Seanad Éireann debate -
Wednesday, 2 Nov 1983

Vol. 102 No. 3

EEC Negotiations: Motion.

Professor Dooge

I move:

That Seanad Éireann, aware of the special negotiations now taking place in the European Community arising from the decisions of the Heads of State and Government at the European Council in Stuttgart in June, and recognising that the further progressive development of the Community depends on the successful outcome of these negotiations and also recognising their importance for Ireland, especially in the agricultural sector, supports the stand being taken by the Government in these negotiations in protection and pursuance of the national interest.

This motion gives an opportunity to this House to discuss the extremely important problem which faces not only the Government and the agriculture sector but which confronts all of us at the present time. Though this is a motion in Private Members' Time put down by one of the party groups in this House, the issue with which it deals is not a party issue. The motion gives an opportunity for the Minister to make a statement describing the nature of the particular problems we face, to review what has been done by the Government on our behalf to date and indicating the Government's position as the six months of negotiations referred to in the motion enter their final month. It also gives the Seanad an opportunity for a constructive debate on this topic, the nature of which this House has had occasion to speak about from time to time.

The issue which was discussed at the summit meeting in Stuttgart will be resumed at the next summit in the first week of December and is one of prime importance for this country. In discussing it we should recognise that the importance is two-fold. One of the elements of great importance is the question of the agricultural sector which is of particular importance to us and lies at the heart of this discussion. But of equal importance is that these discussions which have taken place are not merely concerned with the question of the adaptation of the Common Agricultural Policy as time goes on: they are concerned with the search for a method of re-launching the Community, rediscovering the sense of European progress that has tended to become dimmed under the influence of the world recession. Both these issues are vital to us.

Agriculture represents almost 15 per cent of our GNP. It is double that of countries such as Italy and three times that of the vast majority of our partners in the EEC. Agriculture looms far larger in our economy. Anything that would tend to damage agriculture will hurt us three times more than it will hurt, say, seven of the ten members of the EEC. Equally the problem of rediscovering a European spirit, the problem of re-launching the Community is also one that is vital to us. Because a small country like ours with a very open economy needs the Community, it needs the benefit of rules under which the Community acts and it needs the benefits of a referee to keep control over how the game is played. The effect of the world recession on member countries of the EEC has been a tendency for all members of the Community to lose internationalism under the pressures of home problems. This has been a natural tendency and it has occurred. Unless this can be overcome, even after the period of recession passes, we will have lost a great deal because we will have had here for several years at the root of all our thinking and at the root of our approach to our problems an attitude which is damaging to the future of Europe.

At the meeting of Heads of State and Government in Stuttgart in June they asked that certain negotiations should be carried out. They asked, in particular, that there should be negotiations about the adaptation of the Common Agricultural Policy. They laid down that the basic principles of the Common Agricultural Policy should be observed in accordance with the appropriate Article of the Treaty of Rome. But there is always a tendency — we can see it in the Commission proposal — that the statement about maintaining the basic principles of CAP is made and then follow detailed proposals that definitely tend to imperil those basic principles. Here we need to be careful. A declaration accepted at the end of the Stuttgart meeting listed a large number of questions which should be examined. We must ensure that the last point is not forgotten. It states:

...special problems arising in certain regions such as in the Mediterranean regions, in mountain areas or other regions at a disadvantage because of natural or economic features.

It is essential for us to ensure that that point is not lost sight of in these negotiations. But at the same time we cannot, at a time when the Community is facing very severe budgetary difficulties and the problem of enlargement, ask that everyone else should bear the burden and that we should go scot free. We should be realistic in this regard. The declaration of Stuttgart laid down that if there are to be savings all member states must contribute to achieving the savings. But what we must be adamant on is that we are not asked to carry more than our share.

The way in which the debate has been going to date would indicate that certain of our partners are putting forward proposals which would tend to result in a situation where we would be paying far more than our share. It is the duty of the Government to indicate that for the last ten years we have been prepared to play our part but there comes a point when vital principles become involved. I was happy with the recent speech of the Taoiseach in which he made this double point. I quote:

I pledge my Government's positive support for the measures necessary to resolve these problems even if at some cost to this country.

and he went on to say

...so long as that cost does not threaten our vital national interest by freezing our present level of farm production, imposed on us historically by external forces.

That is a vital point which the Minister and his colleagues must defend throughout the negotiations and defend to the end. Criticism can be made of us if we attempt to hold to this point of view that we are attempting to do what Britain attempted to do, to renegotiate our terms of entry into the Community. I would suggest that this is not the case. The form in which certain of the proposals are now being made in regard to the future of the Common Agricultural Policy is an attempt by our partners to renegotiate on our terms of entry. It is quite clear that we accepted membership of the EEC counting the benefits and the costs. We accepted industrial competition as a price to balance the agricultural opportunity and we have paid that price. There has been an acceleration in structural change in our industry which has intensified the problems we already have and it is being forced on us at a speed that has been damaging to us.

I suggest that, if in any way the fundamental principles of the CAP are interfered with, this will in fact be a forced renegotiation of our terms of entry. The effect of some of the Commission proposals would be, in fact, to freeze the development of our dairy industry and, indeed, to freeze it in a year which, due to bad weather conditions, is possibly the worst of recent years which could be taken as a base year. We have increased our yield by something of the order of 400 gallons per cow to 700 gallons per cow, but now we seem to be faced with the situation that we are supposed to stop there. We are supposed to stop there and not advance by better breeding, better management and by better feed, up to the target of 1,000 gallons, at a time when our competitors in other countries have achieved this higher level, achieved it by the import of relatively cheap cereal substitutes, by intensive methods, by the establishment of factory herds. The milk factories of Denmark and the Netherlands were not affected by the adverse weather in 1981. Our grass was certainly affected, but it had no effect on the corn gluten and the citrus pellets that were the basis of their milk industry.

Where is the principle of convergence that is supposed to underly the Community if, in fact, certain members are allowed to advance and as we attempt the very difficult task of closing the gap suddenly there is an order "freeze everything"? Convergence is a fundamental principle and aim of the whole Community and convergence must indeed be achieved.

Our difficulty is not that the vital points are completely ignored. They appear in the basic document in the proposals of the Commission entitled "Adjustment of the Common Agricultural Policy". The second paragraph lays down, and I am quoting:

Moreover, the adaptation can be successfully accomplished only if the charge is distributed equitably between the different Member States, the different market organizations, and in general between the various interested parties".

But in the body of that document, when we come to deal with the individual problems, then indeed we do find proposals that would be far from equitable. Not only have we in this country got an agricultural sector that is three times the size of the average agricultural sector in terms of GNP but we also have in this country in the critical areas of dairy products and beef within our agriculture a percentage — probably double — of the average in the Community. It is on these areas of milk and of beef that the pressure has come in the Commission proposals and it is on these areas there has been no slackening in the terms of the negotiations. While we have principles laid down in the early parts of the document, we have inflexible proposals which are brought forward later. Again, paragraph 27 of that same submission refers to the importance of the small producers but when you come to the details and fine print of what is proposed this seems to vanish. We are facing problems of the utmost magnitude: with regard to the super-levy, milk losses of the order of £100 million; in regard to the calf premium, £40 million to £50 million. Where is the small producer being protected in this? The alternative of a progressive levy which would give some shelter to the small producer in comparison with the intensive factory producer is dismissed by the Commission as a distortion of the price structure. Yet, what is being proposed is a complete distortion of the principle of a convergence.

Clearly one could go into more detail on these points, but I think it is appropriate that in the three hours we have we should hear at an early stage from the Minister and there should be as wide an opportunity for debate as possible.

I would like to stress once again that this is not, as it were, a single sharply focused crisis. There are layers of crises in regard to this problem. It is not just a matter of milk and beef; it is not just a matter of the agricultural sector and, indeed, it is not just a matter of the economy of Ireland. It is a matter of seeking agreement. The Common Agricultural Policy must adapt in some way, as all economies and all instruments of policies must adapt. If the Common Agricultural Policy is to be made more effective then we should certainly be ready to play our part. But there are other aspects to this. The social and regional policies must be developed. Budgetary problems must be solved. The question of the limitation level of own resources must be removed in such a fashion that we do not have to return to the problem in three or four years time.

This is a situation which has been with us for several years and I think one of the strengths we had in all our negotiations over this time has been—perhaps, this is one of the advantages of rapid changes of Government—that this has not been a party issue, that the seriousness of the problem has been seen by all parties, that equally the necessity for us to ensure a successful outcome has been supported by all parties. This is one of the strengths that we have had. This does not say that members of the Opposition or, indeed, members of the Government parties are not free and should hesitate before expressing the feeling that in regard to certain details of the negotiations the Government are in some way at fault. However, apart from the questions of detail we are at one in regard to the common purpose.

For this reason I look forward to hearing the Minister's statement in this House, and having heard that statement I look forward to a constructive debate. If these negotiations are not successful, if the heads of Governments do not reach an equitable conclusion, then certainly we will suffer here at a vulnerable point in our agricultural sector. But it is not just a question of our agricultural sector suffering. If these negotiations are not brought to an equitable conclusion then ultimately the Community as a whole will suffer and the very idea of Europe to which we committed ourselves over ten years ago will suffer damage that may take a very long time to repair.

Mr. McDonald

I formally second the motion and reserve my right to speak later on in the debate.

Mr. T. Hussey

I support the motion before the House. However, we on this side of the House believe that the Government are not making enough effort in these negotiations to protect our national interests. It is very important that the Government should seem to be making the strongest case possible in Europe, and we on this side will give them every support, because we know that the success and the progress and the expansion of our economy at home depend to a large degree on the success of those negotiations.

