Seanad Éireann debate -
Wednesday, 11 Jul 1990

Vol. 126 No. 1

Farm Incomes: Motion.

Mr. Naughten

I move:

That Seanad Éireann calls on the Government to—

(1) recognise the serious income crisis affecting thousands of Irish farmers,

(2) implement measures to alleviate the present income crisis in the areas of beef, store cattle, sheep, milk and cereals.

This is a motion which those of us associated with the agriculture industry are reluctant to see on the Order Paper. Nevertheless, the serious situation that has arisen in agriculture demands that this motion be on the agenda before the House today.

The social and economic importance of agriculture and farming is of vital importance to the economic future of this country. Very plainly, their importance is such as to be almost incapable of being exaggerated. What do we see happening all round us? A price collapse in practically all types of farming. The price collapse in beef and sheep is such that right now the prices being paid to farmers barely covers the cost of production. Beef bullocks, heifers and store cattle are down approximately £100 per head. Dairy farmers are taking almost £300 per cow reduction in their income. What is being done to ease the blow? Very little, I am afraid. When one considers the disastrous situation of our cereal growers, one wonders if there is a concentrated effort to move people off the land and denude rural Ireland of its population.

I know of no other period during the past 20 years when there has been such a sudden and sharp deterioration in the fortunes of Irish farmers and all independent observers agree that the future is far from bright. In fact farm incomes, according to the best independent advisers, will drop from 20 per cent to 25 per cent.

I welcome the Minister of State to the House. I regret that the Minister is not here but nevertheless the Minister of State, Deputy Kirk, is very welcome. This is an unparalleled and unprecedented drop in income from one year to another. I wonder why the report of the farm management survey has not been issued? Is it being deliberately delayed because of the frightening figures projected for farm income for 1990? Is it being delayed until the Dáil has gone into recess?

Prior to joining the Common Market agriculture was a severely underdeveloped sector which concentrated on supplying a small domestic market and satisfying the needs of the United Kingdom demand for a limited range of bulk commodities. To date, the Government would lead us to believe that agriculture spearheads the national drive towards employment creation and economic survival. Need I mention the publicity attached to the launching of the Goodman deal, when we were all convinced that down the road we were going to have everything pre-packed and landed on the shelves of Europe? We were going to create 2,000 new jobs. What has happened to this project that was launched with such fanfare and now seems to be left on the shelves to gather dust?

One of the main reasons given is that membership of the European Community has given us access to wider markets and the availability of institutionalised price support. These wider markets should have enabled us to boost production and expand processing capacity in areas as dairying, beef and sheep where we enjoy a natural advantage. I point out the advantage that could be gained from the processing of hide, skins and wool. Unfortunately the Government have failed miserably to do anything about these downstream industries. I cannot understand why the Government, in conjunction with the IDA and the National Development Corporation, have not pursued the possibility of creating jobs in the hide, skin and wool industries. I regret very much that the Government have ignored developments in these areas. These three commodities are at present priced at a very low level, and substantially less than they were last year.

I question strongly whether we have taken advantage of the huge market. What marketing strategy have we got? Have CBF and Bord Bainne been given the kind of support they require to market our produce? Have we moved away from bulk commodities towards added value manufacturing? This is something we heard a lot about but I believe, unfortunately, very little has been done about it. What effect has the huge cut in the CBF budget had on the marketing of our Irish produce? Have we taken advantage of the added stimulus from the change made over recent years in the Common Agricultural Policy price support system? I believe we have not and CBF have not been given support by the Government to sell Irish products, have them properly branded and launched in the same way as Dairygold or whatever. We have failed to do that with beef and lamb and we are paying the supreme price for it at present.

A fundamental requirement for the continued development of the agriculture sector is confidence in the industry, in order to continue to supply the raw material but right now this confidence is being shattered. Something needs to be done right away. Producers require confidence and guarantees. They want to know where they are going. I never saw so much uncertainty when one considers the impact the GATT negotiations could have on prices and the prices we are receiving today.

Over the past number of months, we have seen changes in those support arrangements. For example, arriving at the 1990 ewe premium the stabiliser, the method used to take into account increases in ewe numbers in calculating the ewe premium, has been increased to 7.25 per cent compared to 5 per cent in 1989 and the carcase co-efficiency has been reduced to 17 kilos compared to 17.5 kilos in 1989. These combined measures led to a reduction in the ewe premium of £2. That is tinkering with the mechanism by which Irish farmers gain subsidies under the ewe premium scheme from Brussels and because of changing the goalpost and the ground rules, we now end up with £2 less than we would be getting if the 1989 guidelines were adhered to in 1990.

Farmers are very concerned about the current nogotiations on the GATT round. Will prices be halved as is being suggested? Farmers want to know precisely what is happening so that they can plan for the future and invest accordingly. In the case of beef producers, specific decisions as to the extent of future intervention support for the beef sector is now needed. Our milk producers clearly need to know whether quotas will continue after 1992 and if so under what conditions. Farmers want to know if the existing link between quotas and land will be broken, and if so, whether after 1992 quotas will be transported across member state frontiers. This is a very important issue and one I hope the Minister will address when he replies. It is a matter of grave concern to farmers.

Huge questions must be raised about the marketing of sheep meat, when we find that New Zealand frozen lamb is being sold in our supermarkets. Why is this acceptable from a non-EC country when we have such a supply of lamb? Together with our own supply, we are now 105 per cent self-sufficient. Without them, the EC would be in a deficiency situation. Need I point out to anybody here the huge difference that this would make to the sheep farmers of Ireland. I believe it is an absolute scandal that this sheepmeat can come in at substantially reduced prices, be dumped onto the EC market, and as a result depress the price of Irish lamb.

Last week in reply to the debate on bovine TB levies, the Minister referred to a statement which I made regarding farmers' incomes. The Minister stated things were not quite as bad as Senator Naughten said. I want to point out that I did not exaggerate and I want to further point out that I am rather amazed at his statement. It quite clearly indicates that he is unaware of the extreme difficulties many Irish farmers are in as a result of a drop in prices in every agricultural commodity. If the Minister is not aware of the situation one must seriously question, if he is capable of representing Irish farmers at the Cabinet table or in Europe.

