I move:
That Seanad Éireann takes note of Report No. 27 of the Joint Committee on the Secondary Legislation of the European Communities: The Milk Cessation Scheme.
I reserve my right to speak on the motion later.
Report No. 27 of Joint Committee on the Secondary Legislation of the European Communities — The Milk Cessation Scheme: Motion.
At this stage I do not propose to make any address. I will attempt to facilitate the House and confirm my respect for the importance of the House by indicating that, despite what has taken place on the Order of Business, if Senators feel this debate could be concluded today, I am prepared to wait on in the afternoon.
I would like to have heard the Minister's contribution before I made by contribution but I can understand——
What is our intention? Are we going to sit on? The Minister said he will make himself available.
The House has agreed the Order of Business.
There is no reason why we cannot change it. That would be in order. It can be discussed during the day.
Perhaps it would be better to discuss it during the day. I have no objection so long as there is no curtailment of the debate on the Milk Cessation Scheme. I do not think it is the Minister's intention to curtail the debate on it. I am flexible on the matter. I see no reason why we cannot come back to it on another day if the Minister has other business at 1 p.m. I do not wish to have any curtailment of the debate because it is an important matter, particularly at present when these draconian measures are being proposed in Brussels. The people involved in the dairy industry want to know the Government's thinking on those matters. The Government will have the full support of this House in any attempts to curtail the effects of the cuts now being proposed in Brussels.
We are discussing this report today at a time when the dairy industry is under severe threat. This industry which has contributed so much to our national economy is in a state of crisis because of the policies now emerging from Brussels. At a time when many of our farmers have not yet reached their full development potential, we are being forced by outside forces to cut back on production to help to eliminate the surpluses that have been created down through the years. These surpluses have been created not by our farmers, I hasten to add, but by the highly developed farmers of mainland Europe.
Now that quotas are being imposed, Ireland will be the first to feel the effects and there is no provision to ensure that the effects will be the same in all member states. In recent years many schemes have been introduced in an effort to curtail the supply of dairy products. Despite the best efforts of the Commission and despite a reduction in deliveries of about five million tonnes, there is still an imbalance of 5.2 million tonnes of milk between the supply and requirement of milk. For that reason the milk cessation scheme was introduced by the Commission.
The Commission's aim is to buy up 3 per cent of milk quotas on a Community wide basis. In our case this would amount to 33 million gallons. Those quotas would then be abolished and not made available for reallocation. The price proposed for payment to producers willing to give up their quotas is 21p per gallon each year over a seven year period. In addition, a member state would be permitted to operate a nationally financed cessation scheme to cover a further 3 per cent of quotas. In the case where a member state participates in financing a scheme alongside the Community scheme, 50 per cent of the total quotas bought up would be frozen, with the other 50 per cent available for reallocation for special category cases including young farmers.
Because of the importance of the dairy industry to our national economy we must oppose any attempt or effort to cut back production. The dairy industry contributes approximately 9 per cent to the gross national product. Milk accounts for 33 per cent of Irish gross agricultural outputs and directly gives employment to 11,000 people. Consequently it is not only in the interests of the farming community but in the national interest as well that the milk cessation scheme be opposed.
Ireland is still underdeveloped relative to other countries within the EC. It is important that the industry be allowed scope to develop. Recognition was given by the European Commission to Ireland's special position when the super-levy was introduced. I totally agree with the IFA submission that we should be seeking derogation for Ireland from the EC scheme. There is justification for this approach because of the vital national interest involved and because of the decision taken by the Council of Ministers on 29 March 1984 not to reduce the quantities available to Ireland in the year subsequent to the 1984-85 transitional period. Because of what is now proposed under this cessation scheme that argument was not worth the paper it was written on.
This reduction in our national quota will result in a reduction in dairy exports of at least £50 million per annum. It will also result in job losses which, in times of high unemployment, will bring no joy to anybody. There are many areas of the country where there are limited opportunities for alternative enterprises. Western farmers, in particular, who are geared towards milk production would find it very difficult to switch to beef or cereals. Because of farm sizes and the fragmentation of the farms, farmers would not have a satisfactory income from any other enterprise. Milk production is the only system of farming that will give farmers a regular income. Even though the profit margin has been whittled down considerably in recent years it is still the most profitable system, and more so for the small farmer.
Farmers who have to depend on the sale of store cattle for their income in the past 12 months will know exactly what I mean. In many cases those small farmers have had to accept losses on the sale of their store cattle because they paid a high price for them as calves and then when they were ready for sale the bottom fell out of the store cattle trade. Those farmers should be encouraged to stay in milk production instead of being driven out by the quotas, levies and so on. Any other system of farming is too risky and the profit margins are too small. Unless those quotas and levies are opposed vigorously by the Government and the farming organisations we will see many more families leaving the land over the next few years because they simply cannot exist on their present incomes.
It seems strange that while the Community has cut back on production, the United States, New Zealand, Australia and the USSR are increasing their output. Surely any proposals to cut back on production within the community should take account of what is happening on those continents. They should also take account of what is happening in factory farms where farmers have the benefit of cheap feed such as tapioca and other cereal substitutes imported from outside the EC. Indeed a few of those farms would add more to the milk surplus than would the total take from the farmers of Connacht.
For the past few years there has been a steady drift of farmers from the land simply because they cannot exist in the present climate in agriculture. They are coming on to the labour market seeking jobs that are not there. It should be the aim of any Irish Government to maintain as many families as practicable on the land. There is a vital national interest involved here. Our Government should oppose by every means possible the imposition of those draconian measures.
Last week we had further alarming news from the Commission and further cuts in our milk quota are proposed. The measures proposed will have devastating effects on our dairy farmers, on employment in the industry and on our exports. The surpluses that have been allowed to build up cannot be eliminated overnight. The Commission must have regard to the special position of member states like Ireland who are dependent on milk production for economic survival. Sacrifices may have to be made by all member states of the Community. However, the distribution of sacrifices must have regard to the present maldistribution of support across the member states. The distribution of sacrifice must also take into account the importance of agriculture in member states and the economic and social dislocation which would result from major and rapid adjustments in agricultural support or in milk quotas.
I thank the joint committee for their very fine report and join with them in total opposition to the Commission's proposal which would have the effect of reducing our national quota. I also join with the joint committee in calling on the Government to seek a derogation in order that no reduction in our national quota takes place and I call for the introduction, without delay, of a national milk restructuring scheme. We all realise the importance for our country and for our dairy farmers of the measures now being proposed in Brussels. I assure the Minister and the Government they will have the full support of this House in their efforts to curtail the measures now being proposed by the bureaucrats in Brussels. As I pointed out we have a special case because of the vital national interest involved. We are entitled to some consideration from the people who are devising plans for the elimination of the surplus that has built up over the years. It is unfair to think we would be treated in the same way as the people who have benefited most from the building-up of those surpluses and those who over the years have helped to build up those surpluses. I ask the Minister to go back to Brussels to the negotiating table and to fight tooth and nail for the dairy industry in Ireland because there is terrible uncertainty there at present.
Dairy farmers are extremely worried and they have every reason to be worried. If we were in a different situation where dairy farmers could switch to some other enterprise we might not have as much sympathy for them. Unfortunately that is not the situation. Because there are surpluses in beef and cereals, what line of business are they expected to go into? There is nothing else available for them. They have built up those enterprises over the years and invested much money in them. It is unfortunate that now when they should be reaching their full development potential they are being asked to cut back. They do not know whether they will be out of milk entirely next year. That situation cannot be allowed to continue. There must be some deliberate definite policy so that those farmers can continue in the business they have been in over the years — the business in which they have invested much money.
I ask the Minister again to go back and fight their case and to make no apologies to anybody for putting up a special case for the Irish dairy farmers. If he does that I can assure him he will have the full support of this House.
I would like to stress to all concerned that the implementation of any cutback in dairy supplies has very serious ramifications for Irish dairy farmers and for the Irish economy as a whole. We are discussing the views of the Joint Committee on Secondary Legislation of the European Communities on the milk cessation scheme. While some of the points put forward in that report are now somewhat historical the facts and principles set out in that document still remain even though figures and so on may have altered in the meantime.
I am a member of the committee. It is noteworthy that all the bodies that were consulted at the time, notably the farming organisations, the IFA, ICMSA, Macra na Feirme, the central organisations and co-operatives, the ICOS and ACOT were agreed that a reduction or cutting back of our level of milk production would not be in the best interests of our economy. We share their view and must strive to that end. At the same time, if things are happening in Europe and throughout the world we cannot entirely keep a closed mind on the matter and for that reason if there is to be some situation vis-á-vis a reduction of milk supplies it is to our advantage and it is incumbent upon us to make sure that it is done in an orderly, equitable fashion and in a manner that we as an economy can sustain.
The proposals put forward with regard to the reduction of milk supplies are fairly straightforward in so far as they are set out in this document. The reason for the proposed measure is to reduce the gap between production and consumption of milk and milk products. Most member states favour some measure to achieve this aim but have not fully supported the proposal because there is no provision to ensure that the effects will be the same in all member states. This is the nub of the problem. The effects on different member states varies very considerably and very significantly. We are an underdeveloped economy. We are many year behind the Dutch, the Danes, the Germans and the French. These economies had several years head start on Ireland. For that reason the arguments that stood up in 1983-84 with regard to the super-levy still hold good today. Special measures of exemption or derogation are as relevant now as they were at that time.
The measure proposed in this concept of a cessation scheme is one of the many proposed by the Commission to reduce the surplus stocks of dairy products which are depressing markets for butter. However, the measures already taken by the Commission to introduce the milk quota system have resulted in a fall in production of 4.8 per cent. In the United States there is an increase of 3.6 per cent, in New Zealand an increase of 2.3 per cent and in the USSR an increase of 2 per cent. Australia and eastern European countries have also increased production. These increases have more than offset the EC quantity reductions. Thus, further quota reductions will not necessarily help the world production position. This is a very important point. The production levels in these various countries will impinge very directly on the European scene and certainly on the scene in Ireland.
The conditions which gave rise to Ireland's case for an exemption from the super-levy have not changed. The importance of dairying in our economy remains just as great as it was at that time. Dairy output as a percentage of gross agricultural output in 1983 was 35.6 per cent, agricultural output as a percentage of gross national product in 1983 was 18.4 per cent and dairy exports as a percentage of total exports in 1983 were 10.75 per cent. This demonstrates the importance of the dairy industry to the entire economy. Within the agricultural context also we must realise it is an extremely important supply area for calf and cow slaughterings. In the Council Agreement of 1984-85 there was acknowledgement of Ireland's special case, and we must never fail to state and restate that. Agreement was reached not to reduce Ireland's quota at that time. It was also agreed that in the event of the redistribution of quotas in the future, Ireland would be given first priority for increasing its quota. This is a very salient and relevant point.
The disadvantages of the scheme for Ireland are very great and I will refer to the up to date position. Recently there was a suggestion of a cutback of 35.75 million gallons on the basis of a voluntary cessation scheme and that there would be a sufficient uptake of that scheme. Job losses were talked about in terms of hundreds but that has altered very significantly. Many points which were relevant then remain relevant except perhaps in relation to figures etc. which do not apply.
One other very central point appropriate to mention is that Irish farmers do not have alternative enterprises in which to engage. We must not forget that. Much of the dairying activity in Ireland is on land that is totally and utterly unsuitable for ploughing and which is not arable. It is suitable only for growing grass and milk, beef and sheep can be produced in such areas. Unfortunately the present position vis-à-vis beef production is pretty tight. The scope for expansion and development is not great. The position with regard to sheep production is not as great as people may think because there are certain constraints. There is lack of knowledge of sheep husbandry. There is the whole question of the position vis-ávis interference by dogs which we discussed recently in the context of the Control of Dogs Bill. There are many reasons why sheep production is not necessarily an easy alternative for dairy farmers either. There are a very limited amount of alternative areas of production for people in dairying to move to.
If we do not resist vigorously what is being proposed, not alone now, but in recent times, the position will be extremely serious for this country. During the weekend of 8 and 9 November 1986, which is just a little over a week ago, the Commission considered their intermediate report on the application of the quota systems. They are obliged to prepare a report on the system before March 1987. They decided in the light of the effects and output to propose adjustments to the quota system in order to reduce milk output in an effort to restore balance in the market. The proposals are for a further 3 per cent reduction in quotas in addition to the 3 per cent which is already agreed to. This additional reduction will be facilitated by means of a voluntary cessation scheme. The new targets under the cessation scheme would thus become 4 per cent by 1 April 1987 and 2 per cent by 1 April 1988. If the targets are not reached, compulsory cuts would apply in order to achieve the national targets.
