Before Senator Hussey begins, a number of Senators have asked to get in on this matter. I do not want to curtail anybody. I have no control over them except to be generous with the time.
Request under Standing Order 29: Farm Price Package.
I will be as brief as I possibly can. I would like as many Senators as possible to have an opportunity of getting in on the debate as I know it is of interest to a great many of them.
Under section 29 of Standing Orders, I wish to move a motion for the adjournment of the Seanad on a specified and important matter of public interest requiring urgent consideration, the matter being:
The disastrous consequences for Irish Agriculture of the farm price package agreed to by the Minister for Agriculture and the urgent need for the Government to demand a special meeting of the Council of Foreign Minister to review the farm price package.
The proposals agreed by the Council of Ministers will have a disastrous effect on Irish agriculture. Agriculture will always be vital to Ireland's economy. In view of our favourable climate and other natural advantages for agricultural production, to neglect this sector would represent an irresponsible waste of natural resource and bad national economic management.
Agriculture employs directly 15 per cent of our labour force. Gross output in 1984-85 amounted to over £2.5 billion and agricultural exports exceeded £1.6 billion. This is something which should be taken account of, not just in deciding Irish economic policy but equally in settling the lines of development and the priorities of European Community policies. If we examine the deal we are discussing here this evening as it relates to milk production, we find that dairy farmers stand to lose £29 million per year because of the introduction of the milk cessation scheme which will take 3 per cent off the national milk quota.
The Irish climate enables us to produce some of the best grass in the world, which makes us very competitive producers of milk. In the last decade we have concentrated our resources on expanding milk production, which makes up about one-third of farm output. It is bad economics that we should be forced to renounce our natural advantage because of factory type overproduction on the Continent based on large scale imports of foodstuffs from outside the Community.
The Minister stated in the Dáil on 4 April 1984 that not only would our entitlements not be reduced in future years but that we would have priority in regard to the distribution of any additional quantities which become available. Those words sound very hollow now that the same Minister is prepared to accept a cut in our milk quota of 3 per cent without even a murmur of protest.
The tillage sector is the prime loser in this agreement. The removal of the price supports will mean a 15 per cent price drop which could force many of the 30,000 farmers involved out of business. Indeed, the Minister for Agriculture has confirmed that these cereal growers stand to lose £10 million under this deal.
In the beef sector, the real crunch is merely postponed to later this year. There is no guarantee that the carcase intervention mechanism will be used to deliver £120 million in price supports, as the Minister for Agriculture suggests.
The very basis of the Common Agricultural Policy, indeed the overriding reason why this State joined the EC, is being whittled away through quotas, cutbacks and curbs. Urban dwellers see the Community's problems stemming from the support given to those who work on the land, but the Common Agricultural Policy costs as little as 0.6 per cent of Europe's gross domestic product.
We must resist every effort to dismantle the Common Agricultural Policy. We must resist, more effectively and with greater unity of effort, the implementation of policies that would be an undoubted setback of major proportions to our economy. We should not be caught up in a situation where quotas and penal levies are placed on lines of production in which we have not reached our potential. We are one of the least developed countries in the Community, in which agriculture plays so large a role. This should be recognised by our negotiators at Council level.
Irish farmers have had a disastrous year because of the bad weather in 1985. Their morale is very low, especially at present. Certainly, the deal agreed on by the Council of Ministers has done absolutely nothing to boost that morale. I accept that there are butter mountains, a surplus of beef in intervention and also a surplus of grain. The contribution of a small country like Ireland to these surpluses is very small, yet we are being asked to accept cuts in our output on every front. If the EC tackle the vast imports of feedstuffs from outside the Community they will overcome the surplus problems in a very short time.
There is still scope for improvements and increased efficiency and for seasonal diversification here, particularly in the dairy sector. We must also explore every possible new product that can be sold on the international market. In that way we can help in some measure to boost the morale of our farmers and to give them a better output for their products.
I appeal to the Minister at all times not to give in to his counterparts in Europe, who are possibly more industrialised than we are. France, England and Germany may claim they are contributing a great deal in funds to the EC, but they are highly industrialised and have a better chance of boosting their economy. They are not as dependent on agriculture as we are. I hope that our Minister is prepared to stand up and fight, to become more aggressive in the European scene. As far as this side of the House is concerned he will have our full support at all times. If he has to kick the table from time to time, so be it. The farmers will be fully behind him and they expect him to do that. As far as I can see the Minister will get nothing in Europe by being a nice guy. He must realise that now better than anybody because he has served at the Council of Ministers table for the last few years. I hope that he will become more aggressive in his approach to those people, particularly as regards the problems affecting Irish agriculture at present.
I am pleased that we have the opportunity to raise this particular problem with the Minister in the House.
I have been three days trying to ensure that we got an opportunity here to discuss it. I say in good faith to the Minister as a Tipperary man that the best hurlers are always on the ditch. On this occasion none of us were in on the team with him so we can only tell him what we would like to have done if we were on the team. No doubt as he was privy to all the discussions and negotiations that went on there he will be able to explain to us why he did not, as Senator Hussey said, kick the table and come back to us for support and advice. There is no doubt that the final deal that the Minister has obviously agreed with his Council of Ministers was better than what was on offer in the beginning, but it is still so bad and the implications of it are so serious for the agricultural community that I feel it would have been more appropriate for him to at least kick to touch, to not agree to the package, to return home for the support of all of us in the Houses of the Oireachtas and in the country and go back to Europe with a renewed enthusiasm of convincing his colleagues in the Council of Ministers about the importance of agriculture for the Irish community.
I have listened to various speeches by politicians, agricultural advisers and various farming organisations. They talk about renegotiating the terms of entry and all that other pie in the sky as I would call it now because once we are members of the Community adopting the Treaty of Rome we have in fact divested ourselves, constitutionally, of some of the decision making processes within the Community. Having said that, I feel that the Council of Ministers at least, to say the worst, have gone back on their word of 1984 following the debacle that we had at that time on the milk levy. We fought with the Minister, we supported him and he won what was in fact a concession for Irish farmers which was not achieved to the same extent by his colleagues for any other country. It was certainly given to us on the basis that it would last for some time.