A lot of fuss is made at times about these summit meetings. We have the leaders of the different countries participating in the negotiations, being paraded before the cameras; we have a lot of publicity in advance of the negotiations. This has the effect of putting the negotiators at a disadvantage because they are exposed to the eyes of the world and they very often cannot concentrate enough on the serious problems that they are faced with. We know that the whole Community relies on its leaders and depends on them to try to solve the many social and economic problems that the Community is faced with.

There are many problems that unfortunately those leaders, when they meet, have not sufficient time to deal with. I am convinced that because of the short duration of those meetings serious problems being faced are only skipped over. That should not be the case. Despite those meetings and despite all the publicity that those meetings get, the basic economic and social problems of the Community remain unchanged. The Council meeting is Stuttgart was dominated by the subject of the British budgetary rebate. As far as I was concerned no great effort was made at that meeting to solve the serious unemployment problem the Community is faced with. There should be a Community concensus to combat unemployment and this should be encouraged at every opportunity. We have at present 4½ million young people unemployed in the Community. I am sure that those people look to the leaders and look to those meetings of our leaders for some resolution of that serious unemployment problem. I do not think that sufficient time or attention is being paid to that serious problem.

In Stuttgart the Taoiseach attempted to masquarade as a defender of Irish agriculture. We heard Senator Dooge here tonight outline the seriousness and the importance of defending the Common Agricultural Policy as far as our agriculture is concerned. If we look at the situation here, the Government in the last six months, as far as I am concerned, have set back Irish agriculture for decades. First of all they scrapped the Fianna Fáil four year plan for agriculture, including the scheme of exchange guarantee loans for restocking. They have also frozen the Farm Modernisation Scheme and in doing so have deprived farmers in this country of about £11 million which they would be paid in grants over the period while this scheme remains suspended. Also a number of subsidies have been abolished which the farmers benefited from. The farm retirement scheme has been suspended and a certain number of drainage schemes have been reduced or deferred. The Fianna Fáil Public Capital Programme of £112 million has been reduced to £96 million, a cut in investment in agriculture of nearly one quarter in real terms.

Many of the European Commission's proposals on the reform of the Common Agricultural Policy, if implemented, would be disastrous not alone for Irish farmers but for our national economy. I understand that there is still time to influence those decisions, and I hope that the Taoiseach and his Ministers, between now and the meeting in December, will do everything possible to make our position known as far as these decisions which are affecting our agricultural economy are concerned.

The Commission's proposals are far reaching and extend over a number of products and measures. A major disappointment is the weakness with which some propositions are put forward, especially those that obviously would make significant contributions to the budgetary problem. A good example is that under the cereal section, which holds out a rather vague hope of curbing the import into the Community of cereal substitutes. It is by now well known that these imports have a doubly bad effect on the Community's funds, directly in their impacts on the cereal economies of the ten and indirectly in their influence on the production of milk in certain member states. Again, in dealing with sheepmeat, the Commission suggest that there should be an examination of the possibility of negotiation of a reduction in the quantities to be imported from third countries. The Commission also shelved the question of imported butter from New Zealand.

I am disappointed at the proposal to abolish the calf premium. Fianna Fáil Ministers fought resolutely for the introduction of that premium, and with ultimate success. Apart from the financial loss, uncertainties and instabilities of this kind are damaging to effective planning by farmers. Our cattle and beef industry needs a boost, not a blow, not merely in the farmers' interest as recent layoffs and short-time working in our beef plants so clearly demonstrate. I am glad to see the proposal to retain the suckler cow premium.

The proposal that has aroused the strongest resentment is that of the super-levy on milk production. Above all others this must be resolutely resisted. The arguments being put forward must be sustainable and must be supported by strong political action. The core of the Irish case must be to demonstrate that the levy would impose unduly the fear of an unjust penalty on Ireland. The dairying industry is of far greater importance to Ireland's national economy than it is to any other member state. Our cattle industry is heavily dependent on calves from the dairy herd, and the fall in dairy cow numbers that would inevitably result from this penal levy would affect four beef trade.

Ireland produces no more than 4½ per cent of the Community's milk supplies. Our dairymen get a price for their milk which is low by European standards. We are certainly not creating butter or skim milk powder mountains. Seventy-seven per cent of all farmers in the EEC deliver only 30 per cent of the total milk output. It is the milk of the factory farms in Denmark, Holland and Germany that are causing the glut. Those countries largely base their milk production on heavy feeding of cows with concentrated feedstuffs. These feedstuffs are mainly cereal substitutes imported free of duty from outside the Community. The quantities of feed per cow are so large as to force very high milk yields. The quantities imported have trebled over the past decade. MCAs result in an artificially higher price for milk to farmers in Germany and the Netherlands.

The super-levy, then, would penalise unfairly the smaller, weaker and less well-off Irish industry for the problems directly caused by the larger, stronger and better-off Europeans. Further, the gallonage of milk per cow produced in these milk factories is already so high and the financial return so large that the financial loss in their case resulting from the levy would be relatively much lighter than in the case of the Irish milk suppliers.

Ireland must be totally exempt from any such measures. It is entirely contrary to the spirit of the Treaty of Rome because, instead of the strong economies helping the weak, the weak will be penalised for the over-production of the strong.

There is still time, given the political will, to influence these proposals. I can assure the Government that they will have the full support of the Fianna Fáil Party in any action they take to this effect. Our spokesman for agriculture in the Dáil already has made certain recommendations and has asked the Government to put those proposals into effect right away. These are, that we would veto any further imports of butter from New Zealand as the contract comes up for renewal at the end of the year; second, that we would seek the elimination of all MCAs, because they give an unfair advantage to several member states at the expense of the Community; third, that we would seek a ban on cheap feeding stuffs from third countries; fourth, that we would call on the Commission to impose a levy on milk factories in Europe; fifth, that we would recall our ambassadors to EEC member states to give them clear instructions for united strategy to defeat these proposals; and sixth, that we would make clear that Ireland would use the veto if necessary against the proposals.

The effect of these proposals would be so serious that there is no room for discussion on them. We must state our position clearly and unequivocally. The super-levy on milk production will not be accepted by Ireland in any circumstances. The importance of fighting this levy has been made abundantly clear by the Irish farming organisations and by all the political parties. We cannot afford to accept this levy, and the Minister for Agriculture and the Taoiseach should make this abundantly clear to their counterparts in Europe. It will not be accepted here by Irish agriculture. It is important that that message would be driven home at every opportunity in Europe, because the people in Europe at present do not seem to understand the importance of agriculture to the Irish economy.

Minister for Foreign Affairs (Mr. P. Barry)

I will begin by thanking the Seanad for the opportunity the motion gives me to speak on what, as Senators Hussey and Dooge said, is one of the most important matters that faced the Irish people since joining the EEC over ten years ago. The European Community is today at a crossroads. It can either develop into a Community which is relevant and responsive to the needs of its members or it can perhaps stagger on, with less and less credibility, from one institutional and financial crisis to the next.

I believe we all share a common concept of what the Community is and, more important, should be about. In particular, if it is to have real credibility and relevance, it must begin quickly to make the leap from being a Common Market to being a Community. The Stuttgart European Council saw and realised this last June when they decided — and I use the Stuttgart term — to relaunch the Community. It was not a moment too soon.

The first and most urgent problem facing the Community is a budgetary one. We have now reached the limit of existing own resources. An indication of the immediate, indeed emergency, nature of the problem is seen in the deferral by the Commission of certain export refund payments due under the Common Agricultural Policy because funds simply have been exhausted.

The putting in place of new own resources requires a unanimous Council decision as well as national parliamentary ratification. The Government, as did all our predecessors, believe that new resources are necessary now, and in their own right. However, a number of other member states are withholding their consent to this process until a certain number of preconditions, particularly related to agricultural expenditure, are met. One member state does not even go this far and believes instead that the whole case for new resources has to be proven. This reality makes the present negotiations all the more difficult and delicate. It underlines also, as Senator Dooge has indicated, the importance of a united approach by us domestically to these negotiations which are, arguably, as important as our original accession talks.

The re-launching negotiations cover essentially four chapters. In the first and central place there is, as I said, the question of new resources. This chapter also embraces the subsidary question of the relative size of member states' contributions to the Community budget. I have already spoken of the crisis of credibility facing the Community today.

No community can progress, can even begin to be responsive to the needs of its people, unless it has adequate resources at its disposal. Apart altogether from achieving worthwhile progress in Europe, soon we will not be able to operate the status quo unless new funding is put in place. The situation is as urgent and stark as that. We already have had an element of crisis management introduced into our procedures. This cannot be allowed to continue, and perhaps even become the norm, without the most dire consequences for the future of the Community.

The next two chapters in the negotiations concern the development of new policies and the strengthening of the Community's structural funds, that is, the regional social and agricultural structural funds. The impact of these funds has been much less than anticipated. The Regional Fund, for example, does not have anything like the resources even to begin to tackle the problem of regional imbalances, while the scandal of growing unemployment, particularly youth unemployment, is barely being touched by the Social Fund.

Undoubtedly part of the reason for this lack of effectiveness has been the global recession in recent years and the extremely high levels of unemployment which have accompanied it. However, another perhaps more fundamental reason has been the lack of political will to create the conditions and resources in which these funds could play an innovative and dynamic role in re-launching the Community. I hope that the present negotiations will enable us to move on from paying perennial lip-service to the great significance of these funds, especially the Regional Fund, to the taking of concrete action to improve quickly their effectiveness.

The history of the development of new Community policies has also been marked more by political statements than by concrete, effective action. I have always held that if we continue to believe, as did the founding fathers of the Community, that national action alone is no longer adequate or satisfactory in Europe, then we must put a range of new policies in place as quickly as possible. these policies—high technology, energy, the development of small and mediumsized industries, to mention but three areas—are needed in their own right, and urgently, if we are to achieve the qualitative change of which I spoke earlier. Some may benefit this country, others may not, but in this area we have to take a view of what is required objectively for the good future relevance of the Community.

