I move:
That Seanad Éireann takes note of Report No. 28 of the Joint Committee on the Secondary Legislation of the European Communities: Cereals.
Report No. 28 of Joint Committee on the Secondary Legislation of the European Communities — Cereals: Motion.
It is very appropriate that we should be discussing this report of the joint committee. We all know that at present the position with regard to cereals is very critical and the prospects for cereal growing generally in Ireland are not great. However, there are certain ways and means we can adopt to ensure that cereal growing is made as attractive as possible economically and otherwise, because the reality is that for many many farmers now in tillage, there is no alternative to cereal production at present.
Tillage in essence means a substantial amount of cereals on a rotation basis. Those farmers cannot easily get back into another line of production for financial reasons. They have not the wherewithal to stock the land with sheep or cattle and it goes without saying that milk production is no longer open to them. We are producing approximately 950,000 acres made up in actual figures of 710,000 acres of barley and between winter wheat and spring wheat and oats almost 250,000 acres. The situation has changed dramatically in the last 12 months in the cereal growing. The Commission in Brussels has been considering the question of surpluses and over production within the framework of the Common Agricultural Policy and the farm price package in 1986 clearly reflects their attitude to these problems. The Irish cereal growers are suffering a major loss of revenue which could be upwards of £13 or £14 million in a full year. That is the reality because of the co-responsibility levy with high quality standards — which effectively is a disguised price instrument — and delayed intervention. Therefore, the indications are that the actual economic survival of many Irish cereal growers is in grave doubt. There will be a significant reduction in the acreage of cereal in Ireland in the years to come.
The joint committee of which I am a member in considering the question of cereals were of the opinion that the Commission's proposals have helped to widen regional disparities within the Community. There were already major disparities and our committee were of the view that the proposals would only widen that disparity. The fact that the small cereal producer in Ireland is being penalised to the same extent as the large cereal producers in the United Kingdom and or in the Paris Basin is a total contradiction of the Commission's stated policy on maintaining the family farm unit, a concept we in Ireland hold very dear and to which we aspire in the various facets of farming, not alone in cereals but in all branches of farming.
There has been much talk these days about cutbacks and the dangers they will cause to the basic fabric of the common agricultural policy. There is a very real danger that the Germans and the French will agree to cutbacks in cereals as is being mooted by the Commission. They in turn will then compensate their farmers by national aids. Of course, as we well know Irish farmers, whether in cereals, milk or beef, will not have any fall back on such national aids. This is the reality and we must be very mindful of it.
The joint committee are extremely concerned about that kind of evolution. We could be heading into a rationalisation of the common agricultural policy and the question of national aids could be difficult, if not impossible, to contemplate in an Irish context. Over the years we have benefited very substantially by virtue of our membership of the European Community. This year we will have received, as a nation, approximately £900 million from the EC. Over a number of years we have been the average beneficiary to the tune of a figure in excess of £500 million. That is taking a number of years into account. Therefore, it stands to reason that the European Community is important from our point of view. It is also important that there is agreement on the various areas relating to the CAP but of course, we must not have agreement at too dear a price.
We would be of the view that the very serious developments generally in agriculture demand and require further negotiations on the part of the Government in Brussels. There is a very definite erosion of the fabric of the CAP in that Community preference is not now being observed. There are £18.2 million worth of imports of cereals or cereal substitutes into the Community. These have been fairly conveniently ignored by the Commission's proposal. The imports are causing the huge surplus. Without them the surplus produced by the Community would be manageable.
One has to acknowledge that imports into the Community are, in the main, involved in and tied up with the question of GATT arrangements and agreements. As a member of the EC we must be mindful of the fact that GATT is the vehicle by which important trading arrangements are conducted and we must make certain that the GATT arrangement does not work totally and completely against us. We must acknowledge its relevance in the context of surpluses of whatever products into the EC. This situation arises not alone in cereals but in the dairy product sector and in beef and so on. These various imports are causing major surpluses. Without these surpluses we would have production levels that would be manageable and would not lead to this massive and expensive intervention system which is questionable.
When one refers to intervention, one should not lose the opportunity to make the point that intervention was never intended except as a place where surplus stocks would be placed. It was never intended to be a place to sell produce or to place a produce that otherwise should be, and indeed could be, sold in the market place. That is a factor that we have been inclined to forget.