Let me point out to the Minister that lamb prices have reduced by 25p per lb between 1 July 1989 to 1 July 1990. Taking the average lamb at 43 lb carcase weight, that means a farmer is getting £36.12 in 1990 when he was getting £46.44 in 1989, a difference of £10.32. For a farmer with 100 ewes and a lambing average of 1.3, this means a loss of £1,342 on lamb prices alone. Taken in conjunction with the drop in wool prices from 72p per pound to 30p per pound, it means the income of a farmer with 100 ewes is down by a total of £1,600. This is exacerbated still further if one considers a farm with a lambing rate of 1.6; the losses then become £1,965. These are facts that cannot be denied.

Let me remind the Minister that lamb prices in the first week of July 1989 were £1.10 per lb and on the first week in July 1990 they were 84p per lb. Let me further point out that on 1 July 1989 cattle prices, steer prices, were £1.13 per lb. In the first week of July 1990 they were £1.06. Heifer prices in the first week of July 1989 were £1.10 per lb. In the first week of July 1990 they were 95p per lb. A farmer selling 20 heifers, killing at 540 pounds carcase weight will take a loss of £81 per head or £1,620 on his 20 heifers. A similar situation exists for the man feeding 20 steers. If one takes the average 50 to 80 acre farmer he can lose anything from £3,500 to £4,000. I ask the Minister if there is any other section of the population that would tolerate that. We heard of Black Monday on the Stock Exchange but if there were the same ratio drops on the Stock Exchange there would be a riot.

At present one of the greatest difficulties facing the farming community is the glut of lambs on the market. Let me point out to the Minister that on the advice of the Department of Agriculture and Food sheep farmers increased sheep production on the clear understanding that we were only 80 per cent self-sufficient. I ask the Minister, without any further delay, to introduce a scheme along the lines of aids for private storage that would take the immediate glut of lamb off the market for July and August, because if that is not done, the 84p per lb will become 75p per lb in two weeks' time. I appeal to the Minister to convey to the Minister, Deputy O'Kennedy, the vital importance of getting the glut of lamb off the market.

Mutton is being sold at 17p per lb. I cannot understand what CBF or the Department of Agriculture and Food have been doing to allow mutton prices to drop to this level. I appeal to the Minister to take up this matter with CBF and see what can be done to get a market for mutton.

In the dairy industry, 65 per cent of all farmers have 20,000 gallon quotas or less. Those farmers have no capacity to borrow and are taking an income drop of £3,000 to £4,000. They are small dairy farmers who cannot afford to lose this money. I recognise that many of the larger farmers, the 35 per cent with a huge gallonage, have done reasonably well over the years out of milk and can, for the time being tolerate a drop of income but the smaller producer cannot. Many of those people have borrowed to develop their farms and build up their herds. They borrowed on the advice of the Department of the Environment to comply with pollution regulations and so on and now they are not able to meet their loan repayments. There is another group of farmers who are about to develop or to comply with the pollution regulations but cannot get the money to do so because farmers no longer have any borrowing power with the banks. No banker wants to see a farmer borrowing for stock. He will give him money to buy a tractor if he deals in tractor hire or for a lorry if he is in the haulage business but not for farming.

Let me point out to the Minister the necessity to know with reasonable certainty how future community support arrangements will operate so that farmers can plan for the future. My concern is to maintain family based farming in the Ireland of the future and to ensure the viability of the rural lifestyle for our children. As a representative of a rural constituency and a farmer, I am sure the Minister shares my concern. I will continue to champion the cause of family farming and the preservation of rural society. It frightens me to hear that a 100 acre farmer today is not in a position to meet any commitments beyond family living expenses. This will have a devastating effect on farmers who have borrowed to stock their lands, to carry out farmyard improvements or to meet the new requirements under the water pollution legislation. Farmers who have borrowed for those purposes will be unable to meet their repayments.

What plans has the Minister to alleviate the major hardship on those farmers? It is in all our interests to plan with a degree of certainty and in a stable environment. Our dependence on agriculture is not fully realised. Proportionately, Ireland is one of the Community's largest exporters of food and drink which account for 25 per cent of the value of our total exports. Are the producers of the raw materials, the farmers, getting the kind of support they deserve? Commissioner MacSharry has promised a comprehensive range of rural development measures but we need more than promises now: we need action and we need those developments immediately.

The decision to get intervention beef paid for at 45 days instead of 120 days is something I have been calling for for a considerable length of time. It was one of the weaknesses I noted in the intervention system as a member of the Committee of Public Accounts. I welcome that. We were told at the time that this would mean an automatic increase of 3p per lb in factories. Not alone did producers not get the price increase of 3p per lb but the price of cattle was reduced by approximately 8p per lb. Some weeks ago Ireland looked for intervention facilities of 8,000 tonnes of beef and my understanding is that we got intervention of 2,000 to 2,500 tonnes, one quarter of what we looked for. I believe that the factories are working in co-operation with each other and if one checks the quotas of factories it is remarkable how close they are to one another.

Recently the EC Council of Ministers agreed to the importation of 200,000 young cattle and about 50,000 tonnes of processing beef at a time when we cannot sell what we have. The Minister for Agriculture and Food failed in his duty to farmers by not preventing those imports at a time when cow beef is being sold at 70p per pound. One cannot be blamed for believing that the Minister for Agriculture and the Agricultural Commissioner, Mr. MacSharry, have reneged on the Irish farmers and failed to represent their interests at the negotiations in Brussels.

It is frightening to realise that for the first time in Irish agriculture the farming community have no creditworthiness with the banking institutions. Farmers, by and large, are unable to repay loans which they received from the banks and others who need money for investment in livestock or for farm buildings or pollution protection cannot get loans. This is a clear indication by the banks of lack of confidence in the policies pursued by the Government. Most of the repayments will not be due until October or November and this will cause a crisis for many farmers at that time. Lending rates are in the region of 17 per cent and farmers just cannot afford to borrow money because of the amount of the repayments.

There are a number of points the Minister should immediately implement which would help to alleviate the disastrous situation which exists at present. Farmers should be guaranteed a minimum price level below which cattle will not fall in the spring. This is of vital importance to the beef farmer but it is also of major importance to the store cattle producer in the west of Ireland. If there is not a market for beef in the spring it will have an adverse effect on the store trade in the autumn. It is of vital importance that we have a guaranteed price for spring beef so as to guarantee the future for store cattle producers.

