Seanad Éireann debate -
Tuesday, 5 Jul 1988

Vol. 120 No. 12

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

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

Minister of State at the Department of Agriculture and Food (Mr. J. Walsh)

I wish to express my appreciation to the House for making time available at rather short notice to discuss this Bill.

The Bill involves the amendment and extension of the Córas Beostoic agus Feola Act, 1979, principally to confer on CBF responsibility for the promotion of pigmeat in addition to their existing functions in relation to cattle and sheep.

For some time the Government had been concerned that the pigmeat industry was not developing to the extent possible. Outmoded plants with low throughput were a common feature. This was seen as one of the great weaknesses in the sector. A major development and rationalisation plan for the industry is at present underway. This programme, which runs for five years, involves a total investment of £140 million, including substantial State and FEOGA aid, towards improved slaughtering and processing facilities. As many as eight central slaughtering units, each capable of handling at least 6,000 pigs a week and licensed to the highest European Community and US standards will be created. These units will cater not only for their own needs but also for those of surrounding processing plants. At present five units are in the course of phased construction and others are at planning stage. A number of investments in processing facilities are also going ahead. Already two plants are up to EC and USDA standards and more will come on stream. Domestically, the Abbatoirs Act has gone through both Houses of the Oireachtas and will ensure the production of high quality meat, capable of competing with imports. Regulations are being drawn up under the Abbatoirs Act at present and they will relate to structures. Veterinary standards are being drawn up and it is hoped to have them in operation by the end of the year.

In order to ensure the success of this investment programme, optimum use of the new plant capacities is necessary. This will require us to increase pig throughput from its present level of nearly 2.2 million pigs a year to about three million by 1992. The pig production group which was set up recently by the Minister for Agriculture and Food and which reported to the Minister in March looked at this question of increasing pig numbers having examined all areas of the pigmeat industry. A suggestion made by the group was that the manufacturing sector pay a bonus per additional pig supplied by producers. The manufacturing sector is now looking at this suggestion in the context of preparing detailed development programmes for individual plants.

These programmes will be required to address the matter of encouraging additional pig numbers as well as covering the other important issues facing the future development of the industry. I am looking forward to seeing these plans which are now due to be submitted. The whole idea is that the plants are given very substantial and attractive grant aid, up to 75 per cent, and the onus will be on each plant to draw up a programme to ensure that they will have pig numbers up to 6,000 per seek which will be the minimum required for the optimum use of the facilities concerned.

Expanding pig output is, of course, only the beginning. The additional output must be marketed and disposed of profitably. While the industry itself must put in the main effort in marketing, it is important that it has the right promotion back-up. For some time past no central agency has had responsibility for promotion or marketing of pigmeat. CTT have of course provided very valuable assistance to individual pigmeat plants in their export operations. However, the Government have been conscious of the need to co-ordinate meat promotion activities as much as possible within one organisation. We believe that CBF which have been doing such fine work in promoting beef and lamb on both the home and export markets are the most appropriate vehicle for taking on the promotional role for pigmeat and all other meat products as well as pigmeat.

The success of CBF in relation to their existing portfolio is widely recognised. Recently I was delighted to participate in a symposium which was held outside Dublin. I would encourage a number of our State organisations to have a look at other locations around the country to see some of the fine facilities we have. In this case they did not quite go to Cork but they went to the next county which is Kerry. This international symposium organised by CBF had representatives from each of the continents representing 18 different countries. The expertise and professionalism was superb and was commented on most favourably by people from all continents.

I was very glad to meet some of the biggest corporations in the food industries around the world who saw Irish people not only promoting meat but giving a tremendously positive image of Ireland as a country that had a very sophisticated level of communication. I would encourage a number of other State organisations based in Dublin to look at locations outside Ireland because not alone are they doing a good job for their particular industry but they are doing a tremendous job for the image of the country as a whole. I am sure my colleague, Deputy Wilson, from a tourist point of view would be very glad to see some of the idyllic spots around Ireland shown off to best advantage on these occasions.

I have no doubt but that CBF will be equally successful in the pigmeat area on both the home and export fronts. The home market will continue to be very important, accounting as it does for 70 per cent of output at present. Adequate promotion is essential if the potential for domestic sales is to be fully exploited while also ensuring that the Irish industry is in a position to compete effectively at home with imports from some other member states of the Community. However, development of export outlets will be the most crucial marketing task in promoting the expansion of the pigmeat sector. CBF's major input will have to be in this area of promotion and marketing both on the home and export fronts.