We had the Chernobyl disaster earlier in the year which would obviously be a major factor in the context of cereal production since vast areas of land in Russia, and other places from which Russia was getting cereal imports, are no longer suitable for cereal production. This would give scope for production within the European Community. We should also bear in mind that a similar disaster occurring in Europe would dictate to us that we should be very mindful of the need to have substantial stocks to counteract such a disaster. One is hopeful that it would not happen but one must always budget for the unpalatable. Irish cereal growers will be severely affected by a number of points put forward by the Commission. They have been in effect since last July. We have the co-responsibility levy which is in force since 1 July and also the higher quality standards. Certain areas of production will be severely hit. The production of spring barley for many farmers will be eliminated.
The position with regard to cereals generally is in grave doubt. Looking at the cereal production scene at the moment, we have spring wheat and barley which, by and large, give the lowest yield and the lowest production. The Minister, who is a very efficient cereal producer, will be well aware of that fact. There is a tendency nowadays to produce about 80 per cent of our wheat as winter wheat. Roughly 20 per cent is spring wheat. There has to be a differential of approximately half a tonne per acre to justify the extra costs involved in the production of winter wheat to enable people to have an advantage. Ironically, where seasonal factors can have a major effect on production, the 1986 winter wheat, which would have been ready for harvesting in August, was very severely hit by weather conditions, whereas spring grown wheat just hit the right harvesting time in September when we had a unique spell of fine weather. One cannot logically make a case depending on exceptional circumstances during any given year or years, but it does point out the absolute uncertainty of cereal production. In regard to winter wheat there are the added costs of nitrogen, sprays etc. which mean that all those who collectively produce 120,000 acres of winter wheat must get that extra half tonne per acre as against those who are collectively producing approximately 40,000 acres of spring wheat. I mentioned that this year was exceptional but, by and large, winter wheat production obviously has a certain advantage.
No matter what area of agriculture one talks about these days one finds oneself talking about the need for better quality. The quality for the EC requirements is quite different from the Irish requirements in the cereal sector. In 1985, 15 per cent of our wheat found its way into intervention whereas this year the figure was almost nil. The normal figure would be approximately 3 per cent or 4 per cent. In regard to winter and spring barley the difference is mainly on acreage. We have approximately 500,000 acres of spring barley, 75,000 acres of winter barley and 105,000 acres of malting barley. Obviously the malt and barley acreage is fairly definite.
The acreage will reduce as efficiency increases because quantities of barley have grown on a contractual basis for malt making purposes. Winter barley as shown by the figures has little advantage over spring barley. It is so different from wheat. I referred earlier to quality and one of the big factors we have to think about on the quality front is the moisture content. We have to meet a requirement of 14 per cent moisture if our cereals are to qualify for intervention. In 1986 it went from 15 per cent to 14 per cent. This is attainable only through artificial drying mechanisms. By using combine harvesters, cereals of that moisture level cannot be obtained whereas our colleagues and friends in Europe can, from the combine harvester, produce cereals with those lower moisture levels.
This automatically leads to extra cost. To bring cereals from a 20 per cent moisture content level to a 15 per cent moisture level will cost approximately £23. If we are to get it down to 14 per cent it will cost £5 or £6 more. Obviously that extra percentage point would be very hard to attain in the first instance and it would be quite costly as well. The real problem is that it will add to the cost of cereal production and make the whole question of cereal production a problematic factor.
The other major problem is the hectolitre weight which in simple teminology is the weight for a given volume of grain. It is equivalent to the old bushel weight of wheat, barley and oats. The level above which we must be aiming is a figure of 76. It must be downwards from 76 and a figure below 72 grain will not be acceptable at all. From 76 downwards we are talking of a 1 per cent reduction in price which is quite substantial.
In relation to imports which are a real threat to barley producers, we have tapioca and we have soya bean which is a high protein food but would not be of such consequence as tapioca which would compete very seriously with Irish grown barley. We can combat this to a certain extent by the production of corn gluten. We must be conscious of the fact that with an EC arrangement and price fixing, tapioca is available here at world prices. We must look at the alternatives to cereals and if there are to be lower acreages of cereals in the future, the obvious ones are peas, beans, rape, vetches and so on. The Minister might have some observation to make on this. Perhaps one could talk about a figure of 25,000 acres in total there.