It is also of vital importance that the Government make low interest loans available to farmers. As a result of the high capital costs involved, interest rates have become a huge cost on Irish agriculture. It is vital, therefore, for the Minister without any further delay to seek loans in Deutschemarks and they could be made available at 9 per cent when normal bank handling charges are taken into consideration. I believe that shortterm loans could be made available to farmers at approximately 11 per cent or 6 per cent less than they are at present. The Government would have to underwrite the exchange risks. However, because of the short duration of the loans, this would prove a very small cost factor to the Exchequer. Current interest rates are crippling Irish agriculture. Those loans would help farmers to restructure their present loans and would help them to retain livestock over the winter. If the present trends continue stock prices in the autumn will be even worse than they are at present.

The Government should make loans available to farmers to purchase nitrogen for the purpose of a later cut of silage. This was done some years ago and was very effective. It created a substantial additional amount of winter feed. It is of vital importance that we face this winter with an adequate quantity of feed so as to prevent farmers from dumping stock on the market later.

With regard to EC headage schemes the Government have failed drastically over the past three years. Senator Hussey is well aware of what I am talking about here. Why the Government have not pursued the question of reclassification of all the disadvantaged areas to severely handicapped so as to ensure that headage payments could be paid to farmers in all of the disadvantaged areas I cannot understand. It clearly indicates the lack of commitment not alone on the part of the Minister but also on the part of the Government who have failed to make the additional funds available. This is one way that direct assistance could be given to farmers. We have not availed of that mechanism. It is subsidised to the tune of 65 per cent. It is one way that money could be channelled immediately to farmers but we have not availed of it.

I call on the Minister to increase headage payments to the maximum. At present farmers only receive 50 per cent of what they could get under the headage mechanism. At this point of crisis in the agriculture industry, the Minister should double the amount of grants available under the headage system and ensure that all grants are paid without any further delay. With regard to the system of application for those grants and the herd readings, I cannot understand why the applications have only gone out in the last couple of weeks and why the readings for headings payments will not start until August. What does the Minister propose to do with regard to the vast numbers of farmers who have applied for those schemes but who will not, because of the delay in readings, be able to dispose of their cattle until readings take place? This inevitably will cause a glut of cattle later in the year.

In relation to the headage scheme I ask the Minister to announce, without any further delay, that he will accept mart dockets and factory dockets for cattle that have been disposed of and so avoid a glut at the end of the year. If cattle are held until the headage readings take place, there will inevitably be a major glut of cattle in November and December. I cannot for the life of me understand why it is beyond the powers of the Department of Agriculture not to get those forms out in April rather than in July and have the readings started in May instead of in August.

I deplore the delay in the payment of the 1989 part of the ewe premium. I cannot understand why those payments have not been issued since readings for this scheme started last March. Is it that the Department have not got the finance to meet the payments or that they are understaffed? I call on the Minister to immediately pay the first part of the 1990 ewe premium together with the 1989 premium. What plans has he to set up a land authority? This was promised some years ago but unfortunately we have not got it. How long will we have to wait for a land authority?

With regard to the headage schemes and the ewe premiums, it is of vital importance that the farming community get their hands on this money. It is no use to them if they have to wait 12 months and pay 17 per cent bank interest in the meantime. I cannot understand this delay in headage payments. Part of last year's headage payments have not been paid yet. Every Senator from a rural community has had to make representations to the Department of Agriculture and Food to try to get those payments cleared. I am sure I am no different to any other Member of this House in that respect.

What is the Minister's policy with regard to agriculture? What is the future policy with regard to production, what lines of farming would the Minister advise farmers to go into? For example, milk is tied up with the quota system and unless you have a quota you cannot produce milk. With regard to beef, you can no longer produce it economically. It is a recognised fact that you would want to have 500 acres to have have a beef system that would give a family a livelihood. As regards sheep, there is a glut on the market and production costs are not being met. The Minister has a duty to outline to this House what exactly the future is for agriculture. Unfortunately I do not see any future in it.

There are problems in the dairy, beef and sheep industries. I believe the Department did not plan properly. As I stated earlier, farmers were told to get into sheep production. They did so and now they cannot sell their sheep. They were told that we were 80 per cent self-sufficient in sheepmeat and that there was a market there of 20 per cent but within 12 months we found that market was no longer there. The market for beef has slumped. There is absolutely no future there. Whatever future there may be for steers in so far as that you have an intervention system, limited though it may be, there is absolutely no future for heifer beef. Where does the Minister see the future for a young farmer taking over a 100 acre farm from his father or uncle? Where can he get money to stock it and what line of production can he go into?

Mrs. Doyle

I formally second the motion. In doing so, I would remind the House of Brendan Behan's words of some years ago, because they become more prophetic, or the wheel has turned the full circle. In the fifties Brendan Behan said about farming; "in Holland it was a science; in England a hobby and in Ireland a bloody misfortune." If the man was with us today he would have something to say in this debate. Indeed, he would have uttered many a word by now on the way the fortunes of farming have been declining in recent times.

There is a fundamental misunderstanding of what it means to be a farmer with all the risks involved. We have this false urban versus rural situation, a false tension and a misunderstanding that one sector can live without dependence on the other sector. I refer to all the risks involved in farming. Some are natural, others are produced by external forces such as market conditions and the like. There is a misunderstanding of what it means to be caught between the world of business, which most farmers have to be today, and the forces of nature; what it means to be up milking at 7 a.m. and negotiating with the bank manager at 10.30 a.m. for loans or further overdraft facilities.

The motion, before us in a few simple, sharp words, expresses the crisis in farm incomes today. I ask the Government side of the House to reconsider their amendment, particlarly as they are deleting all the words after "Seanad Éireann". They are deleting the reference to calling on the Government to recognise the serious income crisis affecting thousands of Irish farmers. I think Government Senators realise there is a serious income crisis affecting thousands of Irish farmers. They should not delete paragraph (1) or (2) but specifically they should not delete paragraph (1) because their own amendment goes on to say that they are recognising the major improvement in farm incomes — which I will have a word about — and commend the Government for measures which have been taken during 1990 to maintain farm incomes in the face of the more unfavourable market conditions. Thus, they are admitting there is a problem, they are admitting there is a crisis, but they are deleting our reference to the serious income crisis that affects thousands of Irish farmers. They are being inconsistent and their amendment to the motion means absolutely nothing. They are contradicting themselves if they delete in particular, paragraph (1) of the motion. For the sake of consistency and because I feel they must recognise the crisis facing farmers, I ask them to accept our motion and leave it unamended, because I do not think we are as far apart on this as those Members of this House who would like to play politics with the issue think we are.