I want to stress and emphasise that these are proposals from the Commission which have not yet been agreed by the Council of Ministers. It is my prediction that they will not be agreed but they are on the table. There is another proposal to end the transfer of unused quotas within and between regions and that there be no further transfers from the direct sales quota to the dairy quota. In relation to quotas at farm level, it will be compulsory for a farmer who exceeds a quota to pay the levy regardless of the position of the co-operative society. Up to now that was entirely different. There was an amount of flexibility and latitude given. The member states could choose between the farm based quota and the dairy based quota but now it is entirely a farm based quota. The rate of super-levy proposed for the on-farm quota will be increased from 75 per cent to 100 per cent of the target price which at present is 106.57p precisely. This as people will know and understand exceeds significantly the actual price of milk in Ireland. It would lead to an intolerable situation for anyone with an excess quota position.
The Commission says that the coresponsibility levy could be increased if these measures prove insufficient. The Commission estimates that there will be certain savings if the measures are agreed. They talk about the removing of regionalisation, which would save 1.6 million tonnes. They talk about compulsory application of the dairy farm quota which would save 2 million tonnes. They talk about the further quota cuts and cessation scheme which will save another 6 million tonnes. In short, the objective is to have a cutback of 9.6 million tonnes in the dairy product area. This is very serious.
The Council of Ministers have not yet considered these proposals. They are going to discuss them but they are unlikely to reach agreement. It appears that these proposals, together with the existing proposals for the suspension of intervention which remain on the table, will become part of the proposals for the 1987-88 price package. It also seems likely that additional proposals may accompany the proposals outlined. It is the Commission's intention to continue their policy of restrictive price co-responsibility with producers on disposal and co-operatives. We would want to be very clear on that. The Commission is bent and intent on a course that includes a restrictive price dimension, co-responsibility with producers on disposal and also quotas.
The rate of premium in the proposed extended cessation scheme is to be the same as the current scheme. The proposal to end regionalisation together with compulsory imposition of farm based quotas will remove the flexibility of transferring flexi-milk and will confine a farmer to delivering his own quota and no more. Any excess would be penalised at the rate of 106.57p per gallon, a figure to which I have already referred. Without any relief whatsoever the average levy paid in Ireland over the past two years by farmers over quota in co-operative societies was something like 4 to 5p per gallon. That highlights the enormity and the seriousness of the proposals before us from the Commission. The estimated volume of flexi-milk in Ireland is 5 per cent and our national output would be reduced by this amount. In addition the cessation scheme will reduce milk by 6 per cent. However, some of the flexi-milk gallons may be eligible for this scheme but not more than to 1 to 2 per cent. In short, you are not adding the 6 per cent or the 2 per cent, 3 per cent or 5 per cent but finishing up in any event with a proposal from the Commission at this point of approximately 9 per cent and that is extremely serious. That proposal from the Commission would mean in our production a cutback of something like a 110 million gallons of milk per year, not the 22-25 million gallons about which we were already unhappy. The new proposals are extremely serious. No words are sufficient to express one's abhorrence and fears as to their effect on the farming scene, in particular on the dairy industry and on Irish economy generally. I have already mentioned the position vis-à-vis the quota. Since there would be no incentive to exceed the quota, a potential marginal excess of 1 per cent, which previously would have given rise to a tolerable levy, would be totally and utterly removed. That is important.
With regard to the cessation scheme — what I am talking about are some of the very important nuts and bolts of recent proposals — to be applied by the Irish Government through the Department of Agriculture, my most recent information is that the dairy management committee have agreed to extend the closing date for the scheme by one month until 31 December 1986. That is a forward step. I hope and expect the Department of Agriculture will take a firm decision to agree with that as a closing date for receiving applications. The withdrawal of application period would extend from 31 December 1986 to 10 or 12 January 1987. The ten or 12-day period will be agreed. The possible extension of the date of receipt of withdrawals is because the Department has to notify successful applicants of their acceptance into the scheme before 31 January 1987.
These are some details of a scheme that may, in the final analysis, be acceptable to us but certainly not details of a scheme of the magnitude and the enormity to which I have referred. So far, there has been a very disappointing uptake on the voluntary cessation scheme which the Department have been a pick-up in that scheme and the most recent figures I have available indicate there is now an uptake of something in excess of 10.5 million gallons. The uptake is disappointing and in this connection I should like to make the point very forcibly that tax exemption or the nearest thing to it with regard to this scheme is important. I will refer briefly to what I understand to be the treatment of the cessation scheme by the Department of Agriculture and, more importantly, in this context of taxation by the Revenue Commissioners.
The Revenue Commissioners have ruled that the money paid to farmers under the cessation scheme will be treated as capital rather than income. That is an extremely important differentiation. The Revenue Commissioners and the Department of Agriculture are to be complimented for treating the moneys relating to the cessation scheme as capital and not income, because if it was income there would be a very serious tax dimension to it. Availing of the cessation scheme — in the context of it being a capital factor — will thus be valued as a disposal because the right to produce milk is involved in the disposal. The precise details of the opening value as of 1974 or on the date of acquisition of land have not yet been worked out. However, the quota value will be based on a proportion of the value of the land in 1974, that is, when capital taxation was introduced. If the farmer acquired the land prior to 1974 or a proportion of the land value at the date of acquisition, if at a later time, the taxable gain will be reduced by indexation which applies in all capital gains tax questions. For example, an asset accruing in 1974-75 and disposed of in 1986-87 has a multiplier of 4.614. There are various multiplier figures for different periods between 1974 and the present and a full list of those multiplier rates for acquisition and disposal in other years is, of course, readily available. That is the one applicable as of now.
In regard to personal allowances in respect of capital taxation, the first £2,000 gain for a single person is tax free and the first £4,000 for a married couple is not liable for tax. The rate of capital gains tax on any gain after the two reliefs above have been taken into account are 35 per cent if the assets are disposed of more than three years after acquisition, 50 per cent if disposed of within two or three years of acquisition and 60 per cent if disposed of within one year of acquisition. In the context of capital gains generally, it highlights the situation that obtains and it is important for farmers to be acquainted with those basic rules and regulations pertaining to capital gains.
Going back to the milk question, the average milk price in 1974 was 23.8p per gallon. Applying indexation at the rate to which I have referred of 4.614, one reaches a figure of 109.8p. That is taking the 1974 values and using the multiplier in a straightforward fashion which is the way I would recommend to the Minister and the Department of Agriculture and all concerned with this scheme. Without an inducement in the area of tax exemption, this scheme on a voluntary basis will not get the uptake we would all like to see.
For the ten-month period ending 5 October 1985 milk intake figures were +5.4 per cent and at 18 October 1985 the figure was +14.3 per cent. At present we are about 2½ per cent behind the quota. My prediction, and the prediction of some people who have done indepth studies of this, is that at the end of the year we will find ourselves in a position of being at quota level. That is the position that is likely to emerge by 1 April. This year we had a very bad milk season and milk supplies were drastically impaired. At the end of this year we will be about on quota.
While milk intake figures are showing increases, particularly in recent months since the weather became more favourable, increases of a significant nature are unlikely. I would like to refer to the importance of the dairy industry in Ireland. We have employed in the dairy industry at present about 8,500 people. They are employed directly in co-operative societies and in dairy processing units up and down the country. In addition, it is reasonable to submit that we have roughly 9,000 people engaged in the spin-off industries. So we are talking in terms of about 17,500 people employed directly and indirectly in the dairy industry. If the proposed per cent reduction in milk production is introduced we are talking in terms of a loss of between 1,500 and 2,000 jobs. That is the enormity of what is being proposed at present by the Commission. I do not think we can stand back and ignore what is there. Our Minister for Agriculture has made clear his opposition to the proposals as put forward. There is no way that those proposals will meet with acceptance from the Government and the Minister. We are confronted with a certain reduction. It is vital that we would have a reasonable uptake of 2 or 3 per cent in the voluntary cessation scheme. I am confident from talking to farmers, individually and collectively, that there is a desire on the part of many to get out of milk production under the present cessation scheme if the tax scenario is clarified. It is also encouraging for people considering getting out of milk to note that the price of 14.7 pence per gallon has been altered recently to 15.3 pence per gallon payable over a seven year period. That is attractive to a number of people and I believe it will meet with the acceptance of many. It is in our interest that those who want to go out of dairying are given the appropriate encouragement. In the final analysis we will reach a situation of greater efficiency at primary production level and at processing and marketing levels. Those who have shown an interest and applied for participation under the voluntary cessation scheme are small suppliers who, due to domestic or social circumstances outside their control — perhaps unmarried farmers working on their own who are not the most efficient producers — could adapt to other farming enterprises quite well.
I would urge the Minister to make certain that as much as possible is achieved under the voluntary scheme, because otherwise we are going to have a compulsory scheme imposed on us regardless of what level we are talking about. All the percentages are confusing in the extreme. In the first instance we are confronted with a 2 per cent reduction in our milk quota as and from 1 April 1987 and we are then confronted with a 1 per cent reduction from 1 April 1988. On top of that we have the alarming percentages to which I referred and which I consider at present to be theoretical. I hope they will remain so. There is a danger that part of that drastic increase could be imposed. We have to face a reduction. With regard to the flexi-milk and all related to it, I believe we must take appropriate steps to ensure that we are not left high and dry.
Going back to the super-levy era and to the case that was made at that time by the Government, supported very strongly by all political parties and by farming organisations and interest groups, we succeeded in effectively getting a 20.6 per cent concession. The concession was 4.6 per cent but we were allowed to use 1983 as a base year which differed to the tune of between 15 and 16 per cent from the 1981 production figures. The Minister for Agriculture and the Ministers of State and others concerned achieved what seemed the impossible at the time, a 20.6 per cent concession for the Irish dairy industry. We know there has been an erosion of that since and that there is a threat for further erosion but we are still winning. We are still in front so far as that concession is concerned but we must base our case again very strongly on the fact that we are different from others, that we have a special case to make, a case that it totally different from that of other countries.
Looking at the total EC agricultural industry over the last 20 years there are significant changes obvious to us all. The number of farmers has declined very significantly, the agri-business sector has expanded and become concentrated and has become a major financial beneficiary of the Common Agricultural Policy. Technology has helped to expand production beyond consumption needs to create surpluses, in excess of one million tonnes of butter, one million tonnes of skim milk powder and 800,000 tonnes of beef which is now in intervention as well as 15,000 tonnes of cereals. These are high figures and while the Community, and we as part of that Community, should ensure that we have reserves for emergency situations such as the Chernobyl disaster or other disasters which could take place, those sort of figures are in excess of what is required. While there should be security stocks for emergency positions, we must also bear in mind that when we put beef or dairy products into intervention, we are not doing so in the knowledge that we as a Community are paying perhaps the equivalent of 95p per gallon for the milk going into intervention and disposing of it in due course for as low as 10p, 12p, or 15p per gallon. The same criteria and the same serious differential would apply to beef and other products.
One other point that needs stating with regard to intervention is that intervention was never meant to be other than an outlet for the disposal of surpluses. Unfortunately, EC countries, and ourselves included, have tended over the years to use intervention as a place to sell our produce or a place to place our produce, to put it more correctly. That has been a serious setback which has not helped the situation. It is regrettable and very serious in my estimation that there is a high standard required for produce going into intervention, whether it be in the dairy field, the beef area or wherever. Only high quality produce goes into intervention and after a period of time, a number of years, the produce becomes unfit for human consumption. This deterioration in the product is something that must not and cannot be allowed to happen while we have such a serious world wide demand for food. In various parts of the world, millions of persons every day are dying of hunger while we have a position where our massive high cost intervention stocks are at the end of the day totally unfit for human consumption. I am not talking about all intervention stocks but I am talking about a great proportion of them.
Ireland for the future should claim the right to have a reassessment of its membership of the EC in the context of agricultural industrial policy. Briefly, I want to refer to the situation obtaining on our entry to the EC way back in the early seventies when we became a member of the EC in the firm and definite knowledge and belief that we had unlimited potential for agriculture but also in the knowledge that our industry was at serious risk. The vast majority — 83 or 84 per cent — of the Irish people voted in a referendum that we should become a member of the European Community. We found about ten years later that our industrial scene had seriously dissipated, not totally unexpected to us. At the same time we found that the brakes were put on, our agricultural production where we were not allowed to go further, and that is the kind of combination that must again be taken up by the Government and by all concerned with the betterment of this country. There is no way that our country, a small island off the mainland of Europe, can compete with the giants, if you like, of the European scene. Those persons have advantages from a location, economic and other points of view vis-á-vis special agreements under the GATT trading arrangements and so on. As I say, in terms of geographical location we are without any question very distant from Europe's principal markets. The cost of transportation to European markets is high and this aspect has to be looked at because the one part of the EC that is accessible to us is the United Kingdom market.
