is that the Irish dairy industry is besically sound, through there may well be a slight loss of confidence there at the moment. If that confidence can be restored, I believe the future can be as successful as the past seven years have been.
First of all, I would like to thank Senator Howard for extending his good wishes on my reappointment to the Department of Agriculture, and I would like to thank all the Senators who have contributed to the debate this evening.
The introduction of this very short Bill enables Senators to embark on a debate which goes into almost every facet of the dairying industry, and indeed other areas as well, such as the 2 per cent levy, the 30-day test and so on. It is heartening to know that Senators are concerned about the success and the progress of our dairying industry. We all accept that the dairying industry is of central importance to the whole agricultural industry in Ireland, and its continued expansion is vital for the overall, economic and social development of the country.
For the industry to prosper we must have maximum efficiency in processing and marketing. We must develop and exploit markets in a planned and economical way and earn a respected position for Irish dairy products. The dairying industry, as everybody knows, has made extraordinary progress in recent years. Milk output has increased by over 40 per cent and the value of milk produced for manufacturing purposes by over 50 per cent. The value of the milk intake for manufacturing concerns has increased by about 400 per cent in that same period. The value of Irish dairy exports in 1972 was £50 million and, in 1978, revenue from these exports exceeded £450 million. This indicates the role which Bord Bainne have played in centralised marketing. Everybody agrees that they have done a magnificent job over those years and, were it not for the efforts of Bord Bainne, the quoted figure of £450 million might not have been achieved.
The dairying industry is today facing more difficult times. Price restraint is the order of the day and we also face proposals from Brussels aimed at restricting increases in milk production. The Government are fully aware of the serious implications of these proposals and, at this stage, I must again emphasise that they are only proposals. I am sure that, by the time they are argued on, they will be far more acceptable. We will be seeking to ensure that, whatever adjustments are made in the Community milk policy, the interests of the Irish dairying industry are protected. Everybody would want us to ensure that, whatever decisions are arrived at, our dairy farmers, both big and small, are protected. The Members here can rely on the Minister for Agriculture and on myself to fight the case as best we can at the level of the Council of Ministers.
For the future, efficiency in production, processing and marketing will be of greater importance than in the past. Bord Bainne's role in centrally marketing the bulk of our dairy products will continue to be crucial. If our markets are to be expanded, or if new markets are to be found abroad, it is Bord Bainne who will have the responsibility of exploring and finding those markets. A lot has been said about the erosion of confidence in agriculture at present, particularly during 1979. This was mentioned several times by Senator Connaughton in the course of his speech this afternoon. I accept that things may not have been as well in 1979 as we would have liked, but I do not accept that there is that total erosion of confidence that we hear so much about. We know that farmers, during the fall of this year, had to accept less for their cattle than they paid for them last spring. In many cases, the responsibility and the blame for that could lie with the farmers themselves. We know that they went out last spring and paid enormous prices for their cattle and, unfortunately, now they have to accept a lower price. We, and everybody here, hate to see that happening. This is a situation for which the Government have no responsibility and about which they could do nothing.
Reference has been made to the importance of protecting the common agricultural policy. I would agree in full with that. It is vital for this country that we should, at all times, defend the common agricultural policy. I was disturbed last week to see, in Brussels, the Parliament voting against the budget for 1980. This, to my mind, is a dangerous thing. I hope that our Irish representatives ensure that, at Parliament level, they make every effort to defend the common agricultural policy, because we know that that policy is the one thing that encouraged Irish people to vote in such great numbers for our accession to the EEC. I would hate to see any chinks in the armour there. That is all I have to say on this Bill. I think I have answered the points that were made.
Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.