In moving the motion an excellent case has been made by Senator Naughten. All the primary sectors are facing and have faced appalling times in recent months. Indeed, farm incomes look like being down 20 per cent this year. No matter what we say about farm incomes in 1989, there was no real increase when inflation is taken into account. When the stock changes in the national herd are taken into account there was no increase. There was a nominal increase of 4.5 per cent from the CSO but the CSO does not allow for stock changes and the changes in stock numbers which are included in income. Therefore, it is not a real increase in the farmer's pocket; there is no increase in farmer's disposable income after inflation. In 1988 there appeared when one averaged the income increases to be an increase in farm incomes but what we forget about is that there was a huge increase in 1988 for those with viable milk quotas and virtually all the other enterprises were below the line with decreases if not in a standstill position.

The figures quoted by the CSO are average figures across the board and they hide the fact that there was huge divergence in a two-stream farm income system in the country. There were the dairy farmers with good quotas and there were the have-nots in virtually every other enterprise. So let us not dwell too long on the increase in 1989 because the figure hides the tragic crisis of the haves and have-nots in Irish farming today. Statistics are statistics but they do not tell the truth and they do not give the whole picture. We have to read behind the lines.

Let us not pretend, and let the Government Senators not pretend, that the vast majority of farmers had not major income problems in 1989 as well.

We could discuss figures and statistics and the different enterprises but I suppose because of the evening that is in it we must give time to the news about to the GATT negotiations that has broken this evening. I said last week, when we debated the implications of the GATT, on CAP and on Irish farmers generally, and I have said consistently, that I am extremely worried about the outcome of the GATT in terms of the future for Irish farmers, and the basic family farm, because if we do not accept that as the basic unit of the future of farming in Europe we are at nothing.

Mr. Dardis

You excluded that in your amendment.

Mrs. Doyle

Our motion was accepted last week. We supported your motion and indeed our amendment included it. If the Senator had listened to us last week he would have no need to be mischievious in the House tonight. This is far too serious a matter for petty political bickering in this House. If Senators can tell me that there is not a crisis in farm incomes today I will sit and hear what they have to say, because they must be living in a different country, let alone a different continent, from the rest of us. If we do not protect the basic unit of the Irish family farm in terms of the Common Agricultural Policy we are at nothing, our farm Minister is at nothing, the Commissioner, Mr. MacSharry is at nothing. I would ask him quickly to explain his response to the outcome of the GATT talks that has broken in the news this evening. Apparently, it means that the ZEEUW paper which was the one on the negotiating table for the last nine or ten days has been accepted. That means the virtual elimination of export subsidies and substantial and progressive reduction in all farm supports over the next ten years. It appears that is what we will get as part of Europe now and that appears to be the future for agriculture in this country. I await with interest the Minister's response. Hopefully, we will get a detailed response from him on the implications for Irish agriculture. The Dutch and the Danes will be affected, but the Irish will be affected more than any other country in Europe if this is the agreement we are now facing.

Agriculture represents 10.5 per cent of their GNP but when you take the Community as a whole it represents only 3.5 per cent of their GNP. We have far more to lose than virtually any other country in Europe if the US and the CAIRNS group in the GATT talks get their way in terms in liberalisation of agricultural trade in Europe at an unacceptably fast rate. It is totally unacceptable over ten years because we have yet to hear what the progressive transition period would bring us, how we will wean the agricultural supports from our present system, how we will compensate our farmers in the interim, how we will ensure there is not a total flight from the land within the collapse of farm gate prices if the subsidies are removed too quickly. We need the answers and we need them fairly quickly in this whole area.

I said last week — and I repeat it because it is a very important area — that I find it very hard to know in the longterm on which side of this argument Ireland's interests lie. Some 25 years down the road, if we take the right transition steps and if we put in place the proper help to Irish farmers, it is possible that a far more liberal agricultural situation would be to our benefit or would be of benefit to whatever farmers would survive in the interim given that we are a net exporting country and we can claim natural advantage, particularly for grass-based production. However, I do not know how we are to get from our present position to the ultimate position. It has never been spelled out. The Minister, Deputy O'Kennedy, has never indicated what are his views. Commissioner MacSharry has never indicated how Ireland will be protected.

Do not forget that the bigger nations in Europe are in a position from their national exchequers to give greater income aid and supports nationally to their farmers than ever we could as a small nation. If the CAP supports are progressively removed from us, we will not be able to compete and look after our farmers in the same say as the Germans and French, if the reform of the Common Agricultural Policy to meet the requirements of the GATT talks means that Europe no longer supports our primary production and our farmers as it has heretofore.

It is nonsense to suggest that European farmers have been subsidised to a greater rate than those in the US and the Cairns group generally. An OECD report has highlighted it — I do not have time to go through this country by country — but the Japanese farmers, apparently, are the most subsidised, rapidly followed by the situation in the Cairns group and particularly in America. The US Farm Bill, which was published a few months ago, is riddled with supports and protection mechanisms of all kinds at the very time the US were preaching to Europe about their support for agricultural trade. We had President Bush in the past day or two lecturing Europe on what is best for European farmers. He has only to look at the system that operates in his own country; two million US farmers get the equivalent in support as the ten million European farmers. That does not add up. Yet, we have to be lectured by the US and the Carins group as to what to do with our own farmers.

We should reform the Common Agricultural Policy only through internal pressures in Europe. We should reform it along the lines that suits Europe and European farmers. We should not be forced by external pressure from the US or the Cairns group or any other group. We should not have the gun held to our head. We should be able to look at other world agricultures. Let us look to the EFTA countries and how they operate their agricultural system. We perhaps have a lot to learn from them: low intensity model family farms which answer most of the Common Agricultural Policy's new requirements regarding extensification and, indeed, answer virtually all the environmental requirements on sustainable agriculture and farming sensitively generally. That is what we have got to look to but the pressure must come internally from Europe so that we can reform our agricultural policy to suit Europe and European farmers and, as far as I am concerned tonight, to suit Ireland and Irish farmers rather than be forced through GATT talks and external pressure to do what we are told by nations that subsidise heavily their own farmers.