One of the big advantages we saw as a nation when we joined the EC was that we would no longer be reliant on the United Kingdom market so we would be going back to square one if we were put into that position again. Any solution to our problems should be considered in an all-Ireland context, covering Northern Ireland as well. The argument I am making and which I know will be made by others would be greatly strengthened by our talking about an all-Ireland situation in a trading context here rather than our talking about the Republic of Ireland. Therefore, we could not overemphasise or overplay the importance of this aspect of our special position of disadvantage within the framework of the EC. We must not be apologetic to anybody with regard to our looking for special concessions because we are in a vital strategic position from a political and other points of view in the EC context and in the whole context of the western world. Our geographical position has such advantages that economic preference to us would not be too much to ask in return.
This country has been renowned for its excellent food production over the years, but we have not put a serious policy, in my view, into action with regard to food production, processing and marketing. I know that the Minister of State, Deputy Hegarty, has been doing enormous work in this area in recent times, of getting together a meaningful and worthwhile policy with regard to food processing and marketing and, indeed, production as well. The concept of the purity of our food is something that we must sell more. There is a growing market for pure food and, indeed, there is a very strong market for organic farming. We have been producing for intervention without regard for quality except that the quality should be sufficient to pass for intervention access. As I said in the House before, and one cannot over exaggerate the importance of this, we must do a great deal more market research. We must go out and find out precisely what the consumer wants, what the housewives in Germany, Britain, Paris and elsewhere want and produce to meet their needs. In other words we must produce to the requirement of the market and not, as we have been doing for too long, produce first and attempt to market that produce later, sometimes with success. On occasions the success is very questionable.
Recent development in EC policies suggest that we should consider new options as regards the financing of the Common Agricultural Policy. The integrated Mediterranean programmes adopted last year for Greece, Italy and southern France give potentially a blueprint for similar actions for Ireland, both in agriculture and in other sectors such as those that fall within the Regional and Social Funds. There is a precedent in that integrated Mediterranean programme to give us preference or special concessions in our areas of agricultural production and also in the case of the Regional and Social Funds.
The recent EC Green Paper on agriculture suggests that the Commission's gradual tendency is towards a system of direct payments such as headage payments. This system should be studied closely for the future and compared to the present market support system which would be the best for the Irish. In other words, we should try to find the best one for the Irish scene.
With regard to livestock production, which is very closely aligned to the dairying question under discussion, if it was 100 per cent refundable from Brussels it would have certain obvious advantages. The position here vis-á-vis agricultural structures of a small number of very well-off farmers and a large number of poor farmers supported by the present intervention system has led to grave difficulties in income support, surplus production and budgetary waste. I am referring to the EC. The politics of price support systems are based on the votes of poor, small farmers but while they form 75 per cent of all Community farmers, they produce only 25 per cent of EC farm production in the costly products such as milk, meat and cereals. Conversely, 25 per cent of large farmers produce 75 per cent of agricultural production and they automatically take 75 per cent of the farm income. Thus structurally, we create problems of income disparity in the agricultural sector.
Ireland needs to look for an improved arrangement for agriculture as a matter of urgency, possibly based on 100 per cent EC financing of direct income aids to producers. As an island we have natural disadvantages such as our climate and our soil type and agricultural structures and dependency. This has to be looked at on an all Ireland basis. The age structure of our farmers, and the ownership of farms, is a vast area that one could talk about for a long time. I have already referred to the precedent in the integrated Mediterranean programme and it is something that we must not be slow to utilise for our needs when we require it.
With regard to the present scheme I believe there are some basic fundamentals that milk producers are not acquainted with. It is incumbent on us to spell them out and make them clear to all concerned. In the context of a milk cessation scheme which we are striving for no effort should be spared in trying to achieve the highest return possible on a voluntary basis. The amount of the premium is 15.3p per gallon payable over a seven year period during the months of April to June from 1987 to 1993. The persons eligible to apply — this might be unclear to those concerned — are the holders of a milk quota under the super-levy arrangements in respect of deliveries to a co-operative or dairy or in respect of direct off-farm sales. Applicants must undertake that, in the event of their holdings being transferred by sale, lease or inheritance, it will be made clear to the transferee that the quota entitlement relating to the holdings has been surrendered. That means that the quota is part of the land, and goes with the land whether it is sold, inherited or transferred by any other means.
The quota to be surrendered is the entire quantity that has been allocated to the producer under the super-levy arrangements. Where a quota includes quantities from the national reserve for new entrants set up in 1985-86, those quantities will not be eligible for premium. Quotas obtained from the national reserve set up in 1984-85 for producers with animal disease problems will however be eligible for premium soon, as will quotas obtained by producers as a result of land transactions involving lands to which quotas are attached.
Questions are sometimes raised with regard to quotas on leased lands. The position is that in the case of leases applications should be made by the lessee or tenant. The application must include an undertaking from the lessor or landlord that he or she is prepared to accept the surrender of the quota and the allocation of the premium payments proposed. The quantity of milk that is involved is on the basis of what is already agreed — I must emphasise, "already agreed"— 22.6 million gallons in 1987-88 and 11.3 million gallons the following year or 2p per gallon in the first year and 1p per gallon in the second year.
It is very much in the national interest that as many people as possible avail of this scheme and become participants. Applications for the scheme are straightforward. Persons must apply to the Department of Agriculture in Dublin and application forms and any other information required, as many farmers know, can be obtained from co-operative societies.
I should like to compliment the central organisation of co-operatives, the ICOS, for the vast amount of work they have done in ensuring that farmers and persons with an interest in the milk cessation scheme are made fully aware of all the facts. People have been kept very fully informed through the co-operative mechanism.
By and large those who work within the broad parameters I have outlined will qualify under the scheme. The date for stopping deliveries of milk will be 31 March 1987. Penalties will be imposed on any participant in the scheme who delivers milk or sells directly for consumption after that date or on any purchaser who accepts deliveries of milk from a producer participating in the scheme. They are the terms of the milk cessation scheme as I understand them.
I should like to refer very briefly, to a matter that is closely aligned to this because we have an important by-product, beef, which is coming from the dairying enterprise. There is great potential to gain a great deal more for our beef market from that sector. We are selling a lot of beef in a rather unprocessed state. I should like to see more processing and, consequently, more added value to the whole beef industry. It would help not alone the beef industry and farmers but would create employment and help the balance of payments position. It would return a lot more to our Exchequer.
The whole food area — milk is a very important product in this regard — whether it is animal feed or food for human consumption is costing us a lot of money in imports. Not all imports can be substituted by home-produced goods, but a substantial amount can. We imported something in the region of £900 million worth of food last year and we could substitute approximately £250 million worth of that by home-produced goods. That area should be looked at.
Deputy Joe Walsh, and those involved with him in the preparation of this report, deserve of our praise for setting out quite clearly the guidelines and the points to be avoided at all costs. While the report may be a little out of date its central message remains exactly relevant. It is in all our interest to make sure that a voluntary cessation scheme is successful but there is no way we can tolerate what the Commission recently placed on the table for dairy farmers in Europe and, in particular, for Irish dairy farmers. We have got to get a special derogation or a special exemption from that proposal.
I welcome the opportunity to speak on this report. This milk cessation scheme is not acceptable to this country. It will be detrimental to the dairy industry and the agriculture industry as a whole, and it will have serious affects on the economy. The Commission consider that, despite a reduction in deliveries of about five million tonnes, there is still an imbalance of about 5.2 million tonnes between the supply and requirement of milk, and further measures are required to reduce Community deliveries. Ireland's contribution is minimal compared to other EC countries. The Commission state that a better balance between supply and demand can be achieved by a Community indemnity to producers who voluntarily undertake to cease milk production with the aim of securing the release of reference quantities totalling three million tons.
The Commission's aim is to buy up 3 per cent of quotas on a Community-wide basis. In Ireland's case this would amount to about 3 million gallons. The quotas bought up will be abolished and not available for re-allocation. This will be very serious for the dairy industry in Ireland. We will not be producing on a par with other European countries and will have a reduced quota and surpluses will not be available for re-allocation. In addition, member states will be permitted to operate a nationally financed cessation scheme to cover a further 3 per cent of quotas. In the case where a member state participates in financing a scheme alongside the Community scheme 50 per cent of the total quotas bought up will be frozen with the other 50 per cent available for re-allocation for special category cases including young farmers. If those schemes are adopted, young farmers may not be inclined to go into the industry, although they may have been trained in agricultural colleges or served apprenticeships to master farmers who are in the dairy business. If the cessation scheme envisaged by the Commission is accepted by Ireland there will be no future for our young farmers. This is a serious matter and, as the IFA say in their submission, the proposed Community milk cessation scheme poses a threat to Ireland's national interest of equal dimensions to that posed by the super-levy when first introduced.
Senators on both sides of the House agree with that submission. The dairy industry contributes approximately 9 per cent to the gross national product. Milk accounts for 33 per cent of Irish gross agricultural outputs and gives direct employment to 11,000 people. A cessation scheme such as is envisaged will definitely seriously affect the employment of such people. Therefore, it is not only in the interest of the farming community, but in the national interest as well, that this proposed milk cessation scheme should be opposed. It is essential that the industry is allowed scope to develop further, as Ireland remains under-developed relative to other countries within the EC.
Milk output in Ireland is six and a half times more important to the Irish economy than the overall economies of the EC. The introduction of the proposed milk cessation scheme at a level of 3 per cent, will obliterate two-thirds of the increase granted under the super-levy agreement. The recognition given to Ireland's special position by the European Commission must be followed up now by seeking a derogation for Ireland from this EC scheme. This approach is entirely justified because of the vital national interest involved.
The introduction of the proposal in Ireland will further fossilise the structure of milk production as it is today, as milk which would normally become available for re-distribution will be lost to the country. Our negotiators at the outset made a mistake in not seeking a complete derogation from the super-levy scheme. Ireland's position was unique. It was underdeveloped compared with other countries, as Senator Hourigan mentioned in debates in the House in 1983. That was a very bad year for milk production here and it was not a fair year to base quotas on. The Community have already cut back on production but on the world market other countries like the United States, New Zealand and Australia are increasing their output. The EC have already cut back and the world market is filling that gap, yet the EC require further cut backs. At a time when the EC are cutting back other countries are increasing their production.
The Minister, and the Minister of State must recognise that our milk yield is not on a par with the milk yield per cow per annum in the Netherlands. The milk yield in 1965 per cow per annum in that country was 4,207 kgs. while in Ireland the milk yield was 2,308 kgs. The milk yield per cow per annum in the Netherlands was twice the yield in Ireland. In the base year of 1983 the milk yield in the Netherlands was 5,290 kgs and in Ireland it was 3,654 kgs. That proves Ireland was closing the gap and if we got an opportunity we could have closed it. One section of farmers who were helping to close that gap were the pedigree Friesian breeders. They embarked on breeding schemes to ensure that we have cows that would produce more gallons per cow per annum. It was disappointing for the farmers who depend for information on the Farmers Journal to read that they were critical of pedigree breeding. That was a mistake and was not in the interest of the country or the dairy industry. They knocked pedigree breeding, a programme that would increase yields per cows per annum. The winner of a herds competition held by a club of which I am a member had a milk yield per cow per annum of 7,167 kgs, which was better than the average in any EC country. If such clubs, who were doing great work prior to 1983, got more encouragement and were not criticised by our leading agricultural journal, we would have a better milk yield per cow on the base year of 1983.
The Minister of State appears to be agreeing with my remarks. It is a pity the programme of breeding for production prior to 1983 was not encouraged by our national agricultural journal. We are still furthering our policy of getting more per cow. Even under a quota system it is important to have more gallons per cow because in that case it will cost less to produce milk. A farmer need not have as many cows to produce the required quota. That breeding programme should be encouraged to ensure that under a quota system fewer cows are needed to produce the quota required. I am sure the Farmers Journal will change their attitude towards pedigree breeding because proper breeding will bring about an improvement.
I should like to compare the milk production figures in Ireland with those in the Netherlands. Their quota — I do not know whether they have stuck to it or whether they have produced less or more since it was fixed — is 11,979 tonnes of milk for a total arable area of 3,731 hectares. They are producing about three-and-a-half tonnes of milk per hectare while in Ireland we are producing 5,280 tonnes for 7,028 hectares, or three-quarters of a tonne per hectare. In the Netherlands farmers produce five times as much milk per hectare as we do. There is a great anomaly there.
The EC should examine countries that are producing milk not from the green grass as in Ireland but in factory farms or by feeding cows with cereals imported from non-EC countries. That must be tackled. When we joined the EC we thought we would get a fair crack of the whip to create wealth. We expected to be treated on the same basis as other EC countries and that we would have an equal standard of living. If under the milk cessetion scheme we are being asked to take the same percentage reduction as the countries that produce extensively especially the country I mentioned, I do not think the EC is being fair to Ireland's dairy or agricultural industry. The dairy industry is vital to us. The agricultural industry is essential to our economy.
What is the future for young farmers who are studying in agricultural colleges or serving apprenticeships to master farmers in the dairy area? What chance have they of getting involved in a dairy enterprise when they will not get a quota? Many young people are anxious to become farmers but there seems to be no opportunities for them. There will be fewer opportunities for them if this cessation scheme is adopted as proposed in its initial stage at 3 per cent. If the recent suggestions are implemented there is no hope for these young people to become farmers.