The final chapter in the negotiations, the adaptation of the Common Agricultural Policy, is of course central to the whole exercise. The CAP has served and is serving us well in Europe. It has helped to provide a reasonable income for the farming sector as well as ensuring the security of our food supply in Europe. Moreover, it has retained people on the land at a time when a further significant addition to the ranks of the urban unemployed could have had adverse social and other consequences. It is one of the foundation stones on which the Community is built. By all means, let us reform it to make it more effective, but let us not consider altering the fundamental principles on which it is based.

Members of the House, I hope, will forgive me, if, for a moment, I focus in particular on the dairy industry because the Government's approach to the proposed application of a super-levy is dictated by the importance of this industry to the economy of the country, its state of development, its potential and its position relative to the dairy industries in other European countries.

Prior to accession to the European Community, the Irish dairy industry, as Members of the House will know, was limited to a domestic market based on a relatively small and, over much of this century, a declining population. Expansion of milk production in Ireland always has been dependent on increased exports — exports to Britain only before 1973 as the markets of most other developed countries were denied to us by quantitative restrictions or other similar import barriers.

Our dairy exports, therefore, were almost completely dependent on the British market, which traditionally pursued a cheap food policy. These limitations inevitably resulted in the Irish dairy industry being unable to develop at the same pace as the dairy industries in other Community countries—industries which had been able to thrive on substantial market and price supports for decades.

Perhaps above all else, accession to the Community seemed to provide a unique opportunity for the Irish dairy industry to escape from its almost complete dependence on the British market. We looked forward to a period of competition and growth without artificial distortions or constraints. At last Irish agriculture seemed to have within its grasp the opportunity to reach its full potential.

I am sure all Members of the House will acknowledge that accession has stimulated Irish agriculture in general and our dairy industry in particular. However, given the relative under-development of Irish agriculture in comparison with European agriculture, it will be a considerable time before Ireland can reach even average Community levels of development, not to mention the levels of development obtaining in the dairying regions of the Community with comparable advantages of climate and soil. When the lower fat levels of Irish milk are taken into account, milk yields in Ireland at present are only 74 per cent of the Community average and less the 60 per cent of those in the other Community regions similarly placed in respect of milk production.

At present the dairy industry contributes directly or indirectly about 9 per cent of our gross national product. Its importance to the Irish economy is two-and-a-half times greater than in any other member state and five times greater than that for the Community as a whole. It is, in short, as important to us as the petroleum and natural gas industry to the UK, the chemical, petroleum and natural gas industries combined to the Netherlands and the automobile, textile and non-ferrous minerals industries combined to the Federal Republic of Germany.

It is against this background that the Government have judged and have categorically rejected the Commission's super-levy proposal. This, if adopted, would freeze Irish milk production at its present stage of development. If one assumes conservatively that, in the absence of the super-levy, Irish milk deliveries next year would be at the same level as this year, then the imposition of the levy would lead to an immediate drop of 130 million ECUs, approximately £94.5 million, in the value of milk output in Ireland, causing a 13 per cent drop in current net income from milk production. The direct loss to the economy would be approximately 1 per cent of GNP, exclusive of secondary effects arising from the need for Government adjustments to the deterioration in the public finances and balance of payments.

Losses in the future would be even more dramatic. By preventing Ireland from reaching even Community average levels of development, the super-levy would represent a further 4 per cent loss in Irish GNP, bringing the annual cost to the economy to 5 per cent of GNP.

In short, the proposed super-levy would impose a totally inequitable tax on this country. We know the reality of the situation here. It is even more important that the Commission and our partners are equally aware of this reality and the strength of our united commitment in defence of what is, on an objective and statistically-supported basis, a vital national interest. We therefore have made every effort to bring home to the Commission and to the nine other member States the exceptional place of the Irish dairy industry in our economy.

From the moment it learned the content of the Commission proposals for agriculture in late July, in fact from before that date, the Government has pursued a diplomatic offensive both through our embassies abroad and through bilateral contacts here, to put across our concerns to other Community member Governments and the Commission. This has been accompanied by a media campaign, again through our embassies, briefing the local press, to put across our point of view to the wider European public.

The diplomatic offensive was opened with the submission of a paper late in July by the Government to the President of the Commission, Mr. Gaston Thorn. This was followed by a series of visits by each of our ambassadors in the capitals of our Community partners, to the respective Foreign Ministers and where appropriate to other Ministers. The latest phase of this offensive has been the presentation of a paper which each ambassador has presented on the proposed milk levy. Here in Dublin the Government have lost no opportunity to make full use of visits by both members of Community Governments and members of the Commission to hammer home our concerns. Members of the House will be aware of the visits that have taken place over the last few months of Mr. Varfis, the Greek Minister for European Affairs, representing the country which currently holds the Presidency of the Council; Mr. Michel Rocard, the French Minister of Agriculture, Mr. Thorn himself and Vice-President Tugendhat of the Commission and others, as well as the forthcoming visits of Chancellor Kohl.

Full use has also been made of bilateral contacts both through Community embassies here and on the occasion of visits abroad by the Taoiseach and members of the Government. In this context our concerns have been expressed directly to the Belgian, British, Danish and Greek Governments. Irish members of the European Parliament have also been briefed and have been active in pressing our case.

All this is in addition to the strong line which has been taken by the Government in all five special councils to date and in the Single Preparation Group which has prepared the special council meetings. This is a line which will be continued in all the meetings leading up to the Athens European Council.

I believe thast our efforts to date, which I have just summarised, have met with some understanding. I would hesitate to use a stronger word at this stage. The progress report of the Secretary-General to the Athens Special Council last month stated and I quote:

... a number of practical questions have been raised to which pragmatic answers would need to be sought, in particular the problem arising from the special situation in some parts of the Community that are highly dependent on the dairy industry (Ireland).

The letter from the President of the Council of Ministers before that meeting referred to Ireland in similar terms, and reports from inside the Commissions indicate that it is thinking along similar lines. Members of the House may have seen an editorial in the London Times of 22 October which said:

... Ireland's general case about the CAP reform has force enough for the United Kingdom to look sympathetically at means by which it might be helped. It makes good Community sense to permit the development of the Irish dairy industry.

Reports from our embassies show a deepening awareness of the extent of the problem with which the Commission proposals present us.

Finally I do not wish to pre-empt any report the Taoiseach will be making on his recent visit to Athens, but I think it is no secret that our representations got a very sympathetic response from the Greek Prime Minister. The House will, I am sure, have seen press reports of the reference to Ireland's "just demands".

I have given a brief summary of what has been done by the Government to put across its case and what has been achieved. More needs to be done, of course, and it will be done. The House can rest assured that the Government will continue to put across Ireland's case.

This, then is the background to, and some of the details of, the present negotiations. The six month period envisaged by Stuttgart is almost at an end. We have made little substantive progress in our negotiations to date beyond — and this is of course important — identifying the central points of major disagreement. I expect next week's Special Council in Athens, however, to mark a new and much more intensive stage in the negotiations. It is vital that it does if we are to achieve the desired and urgently required agreement at Athens in December.

In entering into this perhaps final stage of the negotiations, the Government have a clear and positive position across the range of issues. We are fundamentally committed to the earliest possible putting in place of new own resources which will give this Community a sense of secure funding for a reasonasble period — and I would personally say ten years — ahead. We are adopting a pragmatic position on the so-called question of budgetary imbalances. We are actively supporting the strengthening of the Structural Funds and the development of new Community policies. And finally, and while being conscious of the need to take effective action to curb structural dairy surpluses, we are firmly rejecting the Commisions' super-levy proposal. The reasons for, and sources of, these surpluses must be clearly identified and the necessary conclusions, including the need to limit cheap cereal imports, drawn. Overall, therefore, as I have said on an earlier occasion, we will not accept any change in Community regulations which would penalise disproportionately, and in a vital economic area, a country which has only ten and not 25 years of membership behind her. It would, in conclusion be, to put it mildly, a rather curious relaunching process if it were to create an unacceptable situation for any particular member state.

I support this motion and commend its acceptance to the House.

Mr. Lanigan

I am glad the Minister in his statement has taken what would seem to be a considerably stronger line on this issue of the super-levy than was taken by the Taoiseach in his Dáil statement of June 22. In his statement to the Dáil on that date the Taoiseach stated that he had expressed doubts in the past about the value of many European Council meetings. He went on to say that the Stuttgart meeting proved of considerable significance to the future of the European Community. He said that the outcome was strikingly positive and that the impulse towards the maintenance and development of the Community and its policies was strengthened, and forward-looking orientations were given for negotiations to be conducted within a specified timetable on the question of increasing own resources, taking account of possible savings in policies including the Common Agricultural Policy and of enlargement and of the problems of individual member states. He stated that the Minister and himself were successful in preventing damage to Irish interests. From this statement the Taoiseach went on to explain how hard he had to work to protect Irish interests and, indeed, one would have to conclude that a positive step had been taken to protect our interests. On the same day Deputy Haughey expressed the view that the outlook for the Council was never very hopeful and that although the Council did avoid a stalemate situation, that was about all that could be said for it. He stated that the basic economic and social problems of the Community remained untouched and that the British budgetary rebate debate dominated the Council meeting. Deputy Haughey said that there was no discussion worth mentioning of how economic recovery in Europe might be stimulated and expressed the opinion that the present generation of European leaders do not see the solving of unemployment problems as their primary duty.

It is now four months since that debate took place, and when one compares the statement of the Taoiseach and that of Deputy Haughey it is clear that the assessment of Deputy Haughey on that day was the valid one. Since June the onslaught on the CAP has continued unabated and, indeed, it has been more clear that the fight for the survival of Irish agriculture is by no means being brought to a successful conclusion. It would appear that we are virtually alone in our fight, and one wonders at the wisdom of the Taoiseach in going to Greece to, it would seem to me, grovel before them for their support. I suggest this support will not be forthcoming without a quid pro quo response.