The motion specifically asks that the Government implement measures to alleviate the present income crisis in the areas of beef, store cattle, sheep, milk and cereals. Most Members would not be here tonight if they were not interested and concerned about the future of Irish farming and Irish farmers generally. Most know the difficulties in all these areas of prime production. In terms of beef, all grades are back on average £100 per head on this time last year. My colleague, Senator Naughten, went through the different weights and I will not repeat what he said. Store cattle is the same. The price of calves has collapsed with over £100 per head off their price. I admit it might have been a false price for a year or two but the sudden collapse, the expectations having been raised in the previous years, is what is causing the problem. The high purchase price of stores contributed to the cyclicals in beef production. The winter fattener got scourged this winter for the third year in succession and bank managers are not looking favourably on forwarding money for winter fattening in the future. There are increased cycles in beef production, augmented and exacerbated by the APS system. We need APS but we must ensure that it does not increase the cycles over the 12 months of the year. Now that the use of hormones is abolished it takes longer and a greater amount of input in terms of feed costs to get cattle to the same weight and then they may not grade to get the higher value. Altogether, there is a large cycle of problems there which are contributing to the problems in the beef industry.

Where is the ewe subsidy? The Minister could have paid the ewe subsidy since April. The French and the Northern Irish have been paid. What are we waiting for with lambs half the price of last year, back to £25 a head? Could it be plainer? What is the Minister playing at? Why does he not pay our sheep farmers? Why delay any longer?

In milk production what is the future for those under 30,000 gallons? Have they any future in the Europe post-1992? What alleviation will the Minister bring the small dairy farmer at the moment? He should be honest with them. Is there a future in Europe for the dairy farmer who does not have a viable quota?

Most of our cereal farmers are facing virtual bankruptcy. If they have not 500 acres and no bank overdraft they are going nowhere. They must have storage and drying facilities or they cannot cope with the present co-responsibility levy and the rules they are now governed by in Europe. Yet, there are, without virtually any penalties at all, corn gluten imports from outside Europe, taking the place of native corn and European corn. It is plain to see there is an income crisis right across the area.

Pig prices have taken a down turn. Poultry prices are decreasing and have had difficult times. There was the BSE scare which had a knock-on effect. What is the Minister's answer? What is this Government's answer to the present income crisis? Why do we have to drag everything from Minister O'Kennedy to help the Irish farmer? Why cannot he have a policy on the table and be pro-active rather than reactive to the problems of Irish farmers? Now the GATT talks have let us down again but where is our Minister tonight? How is he going to stand by as GATT virtually eliminates a future for thousands of Irish farmers.

I await the Minister's response with interest. We joined the EC in 1973 because of the benefit to Irish agriculture. We pursued the single market with enthusiasm also but if this Government lets the Irish farmer down we will have no future in Europe and we will be dictated to by external forces, as is happening at the moment.

Mr. Hussey

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"recognises the major improvement in farm incomes since 1986 and commends the Government for the measures which have been taken during 1990 to maintain farm incomes in the face of the more unfavourable market conditions which prevail at present."

In moving the amendment, of course, I accept there are serious problems in farming but I do not accept that the Government are unaware of this or that they have not introduced measures to alleviate the income crisis for Irish farmers. That is the reason I am moving this amendment to the motion today.

I would find common ground with Senator Doyle in her comments on the GATT negotiations at the present time. Probably the discussions that are taking place in Uruguay are far more serious and have far more serious consequences for the Irish farmer than anything that is happening here at home. I was very pleased to see that the statement made by President Bush was rejected by our Minister for Agriculture and Food, and indeed by the farming leaders here.

We must accept that the situation in Europe and in America are quite different. There are ten million people employed in agriculture in Europe at present and the average size of the farms is nine hectares. Whereas in the United States there are two million farmers and the average size of the farms is 184 hectares. There is quite a different situation and there is no point in President Bush or any of the American negotiators telling us that they are not subsidising their own farmers, because they are subsidising them but perhaps in a more discreet manner than we in Europe are doing it.

Community agriculture cannot be left entirely to market forces. It will continue to require support and protection measures for the foreseeable future and that is why it is important that the CAP be maintained for farmers because our farmers could not survive at the present time without subsidies. We are committed to developing the value of our agricultural production and ensuring that farm incomes are kept at a reasonable level. For that reason, we can support fully the Community's policies in relation to agriculture in the GATT negotiations. I am not aware of what has emerged this evening from the discussions but I am sure that is not the end of the road. Those discussions have to go on for some time yet and I still believe the proposals put forward by the European Commissioner, Mr. MacSharry will bear fruit at the end of the day.

During the past three years farmers have benefited from strong and steady income increases bringing total farm income in real terms to the high point of the decade in 1989. In the farm price negotiations the Minister for Agriculture and Food succeeded in getting a number of concessions in the intervention system. This is particularly important as far as beef is concerned because this is the biggest problem at present. The overall limit for intervention was increased to 220,000 tonnes compared to 200,000 tonnes originally proposed by the Commission. A safety net clause was introduced to provide for unlimited intervention if prices fell below certain levels. The Council too gave special recognition to the special position of the beef industry to the Irish economy, and that again is very important for us.

The special recognition of the relative importance of our beef industry has been of particular benefit to us in our dealings with the EC Commission since the adoption of the revised beef régime. In March 1989 the Minister got special intervention measures adopted to deal with problems that arose at that time. In the autumn of 1989 he got agreement to aids for private storage scheme which was of crucial importance to the industry during the peak production period.

Under the new regime of intervention on the basis of tenders, the Minister has vigorously pursued the case of Irish producers, and it is significant to note that during the first years of the tendering system, intervention in Ireland accounts for 47 per cent of the Community total compared to an average of 20 per cent in earlier years. Even allowing for the fall in prices in recent times, 1990 prices are with the exception of the very high prices in 1988 and spring of 1989, higher than any year since 1984.