Many farmers developed their dairying enterprise at considerable cost, prior to 1983 when the quotas were determined. They have big commitments to financial institutions. They have developed to produce twice as much as their quotas. Because they are being restricted to quotas they are not in a position to meet their financial commitments to the banks. The banks will not be too lenient with those farmers and this is causing them a great deal of worry and distress, especially those who were encouraged by the ACOT advisory service and by some banks to invest in agriculture. They must get special recognition. They are in desperation trying to pay back their overdrafts.
The Minister for Agriculture, Deputy Deasy, has said that the reality of the situation is that we must accept this national milk cessation scheme because of over-production of milk in the EC. Because of our unique position, especially compared to other EC countries, a special case should be made against the milk cessation scheme. When you consider that the Netherlands can produce five times as much milk per hectare as Ireland, we are in a unique position and therefore entitled to derogation.
Senator Hourigan said that we are importing £900 million worth of feeding stuffs and that if we were to produce feed we could reduce that to £250,000. This should be encouraged. At the same time we are not guilty of importing feed stuffs from third countries: what we are importing is produced within the Community. Only a minimal amount is imported from outside the Community. We should ensure that the countries who are importing cereals from non-EC countries should be penalised so as to ensure that the milk mountain which is causing these quotas can be reduced.
Senator Hourigan said we got a derogation of 20.6 per cent in 1983. I do not know where he got that figure. I understood that we got a derogation of 4.6 per cent which at that time we considered inadequate. We should have got a complete derogation for some years because we are a developing country and we should get the opportunity to develop to our full potential to bring us on a par with other developing EC countries. I hope that the Minister in future negotiations will put our case as strongly as possible to ensure that we will not suffer any more because of this milk quota system. It is vital to the agriculture industry and the economy as a whole that we be in a position to produce as much milk as we are at present and not be restricted.
I congratulate Deputy Joe Walsh and the sub-committee of the Joint Committee on European Legislation for producing this fine report. I hope their recommendations will be heeded by the Minister and that he will ensure we will be treated justly by the European Commission because of our special position as far as milk production is concerned.
I thank the Minister for his assurance that he is available to continue discussing this important resolution. In deference to the wishes of the Opposition he has agreed to do that. At 1 p.m. I will be proposing that we resume the debate on this motion after lunch, if the House so agrees.
In formally proposing this this morning I reserved my right to speak until now because I wanted to do some justice to the report. First, I want to compliment the Members of this House who are members of the Joint Committee on Secondary Legislation of the European Communities, particularly Senators Higgins, Hourigan, Lanigan, McDonald, Robinson, Ross and Smith. I thank them for their contributions to the committee. I would like to thank the chairman who commissioned and steered the report to the final stages. As Senator Hourigan, said it is a pity that it is a little out of date. It is dated February, but at least we are discussing it. I am pleased that the Minister and the Minister of State, Deputy Hegarty, who is present, have already been acting on some of the recommendations and have been continually battling in the Community for a special position for Ireland in the whole area of milk production. It was proved on the last occasion when we had what I have referred to in the past as the debacle of the super-levy. On that occasion the Minister, Deputy Deasy, was extremely successful in getting for Ireland what was afterwards generally regarded by all the other member states as a very special deal on the super-levy. Naturally all of us tried together to put sufficient pressure on the Minister to achieve more.
In hindsight, we achieved what was an excellent deal on that occasion, one which has not created too many problems in the milk sector in the meantime. Very few people have exceeded the quota and indeed this year, because of the weather and other factors, the super-levy was not a problem for us. However, the base year chosen for the application of the super-levy was 1983 and we were given 4.6 per cent on top of that. Other countries had a base year of 1981 which would probably have been more beneficial for Ireland if we could have agreed that because the difference between the 1981 base and the existing base is about 20.5 per cent — 15.9 per cent difference between 1981 and 1983 plus the 4.6 per cent. Within the restrictions that have been placed on the whole dairying sector the Irish milk producer has managed to become more efficient and has managed to meet some of the challenges presented to us by the super-levy. It is to their eternal credit that they have managed to live within it and to become more efficient.
The only way the Irish farmer can survive in the Community in future is being more efficient and producing more with less input cost. Senator Kiely said that by improved breeding and more efficient means of management we could achieve a greater output from fewer animals.
I am extremely concerned — and Senator Hourigan mentioned this — at the implications of any curtailment of milk production and the effects that would have on the beef sector. The dairy sector is the source of supply for the whole beef industry. There is a future for beef production in the Community. I am convinced that next year, in spite of the colossal surplus in the intervention system, cattle prices will improve dramatically because there is a general shortage of livestock. A tragic consequence of the curtailment of milk production is that it has a direct bearing immediately on the beef sector. The Minister in the packages he negotiated at Commission level has got additional grants for the producers of beef and there are special headage payments for beef producing cows.
However, Irish economic development and the future sustenance of many jobs in the milk sector depend on a viable dairy industry. Some of the figures quoted by submissions to the Oireachtas joint committee indicate the importance of this whole sector to the employment of people directly. The figures are between 9,500 and 11,000 people directly involved. From that point of view alone it is of importance.
If some of the proposals the Commission are now talking about were introduced, they could have a devastating effect on the employment of people directly in this industry. We could have job losses running up to 400 or 500 people. In this day and age when we have too much unemployment in other activities in the economic sphere, we have to be extremely careful about any suggestions of curtailment of production which would have a direct bearing on the levels of employment in Ireland.
There is no doubt about the economic importance of the dairy sector to the whole economy and to our exports. The figure involved for the economic development of the country from milk production and milk exports and all the by products of the milk industry, the capital value of that for Ireland and its exports, its gross national product, its borrowing capabilities and its whle balance of payments, is comparatively great.
The Commission's proposal, made at the time of this report, was to buy up 3 per cent of the quota on a Community basis. Other members of the Community have somehow the ability to engineer directives to suit themselves, and they have proved that they have been able to bend some of the rules to their own advantage. It can be said of the Irish that we are good Europeans. We have often been accused of being too good. We tend to accept as dogma any directive or suggestion that comes from the Community: it has to be implemented to the letter. This goes for every field, whether it is Euro loans or whatever. At times, because of our strictness, we create problems for people on the fringe whom we would like to assist.
The Commission's newest proposals, as Senator Hourigan said, are totally unacceptable. We could not accept that these proposals could in any sense be implemented here. The consequences would be devasating. However, the 3 per cent the Commission talked about would amount to about 33 million gallons. The quota would be abolished and would not be available to us for reallocation. In other words, the Commission, throughout the Community, would take 3 per cent of all production and wipe it out and say: "We never want to see a gallon of milk again and you will be under penalty if you produce it for any economic reason".
Senator Hourigan dealt in detail with how the scheme would work and the panalties arising from it. That is the kind of consequence if the 3 per cent Community recommendation is imposed. The price proposed for payment to producers willing to give up their quotas is about 21p per gallon in each year over a period of seven years. In addition, the member states would be permitted to operate a nationally financed cessation scheme to cover a further 3 per cent of quotas and, where a member state participates in financing such a scheme in addition to the Community scheme, 50 per cent of the total quota brought up would be frozen. The other 50 per cent would be available for reallocation for special category cases, including young farmers, small farmers and farmers who have had problems with their disease eradication programmes.
There is a lot to be said for a scheme which would be voluntary and would be controlled by the Government who would reallocate it to the co-operative movement. It would be quite dangerous to consider it in the context of the Community totally freezing the equivalent amount which would be taken up under their scheme. We need to be extremely careful how we negotiate the present proposals from the Commission. At present the Minister is arguing these proposals at Commission level. If we had the 2 per cent or 3 per cent and the milk flexi-system we could be talking about a possible reduction through one scheme or another of about 9 per cent of our total dairy production as of 1987.
There is also the problem of farmers making quotas available for sale. Initially farmers tried to sell quotas as a commodity. Thankfully, a stop was put to this and the quota had to be identified with the land to which it was applicable. Now, trying to acquire quotas is probably one of the only ways that you can sell a farm in Ireland: the quota attached to it is sold because it is probably more valuable than the price of land. That is an indication of how serious the farming community consider the importance of having a quota available.
A milk flexi-scheme is being operated by the co-ops at present, at their discretion, in some cases to ensure the survival of young farmers and smaller farms. New entrants to the farming life are trying to cope with some of the disease eradication consequences. A lot of criticism has arisen about the milk flexi-system, but, generally speaking, if sufficient milk had been available a proper flexi-system could have operated. The principle and the concept are very important.
The joint committee were informed by the Department of Agriculture that Ireland has a proposal for a new national milk restructuring scheme financed by the dairy industry. This would free quotas in return for a once-off payment of 75 pence per gallon of quota, and create a reserve from which additional quotas could be allocated to prescribed special category producers. These proposals were made by the Government to the Commission and were being examined by the co-ops. The Commissions' response was awaited by the joint committee.
That is an interesting concept. If the Department manage to achieve that type of flexibility, it could be used for the benefit of many producers in the country who have an interest and an expertise in producing milk, which all of us agree is a very important economic activity.
Many submissions were made to the Oireachtas Joint Committee, including those of the IFA, ICMSA, Macra na Feirme and ICOS. Many of those people would consider they have a vested interest. They put their facts and figures together and it is important that the committee took into account their contributions in these areas. I will not deal with them specifically or individually. They were important submissions and a lot of research was done on the dairying industry and the consequences of the Commission's proposals. ICOS would be the umbrella movement for the co-operative producers. They made an important submission. On page 8 (15) of the Committee's report they contend that most member states favour some measure to reduce the gap between supply and demand of milk and milk products. We would all agree with that. The future for milk suppliers is to ensure there is some relationship between the total quantity supplied and the total demand.
One of the areas in which we can improve the demand is in the area of diversification of the by-products of milk. A lot of research has gone into this. Any co-operative movement that have been involved in research and development of new products have to be commended, whether it is in cheese, yoghurt, the cream liqueur industry and so on, provided they can produce an alternative market for milk which is a marvellously adaptable product. Milk has been proved to be capable of different developments. If more work could be done in that area we would not have a problem about milk quotas.
The Commission have been lax in trying to improve research and development in regard to this commodity. ICOS have not supported fully the Commission's proposals because there is no provision to ensure the effects will be the same in all member states. Up to now we have been very good Europeans but the effects in this case will be different in different states.
Ireland was given a special position on the day of our accession to the Treaty of Rome: we were led to believe there would be no instruments used against us which would preclude us from improving our economy and getting in line with the members of the Community at the time. We were given an assurance we would be given incentives to increase production to bring our farmers into line with their European counterparts. This is one of the reasons why the country accepted the referendum proposal at that time. We could see a benefit for the agricultural community, and that benefit has continued, but it is beginning to diminish in its importance for Irish farming.
The effects of this new proposal will be so different throughout the Community that we have to be extremely concerned.
The ICOS submission states: "The measure is one of many proposals by the Commission to reduce surplus stocks of dairy products which are depressing markets for butter." There is widespread criticism of large butter stocks not being allowed on the market from intervention to categories of people who would benefit from them, because releasing butter cheaply within the Community market is thought to influence prices. So, they have this false system of price support of putting butter into intervention and then selling it elsewhere, to the eastern block countries, to Russia, for livestock feeding and other such things, which all of us abhor as concerned people.
We are concerned about the developing countries, countries whose peoples are dying from starvation but we have to operate a system which precludes sufficient movement of a vital product like butter and skim milk powder to the market place or to the areas where they are required by the starving people in the Third World.
There is a challenge for all of us there. There is a challenge for the Community and there is a challenge for our Government to ensure that stocks intervention are released to the market in some way which would not disturb the normal market forces in the Community.
The ICOS submission goes on to say: "However, the measures already taken by the commission through the introduction of the milk quota system have resulted in a fall in production of 4.8 per cent".
I propose we continue the debate on Item No. 1 at 2 o'clock until we conclude. The Minister will have an opportunity to reply, as he has offered to stay with us.
Sitting suspended at 1 p.m. and resumed at 2 p.m.
Before lunch I was speaking about the submission from ICOS to the Oireachtas Joint Committee dealing with the milk cessation scheme as proposed by the Commission. I was quoting from their submission and I continue to quote from section 15 as follows:
However, the measures already taken by the commission through the introduction of the milk quota system have resulted in a fall of production of 4.8%.
That is Community reduction.
However, the US, New Zealand, USSR, Australia and Eastern Europe are all showing increased production and these increases have more than offset the EC quantity reductions.
