I move:
That Seanad Éireann takes note of Report No. 26 of the Joint Committee on the Secondary Legislation of the European Communities: Perspectives for the CAP (The Commission Green Paper).
Report of the Joint Committee on the Secondary Legislation of the EC—Perspectives for the CAP: Motion.
This is the report by the Joint Committee on the Secondary Legislation of the European Communities. I have noted the Joint Committee's views on it and how it considers the Common Agricultural Policy should evolve to meet the challenge of the future and how best Irish interests could be protected and advanced. It emphasises the importance of agriculture in the Community economy, the need to maintain the basic principles of the Common Agricultural Policy, to safeguard the standard of living on family farms and the need to develop parallel regional and environmental practices. Also, the committee underlines the relatively small cost of the Common Agricultural Policy as against the overall Community gross domestic product and the significant contributions of farmers themselves to the operation of the Common Agricultural Policy in the form of co-responsibility levies.
At the same time we have to accept that the budgetary and market situation make it essential to look at how the Common Agricultural Policy is operating in practice. The problems which face the policy are formidable ones and if not tackled will put its continuation, as we know it, at risk. We cannot just put our heads in the sand and hope that these problems will disappear or that difficult decisions can be indefinitely postponed. They cannot and, as the member state with perhaps the biggest interest in the continuation of the Common Agricultural Policy we can least afford to see these issues dodged. Our task is to ensure that policy changes are gradual or, proportionate to the real problems, do not fundamentally undermine farm incomes and, in particular do not discriminate against Ireland. This requires a balance which I do not believe the Commission have got right in their recent price proposals. As expected, these proposals give concrete expression to the views and ideas contained in the Green Paper which have been the subject of extensive debate and consultation within the Community since the middle of last year.
The following are some of the key issues which the Commission seeks to tackle in its published proposals: (1) the need for budgetary restraint; (2) the problem of surpluses in many commodity sectors; and (3) the aim of giving the price mechansim a greater role in determining a balance between supply and demand for agricultural products.
The Commission seeks to advance these objectives by proposing a general price freeze for the coming year, the curtailment of market support for many sectors, including the beef, milk and cereal sectors which are of vital importance to this country and measures for the accelerated disposal of current intervention stocks. I might point out that these stocks are very considerable and are a large part of the problem. The stocks amount to approximately 15 million tonnes of cereals, in excess of 1 million tonnes of butter and 690,000 tonnes of beef. Difficulties, which these proposals would create for particular groups and regions are not addressed in the price proposals but will be in new socio-structural proposals which the Commission is expected to put forward over the next month or two.
I am rather sceptical and somewhat worried by these socio-structural proposals which would be put forward in the near future because they involve an element of national contribution. They are partly financed by the Community and partly financed by the individual countries in the Community and obviously, that creates considerable problems for us. In other words, it is shifting the emphasis from 100 per cent support by the Community to partial support by the Community and the remainder of the support being made up by the member states. That, to my mind, is not just a shift in emphasis but a shift in the financing of the farmers in the Community. We, of course, are least able to do that because of the proportionately high number of farmers that we have vis-á-vis the other countries.
At this point I would like to comment in particular on the implications for us of the prices and related proposals for beef, milk and cereals. In the beef area, the Commission is suggesting the progressive curtailment of intervention so that eventually it would only be used in exceptional circumstance at the discretion of the Commission. Intervention as we know it would cease if these proposals came into being at the end of November 1987. Even in the interim there would be a phasing out of the magnitude of the intervention available. Such a development could have a very serious effect on the Irish market. We have the largest exportable surplus in beef and therefore our price level is much more dependent on the support levels than the price level of any other member state. For instance, we export something in the region of 80 per cent to 85 per cent of the beef that we produce. Proportionately, that makes us by far the largest exporter of beef in the Community. Even in real terms we still export more beef than any other country, proportionately or otherwise. The seriousness of the proposals can be seen from that very fact. We do, of course, have an interest perhaps greater than anybody else in ensuring that the intervention system is not abused. Therefore we can go along with measures to make it as cost efficient as possible. At the end of the day there must be an effective door to the market and hence clear criteria which would trigger intervention where the market price in any region was below that floor price.