I am satisfied that the changes made in the intervention system and the acceptance by the Commission of the importance of the beef industry to the Irish economy, which our Minister negotiated in January 1989, allowed us to place significant quantities into intervention during the last 12 months at prices which enabled us to support the market both during the critical autumn months of 1989 and indeed in the early months of 1990.

Another important suggestion made by our Minister at a more recent meeting, and adopted indeed by the Commission, was that the delay in payment for beef taken into intervention should be reduced from 120 days to 45 days. This again should help our producers and is a very practical step, taken at the instigation of the Irish negotiators, which will have a positive impact for our producers.

Another welcome extension was the suckler cow scheme which was extended to include small dairy producers. I realise, of course, that the beef industry was doing better in 1988 than it is at present but that was a year when some third country markets were buoyant and our industry was able to exploit those markets and reap the benefits. Some of those markets have now experienced their own difficulties, which means that our exporters have not been able to gain the same access or have had to accept lower prices.

I am glad to note that the Council of Ministers have agreed to explore further markets in the Far East and I am sure, if a concentrated effort is made that we will succeed in getting some of our surplus beef into those countries.

Seasonality of production is something that should be tackled here also. Most of our cattle are being marketed from September to December while for the rest of the year we see factories working two or three days per week because they cannot get cattle in. I hope that the group set up by the Minister to examine this and other problems in the industry will come up with a solution acceptable to all.

I would be very hopeful for our beef industry because we have established on the world market a reputation for top quality beef. We can exploit still further the favourable conditions prevailing here for the production of top quality beef and we should make every effort to rid our national herd of TB and brucellosis because time is running out and we are fast approaching 1993 when it will be far more difficult to market our cattle and beef unless the incidence of TB is drastically reduced.

I was glad to hear the Minister say last week in the Seanad that he had provided extra funds for the eradication of TB in the current year. We know that there are problems in that area at the present time and we know that ERAD, which was set up by the Minister to tackle this problem vigorously, have run into financial troubles and there is a shortfall of £12 million there but, the Minister has provided that money from Exchequer funds. This is an earnest of his commitment and the Government's commitment to get rid of this disease and to tackle it vigorously once and for all and to make sure that our national herd is clear of TB by 1993. We know that the higher number of TB reactors removed in 1989 and again in 1990 are adding to the Exchequer bill. Nevertheless it is better to do that and to tackle it now than to leave the problem for somebody else.

The Government have recommended that the pre-movement test be reduced from 120 days to 45 days. That, again, is very good and shows that they have the interest of the industry at heart, and that that will help in no uncertain way to minimise the problems for the farmer and to tackle this problem head on. The Government are providing this year £48 million for the eradication of bovine TB and, as I said, that is an earnest of their commitment to the eradication of the disease. I hope we will see the end of the disease before too long.

We have heard a lot of talk in recent times about the sheep flock and the problems in relation to sheep production. We all know there is a problem because farmers are expecting a drop in price of some £20 to £25 on their lambs. The provision of subsidies will not solve the problem. I have said, and I repeat, that part of the problem is created by the large subsidies that were paid to sheep farmers over the last few years because they encouraged everybody to get into sheep production. We see all over the country people who never owned a sheep in their life now have flocks of sheep because they benefited under the grant scheme. They got into sheep and they have created a problem. There is a lot that could be done to market lamb, even on the home market, that is not being done. Somebody should have a look at the profit margin available at present for butchers. There must be a huge profit margin there because the price of lamb in the shops and supermarkets has not dropped back in relation to the drop in the price of lamb at the market or factory. Something should be done about that, somebody is benefiting from this rip off and it is certainly not the farmer.

The sheep flock is 4.5 million head, an increase of 500,000 on last year's figure. It shows the problem that has been created by the huge grants that are being paid to farmers because people have got into sheep who had never been involved in sheep farming before.

As was mentioned by Senator Naughten, the Government have reviewed the disadvantaged areas scheme. That review resulted in a decision to lodge a detailed application with the European Commission seeking agreement for an extension of about two million acres of the present disadvantaged areas by adding new areas to the list of less severely handicapped areas and by designating certain coastal areas as areas suffering from specific handicaps. They have reclassified as less severely handicapped those areas now designated as mountain sheep grazing areas, again 255,000 acres; they have reclassified as more severely handicapped certain areas — 1.3 million acres — now designated as less severely handicapped; and they have restructured the scheme to provide for an increase in headage rates and for greater modulation of payments reflecting different degrees of handicap. That has gone to the Commission in Brussels and we are hopeful that there will be a favourable result and that the increase in headage grants and in other grants that were asked for by Senator Naughten will be made available perhaps in 1991.

Expenditure on the new proposals, together with the existing expenditure under the disadvantaged area scheme, will attract 65 per cent Community recoupment. When fully implemented the new proposals, together with the abolition this year of the off-farm income restriction, will increase headage payments from £60 million to £100 million a year. In addition, the newly designated areas will benefit from increased investment aids, exemption from the milk co-responsibility levy and the special supplement to the ewe premium.

Let nobody tell us that the Government are not concerned about the income of farmers, both big and small, and that they are not able to do something about it. I wish I had a full hour to highlight what the Government are doing for Irish agriculture at present. I have only had a short time to go through some of them but I hope I have proved to this House that the Minister and the Government have been active in this area and that they have provided benefits to carry the Irish farmers over this so-called crisis. It is not a serious crisis. It is not nearly as serious as what we experienced in 1973 and 1974. Many Members of this House will remember when such calves were brought from the mart for £1 each. Thank God we have not reached that situation yet and I hope we do not. I ask the House to unanimously support this amendment and to show confidence in the Government and in what they are doing for Irish agriculture.

Mr. O'Brien

I second Senator Hussey's amendment with pleasure. I also welcome the Minister here tonight. I welcome the opportunity to speak to this amendment put forward by the Fianna Fáil Party because it is a very important one. I would like to refer to the drop in milk prices which are caused by world trends. Milk has come back somewhere between 12p and 15p per gallon on the 1989 prices, but nevertheless this drop in price does not bring us below the 1988 milk price. Farmers in general never expected the milk price to go so high in 1989 and for this reason I would not be particularly worried about the present fall in the milk price provided it has bottomed out and that milk prices will not drop any further. At present we have approximately 90p per gallon for 3.55 per cent butter fat and 3.30 per cent protein which is a fair and reasonable price for milk considering the world market trends at present.

