Firstly, I wish to compliment the joint committee for such an excellent and comprehensive report on this entire subject of the Common Agricultural Policy. Indeed, it can be noted quite positively that we are at a very important crossroads with regard to the whole future of the Common Agricultural Policy. Major references have been made by the Minister with regard to the areas that are very positively in question at present. It is a very serious matter that, as outlined by the Minister, in the major areas of agriculture production such as beef, milk and cereals, it is not clear what position we are going to enjoy in these areas in the future. Sheep is the only major area of agricultural production, particularly field enterprise agriculture, which has better possibilities than the others at present.
The Minister clearly stated that, as far as the beef area was concerned, the Commission were proposing a progressive curtailment of intervention so that eventually it would only be used in exceptional circumstances at the discretion of the Commission. I believe that that kind of development is extremely serious. It would have an effect on the Irish economy more serious than any of us can easily or readily comprehend. We have the largest exportable surplus and the lowest prices for beef in the Community. The combination of these two factors leads us to be very concerned with regard to the whole future of beef. Reference was made to concessionary imports of beef, and indeed other products as well, into the Community at a time when there is a surplus of these commodities in the Community. There has to be a great deal more positive negotiations, supported by whatever muscle is required to make sure that concessionary imports do not continue on the scale that exists at present. We have vast quantities of beef and milk products coming into the Community at a time when we already have a surplus.
The Minister mentioned the very serious situation that confronts the dairying sector and the whole milk supply area. That is the proposal to introduce a milk cessation scheme from Europe. This, of course, in the first instance would be a voluntary scheme. It has been specified quite clearly in various documentation from the EC that, should that voluntary scheme not yield a result in the first instance, it would lead then to a scheme that was no longer voluntary. This would have disastrous effects. We would effectively lose 3 per cent of our production or 37 million gallons of milk. That would be the full rigour of an EC milk cessation scheme. That is an unthinkable situation when we realise the very tough battle fought by the Minister for Agriculture and others in achieving the magnificent result of getting a concession of 4.6 per cent in the 1983 negotiations, coupled with — and I stress this — the fact that 1983 was used as a base year. This gave us 20 per cent of a differential with regard to moving forward or staying put since all the other countries in the EC had to take 1981 as a base year.
It is vital — and I would like to re-echo the sentiments expressed already — that we leave no stone unturned to put into effect an Irish milk cessation scheme which would attract milk supplies that otherwise would be attracted to the European cessation scheme. Being attracted in that direction they are tied up for good and taken off the production availability line for Irish milk producers. Any of us involved in this whole area knows that there are massive difficulties involved between co-operative processing societies and milk units generally. I firmly believe that we must in the time ahead pursue vigorously the establishment of an Irish scheme which, basically, would be one of redistribution of milk supplies within the country rather than a cessation scheme per se. It is vital that we do this. It is vital also that we bring that kind of scheme on stream before the European cessation scheme comes into effect. We are led to believe that the European cessation scheme will come into effect some time in the near future. April was mentioned, but personally I believe that the EC cessation scheme will not come on stream at present. Perhaps it might take a while longer. It is inappropriate to start guessing as to what time it might or might not come on stream.
With regard to cereals, the other major section to which I have already referred and which has been referred to by the Minister, the Commission is proposing a co-responsibility levy on producers, delayed access to intervention and a much tighter quality criteria for cereals to be eligible for intervention. The combined effects of these various measures would prove nothing but disastrous to the Irish agricultural scene. We have to be alive to it and cannot afford for one moment to take it less than very seriously. The Commission at present are clearly and positively setting about to achieve some major objectives. These major objectives directly and indirectly have major consequences for us. The targets are to have budgetary constraint, to reduce the area of surpluses in the commodity production areas and to introduce a price mechanism that would be either frozen or at a reduced level. We cannot afford to overlook these objectives or take them too lightly.
I would be the first to acknowledge that the Common Agricultural Policy and its application in this country has done a great deal to resolve the development issues in Irish farming. This is a view that the joint committee in their report support. Since there is a review of the Common Agricultural Policy, the best approach that we can adopt is to get in and make the strongest impact on it. The joint committee have produced a document which is very comprehensive and covers various vital aspects. I would recommend it to those who have not had an opportunity to go through it.