The ICOS contend that further quota reductions would not necessarily help the world production position. It is appropriate to say that any surpluses that have arisen in the European context cannot be attributed to the Irish producer. Our percentage of the total EC production is between 4 per cent and 5 per cent so we have not contributed to any surpluses. Indeed, some of our agencies, for example An Bord Bainne and others, have done a major job in selling outside the Community many of the products of the dairy industry. ICOS continue to suggest in section 16:
The conditions which gave rise to Ireland's case for exemption from super-levy have not changed. The importance of dairying is shown in the following three points:——
(a) Dairy output as a percentage of gross agricultural output (1983) = 35.6%.
(b) Agricultural output as a % of G.N.P. (1983) = 18.4%.
(c) Dairy exports as a % of total exports (1983) = 10.75%.
The importance of the dairy industry to the beef sector as a source of supply of calves and cow slaughterings is also significant.
The dairy industry and the beef sector are inter-linked. If we have widespread slaughterings of cows we will have a resultant loss in the production of calves which are also important to the economic development of the country.
I continue to quote as follows:
In the Council agreement on the 1984/1985 Price Package there was acknowledgement of Ireland's special case and agreement not to reduce Ireland's quota at any time in the future and in the event of redistribution of quotas, Ireland would be given first priority for increasing its quota. In its explanatory memorandum on the measures the Commission emphasises that the provision to allow the transfer of unutilised quotas between purchasers means that deliveries not subject to a levy amount to 1% of production and the facility will not be valid after 1985/86. This would mean that some co-operatives/dairies could find themselves in a position where they would have to pay super-levy even though Ireland as a whole could be below quota.
That is one of the submissions from the economic groups involved in the farming organisations. Macra na Feirme made a very important submission to the Oireachtas Joint Committee. They have a role that we have an interest in. I have a definite interest in it because it is important that young farmers, in particular those we are now retraining and educating to a high level to enter into an industry which is now being looked upon for the first time, as a proper industry, young people with the courage and the capital to go into farming, should be given every facility within our membership of the Community to do so. Macra na Feirme are anxious that new entrants to dairying would have an opportunity to acquire a quota in their own right.
There are interesting submissions from An Foras Talúntais and ACOT to which I want to refer because those two agencies do not have a vested interest in that they are not beneficiaries. They are looked upon as being the experts in the area of agricultural development and are widely respected in this country and the Community for their views. I quote from the An Foras Talúntais submission as follows:
An Foras Talúntais states that should the Commission proposal be introduced and the indications from Brussels are that it will, the importance of the National Scheme is obvious, in that the amount volunteered under the EEC measure will depend on the amount which has already been absorbed by an alternative scheme. The level of compensation offered in the Commission proposal for buying out quota, is important. At present the value of a quota ranges between 10p and 15p, the levy has not been severe up to date as our production quota has not been exceeded because of the possibility of substitution between different purchasers in terms of equalisation. This is the last year in which this will happen, according to regulations, consequently the levies will become much more severe in the future. The value of a quota will increase correspondingly, it will be determined by the loss of income to a producer because he must move to a less profitable alternative.
An Foras Talúntais states that from their research, this situation will give rise to quotas of 30p per gallon. The Commission proposal is for 21p per gallon over seven years. An Foras feels that it is possible that the scheme could continue for longer than seven years and consequently feels that the rate of compensation is low.
That brings me to the point made by Senator Hourigan when he suggested tax incentives for the national scheme. I agree that where workers are made redundant the first £10,000 of their redundancy should be tax free and appropriately the same yardstick could be used where people are made practically redundant by opting out of milk production. There should be some tax incentive for the national scheme. I want to qualify that. Only those involved in the voluntary national scheme should be given the incentive because the European scheme could be to the detriment of our continuing production in that production would be frozen to the amount under this proposal in the Commission's cessation scheme.
ACOT, another widely respected organisation and one which has had a dynamic leadership under Dr. Liam Downing, has now, for the first time, got the full respect and confidence of the farming community. When a body such as ACOT makes a recommendation or a submission all of us have to take serious account of their suggestion. As pointed out by other farming bodies, ACOT in its submission to the joint committee has also stated the vital importance of the dairy industry to the national economy. The arguments made at the time of the super-levy debate still stand in relation to Ireland, and the Council of Ministers then recognised the special position of Ireland in relation to dairying.
ACOT points out that should the Commission propose to go ahead there will be a reduction of milk output which will result in a very large increase in cow slaughterings and the value of beef output could be reduced to the extent of some £25 million. If we add that £25 million to the estimated drop in the value of milk produced of about £33 million then we realise what this kind of Commission proposal could mean to the dairy sector and to the Irish economy as a whole.
ACOT goes on to state that in relation to the national scheme there is a danger that a number of farmers within the lower level of quotas who would find it difficult to pay the full price of quotas being redistributed under the national scheme and ACOT would possibly have to help them improve their efficiency in milk production. This point was made by Senator Kiely and it is one we should look to in the future.
ACOT finally points out that taking inflation and interest rates into account — and we had a debate last week in this House about interest rates, and we had economic experts telling us that over the short term at least there will be no change in interest rates downward — it is obvious that farming is going to be faced with the dilemma of trying to get sufficient capital to continue in production. The restriction in the Euro loan has not been sufficient to meet some of their requirements. Following a meeting yesterday with the Tánaiste and the General Council of Agricultural Committees I hope that continuing presure will be put on the banks by the Government to change the system of regulations applying to the Euro loan. We hope in the near future that Britain will join the EMS. They have indicated their intention to do so after their next general election when the British Prime Minister overcomes her national pride and recognises that they are members of the Community and should join in the monetary system applicable in Europe.
An Leas-Chathaoirleach
Does the Senator think she will not even be a Minister?
She may not be. In the context of interest rates it is obvious that even with inflation dropping, interest rates now and during the coming months are going to be high and that affects farming in particular. It is possible that farmers might see the EC scheme now suggested as being beneficial in the short term. If somebody is in financial difficulty and suddenly sees a scheme that pays them to get out of production it can be very tempting, particularly when the bank manager is pressurising them into making decisions they would not normally make, for example, disposing of stock or land to meet borrowings. With that kind of pressure on farmers following two fairly disastrous years it is obvious that schemes like this can appear to be beneficial. I would be worried and ACOT have expressed the view that they would be worried that it would be tempting for farmers to enter into a scheme that would give them compensation by releasing their milk quotas. They suggested that the tax concession referred to should be considered seriously by the Government. I suggest that the same tax break as that given to people in industry in redundancy would be the guidelines to use in this dilemma. If a tax incentive is going to stimulate them opting into a voluntary national scheme then we suggest that that be considered.
The findings of the joint committee are in line with the various submissions that have been made to them. They have made specific proposals to the Minister. I am looking forward to hearing the Minister's response to the debate in this House. It is his first opportunity to respond positively to the report that has been lodged to his Department. In the concluding page of this report, section 37 states as follows:
In view of the dominant position of dairying in Irish farming, and in the economy as a whole, a fact with which the Council of Ministers was in agreement in March, 1984, during the Super Levy negotiations when the level of the national quota for the next five years was agreed, the Joint Committee wishes to express its total opposition to the Commission proposal which would have the effect of reducing our national quota. The Joint Committee calls on the Government, and in particular the Minister for Agriculture, to seek a derogation in order that no reduction in our national milk quota takes place and further calls for the introduction of a National Milk Restructuring Scheme without delay.
That is one of the final conclusions of the committee. That sums up the views of people on all sides of the House. I hope the Minister of State, Deputy Hegarty, who is present would share also those views.
It can safely be said that the impact of a milk cessation scheme would have enormous effect on our economy and on our farming community. It has been argued that if there is a reduction of milk in the other EC countries and if we could uphold a limbo situation we may reach a stage where we could get into production again on an increased basis. I do not go along with that theory because the reason the problem has arisen is that the other EC countries are producing milk artificially, whereas in this country we produce it naturally from green grass. That is the vast difference between the other EC countries and Ireland.
If people in the European countries are stopped from producing milk artificially that is only a stop-gap situation because the implications involved in getting out and getting in in Europe are much lesser because of the way it is produced. For that reason if the climate is right in the near future the entrepreneur will come rushing back to make a fast buck at the expense of the Irish farmer. I do not go along with the suggestion that if there is an overall reduction we will no longer have any surpluses within the Community. An argument that has been raised is that if we have patience and wait we will get back into milk production again to the same level as in the past.
The milk cessation scheme has been condemned by every organisation within the farming community: the IFA, the IAOS, the ICMSA, ACOT and Macra na Feirme. It is highly unsuitable for this country.
It has been said that we are good Europeans. The reason we are good Europeans is that we have not yet contravened any of the EC directives. If we do not contravene EC directives we are good Europeans but our friends in Britain contravene an EC directive every time it is unsuitable to their requirements. If it is unsuitable to their requirements, they do not bat an eyelid at bringing in regulations adaptable to their conditions.
We must put up a defence against the introduction of the milk cessation scheme. There is no way it can be acceptable because the implications are too great. I will talk about beef later. The farm size of persons who went into milk production in the smaller farms is unsuitable. The variation and size of farms are unsuitable for any other type of farming. For cereal production, pea growing or any other farming venture, the variation and size of small farms are highly unsuitable and would not work. During the past 25 years we have been luring farmers from every rostrum — even from the pulpits: our parish priests joined community organisations — to get them into milk production. The monthly cheque that was necessary to keep small income families viable was an encouragement to go into milk production. In their own small way, whether with ten cows, 20 cows, 30 cows or more, they had to adapt their farm outoffices to provide a milking parlour. They did that and they were geared to milk production. They were told there was a quick buck to be gained and that they would have some security. Now all that has been thrown in their faces and they are asked to get out of milk and reduce quotas. Quotas do not suit natural production. Quotas suit only artificial production.
Because of two bad years and because milk yields have dropped we have not had the same output of milk as we have had heretofore. That was a temporary setback. Our milk production will increase if we get a good summer next year. We cannot accept the scheme. We are not asking the Government to come on their knees to our way of thinking. The Government should be well aware that this does not suit the Irish people and every Senator who has spoken here must realise that, whatever Government are in office, they must fight this bitterly. There is no way in which we can have a national acceptance of the milk cessation scheme.
We have hundreds and hundreds — I have not got the figure but the Minister knows it — of cow slaughterings talking place. Good young milking cows in lactation, some in calf, are being slaughtered because of the curtailment of milk production. There is no encouragement to increase milk yields. The weather, the fodder crises and the de-stocking during the last year and a half will have an impact on our beef industry. Everyone is aware that milk and beef were the two systems of farming which complemented each other. If you had an increased number of dairy cows you had an increased number in beef production. That was good for the national economy but the national herd is being reduced. I do not want to give a figure because it is changing so rapidly. If the Minister gives the official figures today, they will be out by thousands by next week. That is the trend.
Young cows are going into factories. It is horrifying to think that we are killing off good cows rather than culled cows. We have always had a surplus of culled cows and that is natural but when prime stock is killed the economy and employment are affected. Neither beef nor milk farmers can succeed under a cessation scheme.
What about new entrants? There are no new entrants. What about young people coming on-stream who wish to get into milk production in the future? There is no way they can get in because they cannot buy a quota. Quotas cannot be secured and, for that reason, we will have no new entrants into milk production. A milk cessation scheme on a farm means that no further milk production can be carried out on that farm for the future. The full acreage cannot be utilised. That is a very serious implication of the scheme. If it was only a temporary arrangement whereby you could go back into milk production when the climate was right that would not be so bad. Under the scheme there is no way you can go back into the production at a later date. That is the implication of the acceptance of the scheme.
The 1983 figure for dairy output was 35.6 per cent which is sizable amount. Agricultural output was 18.4 per cent of our GNP and dairying exports were worth about £10.75 million. That is a sizeable export trade. It is too much to expect us to reduce it. The grant for the young installation farmer is linked to dairy farming in many of the smaller farms. When we were examining the figures recently in the west of Ireland as to how many would qualify under this installation grant, in the region of west Mayo from the tip of Ballycastle down to the Galway border we could only find 12 applicants who might be considered eligible. The cessation scheme is highly unsuitable because it will not give any incentive to young farmers to go back on to the land and succeed their parents. It will have an impact on the young farmer looking for an installation grant and taking up his parents' holding.
There is only one answer to the milk cessation scheme; there should be a derogation and Ireland should definitely be exempted. Any Government who looks for less in this climate will do an injustice to the Irish people, to the economy and to themselves. That is not acceptable. I appeal to the Minister to ensure that it does not happen. If it happens the output of agriculture will drop considerably and our economy will drop. We are going through a very poor financial time at present and we do not want to exacerbate that in any way. We do not want any further curtailment. There are many people who could be put to work in agriculture in the jobs that will accrue from further processing in the dairy sector. Dairying and agriculture are the only sectors that will work together hand in hand. The other sectors which fall into line such as forestry, will be a bonus. The main thrust of agriculture is livestock and milk. We have trouble with cereal production as well. We are in trouble with milk production and to a certain degree with our sheep production. We must put dairying and beef production together to ensure that we are not slow on this occasion to contravene any EC regulation in the interest of ensuring that our farming community will not be caught in the net with problems we are not responsible for. We are not responsible for the plight we are in. It would appear that acceptance of a milk cessation scheme is an acceptance of our situation. This Government and future Governments must fight that tooth and nail.