This Bill provides for the introduction of a levy by CBF of 20p per pig. This will generate income to CBF of about £400,000 in a full year. In addition, a further £400,000 has been transferred from the grant-in-aid of Córas Tráchtála Teo to CBF for 1988. In-so far as the existing CBF levies are concerned, it is proposed to increase the rates of £1 and 10p for cattle and sheep respectively to £1.50 and 20p. This is being done to meet the unanimous views of the board of CBF who consider that these increases are necessary to enable the body to expand and develop their promotional activities. Total levy income, including that from the proposed levy on pigs, will then be about £3-4 million, annually, compared with £1.9 million at present. That should be viewed against our total exports which are in the region of £1 billion, so that a figure of £3.5 million is really minimal in that context.

Provision is also being made in the Bill to increase the number of ordinary members of the board of CBF from nine to 11. This will enable the pigmeat industry to have appropriate representation on the board.

It will be noted that I am making provision in the Bill for the brief of CBF to be further extended by Ministerial order to other meats at a later stage, should this be considered desirable. I am thinking particularly of poultry meat. Poultry meat exports have developed considerably in the past few years with particularly encouraging trends in added value trade. Exports of poultry meat were worth over £11 million last year, about 90 per cent of which were in added value products.

The poultry meat industry is a headline for the other meat areas in their added value products. As far as the poultry meat industry is concerned, the consumer comes first and they tailor-make their products to suit the consumer. I think this has had a tremendous effect on value added. There is further scope for increasing exports in this area. With recent acquisitions by some of our more dynamic meat and food industries, I see tremendous opportunities in the area of poultry meat.

On the domestic front there are also possibilities for increasing the home-sourced share of the poultry meat market. Additionally, I think, there is a developing interest in venison and deer farming which has considerable potential. Venison will become an important meat product over the coming months and years. There are a number of other alternative farm enterprises such as rabbit farming which I think have potential and will in due course become important. CBF will have a valuable role in promoting and marketing these meat products.

The Bill allows for all CBF levies to be further increased by Ministerial order and this provision is in line with the existing situation for cattle and sheep levies. Any such orders in relation to levels of levy or for extending the activities of CBF will, of course, require approval of both Houses of the Oireachtas.

CBF, as a statutory body, have been in existence now for almost ten years. During that time the main provisions of the enabling Act have remained unchanged. However, there is always room for improvement and I am, accordingly, proposing certain changes and additions to the parent Act. These are contained in sections 5 to 10 of the Bill and are designed either to improve the efficiency of CBF's levy collection system or to bring the provisions of the 1979 Act up to date.

In general these sections increase the levels of penalties which may be imposed for contravention of the Act. There will be a statutory obligation on firms to which the Act applies to keep records for four years; where firms fail to furnish appropriate returns — which in itself is an offence — CBF may, in such cases, estimate the amounts of levy due; officers of corporate bodies will, in future, be answerable, in addition to the body, for offences under the Act. Lastly, the Board of CBF will be entitled to appoint authorised officers who may enter premises covered by the Act and inspect and take copies of records that may be necessary for determining the charging of a levy.

In recent years CBF have restructured their staffing arrangements by reducing the number of headquarters staff so as to increase as far as possible the numbers of field personnel operating both on the home and export markets. The measures contained in sections 5 to 10 of the Bill should greatly facilitate CBF in streamlining and making more efficient their levy collection procedures and thereby contribute to their efforts to reduce administration expenses to a minimum.

I believe this measure is important in ensuring that our important meat trade is given the support it needs. In the passage of this Bill through the Dáil it was supported by all sides of the House who were glad to see our meat and livestock trade getting additional support. The measures here are supported by the board of CBF and by the main farming organisations. I have, I think, touched on all the provisions of this Bill which I now commend to you.

Mr. Connor

I would like to assure the Minister that on this side of the House we, too, support the general principles of the Bill. The only difficulty we have about it is that we feel it does not go far enough. Judging by the size of the meat industry or the food industry in this country my party believe we spend far too little on promoting sales abroad and while this Bill is a step in the right direction it is only a small step in the right direction. In the long and medium term more needs to be done. Anything that helps to strengthen the sale and promotion of Irish meat products abroad is to be welcomed and in so far as this Bill seeks to do that we certainly welcome it.