I would like to reiterate the principles and objectives of the Treaty of Rome: to increase agricultural production; to ensure fair standards of living for the agricultural community; to stabilise markets; to guarantee regular supplies; and to ensure reasonable prices and supplies for the consumer. Arising out of those principles in the Treaty, the aim was to achieve by common organisation of the market place and member states a common agricultural policy. It was to have Community preference which in my opinion is not being achieved by the Community. I listened to the Minister recently when he said that we have always looked for Community preference but the other member states are so strong that, because they have trading links through GATT and other arrangements, they do not want to show Community preference.
Imports from outside the Community have contributed to the massive milk mountains, butter mountains and all other surpluses that are in the Community. The Community are now more than self-sufficient. It is extraordinary to try to achieve all those ideals of common financing, common tariffs etc, while we are producing 1½ per cent to 2 per cent per annum more than can be matched by the consumer. It is inevitable that we would have surpluses. CAP should be looked at for that reason. It has come in for criticism by many people over the last few months, by the Community, the Commission and by the European Parliament.
There are various voting patterns there which unfortunately the Labour Party cannot influence from here any more. I know that the group that I had associations with in 1984 published a manifesto which gave their blessing to CAP, admitting that things needed to be done with it but accepting that it was the only policy that was working in the Community. Now we have taken it upon ourselves, because of famine in Ethiopia, to actually look at the possibility of being able to distribute some of the mountains of food that are there when we have people throughout the Third World who are starving and dying with hunger. It is not as easy to do it as that and that is the challenge that is upon the Community if they are to do something realistic about the problem of over-production. We contend that our Council members and our Council colleagues within the Community gave us an understanding the day we signed the Treaty of Rome that the Irish farmer would have an opportunity within the terms of the Community to produce an unrestrained amount of produce, which we can do better than anybody else and with a better quality than anybody else, and that we should be allowed to do this within the common agricultural policy without discrimination against us simply because we are late members of the club, because we are small members of the club and we are more dependent on the club than any other member of the Community.
To give you an idea of how dependent we are on the club we depend on it for about 14 per cent of our output. Ireland's national dependence on what we want to do in the Community is so involved in agriculture that it is important. The Minister is aware of that. Fourteen per cent of our output is agriculturally motivated and we are so dependent on it. Nineteen per cent of our total employment directly at least is involved in agriculture. In the other member states 4 per cent and 8 per cent respectively are involved in their dependence. For us every move that is made in a revision of CAP in restrictions, quotas, fiddling around the MCAs, export refunds or in any other area the consequences for Ireland and its people whether in agriculture directly, the milk processing and food processing industry is of such significance that I contend that this is a vital national interest.
I know that it can be argued that the Minister tried before regarding export refunds and the Commission identified in his arguments that he could make whatever decision he liked but they still had it within their discretion to change the export refund system depending on the market forces. That gives an idea of how weak we are in the Community. We think we are very important, we are great Europeans. We might be good Europeans and we have always acted as good Europeans but we are such a net beneficiary of the European Community that there is no doubt whatsoever im my mind that the Community would almost welcome it if we left them.
The problems of our renegotiation, the problems about vetoes and all these things have to be judged on the basis of how important we are to the Community and how important the Community is to us. All of us understand how important it is. We have benefited to the tune of billions of pounds since we entered the Community. There have been criticisms from the consumer about the actual structure of financing the Common Agricultural Policy, but the reality is that the overall concept was to ensure that there would always be a sufficient production of food within the Community and that that would be available to the consumer at reasonable prices. I believe in a way we have achieved most of those ideals. But, unfortunately, because we have allowed a lack of Community preference, because we have allowed other member states to import cereal substitutes and other products which add to the massive mountains in all these areas, it was inevitable that factory farming in Holland and other areas in the Community would have created this massive mountain of food. That is the problem we are facing.
I feel the Minister should be able to use his muscle to ensure that Ireland is a special country, not because we do anything different from anybody else but because we are almost totally dependent on the production of our food by natural methods. We have a natural means of producing the best meat in the world, which should be able to sell outside of the Community. It can sell within the Community. Unfortunately, some of our exporters have been using the intervention system, which is a tragedy, when you realise the quality of the meat we produce.
We should also look at the fact that Ireland has probably made more efforts than anybody else to sell our produce outside the Community and thereby benefit from the export refund system. We have done it through the export of live cattle and processed cattle. We have managed to dispose of a lot of our commodities outside of the Community and to third countries. If other members of the Community were prepared to do likewise, we would have fewer surpluses. I realise the Minister fought a strong battle in Brussels, but we did not win it.
We have certainly interfered with milk production and cereal production and we have put a major question mark over the actual production of beef in the future. They are interdependent. The dairy sector alone underpins the entire agricultural economy. There are approximately 70,000 farmers involved in dairy production and there are about 13,000 other people involved in dairy processing. That is 83,000 people, plus the families of the 70,000 farmers, so you now run into 250,000 people. If you put that on top of the 250,000 people who are directly involved in other food processing and the other downstream industries that benefit, you are now talking about 60 per cent of our total population being totally dependent on agriculture, its derivatives, its processing and everything else.
Senators can see why it is so important for us to be able to put our views on the record of this House and to give the Minister an opportunity to respond to us, to tell us what hopes that there are of any changes with his colleagues in the Council of Ministers, and whether the two additional countries have created additional problems for us, because I understood that it was basically the area of fishing, wine and citrus fruits that the accession of Spain and Portugal would affect. Now we have to ask whether all the other nations are against us. I understand that France was one of our few allies on this occasion. I would question the membership of the Community being European. From my dealings with members of the British delegation to the European Parliament, I would say they are not really Europeans. They have never joined the EMS. They are so motivated towards the consumer lobby that any decisions made in the European situation by the British delegates are always to the detriment of agriculture because, as Senator Hussey said, Britain particularly is an industrial nation and not dependent on agriculture to the same extent we are.