The joint committee had the benefit of written and oral submissions from the Irish Co-operative Organisation Society, which is the central organisation of co-ops, the Irish Farmers Association, ICMSA, An Foras Talúntais, ACOT, the Department of Agriculture and Macra na Feirme. We are indebted to these various bodies and agencies for submitting very comprehensive and detailed points of view which are incorporated in the document. All of us should accord our thanks to them and I, as a member of the joint committee, would like to place on record my appreciation to these various bodies for the massive input they made to making this report possible and making it an excellent and outstanding report.
There is one very important point which I feel very strongly about and have raised in this House previously and which has not been dealt with either in the Green Paper, which is part of the report, or in the multiplicity of other documentation. Ireland which has a very underdeveloped economy and which is an island on the periphery of Europe must get special concessions if it is to survive in an EC economic context. That must be a very basic and positive line of approach on our part in any negotiations we have with our European friends at any time. Frankly, we have little chance of surviving in an open economy, in the context of competing on the same basis as the other EC countries such as Germany, Holland, Denmark, France and the United Kingdom. We have some other poor relations in the EC we could compete with but there is no joy in that. The Commissioner, Mr. Sutherland, during the week laid great stress at a meeting he attended in Louvain, which I am sure Members read about, on the need for levelling off the position between the poorer states, the states that are not so poor and the states that are well off.
Within the EC we have a great risk and danger of finishing up with a two or three tier situation where we could have an inner sanctum made up of the élite, an outer wing made up of those less élite, to use the expression, and the poorer relations on the outside. That would be disastrous for the EC and would spell its finish in all its aspects. That is not to say that we must not be responsible and reasonable. We must strive, as Commissioner Sutherland stated, to make certain that there is equity of distribution and opportunity having regard to the economic circumstances and the various other factors that are in existence in the different economies that make up the EC. Whether we like it or not, in recent times the enlargement of the EC to 12 has brought greater economic strain and burden on the Community. We know that if the measures which are being proposed, first, in the Green Paper and then being taken further in other comments and statements by various persons, were to become realities, we would unfortunately be faced with massive reductions of 9, 10 or 11 per cent. Any of those percentage reductions or price freezes coupled with quota situations would be something we could not sustain.
The Green Paper is worthy of reference. It is the basis on which the report of the joint committee was made. This Commission document began to evolve shortly after their taking office in January 1985. The Commission decided to initiate a general discussion on the perspectives of the Common Agricultural Policy and presented their Green Paper which they see as setting the framework for a dialogue between the Community institutions and the professional organisations. We must realise that the CAP has been in existence for 23 years and is viewed in recent times by many, including the joint committee in its report, as a cornerstone of the European situation. I would go further and say it is the cornerstone of the integration process which has not yet begun to take place. In July 1985 the Commission produced their Green Paper the main aim of which, along with the Commission's various subsequent detailed proposals in relation to the commodities I have outlined, namely, milk, beef and cereals, is to reduce the imbalance between supply and demand. Intervention should return to its rightful role as "a safety net" and should not be permanently in position as a market outlet. On that I would agree. Intervention was always intended as a place to put surpluses and was never intended as a marketing place. It became a marketing place but that is something that one could not make a case on.
The Commission have advocated a policy on restrictive prices closely linked with world market prices. The Commission are also conceding that in certain areas this policy would need to be supplemented by income aids. I want to stress that these income aids are not national aids but income aids in the context of the EC. This policy has increased the fears of many that the real nationalisation of the CAP through a proliferation of national aids must be avoided. My clear perception of this would be that — I have read various comments from various persons on it — we are talking about EC aids. But, nevertheless, we must be mindful of the dangers of the reintroduction of national aids, which would be disastrous for us.
The continued central role of the prices system must be maintained and must not yield to income support which would make the CAP more costly to operate. The joint committee in their report on the Green Paper stress very strongly the need for the preservation of the family farm and for ensuring a decent standard of living for its members. The Commission has also expressed its desire, as reflected in the document, to maintain the importance of the family farm. There are many medium and small sized family farms that have invested a good deal of money in their enterprises in the expectation of continuing support from the Community. These farmers have nowhere to turn if prices are severely curtailed. There are few, if any, alternative enterprises available.