CBF are responsible, too, for the promotion of meat sales here on our domestic market. We on this side of the House welcome particularly the extension of the remit or mandate of CBF to the pigmeat industry, that is the promotion of pigmeat on domestic and, more important, export markets. This is a long overdue development. Since the disappearance of the Pigs and Bacon Commission some years ago there has been a promotional vacuum in the pigmeat area which constituted a classical crazy situation. In the past five years vast sums of money have been chanelled into the pig slaughtering and processing industry. In a relatively short time we have brought our capacity to process pigmeat up by one third by extending and modernising our plants yet, because of major gaps in our policy in planning, we find the number of pigs in the national herd barely stable, smaller than five years ago with every indication that they are contracting and becoming smaller during this year with further indications of continued decline next year in the following years. In fact — this may surprise the House — there has been no growth in pig numbers in this country since 1974. In that year the national pig herd reached two million. The figures is about the same for 1988. Unlike in 1974, we have now the capacity to slaughter three million pigs annually, so we have a supply one third short of capacity to slaughter, process or manufacture. Obviously, something is radically wrong.

It is argued that the numbers of people controlling the industry are too small and, therefore, a too complacent and cosy attitude towards expansion has grown up. This, of course, is to the detriment of the national income interest. It is interesting to see that in Holland the expansion of pigmeat output in 1987 was almost exactly equal to the total output in Ireland. In 1987 the Dutch processed 18 million pigs, two million more than in the previous year. Ireland's total output to processing in 1987 was about two million animals.

Looking closely at the industry here, you find that our breeding sector is fully in line in efficiency terms with that of the Danes and the Dutch, our major competitors. By this I mean the rate of bonhams bred from each breeding sow. That sector is as efficient as our main competitors', but in the finishing sector, that is from bonham to slaughter stage, we lose out badly to our competitors. The time taken here to market stage is much longer and feed conversion both in breeding stock and in pigs for market or export is much less efficient. Many people remark that the Irish industry operates under certain disadvantages. Indeed, other sectors of Irish agriculture operate at certain disadvantages vis-á-vis availability of sheep feed and feed substitutes. The Irish industry uses a great deal of whey for feed substitute which is not available to our competitors. While in theory this should at least wipe out their advantage in cheaper feed components from abroad, it does not.

It is generally agreed that we should move towards larger carcases. The Dutch in particular have proved in recent years that there is a very large market and far better added value in producing a larger animal for slaughter, so the Irish industry should have a greater mix of larger animals for processing alongside our traditional smaller sized animal for Wiltshire size sides.

I submit also to the Minister of State, and his Department should be promoting it, that the industry should be using artificial insemination for breeding purposes. Our competitors are all doing so, and so should we. I make that point because it is argued widely that the root problems we have in relation to feed conversion rates are with our breeding. Therefore, we suggest that AI be looked at as at least a part solution to that problem in the industry.

While CBF do a tremendous job with their very limited resources, nobody can be satisfied that they are doing anything like what they could or should be doing in the national interest. There is often a misunderstanding of the role of CBF. Many people believe they have an actual selling of product role, in other words they identify or find a customer and sell directly to him or her. Of course, they do nothing of the sort. Their role is purely promotional and advisory. The actual selling of our meat product is done directly by the sales staff of our meat plants backed up by CBF's promotional work, advertising, market research etc.

As is widely recognised, there has been a notable lack of emphasis by the Irish meat industry on marketing and or selling abroad. There were and are reasons for this, very often not very good ones. The reliance on intervention in this country was and is totally disproportionate and bad and is potentially disastrous. Again, it is difficult to comprehend the readiness with which the industry took aboard the massively expensive upgrading and modernising of their plants costing million of pounds, much of which was admittedly EC grant aid and IDA aid, while little enough emphasis or priority was placed on marketing or going to and capturing areas of market growth. Too often instead the soft option of intervention was used.

However, all that is changing. Every year the Commission puts greater and greater pressure on the amount of beef into intervention. Give us another three to five years and you may see intervention almost closed off except for the most exceptional cases. In the light of this I do not believe CBF with their meagre resources or the industry with its weak marketing reputation and inclination towards the soft option of intervention between them will be able to cope with the close down of intervention stores. Notwithstanding falling cattle numbers in this country and the European market that will over the next five years be under-supplied — that is totally unique in the recent history of the European common market.

Debate adjourned.