Agriculture is so important and the implications of this particular package will have such consequences for our people, for those involved in agriculture, for family farms, for farm workers involved in agriculture and for all the workers involved in the processing industry that it is of sufficient importance to merit this kind of debate, to merit this kind of discussion and to merit a specific and positive response from the Minister, not just to say why he did what he did but to say where do we go from here. If we realistically follow through with the revision of the CAP without making any efforts to try to market the produce, except by dumping it to the Russians or to somebody else, if that is all the Community can do, then let us forget about the Community and the Common Agricultural Policy. Perhaps we are just a front for political unity involving the defence of Europe. If that is what it is, that we are being used as a front, let us complain and talk about it. My understanding was that the Community was to benefit our agricultural industry particularly. Now that we have benefited let us hold what we have. We are asking the Minister for his support in trying to ensure that our vital national interests in Europe are made fully explicit. If they cannot be protected, we want to know it before any deal is signed.
Before I call on Senator Smith, if he would like to wait for the Minister, he is at liberty to do so.
No. I can say from previous experience of the Department of Agriculture that he has fairly able deputies to take his place.
I do not know to whom the Senator is referring.
There never was a time when Irish agriculture required a boost as great as it does today. It has been hit from within the country with the curtailment of subsidies by the Government and by very devastating weather conditions. As we debate this motion here this evening it is estimated that the best part of a 250,000 animals will have died this winter because of malnutrition arising from the summer of last year during which farmers were unable to make adequate provision for winter fodder. There was a certain amount of dismay and anger when we first learned of the outcome of the price negotiations in Brussels. While I want to appeal to all Members of this House to treat this motion in a fair and critical way and not make a political football out of the problems that beset Irish agriculture today, we have to put on record, as our frontbench spokesman on agriculture, Senator Tom Hussey has done, that this agreement has fairly devastating consequences for Irish agriculture. I was quite alarmed to read in the paper a report of the intervention by the former Minister for Finance in the debate in the Dáil indicating that these price negotiations had delivered about £70 million to Irish agriculture, mainly through the devaluation of the green pound. As a former Minister for Agriculture he knows just as his listeners did that this realignement of the currency arose because of the strength of the Deutsche Mark or in turn the weakness of the Irish punt against other EC currencies and had nothing to do with price negotiations. The outcome of these price negotiations as far as prices was concerned was a freeze. I do not think it is fair to present in Dáil Éireann figures of gains of that kind which cannot be sustained.
The main thrust as far as the dairy area is concerned in these price negotiations has been the curtailment of what was the Irish quota. In 1984, the quota agreed for us was 1,192.8 million gallons and the 3 per cent reduction means that about 36 million gallons will be cut off Irish production. This is valued at nearly £30 million. The effect of that on Irish farms is that it takes off Irish farms effectively 45,000 cows. In turn that will take out 45,000 calves valued at their birth at approximately £8 million but at the two year old stage at three times that, maybe £25 million. If you take into account the inputs to those cows — the fertiliser, meal, the co-ops — one is talking about a potential loss of jobs in the region of 300 to 500. Taking Nenagh Co-op, its total milk output is 30 million gallons, so we are talking about the total obliteration of one co-op. Taking the west of Ireland where there is 40 million gallons, you are virtually talking about eradicating that segment out of Irish agriculture in one fell swoop.
There are two other direct effects from that, that is, that the marginality or the threshold at which a farm is viable has been continually rising and the curtailment of milk production has made it extremely difficult if not impossible for a great number of small and medium-sized dairy farmers to expand. As the cost of living increases the threshold for farming and the enterprise has had to rise and as a consequence of all of this more farmers are being squeezed into a bracket which is uneconomic and therefore have to depend on social welfare.
If we try to quantify the total cost to this country of taking that amount of milk out of production, one whole co-op, all the milk virtually that is produced in the west of Ireland, the loss of 45,000 calves, £8 million worth of calves, £25 million worth of cattle at the two year old stage and the pressure for more people to go into the social welfare area, then we being to realise really the impact that this is having on our country. That is not to ignore for one minute young farmers who have no chance of getting into milk, farmers who have disease problems, farmers who have debt problems and require the extra production to meet their indebtedness. They cannot look at this result from Luxembourg with any great hope. They can have only a bleak future.
I think the Minister should vote against the package. We have the general information from the Commission of April 1986 allowing for a decision to take place without recourse to voting. Three delegations made statements saying that they could not approve of the agreement. The delegations were Luxembourg and Spain with regard to reduction in milk production, Germany with regard to the overall package. Further down it says that Spain announced that it would take the decision to reduce milk quotas to the court of justice. We are really asking the Minister for Agriculture as to the strategy he adopted. We understand what the pressures are like, what the financial strictures are, how the surpluses are affecting these deliberations but we would expect an Irish Minister to come out fighting and not to put on the record such a major decision affecting our economy without voting against it. The question of what he would undertake subsequent to that is a matter for debate but I think that should have happened as an initial stage.
We also know — and this has been emphasised by Senator Hussey and Senator Ferris whom I am glad to see leading the Labour Party in this House and supporting us in this motion—that the British are very sensitive with regard to imports, particularly imports from New Zealand. We have seen how the New Zealand farmers have been able to maintain and even improve their share of the UK market. During the past ten years our share of the UK butter market has dropped by 66 per cent. We know that the Dutch are sensitive to factory farming. We know that it is possible for one farmer with 2,300 cows and 15 acres of land to put a chariot and four through the whole Common Agricultural Policy with massive imports of cereal substitutes from Third World countries. It would take about 5,000 acres in Ireland for average dairy farmers to produce the same amount as can be produced off 15 acres and Irish farmers would do it without imports or largely without imports. We are not arguing that factory farming is the base for all our problems. Better technology, better management across Europe has pushed up the parameters of production and the world recession made it difficult to sell. The European Community is by far the largest importer of food and other agricultural products in the world. Its share of the world total of food imports is 20 per cent. It is double the amount of food imports that are imported into the USA. It is estimated the the value of imports into the European Community has increased by 170 per cent in the past seven years. Imports of corn gluten feed have risen by 230 per cent in the last seven years and 55 per cent of all food imports into the Community are duty free. We have to expect that there are aspects of trade agreements which EC countries had negotiated long before our entry that have to be honoured regardless of what we want but we would expect the Minister to force a downward trend in volume and quantity terms of the amount of these imports into the Community when our Irish farmers have to share such a load of the present burden.