The honesty of the British papers on 21 June will give a better expression of what actually happened than did the statement and subsequent actions of the Taoiseach and his Ministers. Under the headline of "Descent from Community spirit to self-interest"The Guardian on 21 June said that Mrs. Thatcher called it a good week's work, that Mr. Dankaert called it a disaster. It went on to say that at the time the Prime Minister was, so to speak, stuffing £450 million into her luggage to carry back from Stuttgart while Mr. Dankaert, President of the European Parliament, got nothing. The paper, quoting Mr. Dankaert, said:

Stuttgart in general was a disaster. As far as the Community is concerned there has been not the slightest progress. In fact if you look at some parts of the final declaration it looks as if things are going backwards.

That was a reasonable assessment of what happened at Stuttgart. The Daily Telegraph stated:

The Common Market Summit ended yesterday with Britain winning a £450 million rebate of contributions and agreement that a financial relaunch of the EEC is necessary, a task which Mrs. Thatcher says will take a lot of hard pounding. The rebate is far less than the sum Britain had sought but, as Mrs. Thatcher points out, "we had no legal entitlement to anything this year".

It stated also:

The Summit formalises the assault on agriculture...

That was a totally different impression from that given by the Minister and the Taoiseach. When one reads the conclusions of the debate that took place in Stuttgart one will agree that it was basically an assault on agriculture. The newspaper article went on:

In the negotiations on Britain's rebate the Prime Minister had played a "game of bluff" with other EEC leaders, said an EEC official. "She stared at them and they blinked first." Over the four years 1980-1983 Britain has secured a rebate in aggregate of two-thirds of its nett contribution to the EEC budget. Nevertheless the fact is that in agreeing to a repayment of only 38 per cent of the contribution in 1983 the Government has accepted the claim that Britain was overpaid in earlier years.

It is quite plain that Britain is getting a lot more out of it than she is prepared to say. We have to agree with the Minister and the stance being taken on the fight against the super-levy, because there is no doubt that the super-levy would create a sense of economic disaster here. People seem to forget that when we talk about the dairy industry we do not talk about farmers and their contribution to the economy alone. When one looks at the number of industries totally supported by the dairy industry one will realise that the impact would be disastrous. If one looks at the major co-ops throughout the country, no matter where one goes but particularly in Munster and south Leinster, one will see the number of off-farm jobs being created by the dairy industry. If anything is done to that industry our economic status will drop to a level it has never gone to and the problems we would face as an economy would be enormous.

It is suggested that the income of Irish farms would drop by about 15 per cent if the levy is brought in. This is at a time when there is only a partial recovery coming about after the disastrous years of 1978, 1979 and 1980. If there is a 15 per cent reduction in farm income it will be disastrous. The Irish economy as a whole could not provide compensation for a drop of that nature. As the Minister has said, the contribution of the dairy sector to GNP is more than five times more important to Ireland than the Community average and almost eight times more significant than in Germany and the UK. It has to be said also that if one looks at the type of farming that takes place in Holland, Germany and Denmark — it is to a certain degree a factory-type farming where force-feeding goes on — one will see it is more allied to industry than it is in Ireland. We have not had a chance to develop agriculture to the degree it needs to be developed. We suggest that Ireland has a case that needs to be met. When one looks at the higher levels of milk output per acre in the Netherlands and Denmark and relate it to high production costs, especially to purchase concentrated feed, it has to be said that Irish dairy farms are grass-based and low-cost enterprises. It is very important that the people in Europe consider this and for everybody outside the agricultural industry to realise the basis on which agriculture here, or the dairy industry is formed.

There is a motion on the Order Paper which will be debated at some stage asking that Seanad Éireann takes note of the "Report: Developments in the European Communities—Twenty First Report" and if one reads the First and up to the Twentieth and Twenty First reports one will see that the very same pious platitudes are thrown out. People are concerned but there is absolutely nothing being done to provide the basis for Community action which will in a sense turn the nations of Europe into a community. Nothing, basically, has been done to provide for the young people of Ireland or the young people of Europe. When one looks at the growing number of people who are not able to get jobs, or who are being displaced by modern technology, one sees that in a sense Europe has failed our young people.

Mention is continually being made of Europe adapting to high technological industries, to low energy industries, but nothing is done. Self-interest has taken over completely. In their conclusions on youth employment we read of the Council "taking note, further welcomes or expects" and other phrases. On the internal market we read that the Council, regrets, calls on, emphasises, underlines, and welcomes. Those statements are made continuously but unless there is a concentrated action by the European Community to fulfil some of the pious platitudes I am afraid the European Community is not going to last very much longer.

We in Ireland have a huge young population. If we continue to throw this type of rubbish at them, as a result of European Council meetings, I feel they will turn on us as being the people who have let them down. We will support the efforts that have been made by the Government to alleviate or eliminate this super-levy at all levels. We are quite conscious of the fact that it is a national problem and it cannot be considered to be a problem that political parties will hassle over. Having said that, I am not too sure that the dynamism necessary is being given to this problem. The report of the Stuttgart Council mentioned various items, and I should like to talk about one problem, that of the Middle East which could have a huge bearing on the future of Europe. In fact Ireland as a neutral nation should be playing a much more positive role than it is in regard to that area. Unfortunately, because we are members of the EEC our position does not seem to come out as strongly as it should. In the end when the position paper is presented it is the European consensus. As we know, when one is talking about producing a consensus statement the stronger points of it might be missed. With regard to the war between Iran and Iraq unless it is brought to a conclusion which is based on justice for both sides I am afraid many millions of people will be killed if it escalates any further. When I say millions I am not exaggerating. The Iraqi Government has made attempts to have this conflict solved by intervention by the UN or direct talks but, unfortunately, these negotiations have not been brought to any final conclusion. With regard to the situation in the Lebanon the European Council states that we should agree with the wish of the Lebanese Government that all foreign troops be withdrawn from that country. We must hammer home the fact that unless all foreign troops are taken out of the Lebanon we will not have peace in that area.

An Cathaoirleach

The Senator is straying very wide of the terms of the motion.

Mr. Lanigan

The motion mentions the Stuttgart Council. We are talking about the Stuttgart meeting. The party on the other side decided to narrow the basis for discussion but I did not read that in the motion. We support all the efforts being made to bring this fight against the super-levy to a successful conclusion but we are not convinced that enough is being done. The Minister stated that he will fight to the end. What is the end? Nobody has told us. I presume that, like somebody playing poker, one has to keep a few cards under the table. Will the situation be as was stated in The Guardian, that a week after the Summit meeting in Athens on December 6, the Parliament will, if it chooses, be able to blow a loud raspberry at the national governments by chucking out the entire budget, British rebate and all?

I presume that can be done if we impose a veto and I wonder if that would be a bad thing. It is something that will have to be considered. If we imposed a veto what then would be the attitude of the British and the other superpowers who are so convinced that unless the super-levy is brought in we cannot have financial stability in Europe? We all realise there will have to be some type of reorganisation of finances within Europe but the effects on Ireland of this super-levy would be to a degree much greater than the effects on any other country. We welcome the Minister into the House and sincerely hope he will carry on the national fight against this measure. We wish him success in it.

Mr. McDonald

I have seconded the motion proposed by Senator Dooge that: Seanad Éireann, aware of the special negotiations now taking place in the European Community arising from the decisions of the Heads of State and Government at the European Council in Stuttgart in June, and recognising that the further progressive development of the Community depends on the successful outcome of these negotiations and also recognising their importance for Ireland, especially in the agricultural sector, supports the stand being taken by the Government in these negotiations in protection and pursuance of the national interest. I am happy that the entire country, the farmers, the trade unions, all the political parties and, indeed, all sides of this House are in support of our Government Ministers who are negotiating on our behalf. After hearing our Minister for Foreign Affairs today our confidence in their ability to succeed must surely be enhanced and restored. None of us can be in the least doubt about the magnitude of the problem facing the Government and the country. We have to wish them well and it is opportune for the House to give them that support and I hope that understanding in their great task. There are 63,000 more people at work in this country today compared with 1977, when there were 1,083,000 people gainfully employed, but in agriculture there are 32,000 fewer people working when we compare the 1982 figures with 1977. In the five years the percentage of the labour force engaged in agriculture has dropped from 20.5 per cent to 16.6 per cent. When we look at the problem from that point of view we realise that the special negotiations taking place are of immense importance to us. That fact cannot be overlooked.

The media attention would appear to concentrate on the proposed super-levy as far as the dairying sector is concerned and that is only to be expected because, as the Minister has so clearly and concisely outlined, the proposals would prove a very grave setback for that sector if they were implemented in their present form. The negotiations we are seeking support for go back, as has already been mentioned by many speakers, to the Stuttgart Council and, in fact, one could go back to April or May to the Williamsburg Summit: while the CAP was not publicly discussed there nevertheless the underlying problems were. Towards the end of April the President of the Commission, Mr. Gaston Thorn, was reported as saying that as far as the EEC was concerned support for the economic recovery which he said was then already apparent in the United States especially would have to be the main aim of the Williamsburg Summit. He stressed that the countries taking part must show their determination to achieve better co-ordination of their economic policies. In particular, Europe wanted to see the United States continuing with a downward trend in interest rates.

At the Community meeting of the Ministers in Stuttgart in June long discussions were held on the question of increasing "own resources". The Minister has enlightened us on that. The 1 per cent ceiling on VAT was set by the Community some 11 years ago and I read that the figure that would be required now would be 1.4 per cent. At the last Summit they were asked if they were in favour of realistic possibilities for increasing "own resources". They were asked did they believe that certain conditions must be laid down for any increase; did they want control and limiting of agricultural expenditure; did they want utilisation of new resources solely for common policies other than the agricultural policies and did they want procedures to prevent intolerable situations for one member state from the point of view of its net budgetary contributions. On this last question most of the minds were concentrated. That seems to be the main difficulty with the present negotiations. We are almost in a chicken and egg situation, which comes first? Is the Community going to progress and go forward and be properly and adequately financed, or are the people who are cribbing about making the contributions they undertook to make when they entered the Community going to dictate the level of expenditure in various areas of the common agricultural policy? The situation proposed if adopted will create an utterly intolerable situation for our dairying industry, our agricultural industry and our national economy in general.