Calf prices certainly have come back to £70 to £90 per head, but calves also were much too dear in 1989 and neither the store cattle farmer nor the beef farmer could make money from them. Store cattle are also a bad trade at the moment because beef is in very poor demand and there is a very depressed market for beef heifers at present.

With reference to the sheep market, the weakness of sterling has affected the prices. Moreover, the increase of sheep numbers over the past two years caused a glut on the market and has thereby effectively brought the price down. Nevertheless, there is a good subsidy on ewes and this offsets the loss.

Cereal prices are not wonderful, but this is due to world market trends. We have so much corn gluten coming into the country from America at a subsidised price that it is depressing our own home market.

Even though I feel that there is a slight fall in farm incomes since 1989, we must recognise that major improvements have been achieved since 1986. I commend the Government for the measures which have been taken during this year to maintain farm incomes in the unfavourable market conditions which prevail at present. The Minister and Minister of State Kirk are doing everything in their power to protect farm incomes in Ireland and I congratulate the Government and the Ministers on doing so.

Mr. McDonald

This is indeed a most important motion. It appears that for almost nine months now our Government were preoccupied with European affairs to the detriment of home matters. While it is reasonable to compliment the Government on their performance during their six months Presidency, that achievement has caused the administration at home to suffer greatly. A happier balance must be found in future years to protect against that.

Beef farmers in particular have been badly hit this year. The only response I have seen to that was the new TB testing regulations. I would like to ask the Minister: do the Department for Agriculture and Food or the Minister not monitor the weekly prices, or are our civil servants unable to keep track of the fall in prices from one week to another, from one month to another, from one year to another? Listening to my colleagues, the proposer the seconder of the amendment, certainly they have not been reading the weekly bulletins from the semi-State organisation with responsibility for our beef sales.

Anyone who says that farmers are having a good year this year are completely out of touch with the situation, because even the weather has been most unseasonal. I certainly do not blame the Government for that, but the Government must recognise the implications of that and the way that it adds to the difficulties and the fall in prices. For smaller farmers, who always get the rough end of the stick, the less mechanised farmers who use hay as a high proportion of their winter feed, they are facing considerable losses and have some difficulties to contend with.

I would like to ask my colleagues on the other side: what contribution do they think the new TB testing regulations will make to our already depressed cattle price situation? It is horrendous, as a farmer, to contemplate the way one will have to comply with these regulations in a buyers' market. It certainly does not inspire confidence. All we on this side of the House sought to do in tabling this motion was to draw the attention of the Minister for Agriculture and Food to those difficulties so that something can be done to give hope, to alleviate the situation, to try to rescue many farm families who will be yet again suffering a fall in income.

At least 70,000 farm families continue to derive less than £7,500 a year in farm incomes and any suggestion that these farm families are in some way better off than urban families is clearly a misconception. The most significant statistic I read in the 1987 Household Budget Survey, published by the CSO, was that the average income earned by farm families was around £119 per week and this compared with an average industrial wage of £189 per week in that year, 1987; and they are the latest statistics in that survey. For many farm households, because of the low level of farm incomes either the farmer himself or some one or more members of the family has to supplement the farm income by off-farm employment. That brings the average direct income of farm families up to £200 per week, which is still less than the direct income of the urban households, which it was stated is at £222.

The survey also shows that the typical farm household is 30 per cent larger than the typical urban household, which means that direct income per capita is as much as 25 per cent higher in urban households. Another big difference between farm households and urban households is that farm households contain twice as many people aged over 66 or of pensionable age. That means that farm households obviously benefit from old age pensions, which bolster the farm income figures to some extent.

The industry has been crying out for a long-term agricultural policy, which we have not got even from the EC for many years. The last effort the Community made in this was to announce a set-aside policy, which, I doubt was implemented to any great degree in this country. I think that is very much a negative attitude. What the farming industry requires are new outlets, new markets for farm produce and not payments for leaving the land idle to grow nettles, docks or buachalláns or whatever.

It is not untimely to introduce a new and dynamic concept of non-food crops. There is, of course, a regime for rape seed oil in the European Community. We have in this country State ownership of almost one quarter of a million acres of cut-over bogs, which the Government have decided will go to the State forestry organisation, Coillte Teoranta. Everybody except the Government must surely be aware that the residual depth of peat left in those cut-over bogs is insufficient to carry grown and mature trees. When you consider the fact that the vast majority of this acreage was compulsorily acquired for as little as half a crown an acre from the farm families who owned it, is it not time to look perhaps for a more economic usage for these acres? Now that there is clearly in Europe a new technology to utilise rape seed oil as a non-food crop, to utilise it as an energy crop — and that is clearly demonstrated with the introduction of the Elsbett environmental engine — I would hope there would be a rethink on the part of the Government in regard to the usage of the cut-over bogs. This affect the Midlands, where we have lost over 2,000 industrial skilled jobs in the past three or four years. That is extremely important.

Senator Hussey, in proposing his amendment, spoke of the ten million farmers in the European Community with an average of nine hectares each compared with the two million US farmers with 184 hectares each. He admitted that our farmers cannot survive without subsidies. This, of course, is where the crunch comes with the new agreements we will be reading about in more detail over the next few days.

Senator Hussey told us of the prices that were achieved in the past, of the increases over the past year, but what is important to the farmers of today are the farm incomes for 1990 and that is what we must be preoccupied with in this debate. It is what this debate intends to do — to bring the attention of the Minister for Agriculture and Food to the difficulties facing very many families.

As has already been said, cattle prices are down over the past number of weeks at least £100 per head right across the board in all categories. The price of sheep has been aggravated by the fact that the ewe subsidies have not been brought forward or paid, which means that they are adding to the difficulties. This is something which could be organised by the Department of Agriculture and Food.

In regard to milk, where we have clearly a drop of 15p or 16p per gallon compared with last year, the entire industry would appear to be on the decline. It is literally a closed shop for thousands of young farmers, even farmers who have sat and won their green certificates and are otherwise highly qualified.

The shocking drop in sheep prices, the lower cattle prices, the 16p reduction in the price of the gallon of milk means that farm incomes will be down at least 10 per cent this year. Unless urgent steps are taken, this will mean a return to a period of uncertainty, where farmers will not be able to meet their obligations to their banks and to other lending agencies, whether they be co-ops or merchants. That will put us back into a difficult situation again. It is unfortunate that that should be allowed to happen.