In the beef intervention area we know that 40 per cent of cattle slaughterings take place in the last three months of the year. So it is vital as to what is happening in the latter end of the year. We do not know at the moment. Eighty per cent of our beef production is exported. The reference price in Ireland is 64 per cent of the guide price, which is the lowest in the EC which averages around 74 per cent. We are a long distance from the market and the role that beef plays in our economy means, that any reduction in the level of EC support has greater implications for Ireland than any other country.
When the intervention system was introduced in 1973 it covered all carcase etc. In 1977 it was altered and was to trigger off when market prices would fall below a certain level; but the uncertainties that are there now cannot be overcome by a Minister's statement to the effect that he has got some kind of agreement from the Commission with regard to what is happening in the autumn. We were promised eight weeks last year; we succeeded in getting three. There was an agreement negotiated with Canada in relation to the export of 10,666 tonnes of beef. It was badly negotiated and fell through. The Minister made a statement to the Dáil on 4 April 1984, where he indicated that our quota would be safeguarded and that we would have not only that but some share of whatever was available in the future in a situation where quotas were to be subsequently divided. So, how can we accept an unwritten promise from a Commission which has reneged on the Treaty in the first instance, failed to deliver on the guarantees given by the Minister in 1984, which were written down and refused to honour the terms of the 1985 negotiations in so far as they related to intervention? We are expected to accept from the Commission a promise, which is not written, of some safeguard for beef enterprise for the end of this year when they have failed to honour the laws, the Treaty and the written undertaking given to us in the past.
In order to give other Senators an opportunity to contribute, I will deal very quickly with the cereal situation. It is not fair to indicate that 70 per cent of our producers will not be affected by the levy. The bulk of our main grain growers will be affected because a small percentage — not more than 30 or 35 per cent — are in grain growing on a full time basis and produce the bulk of our supplies. In a submission by the Department of Agriculture to our Committee on EC Secondary legislation they indicated that the exemption would free 70 per cent of producers from the levy. A lot of these are not cereal producers but persons in other lines of production or in other occupations utilising the land. The concession is not of great value to genuine medium sized producers.
I am not in favour of renegotiating our accession to the European Community, but I am in favour of ensuring that the Treaty of Accession would be lived up to. We are progressively ignoring the fundamental principles of that Treaty. We are not asking to change the ground rules. We want to emphasise the existing ground rules and see that they are adhered to. One of the main thrusts of that was to transfer from the richer regions to the poorer regions economic improvements. That is not happening now. Another aspiration at that time was that lands most suitable for certain types of production would have the opportunity to produce so as to avoid the lavish imports to Germany and Holland which are now undermining or contributing to undermine the system. The principles are being gradually whittled away and the base for the thresholds for commercial farming seems to be the criteria by which the Commission is now deciding our future. We have only a handful of farmers in that category. Seventy-five per cent of our farmers are not within an ass's roar of getting into that situation and we have to try in so far as is possible to create a climate of opinion in the Community that the number of our people who are curtailed in their aspiration to economic viability on their farms is unacceptable. We are pleading with the Minister in a passionate and in a compassionate way. He must be aware of the situation that is fast developing on many Irish farms. People see their prospects for the future totally undermined. I do not want the Minister or any of his colleagues to speak in this House as they did in the Dáil last evening. In many ways this problem transcends politics. There are too many people out there whose problems are too great for any sort of cat-calling or name-calling in any of the Houses of the Oireachtas.
Before I call on Senator Hourigan, I would point out that there is about 20 minutes left for three speakers. I would like to give the Minister the normal time, which is 20 minutes, to reply.
I will not be too lengthy. I should like to say that, in common with other speakers and in common with the Minister also, the outcome of the recent negotiations has not been to the expectations of any body in this House and not even to the expectations of the Minister. However, it was vitally important that progress was made at the recent discussions and for that reason I do not think we can find the various points of agreement and say that this ought not have been decided and this was all right. It is acknowledged by the group that signed the Green Paper that the agricultural policy has been and continued to the cornerstone of the European Community over the past 23 years. It is a commitment for the future as well.
It is no harm that we appreciate that decisions taken in the recent past were taken against an extremely difficult background of very high surpluses in the area of dairy products and cereals and to a certain extent in the area of beef. We must be realistic and see quite positively that the CAP continues. For us as a country there would be nothing more serious than the dismantling of the CAP, the disappearance of the Common Agricultural Policy. Over some months there are indicators which would suggest that there was a danger that the CAP was at risk and was threatened. The question of renegotiation of our terms of entry in 1972 should be left aside at this time because quite frankly, we have been very substantial net beneficiaries from EC membership. We have, in the years 1973-1985, received in total £6,075.97 million from the EC. That has been the total EC expenditure in this country, and we had spent on agriculture a figure of £4,763.77 million or approximately 80 per cent of the total expenditure. We are, as I stated, positively net beneficiaries. It is very much in our interest that the Common Agricultural Policy would continue vigorously. For that reason, the sort of areas that the Minister and his colleagues were confronted with over a week ago were difficult but, at the same time, in my opinion, something that had to be tackled. There was the area of milk. The result could have come out far worse from our point of view. We must look at the milk scene, against a background of the achievement made in 1984 with regard to the super-levy at that time. We succeeded in getting 1981 accepted as a base year; we succeeded also in getting a 4.6 per cent increase. The total result meant approximately 22 per cent increase.
We are at the moment, and none of us is too happy about it, confronted with a 3 per cent levy starting in 1987-88 and going on to 1989-90. Let us be realistic. We are taking that against a background of what we achieved in the year 1984. Fortunately, due to the good efforts of the Minister and others concerned at that time, we had a starting point. While we hate naturally to lose any percentage point, we were in a better position to deal with the present situation now than we otherwise would have been. That is extremely important. Our counterparts in Europe were pegged back 7 to 8 per cent in their milk production in 1984 whereas we were allowed an increase of 22 per cent on the 1981 production figure. That point cannot be over-emphasised, nor indeed can the question of renegotiation be over-emphasised because in my opinion any attempt at renegotiation at this stage would be fraught with danger. There is no guarantee whatsoever that we would come out of renegotiation as well as we would begin it. There is also the extreme danger that we could become very easily alienated in the European context. That would have very major consequences.