The Minister has given us salient figures and Senator Dooge has outlined the more difficult aspects of the challenge facing the Government and the Ministers engaged in these negotiations. I have every confidence in the three Ministers who in the main are engaged in the negotiations, the Ministers for Foreign Affairs, Agriculture and Finance. Bearing in mind Deputy Dukes experience as chief economist of the IFA, and the NFA before that, being based in Brussels in the formative years of our membership of the Community, the farmer's future lies in safe hands. Nevertheless, we must look at what is happening to agriculture which underlines the necessity for our Ministers to take a very strong stand in those negotiations.

I was shocked to read the agriculture figures for 1983 as issued by An Foras Talúntais recently. Over the past five years agriculture has not progressed as we had hoped and thought it would.

There were 44,000 fewer acres of feed barley sown in 1982 compared with 1977 and 1978; 7,000 fewer acres of malting barley; 16,000 fewer acres of turnips and, indeed, 24,000 fewer acres of potatoes sown. The unfortunate thing is that the shortfall has been imported from third countries. These figures show a decline in acres cultivated between 1978 and 1982.

Our cattle numbers in 1982 were down by 353,000 head compared with 1978. If we take one category of cows, they are down 40,000 and this trend is continuing this year. I am quoting from the Weekly Market Bulletin of the CBF. In the week ending 15 October 1983 there were 7,597 cows slaughtered compared with 6,500 in the same week of 1982. This year 218,720 cows were slaughtered at our meat factories compared with 214,000 for the year up to mid-October 1982. This trend is quite disturbing. It shows a very unhappy state in Irish agriculture. The problem in farming is very serious and I think the causes of de-stocking must be urgently tackled and must be looked at. The recall of loans must be one of the major factors in the obvious decline in agriculture this year and I hope the Government will bear that in mind and that the Ministers will look at the wider aspects of agriculture in these negotiations.

We must accept that action should be taken to limit the growth of milk supplies in the Community and to contain the growth of expenditure. While the stockpiles of milk and milk products have increased over the past year, they have not reached record proportions for stock piled over past years. We must insist that expenditure in other sectors which is, in fact, growing more rapidly than in the milk sector is also dealt with in regard to the milk sector. We must insist that whatever action is eventually taken is fair, that it takes account of the level of development of the dairy industry in the different regions of the Community and that it takes account of the special importance of milk in the Irish economy, as has been clearly underlined by the Minister in his speech to the Seanad. The proposed super-levy meets none of these aims and, consequently, is unacceptable to our country.

A super-levy proposal cannot be fair while there exists the present wide divergence in levels of development as between the various member states. It cannot take due account of the degree to which the different regions and the different groups of producers contribute to the current surplus. The three member states with the most developed dairying industry are the Netherlands, the United Kingdom and Denmark. They have only 9 per cent of Community holdings and yet have 27 per cent of the Community dairy cows, and they account for almost one-third of the Community milk production. Other member states, including Ireland, contribute to the total milk production roughly in proportion to their holdings, with the Greeks and Italians contributing less than proportionate. It is no coincidence that the disproportionately high contributions come from those member states with the highest proportion of large-scale holdings.

While milk production is of far greater economic importance to Ireland, where directly and indirectly it accounts for almost 9 per cent of our gross national product, our dairying industry is still comparatively underdeveloped. Looking at the figures for production that I have already given, we cannot expect a great increase in the coming year unless corrective measures are taken.

Another point to consider when one is expecting Irish farmers to compete with European farmers is that on average most of the better developed European farmers are getting a premium of almost 20 pence per gallon more than the Irish dairy farmer. That is a very significant figure. If the present proposal goes through, the average dairy farmer with 30 cows will be limited to a production of 21,000 gallons plus 1 per cent, whereas the average dairy farmer in the better dairying regions of the Community — in the UK, the Netherlands or Denmark — will be able to have 32,000 gallons plus 1 per cent, but he will be selling those at an average of almost 90 pence per gallon compared with around 70 pence here. That clearly shows the great unfairness and the inequality that the Commission are proposing. I feel that we should very clearly in the Seanad support our Government and our Ministers in the task they have, in insisting that the Irish dairying industry and Irish agriculture should get fair play and fair treatment so that our industry can be developed and can compete with the other member states in the Community.

Mr. M. O'Toole

I welcome the opportunity to say a few words on this motion. Like the other Members of this House I fully support the Government in their stand for total rejection of the imposition of the super-levy at this time. I would not go along with some of the views on a two-year period as has been mentioned. I am glad to see the Minister, Deputy Peter Barry, here with us this evening. I regard it as his job as Minister for Foreign Affairs, to put our case to the other member states in connection with the super-levy.

It is not alone a case for the Minister for Agriculture or the Minister of State who is now here with us. It is a case for the Irish people, and we must present a unified front in the fight against the imposition of this levy. It is also our patriotic duty, and anybody with any sense of patiotism will have to stand up and fight on this issue. I regret to say that the IFA are more concerned about the increases that we got from the Minister for the Public Service yesterday than dealing with the super-levy. During the year they were very vocal about the amendment: our increases and the amendment were their two major preoccupations this year. Deputy Peter Barry has all the credentials to fight our case as Minister for Foreign Affairs and I have great confidence in him. He should be negotiating on our behalf.

The negotiations regarding the super-levy are as important as our accession talks when we joined the European Community. At that time we were told that agriculture was one of the sectors that would gain from accession to the European Community. We may have had some good years in that respect but if the super-levy is introduced it will be detrimental to the small farmers of this country. It will be also detrimental to the 15 per cent large farmers, but we must remember that 85 per cent of the farmers have a 30-cow herd. The super-levy will hit the small farmers.

The reason this super-levy was proposed was that the European Community have 20 million tons of extra milk in the Community. That milk has been produced by artificial methods without soil or sun, in factory production. In Ireland we depend on the grassland of our nation: it is from that grassland that we produce our milk. In Connacht alone, farmers have increased their milk yields by over 15 per cent since 1982. We have been told that milk production benefits the small farmers but a great proportion of our farmers will be going to the wall if the super-levy is accepted. The Government and the Ministers negotiating this matter will have the full backing of the political parties in this country in their total rejection of the super-levy.

Times are not great for the farming community as a whole. Feedstuffs, for example, barley, has reached in some parts of the country a price of £200 a tonne although one could buy it last year for £110 to £125 per tonne. It is impossible to make any profit for beef feeding over the winter period in order to give a free flow of beef to our factories. The dairy farmers produced the calves and the beef for this country. As Senator McDonald has rightly said, the statistics have shown that cattle numbers, notwithstanding the headage grants, have continually dropped over the last decade. More people will go out of dairy farming and calf production at a time when large exporters such as Mr. Goodman and Mr. Purcell are finding markets abroad and building up our export market for cattle on the hook and cattle on the hoof.

It will be detrimental to have anything less than the total rejection of this super-levy. In 1960, we had 390,000 full-time dairy farmers. The number dropped in 1970 to 283,000 and in 1980 to 220,000. We have not the 1982 figures yet at hand but they will be considerably down as well. This is without taking account of any super-levy. Farmers were finding it hard in the dairy sector to compete with European farmers, who have artificial cereal replacements produced without sun or soil. We are trying to compete against that. We are on the perimeter of the European Community and that is also debarring some of our farmers from getting to the Community markets and trying to compete with our European partners. We have 11,000 people employed in dairy processing and about 6,000 people in the meat processing industry. These industries will be affected at a time when unemployment is at such a high level. Some 25 per cent of the people concerned are under 25 years of age. It is very serious for the country.

All I can say to the Minister of State and the Government side is that we are united in supporting this motion, but we are not happy that we have been briefed fully as to what may be accepted if our delegation is defeated in Europe. We are very much afraid they may give way on any of the subsidies our farmers enjoy. This might be of advantage to the Minister for Finance in trying to put his own house in order as regards the national Exchequer because most of the subsidies we get from Europe are on a 50/50 basis. We pay 50 per cent of the cost, and any reduction in the millions forthcoming from the European Community would mean an automatic reduction here in what this Government would have to pay out. We should be negotiating for the categorisation of our farmers at this time rather than having to fight this super-levy that is staring us in the face. I know we will not get much support from other member states and especially from our partners across the water. A few months ago they fared reasonably well in their negotiations. Any change in EEC policy should be resisted by our Government for the betterment of our farmers. This country depends on the agricultural sector and we must give our farmers the confidence they need.

In 1973 and 1974 the price of calves was at the lowest figure ever and farmers rushed to sell their cattle. They could not be convinced to increase their cow numbers. It was not until the Eighties that they got confidence and could be convinced to increase their cow numbers. We have achieved that, but there is a scare among the farming community at present. The IFA would be better employed trying to convince their members to stand up against this levy and organise all their forces to protest as vehemently as they possibly can to reject it. If we lose the confidence of our producers—our main producers are farmers — this country will be the worse for it.

I support the motion. I have no doubt that the Government are doing what they can to try to bring about a successful conclusion to the talks. They need every support possible from every member of the community. It is a serious matter for Ireland. As I said at the outset, I declare it a more critical time for the Irish people than when we negotiated our accession.

Mr. Hourigan

First, it was very gratifying to listen to the remarks of Senator O'Toole and other speakers supporting this motion. It is an extremely important motion. As has been stated, it is probably one of the most important motions that has come before this House for a long time. There is a great deal at stake for Ireland, not alone for the agriculture sector but for the whole economy should the super-levy, as proposed, be implemented.