I appeal to the Minister who is a sane man and who can equate and assess the position on the ground to do anything he can do to retain our present position. The climate has been created whereby people who have traditionally been in milk are being asked to close up shop and go on to some other farming production. They are not geared for it financially or because of their farm size.
This is only a report we are discussing. It is not legislation or a regulation. I hope the Minister accepts the view of the Seanad — I think it is the view of almost everybody who spoke today — that there is no acceptance whatever of the milk cessation scheme for the Irish people. It is highly unsuitable and I have no doubt that the Government will find it highly unsuitable also. This is one issue we will have to take a stand on. The economy is at stake and the farming community are depending on our fighting this scheme. I appeal to my colleagues on the other side of the House to use any influence they have with their Ministers, to let them know that we cannot and will not accept the scheme.
I suppose I am covering some of the ground again but it is necessary to do this. I am going to differ slightly with the previous speaker, Senator O'Toole. Although my information is that there is not a great response at present to the milk cessation scheme, there are many people who will join the scheme for many reasons. Some of those reasons are well known to Senator O'Toole and I do not want to labour these. Many people, maybe because of their age and because of financial reasons as well, will join this scheme. Some of them may sell off some of their stock, a move which in my opinion would be unwise, with the intention of joining this scheme. I have been told that most of the applications are coming from the west and north west regions.
One can understand that to a certain extent because in those regions many people are enjoying quite generous cow and calf subsidies. These people are tempted to join this scheme and to get their 14p per gallon for seven years. Some of them may well decide to opt for suckling their cows and it might be equally as profitable for them to do so as it would be for some of the inefficient producers in that particular region. Some of the less efficient producers — those producing may be 600 or 700 gallons per cow — may get £60 or £70 a year from the milk cessation scheme over seven years. These people might be just as well off at the end of the day. In some cases they may not have a choice because their land is not suitable for any other use. For that reason the milk cessation scheme may well be welcomed by some of these people.
Ministers over the last number of years have done a tremendous job for us in fighting our case. We do not seem to accept the stark reality of the position and this is part of our problem. We have had warnings over the past number of years in relation to over-production but we did not think it was going to apply to us — it was to happen to somebody else in Europe but not necessarily to the Irish farmer. These warning shots were fired but it was only when the crunch came that many farmers accepted it was going to affect them. Ministers have done a tremendous job in Brussels. We are a small country with a big voice at the table. We have got more than our fair share at that table.
If we dwell on the milk cessation scheme and talk about the advantages and disadvantages, we could probably stay here for the next 12 months. My main concern is what, if anything, might happen to the cattle population. I do not think numbers will fall very much because most of the people who are contemplating applying, or who have applied, for the milk cessation scheme will probably turn over to suckling calves and, for that reason, I hope our herd will not reduce to any great extent. Although we claim we have not caused the mountains of beef and grain because our production is very small in comparision to some of the other countries, nonetheless we must have played some part in creating those mountains.
The biggest problem Irish farmers have is what are they going to turn to and I am not necessarily referring to the milk cessation scheme when I say that. There is an air of depression and uncertainty at present among farmers as to where they are going to turn to because there is over-production of milk, beef and grain. Most young farmers are wondering where they are going. They are at the cross-roads at this stage. Milk producers have had a good time over the past number of years. Perhaps the past few years were difficult but down through the years they responded to the call from Ministers and everybody else, as Senator Killilea said, to move into areas of production from which they could get a weekly or monthly income. I suppose it is true to say that people lived on this. In recent times — this is no fault of any Government and certainly not the fault of the present Government — farmers who borrowed too heavily found themselves in great difficulties. This may have been no fault of their own. Maybe they felt it necessary to borrow to improve their buildings, their milking parlours and for farm drainage. Those people may well be some of the people who have applied for the milk cessation scheme. When they realised prices were falling instead of going up and that their production was limited to certain increases per year they found that they were unable to meet their commitments. They found it was necessary to change to some other line of production hoping that by getting out they would get a few pounds to satisfy the bank manager or some other lending agency.
The policy of the EC — in which we should have taken a greater interest over the last number of years — was, as the curate said, good in parts. Farmers were not sufficiently warned about the dangers that lay ahead. I watched a programme on television the other night and the British Minister for Agriculture said there is no way we can continue to grow grain and subsidise it for intervention to the tune of £70 a tonne. There is something in the region of 17 million tonnes in intervention at present and this cannot continue. In plain language his proposal is that we let the land go wild. Every farmer would get a subsidy of £70 an acre if he lets his land lie dormant. That is the saddest statement I have ever heard from a Minister. It is certainly one which I will be telling our Minister to oppose at every opportunity. To think that good land in many of the countries in the EC should be let go wild and to pay farmers £70 an acre for looking out the door is the craziest thing I have ever heard in my life. For example, the beef farmer could get £70 an acre of a subsidy towards production of beef. This may be over-done but I know people even in our own small country who cannot afford to buy beef. Beef could be sold cheaper if farmers were given £70 per acre on beef production. It would allow people to buy beef because it could be sold cheaper. The policy of this Government and of previous Governments has been to improve our land and produce more. Now the policy being put forward by one of the Ministers in the EC is to let the land go look wild and to pay farmers £70 per acre to look out the door. That is very worrying. All Ministers in the EC must take a hard look to see where we are going.
In relation to the dairy farmer, as I said before for a short few years they made money. It is also true to say that whatever few pounds they made they spent it on their farms. Any farmer who made money has not got it at present because he channelled it back into his farm and buildings. This was the whole purpose of the exercise. The dairy farmer, as well as enjoying a good price for his milk, also enjoyed a good price for his calves. I have some criticism to make of the dairy farmer at this point. The dairy farmer was solely dependent on the beef farmer to buy his calves but he did not go out of his way to produce the right type of calves for him. It is one of the criticisms I had for the dairy farmer. He produced a calf and there was nothing more one could call it other than a calf. After being educated to this, although the response is still not great from dairy farmers, they find that if they do not have the right type of beef animal, there is no way they are going to find a market for it. Many farmers have come to me complaining about the grading systems in factories. Some of these farmers should have known that that day was coming. They were buying the worst type of calves. I suppose one could just describe them as a calf with a leg in each corner. Some of them were as narrow as a knife. Some of these calves are not graded and farmers are getting a very low price for them.
I remember being on the ACOT board some years ago when the late Jimmy O'Keeffe was Chairman. He said that many milk producers did not care what sort of calf the cow had as long as she had a calf. He claimed that if a cow had the continental breed of calf a farmer lost in the region of £50 to £70 on milk production from that cow. That figure may well be challenged and people may differ in that but nonetheless nobody had more experience on this subject than the late Jimmy O'Keeffe. That was the policy of many farmers and milk producers at that time. I do not think farmers played a fair role in the cattle industry.
There has to be a whole new outlook by many farmers on this question. When we talk about the quality of cattle we have found within the last 12 months, that our live cattle export market seems to have crumbled and we are solely dependent, if you like, on the factories. When we had the live cattle trade — I think few people will dispute this — we got rid of all types of cattle on the live market. They were liquorice all-sorts and we were fortunate to get rid of them. That day seems to have gone. We must send out warnings to the milk producer because they are dependent — and I think it was Senator O'Toole who said this — on the beef man for their survival and should be given more consideration.
We have many proposals from Brussels as to what we should do about the milk mountains. Many criticisms have come from this House about the milk cessation scheme. Many people feel they should avail of the milk cessations scheme because they want to get rid of milk production. In my own county of Louth, many people feel the margins of profits have dropped. Farming is not an easy life — it is a 365 days of the year job. Many people feel that maybe there is something else they can turn to which will give them just as good a margin of profit. In some part of County Louth or in some other counties perhaps they can turn to any other lines of production but in other counties they cannot. This is where the Minister, the Government and everybody else should be appealing to the people who have applied now for the cessation scheme to consider their positions — not necessarily not to take up the scheme, but to consider carefully what they are going to do with their livestock. As Senator Martin O'Toole and many other speakers said today if these people are going to move their livestocks to the factories to be slaughtered, then naturally enough it is only going to be around the corner, so to speak, and we are all going to suffer as a result of this. This is something which we should be very concerned about.
Senator O'Toole said that if these people go out of milk now, they are out for all time. Maybe he is right — I hope he is wrong. I thought this scheme was only for seven years and at the end of seven years people could come back in again. That was the information I got on it but maybe I am wrong. I hope I am right because, if it was going to be for all time I would be very concerned. If it was only for seven years people could come back in again because they could have changed their minds. If people whose families would be grown up decide they want to get back into milk production again, then the door should be open for them. When people go out of milk production and decide to clear out their livestock, I agree with the previous Senator that it takes years to get back into business again.
In relation to the other class of producer who obviously was not encouraged to come into this scheme or felt that there was no incentive to come in perhaps at 14p per gallon, some people are in dairying in a large way and it is not easy for them to move. Many dairy farmers have all their eggs in one basket — they are solely in dairying and they are efficient in every way. No matter how attractive the cessation scheme is I cannot see those people leaving dairying. They probably have the experience of enjoying a few good years and some of them hope that it will only take a few years for the milk, cheese and all other mountains to disappear. They may well be the lucky ones to have stayed with it. Very often in farming you have to stay with whatever line you are in. You cannot keep jumping from one line of production to the other; it is possible you may be taking the wrong jump all the time. These people have spent a great deal of money on their farms, spent years building up good herds of cows and spent years doing up their farmyards and their milking parlours.
From reading this document I can see that the IFA, Macra na Feirme and many other people have discouraged people from leaving. They are posing the same question as I and many other people are posing: if you leave, what are you going to do? Most of those dairy farmers have all their eggs in the one basket at present and I do not think there is room for them to go anywhere else.
Barley prices both this year and last year were the lowest for a number of years, with a very low margin of profit. I can only say that the outlook for anyone moving from dairying to any other line of production is such that they are not quite clear where they are going. I doubt if any Minister could tell them where they should go at present. One thing they should not do is down tools and let the land go wild which is what the English Minister is suggesting. That is the last thing I think the farmers should do. It is sad that after so many years in which we thought everything was going in the right direction that people in charge of the Common Agricultural Policy, for example, the English Agriculture Minister, Mr. Jopling, are asking people to even consider the proposal of letting land go wild and paying farmers £70 an acre to do so. This is one of the saddest things I have read in recent months from the EC. Most people would have to admit that Minister Deasy and his Ministers of State have got great deals for Ireland in the past few years but you cannot satisfy everyone. No matter what they might get, they could not satisfy everybody.
I have a great deal of sympathy for our Ministers who make these deals. I suppose we could contrast this with the days of Mr. Mark Clinton and other Ministers. I remember Mr. Clinton in his earlier years as Minister in the 1973 to 1977 period. In Brussels he was regarded as one of the greatest Ministers and far be it from me to belittle him in any way. I remember him opening offices in Dundalk for ACOT, of which I was chairman at the time, and I remember housewives gathering outside the gate and protesting against the large sums of money he was getting every time he went to Brussels. Perhaps some other Ministers would have got it just as well, but as I would see it the money was there that time. There were no problems there that time but who can get the same amount of money now when it is not there. The boot now is on the other foot and this is the stark reality of the situation.
People who enjoyed these few good years are finding it hard to accept that it should have turned in this direction in a relatively short time. When we look for advice I doubt if the Minister can give us much advice but people are looking for advice. They are wondering in which direction they should turn. I am not sure if some of them know where they are going and I suppose if you do not know where you are going, it does not matter what road you take. For that reason I think there is a great need for EC Ministers to decide in a very positive manner which way we are going. Maybe when all this dealing is done — all eyes are on Brussels when the Ministers are over there doing their price fixing once a year — I wonder will that be the end of the discussions or are there ongoing discussions the whole year round to monitor what is happening and to decide on what advice should be given to farmers. This is what worries me a little because many farmers are saying to me that either they are starting up farming or are giving up a certain line and are wondering where shall they go. There are many people not quite sure which way they should turn.
I do not think the Minister would disagree with what I am saying. It is not easy for a Minister to tell them which way they should turn, but there is so much uncertainty about every line of business that this is the big question facing every farmer whether he be young, old or middle aged but particularly the young farmer we hear so much about. Fifteen or 20 years ago I suppose every farmer starting off, if he sought advice from the Agricultural Advisory Services would have been advised, without hesitation, to go into milk. That was probably very good advice and farmers enjoyed perhaps 15 to 20 good years in milk production in which they got a fair return. But at this stage the young farmer is not sure where he is going to go. That is my main concern and I am posing those questions to the Minister present so that he may tell us what he thinks should be done in relation to the direction of farming.