I totally agree with the views expressed by Senator Smith and others indeed, that agriculture never needed a boost greater or more than it does at this point. We have a situation, unfortunately, of an extremely late spring which has followed the disastrous winter and summer of last year. We have a situation of extremely high mortality in cattle and other farm animals. Therefore, psychologically as well as financially and otherwise, farmers are not in a good position to take a set back. Nevertheless, it is better that reality should prevail and that some security for the future be established. This is important and must be borne in mind.
Grain is another area which is extremely difficult at the present time. Unfortunately, indications for the future are not bright for it. As I see it, we can do a great deal in the grain area here ourselves. There is as much as £100 million of grain imports which we could substitute by Irish-produced barley and feed wheat. That would do a great deal for the grain situation.
With regard to beef, which, indeed, the Minister and others have in recent days stressed and harped upon, there has been a positive achievement whereby intervention has been retained, at least until the end of the year when a review will be made. It would be misleading if anybody were to suggest that intervention would continue this year and next year. It is only correct to state that at least intervention exists for this year and, hopefully, will be put into operation, when the time comes.
Let us remember that the EC proposal was for the total abolition of intervention for beef. That would have been disastrous for us. Our Minister has succeeded in retaining it. That is something that should not go unnoticed.
There are many points I would like to make but I am very conscious of the time, and will have to leave them aside. I do want to say that I, in common with other people, as I have stated in this House before, believe that this country ought to get preferential treatment. As an island on the periphery of Europe, we have major disadvantages from climatic and location points of view and so on. I believe that we need preferential treatment in agriculture and other areas in order to survive. Having said that, I am personally satisfied that what the Minister agreed to in recent days was the best deal possible that he could achieve. I am quite satisfied that he will continue in his vigorous, persistent role in the European scene on behalf of Irish farmers.
I will be brief. Senator Hourigan in the introductory part of his contribution said that while this was not a good deal, progress was being made. I fail to see how progress was made with this settlement. The settlement which the Minister accepted will do untold damage to Irish agriculture. It will have a terrible impact on our principal sectors, that is, milk, cereals and beef. The outlook is not very rosy either. It will put Irish farmers on the bread line. The majority of our farmers are involved in dairying and the settlement will definitely not provide an adequate income for them or their families. Grain growers will be seriously affected and the outlook for beef, as I have already said, is not good. Therefore, this package is unacceptable and is detrimental to Irish agriculture.
The farming community is about 40 per cent of the population. There are people in jobs from the spin-off from farming and industry, the raw materials for which come from agriculture. All these will be affected. Senator Ferris maintained that it would affect 60 per cent of the population. That is all the more reason why the principles of the Common Agricultural Policy should be adhered to so as to ensure an adequate income for farmers. Farmers will have debts after this package. It is well known that farmers' incomes are less than their counterparts in other EC countries. This is caused by the importation of substitute cereals which are producing milk in factory farms in Denmark and other countries. Dairy farmers had hoped that they would at least maintain their position. They felt secure because the Minister for Agriculture, when negotiating the milk quota in 1984 — and I will quote an extract from the Dáil Official Report of 4 April 1984 — said:
However, after some very difficult negotiations, we succeeded in reaching an agreement that gave us a basic entitlement of our 1983 level of deliveries, plus more than 4.6 per cent.
We all know that that 4.6 per cent will decrease because of a miscalculation, someone could not do their sums. He went on:
In addition, it was agreed that not only could this entitlement not be reduced in future years but that we would have priority in regard to the distribution of any additional quantities which became available, for example, from production shortfalls or market improvement.
What basis had the Minister for Agriculture for saying this? Did he get a guarantee from the EC that our quota or the 1983 figures would be maintained? If I remember correctly, 1983 was also a disastrous year for farmers. It was not the best year to base a quota on. It is well known that the income of Irish farmers are less than their counterparts in other countries.
The dairying sector of the farming community and, in particular, the new entrants into milk will not have much encouragement from this package. They are affected by disease and the quota. A dairy farmer producing 70,000 gallons can increase his yield by 4.6 per cent, which is a bigger increase than the farmer who had a quota of 30,000 gallons. There is an imbalance here. It works against the smaller farmer, and especially the young farmer who is trying to develop. This should be corrected. Farmers have many difficulties to face, especially as a result of the bad weather, cattle dying and bad fodder. Apart from this package, there have also been other restrictions and cut-backs. There was the suspension of many good schemes — the lime subsidy scheme, the AI subsidy and the farm modernisation scheme — which has not helped agriculture.
This package will make the situation much worse. Under the cessation scheme farmers will lose 36 million gallons of milk. We have not been told how this will be implemented. It could be up to 5 per cent or 7 per cent in some areas and less in other areas. The probable outcome is that small farmers or farmers in the west who have not big quotas will lose out altogether or will decide to get out of milk. The outcome of these price negotiations is very serious for farmers, especially as farmers owe in the region of £1,500,000 million to financial institutions. The financial institutions are on their backs to get them to pay back. It is about time that the Departments of Agriculture and Finance took farming seriously, especially after these bad negotiations, so as to make things easier for the farming community.
The last speakers have said most of what I want to say, but I wish to be associated with some of their remarks. As a farmer, I am less than happy with the result in Brussels; but I wonder could we have got any more? I have great fears, not necessarily for this year, but for the years ahead. The problem with the EC has been that over the last number of years, particularly since our accession, most farmers thought that there was money for everybody for everything. For the first few years after joining we enjoyed a reasonably good time in farming. We go back to Ministers such as Mark Clinton and others whom we looked upon as great Ministers. They were good Ministers and they did a good job. But it would also be true to say that in those days it was easier to get money in Brussels than it is today. Nobody should get away from that. When we joined the EEC we did not have the mountains of beef, cheese and butter that we have today.