One appreciates that the motion before the House, which I fully support, extends to a wider area than agriculture, but it has particular implications for the agricultural sector and especially it has implications for the dairying sector in the context of this proposed super-levy. I do not think that words of any kind would in any way exaggerate how serious the position would be for Ireland if the super-levy as proposed were implemented. Taking 1981 as a base year, the levy as proposed would have such serious ramifications and implications for this country that it would call in question whether being a member of the European Economic Community was an advantage to Ireland. At present we are a very definite and positive net beneficiary as a member of the EEC to the tune of approximately £500 million, but this super-levy if applied on the basis outlined would immediately take from our economy about £200 million, not to mention the other ancillary and side effects it would have. It would cause economic chaos and disaster for this country.

The dairying sector alone accounts for approximately 9 per cent of our gross national product. This is very substantial and gives an indication of the problem. We have a situation where our beef industry, which is a very important export, also relies heavily on the dairying sector. Milk and beef represent 70 per cent of our total agricultural output, and 75 per cent of the beef herd comes from the dairy herd. In other words, 75 per cent of our beef animals that we rely on so heavily to keep our economy half right comes directly from the dairying herd.

There is no doubt a need for the control of the surplus situation of dairy products in the EEC. As was stated a few moments ago, there is a very large surplus of milk and dairy products in the Community. There is a positive need to control this surplus, but we must make certain that as a country we do not suffer the brunt of this control mechanism, whatever shape or form it might take.

It was very gratifying to hear the remarks from the opposite benches. One important point is that there is a definite and positive effort being made by our Government, ably led by the Taoiseach and engaged in by the Minister for Foreign Affairs, who was with us earlier, the Minister for Finance, Deputy Dukes, and the Minister for Agriculture, Deputy Deasy, and supported by the entire Cabinet and by particularly all politicians in this House. It is only in this way that we can arrive at a successful conclusion where we have total and utter unity against this very serious threat to our economy.

It has not been stated already but it is worth making the point that the super-levy as proposed is a direct quota on the Irish farmer. It is not related to the creamery unit but it is a direct quota on the Irish dairy producer. Relating this to a practical situation, the person who produced 20,000 gallons of milk in 1981 and who produces 30,000 gallons in 1984, will be liable to pay a penalty of 70p per gallon on 10,000 gallons. Obviously with milk prices being approximately 73p per gallon it would not be economical for that person to engage in milk production beyond the 1981 level of production. When we look at the fact that from 1981 to 1983 we have seen an increase of 15, 16 and 17 per cent in the different areas, an estimated average of about 16 per cent, it would really mean that if the super-levy were to be applied, production would automatically be cut back by 16 per cent to the 1981 level. That shows how serious is the situation. It would leave us in a position where farmers would have no hope of recovering from the serious economic position they are in, and the level of confidence which is extremely low and which has been low for the past three or four years in the farming sector would get shattered beyond repair. I agree totally with every sentiment that was expressed to oppose this super-levy.

The farming organisations and the trade unions together with all political parties, working together, are required to make this battle succeed in the end. It is worth noting that dairying is approximately six-and-a-half times more important to us than it is to the Community as a whole. It may have different importance in different countries. I feel confident that we will not damage our dairying and agricultural industry or our economy as a whole too seriously. This will not happen of its own accord. It will need maintaining the continuous fight which our leaders are making. They will need support in every conceivable way.

Ireland should get some sort of derogation for a period of five or four years. When one looks at our level of production there is no way we can be compared with other European countries. Cereal substitutes have been referred to. In the last year approximately 15 million tons of cereal substitutes were imported into the EEC from third countries. Of that 15 million tons, 70 per cent was utilised in three countries, the UK, Holland and Germany. These three countries produced in excess of 50 per cent of the total milk production of Europe while we produced approximately 4.6 per cent. That is the kind of situation we have to contend with.

It is important to look at where we fit into the overall position. The most recent available production figures are the 1981 figures. They have not, in proportion, altered appreciably. Greece produced 2.1 per cent of the total production, Germany 23 per cent, France 24.2 per cent, Italy 11.7 per cent, Holland 11.5 per cent, Belgium 3 per cent, Luxembourg, a very small country, 0.2 per cent, the United Kingdom 15.8 per cent, Ireland 4.6 per cent, Denmark 4.9 per cent. If we look at the average production in each of the countries, we see we are amongst the lowest for that year, 708 gallons. For 1983 it is estimated at 760 gallons. The average within the Community is approximately 200 gallons more. This tells a story in so far as we must insist on being given the opportunity to develop an industry that has vast potential for us but we have not yet got an opportunity of developing. Cereal substitutes cost the Community approximately £2,500 million per annum, which is approximately 40 per cent greater than what it is proposed will be saved by the introduction of a super-levy in 1984.

Mention was made of persons in financial difficulties. There is no doubt that unless persons in the farming sector are allowed to move forward without being restricted there is no hope of their recovering to a viable position. The situation is that serious. We must bear in mind we are talking about the entire farming sector.

I would like briefly to refer to the unemployment position. In the EEC it is about 5,000,000 and in Ireland it is 200,000. About 17,000 of those are engaged directly in the agricultural sector. In the milk processing sector there are 11,000, and 6,000 in the meat processing sector as well as all the people engaged on the periphery of this important industry. One could go on and on about the absolute importance of our getting some sort of derogation. If we do not our membership of the EEC is a matter of question. We must resolve the whole Common Agricultural Policy and the funding of the EEC, before we, as one of the ten countries, can seriously consider if we can afford the membership of Spain and Portugal. I am sure nobody on this side of the House has any objection to Spain and Portugal becoming members of the European Economic Community, but we must look at the economic realities of it and see what the position is because these countries like ourselves, Greece and Italy, are underdeveloped countries. We must examine very carefully whether we can afford them being with us. We must put other things in order before we can go headlong and have these countries involved with us.

We must use every mechanism at our disposal to make certain that we are saved from this serious situation. I flatly contradict references made by one or two persons that the efforts being made by the Taoiseach and the Ministers directly involved are less than dynamic. I doubt if there has been any effort in recent years that has been approached with such a thorough sense of sincerity, dedication and a real dynamic approach. It would be extremely wrong for anybody to level any blame on any of these persons that they have not being pursuing this matter very vigorously and actively. Everybody can be full assured that the Government will continue this extremely important fight and anxiously welcome all the support they can get from every sector, the trade unions, farming organisations and all political spheres.

There are other points I had hoped to make but time has beaten me. I advocate that everybody in this House support the motion.

Mr. Robb

I would like, in supporting the motion, to make one or two short points. It seems incredible that we have vast mountains of food accumulating in Europe at a time when so many people throughout the world are starving. Secondly, if Ireland—I am not speaking as a farmer—is carrying on an agricultural industry based on natural biological methods—which from what I have heard today seems to be much more so than our European counterparts—then, in fact, Ireland deserves consideration for funding in a positively discriminating manner in its favour. It is now increasingly appreciated that if farming is to continue to develop along chemical lines rather than biological lines we will run into a health problem as well as a food problem.

I believe there should be some financial inducement in the European Community in favour of those who have a milk marketing industry which is based on biological rather than on chemical methods. Having said that, I am also very well aware, from what little I read on agricultural matters, that there is a danger of the Irish farmer, because of the intense competition he is subjected to from elsewhere, moving in the very direction that I have just criticised.

When I was a medical student we were told by our somewhat arrogant teachers that what Cow and Gate could produce was better for the baby than what its mother could produce. The fallacy of that statement is only beginning to dawn on the consciousness of many people. In fact, what Cow and Gate and various firms who make artificial milk products were saying was that there were certain aspects of their production which, as far as science could say and judged in terms of certain parameters, seemed to be better than what was in human milk. In fact they were looking at only a fragment of the whole and they were not looking at the whole thing. When we look at the whole picture, in terms of what we are producing and the purpose of its production, which is to feed people and keep them healthy, then I suggest that the way in which Irish milk farming has developed seems to be a much healthier manner than the way in which we have heard in this House today other countries develop theirs.

If third countries are providing the artificial cereal to feed cattle in very unnatural conditions then it is up to those who import this feeding to ensure that the third countries have enough money to train people to use and to buy the products of the vast mountains that are produced in Europe if we are to have any sort of equity throughout the world. It is utterly obscene to see food piling in mountains in Europe and to see millions of people starving in other parts of the world.

I ask Senators, at least, to consider the ways and the means by which we can as Europeans begin to cope with this recurring problem of lurching from crisis to crisis. I suggest that it must in some way be related to over-centralised planning. It is impossible to plan for so many regions, so many different people, so many conditions, from one central point. It is impossible in the context of the United Kingdom for a directive from London to manage equally with conditions in John o'Groats or Lands End. Many people in Ireland would say that it is impossible for Dublin to plan appropriately for all parts of the island. Perhaps it is necessary to start to think of more flexibility rather than increasing uniformity in the macrocosm of Europe as well as in the microcosm of the regions of the countries of Europe.

In that most over-centralised state in the world, the USSR, when Alexander Solzhenitsyn was still there at the height of his dissident period he wrote a series of letters to the Soviet leaders. He implored those leaders to return to the original concept of the Soviet, that is, taking back power at local community and regional levels, inside the smaller nations that have been encapsulated in the large nation states so that decision-making would be more appropriate to local need. Because there was more power distributed much more widely the situation was much more flexible. At the same time he implored them not to make the mistake of returning to the isolation of their predecessors, the feudalism, the small community all-powerful concept in isolation from others, but to try to develop a new dynamic in which because we are a federation of many we would begin to have a much more flexible approach to these problems.

I make an appeal for Europeans to consider the rest of the world as well as their own world. I suggest that Ireland, far from being penalised, should, in fact, be encouraged to produce its milk in the way it has been producing it, for health reasons, and I suggest that we need a much more decentralised philosophy if Europe, the Europe of the many regions and the many nations, is to survive.