We cannot continue producing if we are going to ask the taxpayer to subsidise everything by way of putting it into intervention. It is said that people in countries are starving while discussions are going on in Brussels about throwing some butter into the sea. People cannot understand why we have mountains of everything while so many people are starving. People cannot understand why, even in an already loss situation, we cannot get stuff to those starving countries. People would not mind subsidising much of what we produce if they felt that some country in which people were starving was going to benefit as a result.
Some of the people who have approached me about this matter, are looking forward to this milk cessation scheme. They may not get rich as a result of it but, but if they are trying to decide to get out of milk and are finding difficulty in making up their minds, the fact that over seven years they will be subsidised to the extent of 14p a gallon and will have an opportunity to qualify for all the other subsidies, for cow subsidies and calf subsidies, means we are helping another section. We are not affecting the many efficient producers. If we get X million gallons as a result of this scheme, perhaps we will have gone some little way without jeopardising the chances of the more efficient producer who has his mind made up firmly to stay where he is.
This question of milk quotas has been a source of concern over the past few years to dairy farmers, to co-operative creameries, to agriculture in general and, indeed, to Governments also. Because of a surplus of dairy products, farmers are advised to go in for the single suckling. We have a surplus of beef at present which is going into intervention and that is not going to last. Quotas for beet, grain and other products are threatened. It has been suggested that sheep could be a very profitable enterprise. In a few years we will find ourselves with too many sheep. The EC should formulate some sort of policy for agriculture. Indeed, the EC should have enough brains because all the top people in most countries opted for jobs in Europe. This problem should have been foreseen. Intervention was the biggest mistake of all. At that time it was an easy way of dealing with surplus products. Intervention to me is like a country borrowing money for day to day spending. There was a time when we would not dream of borrowing money for day to day spending, but then we started in a small way. Look where it has gone today. It is the same way with intervention.
I was in Germany recently with other parliamentarians. We were guests of the German Government. They took us to different places, including farms and milk processing plants. Everywhere we went the surplus of agricultural products was the topic. In Germany they pay farmers to leave their land idle. As other speakers have said, this is something we should try to avoid. We made this point to the Germans. They asked which was the better option: to leave the land idle, or to keep on putting products into intervention, knowing that some day it will all have to be thrown out because it will be useless. If you look at it that way, you might be inclined to agree to leave some land idle. Land need not necessarily be left idle because we understand there is a great market for forestry. A number of acres on every farm could be devoted to forestry, especially on bigger farms. That would solve that problem.
We voted for entry into the EC. We were told that, once we were in the EC, our agricultural problems would be over. We were told also that our industry might not fare as well. The sad thing is that both agriculture and industry have been severely affected by our entry into the EC. We were led to believe that when we were in the EC there would not be any foreign produce coming in, that the countries in the EC would get first preference for everything. Today we have more foreign imports here and in Europe than we had before our entry into the EC. It is very difficult to explain that to the man in the street. All the big countries are tied up with other countries outside the EC. Take Britain for example, a member of the Commonwealth and the EC. Therefore, they have the best of two worlds.
Earlier this year the EC made an agreement to allow more New Zealand butter into the EC, and Britain in particular. It was a bargain. French people were imprisoned in New Zealand for crimes they had committed and they wanted to get those people released. It was disgraceful that every other country in Europe should be sacrificed for the sake of a few French men who were in jail legally. It is similar to what is alleged to be taking place at present in America. The Reagan Government are alleged to be making deals with Iran for the release of hostages. That is no worse than what happened last year. I did not hear much protest from anybody in Europe about it.
I come from a traditional dairy area. The people I am concerned about are the small farmers, the people who kept the creameries going down through the years when a big farmer would not dream of having a cow on his farm. The small farmer is now being pushed out of business. The co-operatives have not much time for a farmer with fewer than ten cows. They put so many restrictions on his milk collection that as a result he will be pushed out. Our co-operatives only want the big farmer so that they can drive their lorry into his yard and get a full load of milk. They do not want to stop here and there along the road. The day will come when our creameries will be glad to see those type of farmers again. Farming is traditional. Dairying is traditional in Munster. Farmers used to go out of milk production and go back into it again. That will now be knocked on the head because, if they go out of milk production for any reason, they cannot get back into milk production again. It is most unfair.
I was very much involved in the establishment of the ICMSA over 30 years ago. I do not know what the average dairy herd is today—I did not get time to check it — but the average dairy herd at that time was only seven cows. It is hard to believe it. At that time an agricultural expert from the United States came over and gave us a lecture in Limerick. We were worried about the shortage of dairy products. We were not able to produce enough products—butter and other things—and we had to import them. We were complaining about that and he said; "gentlemen, it is a good complaint". He said that certain States in the United States had caves—they did not have proper cold storage facilities then—which were full to the brim of dairy products they could not sell. He hoped that would never happen in Ireland. We did not think it would happen, but it has happened and much sooner than we expected.
I want to take Senator Lennon to task for his comments on scrub bulls. He mentioned that dairy farmers do not mind what sort of a bull they get for their cows, it is the milk they are interested in. I do not agree with him. Maybe that might apply in his county but it does not apply in the south. The efficient dairy farmer in the south wants a good calf because if it is a heifer calf he will want to put her back into his dairy herd again. I do not think that is happening on as large a scale as Senator Lennon said. It may be happening here and there but it is certainly not happening in the Munster area where we have top-class bulls in all the AI stations. I have to contradict him on that point.
Dairynews — the newsletter of An Bord Báinne — mentions that if Formula A becomes compulsory, quotas will be based at farm level, so that if a farmer exceeds quota he will pay regardless of the position of the co-operative. Up to now member states could choose between the farm-based quota and the dairy-based quota. The levy was bad enough when it came in but at least farmers were in a position to play about with it and so were creameries. If one co-operative in the country exceeded their quota they could transfer the surplus milk to a creamery that had not a quota. Therefore, there was levelling of milk production rather than an increase. I can see our milk quota will start to fall if all farmers are prevented from increasing their herds. Every year a number of farmers have to go out of milk for one reason or another and naturally the quota will be reduced. If times change, will we ever get an opportunity to allow our quota to increase again?
The fact that one could change milk from one co-operative to another was a very good thing. Our co-operative movement at the moment is on a very shaky foundation; most of the creameries are only barely ticking over, the slightest bump and they could find themselves bankrupt. The only hope they have is to have as much milk as possible. If there was a sudden outbreak of bovine TB, as has happened, and if all the cows of a parish had to be slaughtered that would make a big difference to the creamery involved. That creamery cannot go and get that milk anywhere else which I think is very wrong.
In Ireland we seem to accept every rule and everything that is drawn up by the EC. In England they do not accept anything: they just do their own thing. For example, we in Ireland had to change our signposts on the road to kilometres but if you travel through England you will still see the English mile on every signpost. We were told we would have to conform with EC regulations but Britain seems to do their own thing.
What has to be said on this has been said. I do not want to say much more except that it is time we talked to the EC about renegotiating our terms of entry. Definitely without any question, we are the country that is most affected. We are not offending anyone because we produce our milk and dairy products on raw material that is growing here, grass. We also grow a great deal of cereals like barley and wheat that are fed to our cattle in the winter time. That is not the position in Europe. In many European countries the farmers may not have an acre of land but they might have 500 cows housed which are fed on cheap imported grain from countries outside the EC. If we are serious about regulating our surpluses, it is time something was done about those countries that are getting away with that practice. We do not hear a whole lot of protest about it. When we were in Germany we pointed that out to the Germans but they gave us the deaf ear as far as that was concerned because they are a bit involved in that too but not to the same extent as other countries. We were in a milk plant where they manufactured condensed milk. I thought condensed milk; was a thing of the past. At one time we manufactured a lot of condensed milk; we had a plant in Tipperary town and a big one in Limerick up to some time ago but now they are closed. The answer we got was that you could not sell skim milk now. The Germans told us they were supplying skim milk to some of the African countries. They are not giving it away for nothing, but are getting well paid for it. I am sure there is a market there if it was fully explored. While Bord Báinne are exploring new markets, much more could be done. Many of our milk and dairy products could be sold in new forms to other countries and I hope that the powers that be will take notice of that.
Like everyone else here, I deplore the quota system. I appeal to the Government to try to come up with some scheme to protect Irish farmers. It is not an easy thing. We are one of the smallest countries in the EC and it is very wrong that we should have to suffer so much. If that trend continues farmers will go out of business. Most farmers are to this week in debt to the banks. If their income is further reduced there will be no hope for them. I appeal to the Minister and the Government to do their best to make sure that we are not further penalised as far as dairy products are concerned.
I shall be brief because I know that Members are anxious to wrap up this comprehensive debate. It is a sad and a happy debate, a fortunate and unfortunate debate, one that our ancestors of 140 years ago at the time of the Famine would dearly love to have been participating in. Our surplus presents us with the formidable problem of rationalising our agricultural output, of diversifying and utilising our land in the best way possible without creating the embarrassment of the surplus we have at present.
This is not an indictment of this country or of the political leaders of the other countries who are members of the Community but it is definitely an indictment of the permanent government of the European Community, the bureaucrats and the technocrats. From time to time those people lectured us and dictated how we should do this, that or the other when they did not have the foresight or the vigilance to see that in certain areas of production we were well beyond capacity, we were overproducing and were becoming an embarrassment. It is predicted that by the nineties, if we continue with at our present rate of production, it will cost something in the region of £2 billion to store the overcapacity we have in the Community at present.
It is quite obvious that we have a very special case in Ireland, that we were caught in the crossfire and that our industry was very much at the embryonic stage. One can understand the bewilderment of Irish farmers, as has been alluded to by all sides of the House, when they find themselves no longer able to produce certain items that are in over supply. Nobody can point them in a direction and say: "Thus far and no further. That is where you go. That is where your future lies and that is the direction you can take with a certain amount of certainty that within the foreseeable future you will not be curtailed, cut back or be subject to a lot of the jargon that has become part of the vocabularly of rural Ireland, of this country and of the EC". We hear words like derogation, responsibility levies, intervention, green pounds and so on very often. People are bewildered and mystified and do not really know where to go. The report is excellent in that it has highlighted very clearly the supreme importance of (a) agriculture, (b) the common agricultural policy, and (c) dairying to this country. When one looks at the figures it is quite obvious that any cut back in the production of dairy products will have devastating effects on the life and the economy of Ireland.
The dairy sector, as mentioned by Senator M. O'Toole, is vital from the point of view of the production of quality breeding stock and the lifespan and future of our beef industry. Those who made submissions to the joint committee, such as ACOT, ICMSA, IFA, Macra na Feirme and so on, are motivated not out of a selfish desire to preserve their own welfare but to do the best for Ireland and ensure that an industry that has been part of the life of this country is protected. They want to ensure that nothing happens to diminish the capacity of farmers who have a genuine right to produce.
At the same time, and we say this without any apology, we have a responsibility to be good Europeans. We have been excellent Europeans but I do not believe that we have too good as Europeans. When it came to the vital test, the acid test, the litmus test, our Ministers, our junior Ministers, and our Taoiseach were not found wanting when in March 1984 they were forced by virtue of a vital national interest, in other words the dairy sector being under a threat, to walk out, to bring people to a sense of reality and ensure that the Irish economy was protected by seeking and getting a derogation. I have no doubt that the Minister will do what is necessary on this occasion to ensure that, while staying within the ambit and our remit as good Europeans, everything possible is done to protect the dairy industry.
There was an implied note of criticism in Senator O'Toole's contribution when he said the Minister must not be slow. I should like to congratulate Deputy Deasy on not being slow, for jumping to the defence of Irish farmers very quickly, for pointing out that on top of the 3 per cent already agreed to, and 3 per cent at national level, another 3 per cent would mean that by 1988 Irish dairy products would be cut back by a total of more than 9 per cent. That is too much of a reduction. Any time we are asked to reduce within a relatively short period of time our capacity and output by 10 per cent it goes beyond our capacity, it goes beyond the rules of fair play and the reasonable expectations of anybody in relation to a small country like Ireland. People in the west of Ireland have been caught in this cleft stick. People who for years were operating primitive type dairy operations invested extensively availed of grants obtained milk quotas, got all the paraphernalia, the machinery and all the up to date data which are part and parcel of a modern dairy enterprise, but now they are not sure what direction to go. I know that the Minister, and the Ministers of State, will do their best on behalf of everybody throughout the country. The questions farmers are asking is: What do we do? Where do we go? What do we do with our land? Can we leave land idle?
The British Minister for Agriculture has been criticised for advocating this disastrous course of action but I believe that at European and national level one area that has been debated quite considerably but not acted on is forestry. It amazes me that many years after the Treaty of Rome was signed there is no common afforestation or forestry policy for Europe. Irrespective of what Europe does, we have a singular obligation to get our people out of the plight they are in by utilising not alone marginal land, even though it has been proved that marginal land is manifestly suited for afforestation but any land if people are willing to devote land for this use. We should encourage people to go in this direction. We have a very elaborate and attractive scheme of grant-aids in order to encourage people to invest in afforestation and it amounts to up to 80 per cent of the cost in some cases. Until such time as we give farmers who turn to afforestation an income support to help them maintain the standard of living they enjoyed under their previous enterprises, dairying, beef or cereal, we will never sell any afforestation programme. We must bear in mind that one does not get a yield from forestry for at least 15 years when the thinnings come on stream.