I think it was Senator Hussey who talked about imports into the Community. He was quite right to mention this. We have to look at our position now as farmers. I am looking at this from the Irish farmer's point of view. What do we do? Do we start to cut back? It appears that we have to. Will this leave us any better off in 12 months time? If we cut back and other countries do not, or if they still allow imports in, it will be all for naught. The Minister did the best possible job he could, as I believe every other Minister has done. He tried to get the best possible deal. People other than farmers are benefiting as a result of the great prices we got for years. I recall Minister Clinton opening an ACOT office in County Louth at a time when things were going well. I distinctly remember the housewives picketing outside the gate because he was getting too much money from Brussels and the housewife was having to pay more. The housewife today, as a result of cut-backs, is benefiting from this and I do not think she realises it. I am a beef farmer and, looking at the different sections of farmers, the margins of profit in beef over the last few years have been miserably low. I look at the dairying man, who is shedding some tears at the moment. Perhaps they are the first tears he ever shed, because over the last number of years he enjoyed a good time.
I defy contradiction on that. Only last week I gave £200 odd for some calves. I have to rear those calves to beef. At the end of the day I am not quite sure what the future holds for them either. Perhaps all of us have to get our own house in order and ask why we are doing this. We have done it and I have done it as recently as Monday of this week. I must confess that I have seen calves selling at £270 — admittedly they were continental calves. I remember a time when we used to export plane loads of calves until we, the feeders, had to buy them at dearer money.
We have all to look at our own position in farming. In those early days when we joined the EEC we enjoyed big prices. We thought that the "kitty" would never run dry. We believed that. It put the price of land in some counties, and even in my own county, as high as £4,000 per acre. Some people are paying for it yet, and some people may not be able to pay for it. People borrowed far more than they ever should have. No one can dispute that either. We believe that Ministers can go out to Brussels and bring home the same type of package that some of the Ministers have done over the last number of years. That is not going to happen.
My concern is not necessarily for this year. As many Senators have said this year some farmers are on their knees. It is true to say that. Certainly, the weather — and I do not think we can blame the Government for that, although some people would like to — has played havoc with the situation. In fairness to the Government, although some people made light of it, they did try to help out with fodder schemes during the winter. Again, nobody could foresee that the winter was going on for six months longer than it should, and this has not helped the situation either.
As far as this year's deal is concerned, we are only wasting our time talking. The Minister went out with his officials and advisers and took the best advice he could get. He saw that in the game he was in he could not win. There is a lot of play being made that he did not vote against it. I wonder what that would have achieved? It might have been ten to one or 12 to one. I believe that every Minister has done his utmost for the farmers of this country.
An Leas-Chathaoirleach
Senator Lennon has one minute to conclude.
That is not long. However, I say to the Minister now that there may well be, and I am sure there are, many farmers in financial difficulties. The Minister is a very responsible member of the Government. He understands the farming position quite well. It may well be that the Minister, out of the funds which are scarce owing to the recession, will have to come to the rescue of some farmers during the coming year. I have great admiration for the Minister. When he goes out to Brussels in the days and weeks ahead he should talk to the rest of the Ministers to try to get our house in order for next year. As Senator Hussey has suggested, the Community should stop imports from other countries. All of us agree on this proposal. We will never be able to get our house in order if these imports continue. I am fully aware that the Minister has done his best and I appreciate the efforts he has made. We differ about the millions that are coming. My main conceren — and I am not necessarily being parochial in this at all — is the question of beef for intervention in the autumn.
Thank you. It has been a very interesting debate. It was a much more level-headed and constructive debate than in the Dáil. I appreciate that, and it is the proper way to do it. I have quite a lengthy script here but, as it is very boring I will leave it. I will deal with some of the points Senators have made. This will lead to a disjointed contribution, but it may be more interesting in ways.
One of the points which arose and which was mentioned by several Senators was that of renegotiation of our terms of entry. Senators Smith and Hourigan both made the point that they did not think it was a good idea, and I agree with them. It is being bandied about in recent days as something that could be used to get us far more out of Europe than is presently the case. I do not believe that. People attempt to draw parallels with what they term as the British renegotiation and the Greek renegotiation. I wonder if either of those could actually be classified as renegotiations. What the British were talking about was paying less. They were major net contributors to the Community. They felt that the mathematical equation upon which their contribution was based was incorrectly worked out. As a result, their contribution was reduced. That is the essence of what they were negotiating about.
Some people have doubts as to whether there was Greek renegotiation or not. It is all a little clouded. People go through these charades at times in order to pacify the punters at home, especially at a time of election. In essence the Greeks did not get any better deal on commodity prices. This is the sort of talk that is being bandied about. It is dangerous and misleading. I do not believe it would happen or that any sensible person involved in negotiations or in the working of the European scene would believe that it could honestly happen. The Greeks did get some concessions, but they were in relation to the Regional and Social Funds. It had nothing whatsoever to do with the reformation of the Common Agricultural Policy as it affected them.
Another major reason why I do not see any possibility of us getting a favourable renegotiation is that presently in agriculture we get a net £900 million from the Community. This is a very sizeable amount of money. Some people might say in the course of renegotiation that one is actually getting far too much; they might decide to give you something less. The figure has actually risen since 1982 from £400 million to £900 million, which is a very considerable take, I think you will agree. It involves a lot of aids, one being the export refunds which enable us to sell cattle to third countries at competitive prices, competitive with eastern Europe and South America.
I will give you a generalisation as to how it works. For simplicity sake we will say beef fetches £800; £400 of that aid which the farmer gets is paid directly by the EC. If you did not have that type of aid you can imagine the type of prices you would get for your livestock. Another form in which we get a great deal of aid is in storing our produce. We get a recoupment for storing our own produce. We store it on behalf of the EC. They give us a minimum guaranteed price for our produce. That is probably the greatest advantage of all that we have received, a minimum price for an unlimited amount of produce — unlimited in some commodities, more recently limited in others.
