Seanad Éireann debate -
Tuesday, 5 Jul 1988

Vol. 120 No. 12

Córas Beostoic agus Feola (Amendment) Bill, 1988: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Connor

Prior to that slight pause I was making the point that the European meat market over the next five years will be under-supplied and this country, because of the weakness of our promotional board for one thing, will be in no great position to take up the opportunities that will be offered to us. CBF receive less than £1 million in direct State subvention which, incidentally, is only about 20 per cent of their total running cost, the rest coming from levies etc. It is against that background that this promotional body with a staff of no more than 30 to do everything on a meagre budget are given the task of promoting Ireland's greatest export product.

Córas Tráchtála, on the other hand, will have a budget 20 times as great, and perhaps a staff ten times as great, and no doubt they need it. They will use the resources they are given well, but one must question why we spend only about 0.2 per cent of the value of our meat exports promoting them on the markets where we sell them, while we spend closer to 2 per cent, or perhaps 3 per cent, of the value of industrial exports in promotion in the areas where they are sold.

At the moment we sell about 40 per cent of exports of beef and lamb to what we call the continental EC — that is, the EC without the other major offshore island, the United Kingdom, 20 per cent to the United Kingdom, and about 40 per cent of our beef and lamb exports go to third countries, mostly in North Africa. All market analysis suggest that the growing market for us to target is mainland Europe. Downward pressure of the quota restrictions has greatly reduced beef steer numbers throughout the continental EC, hence the growing shortage. It is there our salesmen, our promoters, our advertisers and market researchers must be working aggressively, full-time to garner a greater corner of that market for the Irish product.

Years ago the Danes cornered the market for pigmeat and bacon all over Europe, the Dutch, and to a lesser extent the French and the Swiss, the dairy products market, but Ireland, often with far better comparative advantage, made no mark whatsoever, or no market impact, in cornering a share of any of these lines. The only market we cornered, alas, was the live cattle exports to the United Kingdom.

Now, all that is history and the situation we operate today is entirely different. It has changed fairly rapidly in the recent past, and it will change even more rapidly in the future. By 1992 we will operate in a single barrier-free market with all its challenges and all its opportunities. To meet all the challenges and all the opportunities for the food export business, the resources, and indeed the role of bodies like CBF, will have to be greatly extended. I would like to see one dynamic national promotional body to promote Irish food products, particularly in the export area, and here I mean, the promotion of all our main food export lines, including dairy and milk-derived products.

I have been brief in my contribution today, because there is little controversial in this legislation, and, as the Minister knows, controversy leads to long-windedness. Basically, I and my party agree with the intent of the Bill, and we will not hinder its progress through this House. We sincerely wish CBF every success and every good luck in the extension of their mandate to include the promotion of the pigmeat industry.

Mr. Hussey

I welcome this Bill because it opens up great opportunities for the beef meat industry, the sheepmeat industry and the pigmeat industry, which now comes under the ambit of CBF. Over the years CBF have done a magnificent job marketing beef for the Irish farmers and have succeeded, to a great extent, in putting Irish beef on the tables of many housewives in Europe who otherwise could not have availed of this very high quality meat. It is very important that we produce to the highest standards, that we have a product that is recognised on the European market, that we have a product for which there is great demand and which has great potential for development.

CBF have done a great job marketing beef and sheepmeat. Pigmeat has been the poor relation because CBF did not have responsibility for marketing pigmeat until now. I hope they will set about marketing pigmeat with the same vigour and determination they have marketed beef and sheepmeat over the years.

World and EC pigmeat consumption is growing by 2 per cent and 1 per cent, respectively. There are opportunities in major European markets, such as the United Kingdom, Germany, France and Italy, as well as Japan and the United States, as these countries are not self-sufficient in regard to this commodity at present. Danish and Dutch companies are already well established in these markets. Around 80 per cent of Irish pigmeat is sold on the home market where competition is intense due to the lower cost of unlicensed plants undercutting the export licensed plants. Competition on the home market will increase as it is now open to imports from Denmark and Holland.

The growth of the Irish pigmeat industry depends on the development of a number of large, efficient market-orientated companies that can protect the home market from imports and capture an increasing share of the export market. The growth in world pigmeat consumption, together with a well managed and efficient pig production sector in Ireland, is a sound basis on which to expand pigmeat exports. By 1992, pigmeat exports can be increased by £100 million creating a demand for 900,000 extra pigs and providing in the region of 1,000 new jobs in processing and 500 in production and related activities within the processing sector.

This offers great opportunities for the industry. I hope the new board being set up by CBF can tackle that area and achieve the same success rate as they have achieved in marketing beef and sheepmeat. There have been a number of weaknesses in the industry up to now. One of those weaknesses was that there was very little export market orientation or awareness in the industry. The industry has traditionally produced bacon, which is a declining market segment, and will face increasing competition on the home market which is now open to imports.