One of the criticisms of Irish farmers is that they are conservative, that they do not move, that they are not willing to adapt but that has been proven to be a myth time and again particularly in relation to the west of Ireland where people have rotated from beef to dairying and back again with relative ease in order to try to maximise the benefits and potential of the land. I have no doubt that, if the forestry policy is properly addressed, the people of Ireland will not be found wanting. One of the patterns in Europe is that they do not devote marginal land only to afforestation. Some farms in Germany, with a thickness of topsoil of seven, eight or ten feet, because of over production and over capacity in certain areas of agriculture, have been devoted to afforestation. We are part of a world community. It is not just an EC problem, it is a global one. We may reduce by 10, 15, 20 per cent but if our co-partners in the world, particularly Russia, the US and New Zealand, continue to overproduce — the figures show that while we have cut back by 4.2 per cent, the US and New Zealand have gone forward — we will be hitting our heads against a stone wall. Some day all of us should pool our resources, our energies and our goodwill and transfer the resources that are there to the areas of the world that are in crying need and have large deficiencies. We have a moral, social and political obligation to these people. In relation to protecting the national interest, I have no doubt that Deputy Austin Deasy, Deputy Paddy Hegarty and Deputy Padraic Connaughton, and our co-negotiators, will have the interests of Irish farmers at heart at all times.
I should like to compliment the House on the very worthwhile debate on the report of the joint committee. It is nice to know that Members took time to compliment the joint committee on putting together this fine report. It may be a little out of date but the thrust is generally the same. It sets out the seriousness of the position — it has become more serious — and it prepares the way for the Minister, Deputy Deasy, the officials and all of us engaged in fighting our corner at EC level. I was heartened by the comments of the Senators. There is a general acceptance that since we joined the EC we have been net beneficiaries and it is most important to remember that. It is all very well to talk about good Europeans and bad Europeans but by and large we have done well. I hope, as a farmer, that we will continue to do well even within the constraints imposed on us in many areas.
I was pleased to hear Senators refer to forestry because for the life of me I cannot see why it has not taken off. Apparently we have the best climate and the best soils to grow the fastest timber, all we need is the will to get involved in forestry. There seems to be some farmer resistance to it too. I am told by people who are serious about this type of development that very often they run into difficulties in the acquisition of large tracts of that type of land. That does not help. Throughout Europe pension funds, financial institutions and people with money to invest are getting involved in that area. We can talk about red deer, rabbit production and other small areas but we should talk about an area that will take up fairly substantial quantities of land such as forestry. With regard to the artificial production of milk I often think it was a pity that we did not go in for the artificial production of milk before the quotas were introduced. We would have our 1,200 gallon cows and our 1,300 gallon cows and we should not have the problem we have today. Some of the people who advised against that some years ago are still around and very cocky. They are still giving advice but that was one damn bad bit of advice they gave to Irish farmers, to rely on silage to try to produce milk, especially when we had very inclement summers. We should have been doing precisely what the Dutch were doing getting all the cheap feed we could into our cows and increasing our milk production thus ensuring our quota.
We favour the provision of increased financial resources as do some other member states. Unfortunately, others do not. We have to be realistic because while we may not like this we cannot get rid of it. In Europe it is a prerequisite to any solution that there should be a proper adjustment to the CAP. I am giving the House some background information, not my own point of view, and setting the scene of what we are up against. Any expenditure in Europe whether it is in the context of cereals or whatever, is up against a VAT limit of 1.4 per cent. That is what we are dealing with; is the type of money that is around.
Again, as was pointed out by all Senators in the debate, we have massive stocks of butter. At least we are facing up to that problem now in the Dáil and in the Seanad; more reluctantly in the Dáil I may add and more realistically in the Seanad. We have 1.4 million tonnes of butter, one million tonnes of skimmed milk powder and we have to try to unload stocks. If we unload stocks tomorrow morning on to the market place the market will collapse. That is the problem. It is very hard to defend the production of products that nobody wants. I accept that we contribute to the surpluses and people should not have ideas to the contrary. Of our total of 150,000 tonnes of butter we manage to sell 25,000 tonnes on the home market, 40,000 tonnes into the EC but we put 85,000 tonnes into intervention and 90 per cent of our skimmed milk is supported by intervention. We are as big a culprit as the next. When the CAP was introduced it was the real El Dorado which was supposed to solve all our problems. For the first time we had this wonderful frontier protection and we could afford to sell well in that protected market. We had the support mechanisms — they are still there — for the third countries and as a last resort we had the one that we favoured most in a lot of areas, intervention. Indeed, CAP protected us from the consequences of rising production, falling demand and depressed world markets but CAP cannot operate this way in the future.
I accept, as Senator Ferris said, that jobs depend on the dairy and beef industries but I am one of the people who are convinced that we have not even started trying to create jobs in the dairy industry. We have adopted a mechanical type of approach that gets our milk from the cow straight into intervention without seriously considering, as mentioned by several Senators, other products that would create jobs. For example, we are importing £12 million worth of soft cheeses and it is difficult as I know because it is my responsibility to try to convince some of the co-ops to get into that area. It is a long hard haul. They know that there are problems. It is a manual type of operation and they point out that these jobs cost money but there is little competition. We should consider that a slice of Camembert or a slice of Brie costs £1. Surely we should be able to beat that sort of competition. At some future date we should have a discussion on that in the House.
I was glad to note the reality about GATT being brought out in this House. it is all very will to ask why we allow Germany to bring in products from Australia, New Zealand and South America but the Germans, the French and, indeed, Britain are funding the EC bills. It is due to the fact that they are trading with these countries that they can pay the bills of the EC. We have to allow for a certain number of GATT deals to be done which means that products from outside the EC are finding their way back into the market.
Senator Kiely and others raised a point about the campaign for breeding. I was particularly pleased they made that point and dwelt on it at length. Senators asked where do we go from here. Of course, there is very good scope in high quality beef production but we have only scratched the surface when it comes to getting into the top markets of Germany, France and Britain. We took an easier way out, but it was a lucrative way out for us while we could get the export refund. It is something we should have a second look at especially with the diminution of the petro-dollars and so on. For the first time we have a number of first class boning halls in the country, a super new development. Obviously the entrepreneurs in the meat industry have seen the light, and we are now ready to take on the continental markets in a big way. There is scope there now, especially with the disappearance of hormones and antibiotics, only if we produce the right animal. We will produce the right animals if we have proper breeding and proper husbandry. There is no other way. It is amazing the lampooning I got from people who should know better. I resisted that, I feel strongly that we have to keep our Friesian breed very pure. We should not go down the hodge podge road where we can run into all sorts of problems.
Our Friesian breed is the best in the world. Let us keep it that way. Let us protect it by using proper sires which are readily available at very economic prices from the breeding society. That is the way forward. Some person may say he does not take short cuts and another person might take short cuts with a percentage of his herd — a mopping up operation, a certain amount of A.I. and so on — that is the problem. Whatever complaint the dairyman may have about his margins one thing is certain: the unfortunate beef man is working on a much smaller margin. If that beefman is to be around six years from now, he has to be given the right article.
Another problem facing us at the moment is that all member states are feeling the pinch. There is no doubt about that. There is no longer any sympathy for the concept of giving special treatment to Ireland. We must reach agreement because if we do not, we will be putting support for milk in jeopardy. The Commission can, and has the authority, to introduce its own penalties and has done so. All it has to do is to delay payments. That could cost us up to 6p or 7p per gallon. It is important, therefore, that we reach agreement.
I would like to pay tribute to the work of the members of the joint committee who prepared this report.
The Community cessation scheme agreed by the EC Agricultural Ministers in May last turned out to be significantly different from the original Commission proposal which formed the basis for the joint committee's report. The principal change is that, instead of the purely voluntary scheme which was originally proposed, the Council of Ministers decided in favour of a voluntary cum compulsory scheme with a view to achieving the same percentage quota deductions in each member state.
Against the background of huge Community stock levels and an acute budgetary situation, there was no support from other member states for a derogation for Ireland. However, the Minister did succeed in negotiating some significant improvements from the original proposals. For instance, there are no quota deductions taking place in the present milk year. The first cut in national quotas of 2 per cent will take place on 1 April 1987 and a further 1 per cent on 1 April 1988. These percentage deductions will be applied in each member state, but Ireland will continue to retain the relative advantage which we achieved when the quota system was first established in April 1984. By succeeding in having our quota based on 1983 deliveries, with an additional 4.6 per cent, we are more than 20 per cent better off than we would be if, like most other member states, we had to settle for a quota based on 1981 deliveries.
Under the Community scheme, producers are invited voluntarily to cease milk production and surrender their quotas in return for a payment of approximately 14.5p per cent per gallon — that is now 15.3p per gallon — per year, for seven years. The voluntary scheme is well under way here and the closing date for the first tranche of applications is at the end of December. If the voluntary take up is sufficient to cover the required quantity of 22 million gallons, there will be no need for any compulsory reductions in quotas of other producers.
It is, therefore, in the national interest that as many producers as possible who are considering ceasing milk production or who are delivering well below their quota levels should apply to join the scheme. However, I must say that the response to the scheme so far has been disappointing. To date, we have received applications for just over nine million gallons of the 22 million gallons required although there has been some improvement in recent days. If we get enough voluntary expenses we do not have to have any cuts in our 2 per cent quota cuts. I find it hard to reconcile this state of events with what is happening in Denmark. In that country, even though the premium was fixed as low as 4p per gallon, they have secured already three times more than the quantity they require.
It is obvious that in Ireland many producers are being dissuaded from joining the scheme. I had hoped that there would have been sufficient applications here, particularly from farmers reaching retirement age or without dependants, to ensure that compulsory cuts would be unnecessary. That must still be our aim and with a view to achieving this objective, we have requested approval from the EC Commission to extend the closing date for the scheme beyond 30 November.
If the scheme is over-subscribed, not alone will we not have to apply compulsory cuts, but we will be able to prevent disproportionate losses of quotas from occurring in the west and northwest of the country. I can assure co-operatives in these areas that, even if the scheme fails to attract sufficient applications, we will be seeking to devise a solution in conjunction with the EC Commission to prevent any disproportionate losses taking place. I would also warn those co-operatives in the south and east of the country, who at this stage may be feeling complacent about quota losses, that in the event of the scheme being under-subscribed, I will be looking at ways in which areas which have given up disproportionate quantities in the voluntary scheme will be protected from compulsory cuts. I am hopeful, therefore, that in those circumstances over the next month or so we will see a large increase in the level of applications so that the target of 22 million gallons can be achieved on a voluntary basis.
In addition to the Community scheme, we should also have available here shortly a national restructuring scheme. I have always considered it essential that conditions should be created to benefit smaller scale farmers with the capacity to develop and other farmers with special needs, young farmers and new entrants. That is why I sought and succeeded in obtaining a commitment from the Commission at the price fixing negotiations that they would put forward a proposal which would enable restructuring to take place at the level of co-operatives or dairies. It will be recalled that attempts by the co-operative here to set up a national milk cessation scheme on the lines of that referred to in the joint committee's report, failed because of the Commission's insistence that re-allocation of quotas had to be operated on a national rather than on an individual co-operative basis. The co-operatives did not proceed then with their scheme because they feared there would be outflows of quotas from co-operative areas.
I am pleased to say that in the proposal for the restructuring scheme which the Commission has now presented in response to my request, this difficulty has been resolved. Under this proposal, co-operatives and dairies will be able to pay compensation to producers undertaking to cease production. The quotas bought up would be reallocated to other producers within the same co-op area who require additional quotas and are prepared to pay for them. The proposal has not been discussed by the council of Ministers but it is expected it will be submitted to them shortly. I am anxious that it will be adopted by council without delay, as I am satisfied that it will be of considerable benefit to the industry here.
Finally, I should like to thank those Senators who have spoken in the debate. I found their contributions both interesting and knowledgeable.
Question put and agreed to.
When is it proposed to sit again?
It is proposed to sit on Wednesday, 26 November 1986 at 2.30 p.m. to resume the Committee Stage of the Clinical Trials Bill. The next item to be ordered will be the Air Pollution Bill and the National Monuments Bill and a Private Members' motion. On Thursday we will be dealing with the motion on apartheid. I want to thank the Minister for the patient way he and his officials have stayed with us all day to respond to this excellent debate on this motion. I thank him on behalf of the House.
The Seanad adjourned at 4 p.m., until 2.30 p.m. on Wednesday, 26 November 1986.