The idea of quotas was raised by a number of speakers. Some Senators said we should have them and others said we should not have them. That is all very interesting because there are conflicting views on that. The quota system is not a new concept. We have had a quota system in the sugar beet regime since we entered the EC. It was supposed to be only a temporary imposition but as so often happens temporary becomes permanent. Now we have a quota system in the milk system. It will be interesting to see whether it lasts indefinitely or is only a temporary measure. Some people advocate that we should have a quota system in the cereals industry. I floated that idea last year in the Community and the Commission agreed with it but the other nine members at the time flatly rejected any idea of a quota system in cereals. It would have advantages for us, in that we would know what we could grow and we would have a guaranteed price which would not be subjected to the massive reductions which are being proposed in latter times by the Community. There are certain attractions in it. Price reductions — and I am not an advocate for price reductions in any community — have certain side effects which are beneficial to people who are feeding, for instance, pigs and poultry. It will bring the price of feeding stuffs down. I do not know if that is generally recognised. It is not a net loss if you have to suffer a price decrease; somebody else is going to benefit from that. Nevertheless overall it is not a satisfactory situation. I would prefer if there were price increases rather than price decreases. The quota system is something that merits quite a deal of attention. It has its advantages and disadvantages. The reason the Community will not entertain a quota system for us for cereals is that it is not a Community measure. You must have the same type of operation in every part of the Community. You cannot have a price increase-price decrease system in one part of the Community and a quota system elsewhere. It must be a Community measure. It must apply uniformly throughout the EC.
The motion — says that what we need is a special meeting of the EC Foreign Ministers to rescind the decision that was taken last week. Are people naive enough to think that the Council of Foreign Ministers would be any more sympathetic or generous than the Council of Farm Ministers? I think that is really pie in the sky, with all due respect. I do not believe there would be any sympathy. It is a very tough situation in Europe at the moment. I do not make any apologies for the deal last week. I have said this before. I think it is the best we could possibly have obtained. We could do far worse, a great deal worse. Having been there for weeks and months — we have been at it for the last two to three months — in my considered opinion it was the best deal we could get. People are saying they are disappointed. Will you ask yourselves honestly, what did you expect? Surely people saw what the Commission originally proposed. You must have seen what they proposed. Those proposals were very drastic. I will deal with them as quickly as I can.
On the milk sector they proposed a 3 per cent cut in production of all milk in the Community. People are saying that is a breach of the agreement we got in 1984 which said that we were not to have our quotas cut in the subsequent years of the super-levy system. It actually said that if any extra milk became available we would have priority in getting it. The fact is that the position in the milk market has changed in a negative manner rather than a positive manner. The super-levy has only been partially successful. It was supposed to get rid of the surpluses. It has not actually succeeded. In the past year for instance we have taken more butter into intervention than ever before. Intervention stocks of butter at the moment are at an all time high. The Commission felt obliged in those circumstances to take action. The simple figures are as follows. Before the super-levy came in in 1983 the Community produced 105 million tonnes of milk. The super-levy brought that back to 98 million tonnes. We only consumed 85 million tonnes. This new 3 per cent cut will bring the output back to 95 million tonnes. Even after cutting it by a further 3 per cent we will still have an excess of 10 million tonnes which we will have to sell off at an enormous loss. Obviously the Governments who are contributing to the running of the Community cannot accept that we should continue to do that, that we should continue to produce something which would be cheaper to dump the day it was manufactured rather than to store it and sell it off for 10p or 12p a pound. That is the reality of the situation.
The beef proposal was absolutely unacceptable to us. You get no gratitude for defeating something which was pretty awful as long as the other contents of the package may have some unattractive segments to them. The fact is the Commission wanted to eliminate any possibility of having intervention for carcase beef in the autumn in this country or in the Community generally, I should say, but it would affect this country more than any other. Any farmer who is involved in the beef industry can see what the effects would be on the cattle trade if that were allowed. I would hate to think of the extent of the collapse in the cattle trade this week if that got through last week. People say, what did you do out there? We stopped that from happening and that was a major achievement. I am not giving any guarantee and I have no guarantees from the Commission or anybody else that they will introduce full carcase intervention in the autumn. The option is there as in former years. There was never a guarantee; the option is there and the likelihood is there. That is as much as we can hope for at this particular time.
On cereals, the House knows, the massive surpluses there are of cereals in the Community. A number of countries prodded the Commission into doing what they did. Some countries want to be able to take on the Americans in the world market. They want to be able to sell their cereals at a competitive price. That was one of the main reasons why the Commission's proposal got such support. Countries like ourselves and the Germans opposed it vigorously. As you saw last year, when the Germans could not get a reduction — we voted with them last year — they vetoed a price reduction which only amounted to 1.8 per cent. This year they did not think it worth their while to veto a price reduction of 8 per cent because they knew very well as we all did that the Commission would come along and use the same mechanism as it did last year to bring about a price reduction of the same magnitude as the original proposal.
Let us face up to that. Let us not fool ourselves by thinking that by voting against it you can achieve something. It would be lovely and politically popular for me to go and say I will vote against this and I will vote against that and kick the table, knock down doors, and beat them into giving us what we want. That type of savagery will get you nowhere in the EC. We are dealing with a very well organised, civilised group of people. We have to negotiate with them. We have to negotiate in the most skilful manner possible. We are recognised in Europe as having the most skilful negotiating team in the Community and have been recognised as such for several years. We take a decision on the basis of what we think is best for the country, not on the basis of what we think is politically expedient and popular. That is as it should be.
I was disappointed with Senator Ferris's remark when he referred to the debacle of the milk super-levy in 1984. The milk super-levy agreement in 1984 was anything but a debacle; it was a massive achievement. It gave us a 22 per cent advantage over the other milk producing countries in the Community.
Do not selectively quote me on what I said. The Minister was not listening. There was a debacle and the Minister succeeded.
I am sorry. I have it written down here.
It is appropriate that the House should have the correct record and not a selective quotation.
I wrote down this expression "debacle of milk levy 1984". I am glad Senator Ferris has corrected me on that.
We got a 22 per cent advantage in 1984, which was quite significant. Some people are trying to compare the present situation with 1984 and they say we have lost that advantage because of the 3 per cent reduction. We have not. We are very far from it. We may have lost 3 per cent of the 22 per cent but it is a long way from losing the whole 22 per cent — it is a small fraction of the advantage we got in 1984. Let me point out that the other countries are based on 1981. If you base our milk production on 1981 then we got a 22 per cent advantage. Everybody is gone back 3 per cent, so they have 1981 minus 3 per cent. That is what they are getting at the moment. We have 1981 plus 19 per cent. Therefore we have the comparative advantage of 22 per cent all the time.