I want to state that, in my opinion, and while Senator O'Toole spoke about the alternatives available to farmers in certain parts of the country there is no doubt that for most farmers there are no alternative lines of production at this stage. Thus, it is something we would want to be very clear on. The milk scene, if one likes to call it that, is a closed shop. The position with regard to cereals is not promising, to say the least, and the position with regard to beef leaves much to be desired. We have the remaining feed enterprise of sheep which would not, in a national context, take up the slack. We do not have these alternatives. There is no point in our deluding ourselves.
I have already referred to the position of this country in relation to milk, in a unilateral sense, and the super-levy negotiations when the special position of dairying to the economy was recognised by the Council. It is a very important precedent to which we must attach strong and firm argument because coupled with that derogation we got an assurance that areas of natural advantage would not be restricted in their pursuit of greater production. Particularly for all grass produced products, we have an irrefutable case for exemption or derogation. The same may not apply to tillage, be it cereals or beet, or farmyard enterprises generally.
The guarantees which we got at that time are now positively and clearly under threat. I have already referred to the suggestion of cutting milk production by 3 per cent. In 1983 we were given a guaranteed quota for five years. The present proposal is contrary to those decisions and a serious blow to the Irish dairy industry. In the last report from this joint committee there was a call for a derogation for Ireland from this proposal. That derogation should be called for again and again. As far as the cereal side is concerned the principal elements of the Commission's proposals concern price restraint, a co-responsibility levy, intervention, quality standards and access to intervention. There is a general acceptance that some form of co-responsibility levy will be introduced and Ireland's approach is that the levy should not militate against our medium sized specialist grain producers. In addition, the Commission's thinking on intervention quality standards would militate against production of feed grains which account for the bulk of Irish grain production. Ireland has expressed concern at such developments at Commission and Council level. The European Parliament recently rejected their agricultural committee's report. The matter in debate will continue with the price packages for 1986 and 1987.
At present Irish farmers are especially concerned with the proposals with regard to the reform of the beef market regime because beef exports, in the light of that trade generally, have always been a centrally important barometer to our economy. Beef exports, as everybody knows, represent a very formidable percentage of our agricultural exports and indeed of our total exports. The beef market is now overhung with 750,000 tonnes of beef in intervention stores. It is pointed out that the intervention buying system, which started off as a market safety net, has now become an outlet for beef selling generally. I already made reference to that and it must be corrected as intervention is a place for surpluses that cannot be sold in the market-place. More vigorous marketing right through the Community is required and from the Community to other countries.
A point that has not been referred to very often is that this system takes high value fresh beef and turns it into low value product by freezing and storing it. It must be sold cheaply to a third country. Thus, we take in the first instance a prime product, put it through the intervention process and come out with a much reduced quality product. In this country we have also seen the production pattern being distorted because the intervention price is the same all the year round. In a country where it is regarded as the most important outlet there is encouragement for cheap production of cattle off grass and discouragement of winter feeding. This is extremely important where the seasonality aspect of it is getting shoved aside in spite of the advocacy of it from time to time. It means in practice that there is no continuity of supply. Irish exporters are unable to build up the kind of market in other member states which should pay more than the minimum on which the intervention price is based.
The Commission at present is emphasising that intervention buying should again be used as a safety net and should not be permanently in position as an outlet. It has been proposed by the Commission that this will lead to a better balance in the market and appreciably improve the competitiveness of beef in relation to other types of meat. There will be a two year transitional stage ending 13 November 1987. During that period only a few classes of forequarters and hindquarters will be eligible for intervention after which it will cease to be part of the day-to-day management system and only be used in an emergency situation. As a nation and exporter of beef, this has very serious ramifications and implications for us. Obviously, the reaction from people in the trade and from those who know the whole beef business has not been favourable to that kind of proposal.