It is difficult — and there is no point in saying otherwise — to find the alternative to any substantial change or reduction in acreage. We have many small farmers who produce a lot of our wheat and a great deal of our barley. Only 10 per cent of our total number of producers produce over 200 acres of cereals and that would be 5,000 people: our total cereal producers number 50,000. We have only 10 per cent of those in excess of 5,000 acres. We have 10,000 wheat producers who produce 15 acres of wheat or less, and we have a higher figure from 15,000 to 20,000 who produce less than 14 acres of barley. The point I want to make quite clearly is that grain production is not in the hands of the large farmers only. It is in the hands of 50,000 farmers at present. Those 50,000 farmers are involved in other lines of production as well and we must be mindful of that. At present there is an output production figure of 2 million tonnes and there is a requirement of 3 million tonnes. We have scope for producing more. To what extent can we replace over 225,000 tonnes of wheat which we are currently importing? We have 90,000 tonnes of the Canadian hard wheat, which we could replace substantially. By and large, we are back to the old chestnut of quality. There are 225,000 tonnes of wheat which can be readily replaced which is imported at present from the United Kingdom and France. The same applies to other cereal products. The Joint Committee on the Secondary Legislation of the European Communities examined these and various other aspects of the whole cereal area. Persons have had the opportunity of examining the document and have views to express. I do not intend to dwell any further on this matter, except to say that we are now placed at a very major disadvantage vis-a-vis cereal production in this country. We must be mindful of that and we must make sure that the appropriate steps are taken to ensure that cereal producers are not faced with too great a loss.
I wish to make a few comments on this report on cereals from the Joint Committee on the Secondary Legislation of the European Communities. The proposal coming from the Commission would have serious effects on the agricultural community and on the country. I often wonder if the EC Commision are fair to a country like Ireland. The situation, as it applies to milk, should also apply to cereals. We are in a unique situation geographically. We are an island to the west of the European Community and our climate is different from the rest of Europe. We are subject to more rainfall and, therefore, it definitely affects cereal growth. This has been obvious for the past two years when the cereal growers and the tillage farmers had a rough time and their incomes were drastically reduced because of climatic conditions. The EC Commission should endeavour to have a uniform level of income for all farmers throughout the Community. While certain decisions would be fair to our partners in Europe, those decisions if applied to our country, would cause our level of income to be lower than the income of farmers in other countries because of our geographical location and the amount of rainfall in Ireland.
Community production of cereals has risen at a faster rate than Community consumption plus other market requirements. The Commission makes proposals which include price restraint, the co-responsibility levy, quality standards and access to intervention. All of these proposals would have serious implications for the grain growers, the tillage farmers and especially for our economy. A price restraint, or a 3 per cent co-responsibility levy, together with price cuts of over 10 per cent as a result of the changes in quality standards for feed grain, and the intervention price for bread wheat fixed at the same level as that applying to feed wheat, barley and maize in 1985-86 are proposed. The purpose of the co-responsibility levy, the report states, is to develop Community outlets and also to give producers an indication of the nature of the market situation. There is a levy of 3 per cent on all grain marketed, including inter-farm sales and grain delivered by producers for processing and return to the producer. The small producer can apply for a refund of the levy on the first 25 tonnes of production but 25 tonnes is very little and does not give much scope.
The quality standards are very demanding for Irish farmers. The report suggests that access to intervention is to be confined to wheat of not over 14 per cent moisture content, as opposed to 15 per cent moisture content in previous years. The moisture content, especially with our climatic conditions, is much higher than that. It will definitely put our tillage farmers to extra expense in buying drying equipment and storage, which they will not be able to afford. The farm modernisation scheme should be implemented. I appeal to the Minister to ensure that the £3.5 million which was earmarked for the farm modernisation scheme — which the Government seem to be determined to save — should find its way to the farmers who are anxious to improve their buildings.
I do not know if the Minister is attentive to the debate but I have a few complaints to make. I am talking about the cost to grain farmers of providing storage and drying equipment to ensure a moisture content of 14 per cent or less in grain. The farm modernisation scheme should be implemented to ensure that these grain farmers or tillage farmers can be provided with aid for drying equipment and storage. I understand the £3.5 million which has been earmarked for the farm modernisation scheme for the past couple of years — it will be matched pound for pound by the EC — is not being utilised. That is a shame. I know there is new farm modernisation scheme and I have had complaints already from applicants who applied to participate in this scheme. They said they would be prepared to commence work in October. Because of necessity they commenced the work — I am speaking of farm roadways which are important. They had to build these roadways to take slurry out but the inspector did not call until two or three months later. They were then told that because the work was done they would not get a grant, that the work should have been approved prior to its commencement in order to qualify for the grant.
Debate adjourned.