Senator Hussey made an interesting point about the fact that we have a very favourable climate and soil for agricultural production. So we have, and it thereby enables us to produce certain commodities such as milk and beef quite cheaply. It is actually a comparative advantage. People look for special exemptions. Other Ministers come to me in an absolute rage. The German Minister says he has tens of thousands of small disadvantaged farms. The French say they have thousands of square miles of hilly mountainy land where people have only three or four cows. They are tremendously disadvantaged just as we are. The Italians are in the same position. The South of Italy is disadvantaged. The whole of Greece, Portugal and large tracts of Spain are disadvantaged. It is not going to be that easy, if at all possible, to get exemptions when we are dealing with countries which have enormous problems. It is not true, as somebody stated in the Dáil last night, that we are more dependent on agriculture than any other country in the Community. Agriculture accounts for 11 per cent of our gross national product. In Greece agriculture accounts for 16 per cent. Therefore, as Sentor Hussey said, we have a climate and soil conditions which are much more suitable than that of our partners in the Community. One can lose sympathy by trying to flog that one too hard when people are living in much tougher conditions on much smaller farms.
One Senator made the point that we should resist the dismantlement of the CAP. That is what these negotiations are all about. We want to see that the CAP is retained. If we did not go along with the vote in the Council last week the Commission would come in and use its powers — and it has tremendous powers — to do what we did not want to do. They would have done it. They did it last year. The solutions that the Commission would have imposed would have been far more harsh than the eventual decision. The day that we hand the powers over to the Commission then we are on the way to dismantling the Common Agricultural Policy. It is far better that the Council of Ministers should make the decisions than let the Commissioner exert his emergency powers and reduce the prices as he sees fit.
There is one other matter, which is incidental, but it does affect people in this country. We most certainly would not have got the benefit of the green £ devaluation. We would probably have been left a full year without it. At this time of year, when milk production is high, it is worth about £10 million a month to farmers in this country, £70 million in a full year and if the premiums are added it is worth another £30 million to £100 million. If we lost the full carcase intervention, I would hate to try to put a price on that. It would be colossal. The advantages of having agreement are enormous. I know it is the politically popular thing to say that one should have held out, that one should have done this and so on. I am prepared to take my medicine like anybody else. It is part of politics. There is no point in trying to be dishonest with the people. The publicity would be great. "Deasy stops package from going through". What would I feel like or what would you feel like if the cattle market collapsed? Then we would have reason to be really sorry.
The eventual outcome is a tremendous improvement on the proposals which the Commission put forward. We must build on those. We must see that the beef market is supported in the future. That is my main concern. We must see that we make the best use possible out of the milk we produce. I have said this in the last few days on radio. We are not making the best use of what we are producing. We convert 80 per cent of our milk into butter and we put half of that into intervention. It is an amazing thing. It is no credit to us. Other countries hardly put one pound of butter into intervention. They convert it into commodities which can be sold, such as a whole variety of cheeses, yoghurts and so on. At present we put 16 per cent or 17 per cent of our beef into intervention despite the fact that it is acknowledged as the best beef in the world. We cannot sell it. People talk about job losses. There are tens of thousands of jobs to be created if we sold what we produced on the world markets, or even if we only sold it on the Community markets. There are 320 million people in the Community at present. It is by far the largest economic block in the world. We should be able to sell everything we produce without resorting to intervention. If we could do that we could create tens of thousands of extra jobs and our farmers would get premium prices for their produce. We constantly hear the complaint that all the farmers in Holland and Denmark are getting £1.10p for their milk and we are only getting 75p. Why is that the case? The reason is primarily because they convert their milk into things which can be sold at premium prices and which can be exported to the States and all over the world. We have a lot to answer for.
We should take a good look at our own position and see if we are making the best use of our opportunities. It is quite apparent that we are not. Concessionary imports is an item which is being misconstrued to quite an extent. Virtually all the concessionary imports into the Community of cereal substitutes or beef are covered by GATT arrangements. People will ask what is GATT. GATT is the international trading forum. Agreements made in that forum are legally binding. The only way to terminate those agreements is if there is mutual consent. One side wanting to opt out is not sufficient.
Those agreements, by and large, were made in the middle sixties long before we entered the Community. It is virtually impossible to reduce the amount of those commodities coming into the Community. The French and ourselves over the past number of years have tried very hard. Because of the legally binding nature of those arrangements it is very difficult to do anything about it. We have got small reductions in the last year in the amount of cereal substitutes coming in and in the amount of beef. That is the first time ever there has been a reduction. It has taken a lot of doing. You cannot break agreements just like that. It is not possible. It is simplistic to say you can.
Another important point: the Community is the largest trading block in the world and they take in those concessionary imports. That was the idea back in 1965 when the agreements were drawn up. They want to trade with countries all over the world whether it is Thailand, Indonesia, South America or wherever. They want to trade. They sell motorcars and washing machines and innumerable consumer goods. Many of these countries cannot trade with the Community in any other items than cereal substitutes and maybe livestock and meat from South America. They have nothing else to trade with. They are agricultural countries primarily. The Community trades and the money it makes from its trading is used to finance the Common Agricultural Policy. That is how we get our net £900 million a year. We get it because the Community makes a profit on its trading. We benefit from that. Let us not look at it from the narrow point of view. Let us look at the broader prospective. It is very easy to be blind to that.
Something that did not help us last week, I might point out, was the vote the previous week in the European Parliament. That is the first time ever that the European Parliament has voted against price increases or improved conditions for agriculture in the Community — the first time ever, unprecedented, and it strengthened the hand of the Commission and strengthened the hand of those countries who have been looking for cut-backs in agriculture for years past. It certainly did. It gave them a great boost.
There are quite a few items I would like to refer to but I think I have kept the House too long and I will leave it at that. I found the debate most informative and constructive. I certainly could not agree with the terms of the motion. You get less sympathy in any other councils than the Council for Agricultural Ministers.
The Seanad adjourned at 10.20 p.m. until 10.30 a.m. on Thursday, 1 May 1986.