Mr. Kiely

I would like to make a few comments on this motion in the names of Senators James Dooge and Charlie McDonald, part of which states:

...recognising that the further progressive development of the Community depends on the successful outcome of these negotiations and also recognising their importance for Ireland, especially in the agricultural sector...

It is with the agricultural sector I am concerned and especially the talk of the super-levy that will be imposed on the EEC countries. The milk Super-levy, as all Members of this House and the community at large know, would have serious effects not alone on the agricultural sector but on the economy as a whole. If this super-levy is introduced it will mean less milk production for us, there will be less employment in milk processing factories and especially in industry depending on agricultural products.

We are somewhat confused in our approach, because the Minister for Agriculture on one visit to some European capital to speak on the super-levy, did not have much hope going out. He came back saying there would be a two year derogation of the super-levy for Ireland until 1985. It is well known that the national milk yield average for Ireland is much lower than from the member countries. Other member countries have a national milk yield average of approximately 1,000 gallons per cow. In Ireland, the national average is 750 gallons, A few years ago it was only around 550 gallons, so that proves we are progressing and developing our agriculture. I feel there should be complete derogation for Ireland on this super-levy until such time as our national milk average is on a par with what it is in the member states as of now, that is, that Ireland be completely derogated from the super-levy until our national milk yield average is at least 1,000 gallons.

We have made progress and our agricultural industry has developed over the past few years. If this super-levy is introduced it will definitely deter that development. This development was helped by the farm modernisation scheme which has been suspended. That is a pity, because it is curtailing development. I would like to see the farm modernisation scheme — and I am delighted to see the Minister of State at the Department of Agriculture, Deputy Hegarty, here when I am making this point — reintroduced as soon as possible and definitely the costings brought up to date.

I was fortunate to attend a lecture in Limerick on milk production by a Mr. Pat Filt from a leading herd in England. The theme of the lecture was Production to 2,000 Gallons a Cow. He showed slides of his farm accommodation, which was of a high standard. We have not such buildings here. When asked the reason for this he explained that in England he gets 40 per cent grants for such buildings. We only get a 30 per cent grant on costings that are based in 1979 or 1981, which are completely out of date. If the grant was analysed properly it would work out at less than 20 per cent. I appeal to the Government to bring back the farm modernisation scheme to ensure that we can further develop our agriculture and bring it on a par with our EEC partners.

I appeal to the Government as the super-levy is of vital importance to the agricultural sector and to the economy as a whole, to agree to nothing less than complete derogation of this levy until such time as our average milk yield per cow is on a per with the other EEC states. I was delighted to hear Senator John Robb say that instead of being penalised Ireland should be encouraged. The message that should go out from this House especially to the Government who are negotiating on our behalf, is that Ireland should be a special case and should be allowed to develop until we are on a par with the other EEC countries.

Mr. Connor

I would like to add my voice to that of the other speakers in supporting this motion. We support the Government and the Ministers in the stand they are taking for the protection and the pursuance of the national interests. That is exactly what it is. I would say to the Minister that the essence of Ireland's case is that we are a very special case in European terms as a member of the EEC. Agriculture in the Irish economy has a very special and predominant place and, above all, must be the very basis of our negotiations. Ireland has a greater necessity to export agricultural produce than any other country in the EEC. Take any other member state, and you can look at them as closed economies as far as agricultural production is concerned. That means that they can literally consume the total agricultural product which is produced within their own boundaries. That is true of France, Denmark and Holland. In Ireland the propensity is entirely different as we must, to survive, get rid of 80 per cent of our total dairy produce and 80 per cent of our beef produce. No other member state is in that position. That puts our position into the picture.

I would say to our negotiators that the original concept in the minds of the people who conceived the idea of a European Economic Community was to equalise economic conditions within member states, which would create political conditions so that we would never see the states in Europe going to war again. Because of the special position of this country, that we started from the lowest base—it is rooted in the Treaty of Rome that it is our special position— when arguing our case on the basis of economic equalisation Ireland's case is absolutely outstanding.

On the milk super-levy there are a number of interesting points that can be made because the milk super-levy is being introduced to restrict over-production in the Community. It is interesting to note that it is not just production of milk which leads to fats, butter and so on that is necessarily causing the surplus we have. It should be noted that butter only accounts for 20 per cent of all the fats and oils consumed within the whole Community and that, in fact, the Community is only 60 per cent self-sufficient in fats and oils. The rest is made up by imports from other countries. One can particularly instance the large imports, particularly to the UK market, of butter from New Zealand.

I understand that this year it is estimated that the imports of New Zealand butter, particularly to the UK market, will amount to something like 87,000 tons. In 1977, when this derogation was got for Britain and for New Zealand, this accounted for something like 24 per cent of the total butter consumption in the United Kingdom. Nowadays, the total New Zealand imports into the United Kingdom market amount to 34 per cent of the total consumption in the United Kingdom. I submit to our negotiators that the serious distortion which has grown up especially in a surplus situation, must be looked at. We are not against free trade but there must be curbs placed on imports from such countries while we have a surplus within the Community.

Besides the super-levy on milk there are other areas which are a cause of worry to our farmers. We note also that the Commission propose to restrict intervention on beef and they wish to limit intervention of fore quarters for the five summer months and hind quarter purchases for the five winter months. We accept that intervention should be restricted at certain times, but it does not really make sense for the Commission to decide in advance on restrictions when they have no idea of market buoyancy during any period. I suggest that our negotiators take due note of that.

It is also proposed to take away Ireland's calf premium. The calf premium was a special concession given to us two years ago to compensate us for our very high rate of inflation, which had a particularly devastating effect on farmers' incomes. We were given this concession and this should not be taken away for at least another two years because, while our rate of inflation has come down, it has not come down to anything like the average rate of inflation in member states. I feel that we are entitled and we should continue to be entitled to that concession.

There is also the question of the MCAs and the kind of distortions that they are causing within the EEC budget. It should be remembered that the MCAs were originally introduced to minimise the effects of currency fluctuations on agricultural prices. In July of 1979 we set up the European Monetary System. This should have eliminated the differences in the various currencies which prior to that had been leading to all kinds of trading distortions between the member states. Due to the maintenance of green rates of exchange at levels lower than the market rate of exchange, the maintenance of positive MCAs now has become the norm for countries with the strongest currencies, namely, Germany, Holland and Denmark.

These positive MCAs also raise farmers' prices and are a barrier to free trade in the Common Market. The use of green rates at lower rates than those which are within the European Monetary System is nowadays a positive abuse of the system.

Previous speakers said that the Community is spending vast sums of money on importation of cereal substitutes. Senator Hourigan said that last year something like 15 million tonnes of cereal substitutes were imported by the Community. Most of these imports came through ports like Rotterdam and Hamburg and were used in West Germany and Holland and to a lesser degree in France and Denmark. These cheap substitutes, mostly coming from South East Asia, come as a natural advantage to those countries with great trading ports. They come in the first place as part of GATT agreements by those countries because they are major exporting nations, which we are not, on the world market.

These substitutes are used for factory farming. The result is that within striking distance of those ports huge factory farms, so called, exist where there are huge outputs of milk which cannot be matched by the natural production as we know it, based on grass and climate. This is something which must be taken very seriously by the EEC Commission if they are serious about controlling the budget and getting the whole question of agricultural prices into line. Primarily it must be the concern of the Commission to protect its own farmers and the agricultural industry within its own boundaries.

This House must never forget that Ireland's case is very special. We are the largest exporter of agricultural produce within the whole Community. We must do that to survive. Our propensity to export is 80 per cent in respect of beef and milk, our two major farm products. It would be disastrous for this economy if the measures to restrict the intervention of beef and the measures to take away the calf premium and other little things which have not been realised or discussed were implemented. If all these were to come it would be a disaster for our economy.

The Taoiseach was in Greece this week and he and the Minister for Agriculture will be in Athens next month. They will do a very good job, though it can be said clearly that there are eight or nine countries against us. Nevertheless, I am confident that our special position will be recognised and that the Taoiseach and Ministers at the end of the day will sell our case so that at least we will get a derogation which will let Irish agriculture develop at least to the level of our major competitors and partners in Europe.

Professor Dooge

There are 35 minutes left of the time assigned to this debate and there are no other speakers offering. Because the debate has been essentially non-controversial I only need five minutes for reply. The House might like to hear the Minister of State, Deputy Hegarty, who sat through a good part of the debate. We heard the Minister for Foreign Affairs at an early stage. We know this is a complex problem which involves foreign affairs, agriculture and finance. I make this suggestion without in any way seeking to create a precedent.

An Cathaoirleach

I have no objection, provided that nobody offers from the other side of the House. If Senators are offering from there I must call on them.

Séamus de Brún

We have no further speaker.

Minister of State at the Department of Agriculture (Mr. Hegarty)

I do not intend to delay the House. I welcome the opportunity to speak on this subject in this House. I have been very impressed with the contributions from both sides of the House, and perhaps it is something which should be translated to another part of this building, this sort of co-operative spirit in debating, people getting down to the job and approaching it in a very constructive manner.

I agree with the points that have been made so often, but they need repeating. I believe that one of the most important points that has not been made often enough is that we are recipients, to a substantial degree, of the Social Fund, but should this levy be introduced a much more substantial part of our country will be looking for the Social Fund and will be made more dependent on it. During my one and only visit to Bonn I made that point very strongly, but like the old Chinese proverb, we prefer in this country to be given an opportunity to fish rather than to be given fish.

All we are asking our friends in Europe is to give us an opportunity to produce, to make a living on a commodity that is really the basis of our economy. Our total production, far from creating a mountain, is really only a pimple in the Community — it is not significant in the totality of Community production.