Another feature was the fact that Irish pig processing plants are too small. The industry is dominated by mature low-profit companies and major capital expenditure is required to make the processing sector efficient and able to compete in export markets. Pig production costs are also pushed up by the high cost of feed in Ireland. This is an area which could be tackled by the new board, perhaps by subsidising the cost of feedstuffs or otherwise keeping costs down because the high cost of feedstuffs is the biggest problem pig producers face in trying to keep down costs. The expansion of pig production is also hindered by the high entry costs at 300 sow level, an investment of £400,000. High interest rates have also been militating against expansion in that area.

These are some of the problems that the new board is faced with. The experience in exporting beef and producing suitable products for the European market will help in tackling the pigmeat industry. I believe they will succeed in developing a brand that will be recognised in foreign markets. This was never achieved before. Irish bacon did not get the recognition it was entitled to, particularly on the British market where most of our exports were going in the past. This was probably our own fault because we did not market it properly as did the Danes and the Dutch over the years.

Increased levies are being imposed. While we all dislike an increase in levies, I believe it is necessary, and that those increases in levies will be accepted by the industry because they feel CBF will now be able to do an efficient job for them. If the board is able to secure markets for beef, pigmeat and sheepmeat the producers will benefit in the long run. Nobody will begrudge paying those increased levies provided they get a better service and I believe they will get that from the new board which will be increased from nine to 11. Again this is a good idea because it will give representation to the pigmeat industry. They will have their voice heard in the new board and be able to put forward ideas for the development of the industry.

Like Senator Connor, I do not wish to delay the House. We all realise the importance of this new legislation. We are approaching 1992 with fear and trepidation in many areas of industry. Here is one area where we do not need to have any fears. We have the product; we have the means of producing the best meat in the world. All that is required is to have an efficient marketing organisation to sell what we are producing. This will be to the ultimate advantage of everybody in the country because it will create badly needed employment for our young people and a major source of income for the country and for individual producers within the country. Anything that does that must be welcomed. For that reason I welcome the legislation that is now introduced here and I look forward to great developments in the four years up to 1992.

Professor Murphy

I had not intended to speak on the Bill. I do not know a great deal about the subject, and such is my ingrained modesty that I would never dream of pontificating on things I know nothing about. It occurs to me, having listened to the Minister and Senators Connor and Hussey, that I should express my own support of the measure. I know enough about it to know that the agricultural economy is underdeveloped, and that it is our greatest potential. No matter what fashionable talk there may be about developments in high technology and so on, the promise of real development in this country, the only ultimate hope of increasing employment substantially, as Senator Hussey suggested lies in development of the agricultural economy.

I am glad to see that this measure recognises and indeed proposes to promote the pigmeat section of that economy, a very important part of the economy, even though the pig no longer occupies the pivotal place he held in the 19th century for the Irish smallholder — the gentleman who paid the rent. I am nonetheless very glad to support this sensible and desirable measure.

I also want to take the opportunity to congratulate the Minister on his performance in this Administration to date. I have watched his progress with great interest and, I may say, a pardonable pride. There is no kick coming——

Mr. Hogan

There are others watching, too.

Professor Murphy

——this is a pure bouquet, no brickbat. I say, "with pardonable pride" because the Minister was a pupil of mine.

Mr. Hogan

He is a Corkman.

Professor Murphy

He is not only a fellow Corkman but a pupil of mine and I think the House will agree that I helped to make a very good job of him.

Mr. Hussey

He made a good job of it.

Mr. Hogan

The Minister, Deputy O'Kennedy, would not be pleased.

Professor Murphy

So I have pleasure in welcoming the measure and in welcoming the Minister to the House.

Mr. Hogan

I want to join, too, in Professor Murphy's tributes to the Minister of State in welcoming him to the House. Not only is he a former pupil of Senator Murphy's but he also has a deep knowledge of the agricultural industry. He would be very familiar with the efforts today to promote in an even greater way our agricultural produce in the marketplace in Europe and the wider world. He is giving more powers to CBF to do that. It is certainly something that I totally and wholeheartedly welcome.

However, I would sound a serious note of warning in relation to agricultural production generally. We are facing a crisis in relation to the supply of raw material, particularly in the beef sector. This has not been recognised fully by the Government in drawing up a programme that could be put before the farming community and the producers of this country to ensure that we have sufficient raw material to satisfy the meat processing capacity that is so large here at the moment. It is suffering from overcapacity, being underutilised to the detriment of the maximum benefit of the country and of creating maximum employment.