The most serious issue for us on the milk front is the proposal to introduce a milk cessation scheme under which dairy farmers could voluntarily sell their milk quotas. The surrendered quotas would be suppressed, thereby to that extent reducing the national quota. Given the importance of milk to us I am against the diminution of our national quota but I am looking for changes in quota arrangements which will allow for greater structural change in milk production. That means in effect that we are very anxious to get in place a national cessation scheme which would involve the restructuring of the industry which, of course, is highly desirable. Presently, my Department in conjunction with the umbrella organisation for the co-operative society, ICOS, are trying very hard to put together such a national scheme. There are particular difficulties because of the disproportionate number of small milk producers in certain western and northern co-operative societies who would be attracted to the new scheme. This could lead to a flow of milk from the northern and western milk co-operative societies to the larger co-operatives in the south of the country. From the point of view of the co-operatives in those western-northern areas that would be a highly unsatisfactory situation. I am trying to bring about a situation where there will not be a net outflow of milk from any particular area in the country, that the balance will be maintained within all co-operative society areas, that nevertheless people will be given an opportunity to leave the milk industry if they so wish but that it will not undermine the economies of any particular society or groups of societies. Talks on this are still in progress. There have been various difficulties because of the fears of the people in those western-northern societies but I hope that those fears can be overcome and we can get a workable system.
The major proposal from the Commission is that there be a Community-wide cessation scheme which would mean a 3 per cent reduction in milk output in all the member states. We contend that the super-levy agreement of March 1984 should exclude us from that cessation scheme in that at that time we were assured that our milk production levels could not be reduced during the lifetime of the super-levy regime. Unfortunately, a number of other countries are looking for exemptions or derogations as well as us. This creates additional problems. A number of them are looking for derogations or exemptions on the basis that they are deficit producers, in other words that they do not produce enough milk to meet their own needs, and therefore, should not have to suffer any further cuts.
In regard to cereals, the Commission is proposing a co-responsibility levy on producers, delayed access to intervention and much tighter quality criteria for cereals to be eligible for intervention. The combined effect of these proposals poses a very serious threat to the profitability and to an extent the viability of the cereal industry. I will be fighting to alleviate as much as possible the impact of these proposals on Irish cereal producers. The proposal specifically is that there should be a co-responsibility levy of 3 per cent introduced on cereals and that the access to intervention should be delayed until the month of December each year. As Senators know, our harvest goes directly from the fields into the miller or compound or whatever. A delay like that of three or four months will create very serious problems for our cereal growers.
The biggest problem, of all, however, is the proposal that quality standards be introduced. By virtue of our climate, the quality of grain produced in this country is necessarily below the quality that pertains in other member states. In particular, the moisture content is exceptionally high by normal European standards. If those quality standards are introduced, it could mean a price reduction directly emanating from those quality standards, a price reduction in the order of 9 to 12 per cent in the price of cereals. That together with the 3 per cent co-responsibility levy would give a price reduction varying from 12 per cent to 15 per cent. That is in an average year. That, to my mind, would make cereal growing in this country not just marginal but quite likely downright unprofitable. Probably of all the proposals this would be the most devastating if it were to be carried through. It would virtually bring about a situation where commercial growing of cereals would become a non-profit making proposition.
Taken as a whole these proposals, which, as I have said, emanate from the ideas of analysis in the Green Paper, represent a very serious challenge to Irish agriculture. They do not of themselves represent the full extent of the Commission's approach to reforming the Common Agricultural Policy. Other issues such as the development of new outlets in alternative production, the need to protect family farming and to meet the needs of particular regions, the need to address environmental considerations, will be met by additional proposals in the very near future.
We are, therefore, not looking at the whole picture as it is premature to draw final conclusions on the impact of the whole exercise for Ireland. I might say that the future proposals coming from the Commission in my view could never hope to go anywhere near compensating the losses we would suffer if these main proposals were to come into being. They would only be peripheral or marginal and certainly would not to any real extent compensate the losses that we could suffer. What we have seen is worrying. I have been engaged in extensive consultations in recent weeks with farming and other organisations. All of us must fight to ensure that the worst consequences of the proposals on the table are avoided. We must be clear that this is not to say that we are opposed to all change. Our fundamental position is that the Common Agricultural Policy has served the Community well and will continue to do so as long as its main principles are maintained and such problems as have emerged are confronted. It must remain a common Community-operated and financed policy. We must see that it does not encourage production simply for storage. That is the biggest danger of all, that it is encouraging production just for storage. It was never intended to do this and if it continues to do so it will bring about its own destruction.
Therefore, we must have greater regard for what the market needs can afford. Intervention should remain as a permanent floor to the market but not constitute the whole edifice. From our point of view we in Ireland must look critically at what we are producing and how it is being processed and marketed. If we have the greatest interest in maintaining an effective Community support system — and I believe we have — then we have also the greatest interest in ensuring that we build on that to create a viable market-orientated industry rather than one geared towards intervention. If we can do that, and clear progress has already been made, then we can look to the future with some confidence and come to terms with changes in the Common Agricultural Policy which are inevitable.
I must make specific reference to some other matters which give rise to concern. Some of them have been there for a long time and more of them are of recent origin. Concessionary imports into the Community cause us considerable difficulty.
Debate adjourned.