I would not like the suggestion to go from here that the reason this motion was put down was to embarrass the Government. The fact that the Government are taking no steps to change or improve the situation over the past number of weeks is a cause for considerable concern. We feel there must be some recognition of the difficulties being experienced not just in relation to store cattle, sheep, milk and cereals, but there has to be a policy to bring hope — a policy that will keep the younger farmers on the land. They are perhaps better educated than any previous generation, because it is not possible to take on farm ownership or to have a farm transferred to a son or a successor now without their having a certificate of competency or a green certificate. This was a very positive and proper step. The young farmer now who would accept the gift of 100 acres of land, or certainly less than 100 acres of land, would need to think very seriously, because if he was not able to sell it he would be signing himself into hardship for life. That is a problem. This Government, the Minister for Agriculture and Food and his two Ministers of State have a heavy responsibility to ensure that there must be a future in farm incomes.

I support the motion so very ably proposed by Senator Naughten and seconded by Senator Doyle and I would ask the House to accept it.

Mr. Dardis

May I say that my party, the Progressive Democrats, fully realise the seriousness of the income problem within Irish agriculture. In that sense I support the first part of the motion as proposed by Senator Naughten. I do not think many people would need convincing as to the depth of the problem which confronts people living in rural areas, and particularly on smaller family farms. In that connection, if I am not out of order, I would like to welcome representatives of the United Farmers Association to the Visitors Gallery here this evening.

I fully agree that there is an income crisis. I also accept that incomes did increase during the latter half of the decade, but they increased very modestly and only were of an acceptable level because of the fact that inflation finally came under control. We all know what happened in the early part of the decade when we had inflation totally out of control and we had price levels being increased by very modest amounts from Brussels and related to European levels of inflation, which were very much less than ours, and that lead to the squeeze on farm incomes. That was a fundamental problem.

I do not think there is much point in me giving a catalogue of what sheep prices, beef prices, calf prices and milk prices. Every farmer knows the price of what he is selling; they have been catalogued already here this evening. Suffice to say that in virtually every commodity the price the farmer is receiving today is less than it was six months ago; it is certainly less than it was last autumn. As a tillage farmer myself, I know what the stabiliser mechanism is doing to us in terms of an automatic 3 per cent reduction in prices every year. Only today I learned that there is a prospect of a reasonably good harvest, and thank God for that. I hope that we do have a good harvest and that it is safely collected, but once again, the consequences of a good harvest will be another automatic cut in prices, more co-responsbility levy and to say to a farmer that he must have so many pounds deducted from his income when it is a very modest income — it is only a plus income on the large acreages — is a matter of extreme concern.

The fact of the matter is that there are people leaving the land daily. There are people leaving the land of Ireland daily. There are people who are forced to take the emigrant ship or to take the plane to make a living somewhere else. I do not if that is the Governments' responsibility, Brussels' responsibility, or somebody else's responsibility, but it is a fact that the people are leaving. The year for which we have the most figures indicates that something like ten or 11 people a day were leaving the land and going abroad or going onto the labour market which is already over-supplied. How can they be accommodated there?

I am pessimistic about the future of the industry, and I share the sentiments which were expressed earlier about the division between town and country. It is something that we have already referred to here in the last couple of weeks when we discussed GATT. Agriculture is central to the welfare of our economy and to the welfare of our people, just as industry is central to their welfare. There seems to be a presumption abroad that it is almost not in the national interest for farmers to do well — and, of course, it is very much the reverse. If there is money in farming, there is money in the rural towns and there is a greater air of optimism abroad. It is in all our interests, because of the importance of agriculture within our economy, that agriculture does well.

That brings me to the question of GATT. We debated GATT here over the past two weeks. The motion which the Progressive Democrats put down was out of concern for what was happening in the GATT Round of talks and to bring the attention of the people in Brussels to the opinion of this Parliament, and the opinion of this Government and to the opinion of this country, and there was no apology for that.

I noted with interest what Senator Doyle had to say about defending the family farm. I fully subscribe to that. That is central to the whole philosophy of my party and I know it is central to the agreed Programme for Government. I did find it somewhat curious for Senator Doyle to say that she was supporting the family farm when the amendment Fine Gael put down last week to the GATT proposal excluded the family farm. It said: "in the interests of producers and consumers". The family farm is central to what we are as a nation. The family farm must be defended without fear or favour. The people in Brussels must know about the central importance of the family farm to this country. The people in GATT must know of the central importance of the family farm and that we are not prepared to compromise.

The Community is not prepared to sell itself down the river in the face of American bullying. The doctrine which America is putting forward in the GATT Round is a very attractive doctrine — the doctrine of market liberalisation, the doctrine of a free for all, but it is a doctrine based on self-interest. America knows that its farms are very much larger than ours. America knows that it can compete on the world market very much more successfully than the smaller European farmer. It is totally out of self-interest that America is pushing their line in the talks. It is a line which must be resisted, and I am glad that the Minister this afternoon and the farming organisations have responded to what came out of the G7 talks.

Incidentally, it should be remarked that there are only seven countries involved. There are 98 countries in GATT. I am sure the 91 other countries have something to say about the matter. I look forward to the Commission defending the principles of the Common Agricultural Policy and defending the family farm.

Reference has been made to the growth in sheep numbers and that people were advised to go into sheep — I submit that it was very correct that they were advised to go into sheep. Certainly, many farming incomes improved over recent years because of taking that advice. That is not to say there are not serious marketing problems at the moment. Of course, there are; and of course it is difficult for people to see a very big drop in the price of sheep meat. I would say that the advice was correct at the time and that it has brought national benefit.

The problems that are there now must be addressed and must be overcome. The point that needs to be made is that we have a perception of ourselves as a clean, environment-friendly country. We do produce extremely good agricultural products. We have some of the best food in the world. If we have some of the best food in the world, the question arises: why do we not go out and market it? I said before in this House that if we were to capture even an additional 1 per cent. of the European market it would have enormous national beneficial consequences. Any multinational company launching a product and going on to the market would expect to capture at least 1 per cent of the market. Why can we not have a national marketing drive for our agricultural products? The price is the problem; Let us see what we can do about it.

Debate adjourned.