Platitudes have been used over the past year and a half in relation to the generation of additional employment in the agricultural sector. I hope we will see the raw material being produced more quickly in order to satisfy those employment opportunities in the meat processing sector right across the board, whether in dairying, beef or pigmeat. I am very distraught about the future in relation to that matter. The figures are startling when one considers the December 1987 livestock count. We have lost 100,000 cows in the dairying sector over the last three years, since the introduction of the super-levy. This brings about the enormous shortage in beef production that we have at the moment with prices being paid in the marketplace escalating out of all proportion. The laws of supply and demand dictate that in a scarcity of produce and raw material one will get a higher price.

Never was that more evident to the farming community than today. People who invested heavily in cattle production are now finding the going extremely tough, to such an extent that they are not prepared to buy and feed cattle during the winter months in the hope of making a profit in the month of April. That system is on the way out. What we need is a radical plan to boost beef numbers. I am disappointed at the rate of progress to date and I take this opportunity to appeal to the Minister once again to put the necessary programme of action, which is so essential for the creation of employment and greater viability in the meat processing sector and in farming, in place. Those objectives are so noble that we must put a radical plan in place as soon as possible. Come 1992 with the opening up of all the opportunities which have been spoken about I would not like to see us as a nation fail and CBF not being able to guarantee the supply of raw materials and goods to those markets.

I welcome the extension of the remit of CBF to cover pigmeat. As Senator Murphy has said, gone are the days when pig production was necessary to pay the rent in many farming households. Particularly on mixed farms pigmeat formed part of the basic diet. The tradition of killing the pig at Christmas has gone out of fashion. For a long time that tradition was part and parcel of the way of life on many rural farms. The housewife took it upon herself to nurture and feed the pig to the stage where when it was killed it took pride of place on the table. That kind of pig production is now non-existent in this country. We now have larger units and greater economy of scale but certainly the pigmeat industry has been treated during the years as a Cinderella industry and wrongly so in my opinion. I hope the taking advantage of the new marketing opportunities which may be identified by CBF will lead to more stability in the pigmeat market.

As the Minister of State is aware, pigmeat producers have gone through a difficult time in recent years. With the oscillations in the price of feed, which have now levelled off, they never knew what their profit margins would be if any. The return from their enormous investment and the time and effort they have put into their enterprises has been very small indeed. I hope that with greater stability in the marketplace pigmeat production will be more viable in the future. There has been a number of closures of pigmeat units in recent months and in Threecastles a large pigmeat unit had to close down as a result of a difficult trading position, high energy costs and the lack of continuity in the price of raw material. Senator Hussey referred to the high cost of feed but during the last two years or so these costs have levelled out as have energy costs. I hope that these costs will continue to fall and any reduction in costs, particularly for the pigmeat sector where margins are so tight, would be welcome.

We must improve the quality of our pigmeat and the former Minister for Agriculture, Deputy Deasy, attempted to rationalise the pigmeat sector and decided to establish eight new units. It was intended that the Department of Agriculture and the IDA would come together to draw up the standards that each of these eight units would have to comply with before they could obtain a licence to export pigmeat to the United States or other world destinations. These have not been drawn up as yet. I am particularly pleased that one of those units is going to be established at Graney in south County Kilkenny. Work has now commenced and I hope that that plant, which is targeted for IDA and FEOGA assistance, will come into operation during the next 12 months and will export to the United States in particular where higher standards and quality are demanded.

On a recent visit to the United States I was amazed that consumers, particularly on the east coast, of all the products they could receive from this country, demanded pigmeat products more than any other. Here I am particularly speaking about rashers, bacon and sausages. The main difficulty is the continuity of supply and I hope that the CBF will seek to resolve these problems with the result that supermarket chains in the United States will do business with our pigmeat producers.

The Government have not given enough attention to ensuring that the amount of money spent on marketing in particular sectors of the economy was increased. With the build up to 1992, when new opportunities will open up to us, it is now more important than ever to put the emphasis on marketing. We have many advantages over other member states and we need to exploit our clean image. We do not need to produce more, rather to produce quality produce. We must sell our clean image to the Europeans. The Minister for Agriculture and Food made a recent announcement on measures aimed at the control of pollution which will go a long way toward correcting the wrong image that some people hold and which could seriously jeopardise the export of many of our agricultural products.

I was disappointed to note that farmers in areas of intensive production, those areas outside of the disadvantaged areas, will not qualify for the higher level of grant which the Minister has boasted and gloated about in the media. The areas where pollution control is most needed are those areas in which there is intensive production and those areas are outside of the disadvantaged areas. It is not good enough to create a third border, with those in low lying and non disadvantaged areas being treated differently from those in disadvantaged areas, with a higher level of grant being paid to farmers in those areas.

Following the incident at Chernobyl we were given the unique opportunity to exploit opportunities in the marketplace but we have not taken them in the way that we should have. I hope the extension of the remit of the meat marketing board will result in not only continued expansion in traditional enterprises, such as the production of poultry and venison, but that the CBF will also assist in finding niches in the marketplace which are important to create alternative sources of income for many of our farmers today.

Debate adjourned.