I was glad to note that both sides of the House referred to the cereal substitutes. Cereal substitutes create a double problem for the Community. As somebody who produces grain, I know exactly the problem it causes. The mainland of Europe, by introducing cheap substitutes, produces quite an amount of milk, 1,500 gallons per cow, and this can be improved on, whereas, because of our production on grass, our yields are well down: we feed our cows in the normal way on grass and silage. By producing large amounts of milk these states exaggerate the problem, but at the same time build up surpluses of intervention grain in Europe, which again is costing the Community a great deal of money. That point has been made very forceably by the Government.

Anybody who has any knowledge of farming realises that quite a number of farmers have substantial financial problems. They are working their way back, and they are working hard at it, but any banker will tell you that the surest and speediest way to recover on a farm today is by dairy production. Milk production is practically the only way for a farmer who has heavy borrowing to get out of it. That is another very important point.

What is not generally realised, certainly in the past 10 to 12 years, is that Irish farmers have been putting the least percentage of production in the EEC into intervention, because An Bord Bainne and our co-operatives have been doing a harder job selling our commodities to third countries than any of our European counterparts. We have to make the point that we are selling, and continuing to sell, to Third World countries and to countries all over the world. We are going all over the world with our milk powder, frozen cream, all sorts of cheeses, yogurt and so on. This is a growing side of our business.

The high dependence of the Irish beef industry on dairying has been pointed out by both sides of the House. Seventy-five per cent, some people say higher, of our calves for the beef industry come from the dairy herds. You can imagine what would happen to that very valuable industry if there was to be a cutback in our dairy herd.

The Government fully accept that the EEC budget must be balanced. We are in the process of trying to do the same thing here at home, but we do not think that it is realistic that a budget can be balanced in Europe from one commodity or one industry. Let us look at the totality of the budget and then we will probably find that there are many areas where savings could be made. I could name a few of them and did so on the one opportunity I got: I saw much waste in my few years on the Council of Europe, and quite frankly what you save in cutting back in dairy production would not remedy it.

We entered the EEC initially on the basis of the prospective benefits for agriculture. There is no doubt in anyone's mind about that. We were encouraged by the spin-off to agriculture. Some have done extraordinarily well, others have not done so well, but we deliberately decided to forego certain industrial benefits that we had and certain industrial protections that we enjoyed because we would be entering a large market for our agricultural produce. It has worked out that way, we have done well. Nobody can deny that we have done well up to now, but we cannot afford and we cannot allow them to turn this around on us at this stage of our development.

The media, the Opposition and others are asking us to declare our strategy at this stage of the negotiations. They ask what will we do if X, Y or Z happens? The Government, the Taoiseach, Deputy Peter Barry and Deputy Austin Deasy will have to be trusted to do the job, because at this stage we are saying quite clearly and unequivocally, "No super-levy". So please do not start asking "If this or that happens what will we do?" We are dealing with this efficiently, and that has been accepted and welcomed. It is being dealt with at top level, and it is wonderful to see the Taoiseach, with all his other affairs to attend to, and Deputy Peter Barry, and Deputy Deasy, who has to be there, getting involved, chatting up our EEC partners and pointing out to them in a fairly firm and concise way that we cannot wear this. That is the sort of hard sell we will have to do, and we will have to do it for a long time yet.

This House this evening has done a good service to the farming community and to the people of the country. Both sides of the House were unanimous, they were helpful, and this is the sort of help the Government need because, as Minister Deasy pointed out, we are a very small nation in the midst of very powerful giants. We need to be unanimous because if there is any crack or any chink in our armour and if that chink appears on our daily papers, that is ammunition for the people we are taking on when it comes to arguing our case abroad. There is no place for point scoring. There has not been point scoring in this debate.

I am little concerned about public meetings around the country and so on. It is a good thing that farmers should show their worry and fear about these things, but there is also a danger that the wrong message could emanate from some of these meetings: somebody might be quoted out of turn or misquoted. The important thing is that our message is simple and concise: we are all behind the Government in what they are doing, and that is appreciated by the Taoiseach and the Government. It is a great help when you are out fighting a case and you realise that you have the full support of the people behind you.

This support is very important because our economy is built on the dairy industry. Our towns are built on the co-operative movement, the spin-off from the co-operative movement — fertilisers, all types of industries not directly related to agriculture, like the transport industry and all the industries involved in the manufacture of feeding equipment and so on for cattle.

We are doing well. Our milk yields though they are comparatively low by EEC standards, are improving. It is important that for the first time we are controlling the dread disease of bovine tuberculosis. We are now on the way back as far as TB eradication is concerned, and that is another matter that has hampered very seriously our progress in increasing our dairy herd. Total herds were wiped out in some areas in the past few years. We seem to have conquered this disease, so we deserve an opportunity — and I do not think we should have a difficult case in convincing our EEC partners — to allow our dairy industry to grow in normal natural way because we are so dependent on it.

If we are to sort out our unemployment situation, one of the areas in which there will be jobs will be in the processing of our dairy and beef produce. The downstream value of all our beef products is enormous, and the processing is only in its infancy. All this depends on the success of our efforts at the moment. People might say that we are over-preoccupied, that our recent annual get-together for the agricultural debate was almost totally on the milk super-levy, but that is the way it has to be: that is one hurdle that will have to be got over before we can get back to our normal business.

Professor Dooge

When opening the debate I said that the tabling of the motion gave an opportunity for this House to have a constructive debate on a problem of vital importance. The House took that opportunity and took it well. We have had a most constructive debate and I am quite sure that the members of the Government who are closely concerned with this as a daily problem appreciate the type of debate we have had. Because we have had a constructive debate, because there has been such a large measure of agreement, there is very little for me to say in reply. There are just one or two points to be made.

Senator Lanigan in talking about what happened at the Stuttgart Summit characterised Stuttgart as being essentially an assault on agriculture. I think he was quoting the Daily Telegraph or some other newspaper to support this. It is very important to remember that there is an element of truth there, but the assault on the Common Agricultural Policy which undoubtedly exists did not start at Stuttgart. This is a problem that has been with us in an intensive from for the past three years. People sometimes ask me whether during the short period when I was Minister for Foreign Affairs I tended to lose sleep over any of the problems involved. My answer is that during the first half of that period I lost a good deal of sleep over the hunger strike, and in the second half of the period I lost a good deal of sleep over the future of the Common Agricultural Policy. In relation to this problem we were faced with disaster in 1981. We managed to hold our ground, and the fact that the intensity of the controversy tended to die down was because certain factors in regard to production, consumption and world prices moved in our favour and gave us a two-year respite. We are now once again facing this problem. It is not a simple problem, it is a complex one. We are facing at the same time the ceiling on our resources and the question of surpluses in regard to many products, but it has become a critical subject of debate in regard to milk.

I want to repeat something I said in introducing this debate. In the Commission's proposals, in many of the statements of our partners, it is stated that there can be no interference with the basic principles of the CAP. Then they go on to make detailed proposals. We have touched in this debate on the principles of the CAP, such as the principles of a common price system. This principle has not been defended either by the member states or by the Commission. We have once again a proposal to get rid of the MCAs but if we had held to a common price system there never would have been MCAs. Reasonable proposals which would in fact mean that there would be progressive charges on the intensive producers are rejected by the Commission because they say they would tend to distort the price structure and are against this basic principle. But in fact they are no more against the basic principle than what has happened under MCAs for the past five years. It would be a smaller distortion and it would be more in line with what is again agreed to be a principle, the protection of the small producer.

A second principle of the CAP which was always heralded, and to which lip-service is paid is that of Community preference. Why are we still talking about New Zealand butter in this regard? It is almost too late to clean up this breach of principle. On the principle of financial solidarity, that is no distortion of competition. Members from both sides of the House have spoken of this factor. Senator Hussey talked of it and the Minister of State talked of it noting the double distortion which we have with these factory herds based on the import of cereal substitutes. Here is a distortion of what is supposed to be not only the foundation of the CAP but the foundation of the whole action of the Community.

Another very important point has come out of this debate, and I want to underline it: I said it last night to a representative of one of our partners. The surplus of milk is a common problem for the Community but it is not our fault. Our contribution to the creation of that surplus was a very small contribution, but the cost we are being asked to pay in order to overcome that is far above the average. I am glad the Minister of State made the point here about the efforts that have been made on behalf of Ireland to reduce our surplus by selling outside intervention. It is not the development of the Irish dairy industry, it is not our efforts to realise convergence, which is supposed to be a basic principle of the Community, that have created this surplus. Certainly in raising our production from 400 gallons per cow to 700 we have made a contribution to the surplus, but it is nothing compared to the contribution to the surplus that has been made by the industrial production of milk based on cereals and cereal substitutes. I was interested very much by the point Senator Robb made that ultimately it may well be found there is a health hazard in this artificial production of milk. We know of the problem that arose in recent years in aid to the Third World over the question of milk powder, the feeding of milk powder to young childern. Here it was thought that we had a solution to the problem of one of the deficiencies of the Third World and we found that the solution was killing those infants and young children throughout the Third World. It is a complex problem that we face. The Minister for Foreign Affairs said that there are these four factors concerned. I would like to end on the note on which I began. There are two main problems here. There is the need for the Common Agricultural Policy to adapt in some way, and certainly we should be prepared to contribute to that solution in proportion to the extent that we have contributed to the problem. But we are being asked to contribute to the solution by ten times what has been our contribution to the creation of the problem. This is not equity, and no relaunching of the European Community and no attempt to revive the European spirit possibly can be successful if it is founded on such an inequity. It is for us, not just for the Ministers who are negotiating but for every one of us here who are public representatives, to indicate that while we all look for new advances in Europe, we all look for a recovery of the European spirit, if that relaunching is to be based on a fundamental inequity then it is bound to fail.

I thank the House for the manner in which this matter has been debated. I think it has been a most useful debate and that this House of the Oireachtas has discharged its duty to the country well in this debate.

Question put and agreed to.

The Seanad adjourned at 7 p.m. until 2.30 p.m. on Wednesday, 9 November 1983.