Farmers over the last ten years have become very accustomed to the intervention system. It must be said that in recent times the value of intervention has been considerably and seriously eroded. For instance, in 1985 we had intervention applying for only a very limited period and only to certain categories of animals. On that point, it is vital that intervention should apply, while it is there, to female beef as well as to steer beef, because there are many problems with regard to its disposal from time to time. We also have the whole area of aids to private storage. These are, of course, vital. They have proved vital for the last few years. We were able to export cattle to Libya, or any other third country, because the MCAs made it possible for the Libyans to buy beef at a price above which they could not otherwise have afforded to import it. That is the reality of the situation. One could argue that one is providing these people with cheap beef. If we did not have those MCAs in existence, beef would not be bought by the Libyans. That is the long and the short of it. Meat processing plants are strongly opposed to the moves which are envisaged with regard to intervention and the aids to private storage because many of these have erected boning plants on the security of the boning allowance for intervention beef. Their cold stores are also used for this beef.
In the 23 years of its existence the Common Agricultural Policy has undergone enormous change. The most obvious manifestation of this is the development of the application of farm technology which has led to a substitution of capital for labour with a consequent significant decline in agricultural employment. The prospect for the future is an acceleration in the application of new technology with an extention of the problems that now beset European agriculture. In other words, this is going to gather greater momentum as time proceeds. Structural surpluses of many farm products are likely to keep on growing.
The joint committee in their report on the CAP highlighted three areas where it has failed. These are very worthy of mention. These are three areas where the CAP has failed to resolve key issues in Irish farming, and they are: the vast amount of under-utilised and inefficiently farmed land in this country; the absolute rigidity of our land tenure system and the distorted age structure of our farming population; and the extreme variability in economic performance of farm income among the different categories of farmers in Ireland as compared with farmers in other parts of the Community.
The Community's external policies are vital to the operation of the Common Agricultural Policy and any significant change in those policies should not be to the detriment of the family farm. We must at all times keep the family farm in our minds. A review of the import of cheap foodstuffs with a view to their reduction is necessary, because they have disrupted the Common Agricultural Policy to the detriment of the farm family. In trade policy Community preference must be respected.
The three aims of the Common Agricultural Policy must be maintained. They are: unity of market, Community preference and financial solidarity. The Common Agricultural Policy has made some very significant achievements. Agricultural production has substantially increased, far more than it would have at the level of separate national economies. Based on gross value added at market prices, the volume of agricultural output has risen on average by between 1.5 per cent and 2 per cent annually over the past 20 years. Security of supply has been attained for the Community and it now has no difficulty as regards the availability of foodstuffs for its people. That is a point which is very often overlooked. The absolute guarantee of food for the people in the Community is an extremely important point. The Common Agricultural Policy now covers more than 90 per cent of Europe's agricultural produce. EC exports of food and agricultural produce have greatly increased and are contributing to the overall balance of EC trade.
There are a number of other points I want to cover very briefly, one of which is very relevant. In summary, it gives a very good idea of the way people are thinking. It is a statement made by Mr. Andriessen on 31 January 1986 to the Royal Dutch Farmers' and Horticulturalists' Federation at Arnhem. This is a summary of the points he made on the implementation of the Green Paper. I quote:
By means of its "Green Paper", the Commission stimulated a general discussion on the reform of the CAP. The aim is to define a coordinated group of measures, in order to provide new perspectives for the policy.
It became clear during the consultations that all parties agree that the open-ended guarantees cannot go on. But it is also felt that neither price reductions, even offset by direct income aids, or quotas are feasible in practice.
On the other hand, there was support for an approach involving a restrictive policy with regard to prices and for the principle of some degree of farmers' co-responsibility for the financing of stock disposal schemes and the re-organisation of the market.
For there is very little margin left for increases in prices, what is needed in this connection is a restrictive policy, combined with more emphasis on quality and more flexible implementation of the intervention mechanism.
The development of alternative products must be encouraged, but policy on structures should also be strengthened.
A co-responsibility levy in respect of quantities of cereals sold must be introduced. A method of calculation based on acreages, an alternative advocated by some members of the farming community, has manifest disadvantages:—it could well form an incentive to more intensive farming; —it would favour poorer qualities having higher yields; —it could not be confined to grain production but would also have to cover many other crops; —it would necessitate restrictive action on cereals and on substitutes.
