Agriculture Industry: Statements.

Acting Chairman (Mr. Farrell)

The following time limits were agreed on the Order of Business this morning: the first speaker from each of the groups, 20 minutes; every other speaker, 15 minutes.

Mr. Fallon

That was agreed this morning.

Minister for Agriculture and Food (Mr. O'Kennedy)

The negotiations which started this week at the Council of Agriculture Ministers on the Commission's proposals for the reform of the Common Agricultural Policy will be difficult and protracted. At stake for all the European Community is the future of the CAP, at stake for Ireland is the safeguarding and development of agriculture which is a vital sector in our overall economy. The two are inevitably interlinked. A healthy and effective CAP is more important to Ireland than to any other country. We have a vested interest in ensuring that the CAP is not buried under mountains of beef or butter. We cannot live with the illusion that the future of our farmers can be secured by loading surplus butter onto ships floating off our shores.

It is now universally accepted that reform of the policy is essential and that the mechanisms which were necessary to achieve continued expansion of food production in earlier years are not appropriate today when there is a total imbalance between supply and demand. The extent of surplus stocks in stores and ships around Europe cannot be ignored. Over 20 million tonnes of cereals, 800,000 tonnes of dairy produce and 750,000 tonnes of beef provide very weighty evidence in favour of urgent reform. Of course the build-up of these surpluses owes something to the free access to the Community for cereals substitutes and the recent developments in eastern Europe which led to increased exports from that area both to the EC and to the world market as a whole. It is for that reason that I insisted that the Commission operate a safeguard clause to reduce by 50 per cent in 1991 the number of young cattle imported from eastern Europe under existing arrangements and obligations.

The substantial increase in guarantee expenditure — 32 per cent more this year than last year — has not prevented the decline in producer incomes throughout the European Community. Even more significant is the decline in the number of producers — a reduction of 40 per cent since 1975 — despite increased guarantee expenditure of 4 billion ECU to 31.5 billion ECU in the same period. The picture is no different here at home where despite an increase of guarantee expenditure from £886 million in 1989 to £1,352 million in 1990 our farmers' income dropped significantly. This scenario hardly supports the idea of a CAP which responds to the current requirements of Community farmers or particularly of Irish farmers who play such a vital role in our overall economy.

The presentation of the Commission's proposals to the Council this week is, of course, only the start of the long process towards the reform of the CAP. Let me say without qualification that the proposals as they stand are not acceptable and I intend to negotiate the necessary changes which will be consistent with the principles of the CAP and which will recognise the unique importance of agriculture in Ireland.

The reform process is under way and my job is to see that it is carried out in such a way as to respect the vital role of agriculture in our overall economy and to safeguard farmers incomes now and into the future. I will not attempt to do this by supporting the unsustainable or by ignoring the budget reality within which any efficient system must operate. Financial mismanagement will guarantee the collapse of any enterprise sooner or later and I will not stake my claim by demanding that the European Community enterprise should ignore all the rules of accounting in any changes it is proposing.

What I will do is to rely on the principles of the Treaty of Rome itself and the stated aims of the Commission, to point out where the proposals are inconsistent with these aims and principles and to indicate clearly the changes that require to be made to make them conform with these mandates. That is what they are — mandates under the Treaty and the Commissions own guidelines.

Article 39 of the Treaty provides that —

In working out the CAP and the special methods for its application account shall be taken of

— the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions;

— the need to effect the appropriate adjustments by degrees;

— the fact that in the member states agriculture constitutes a sector closely linked with the economy as a whole.

Ireland, above all countries, is clearly entitled to rely on this Article. I have forcefully reminded my colleagues and the Commission of this in the following terms. Nowhere is there more risk of undermining one of the most important sectors in the economy than in this country. Agriculture and food accounts, directly and indirectly, for 20 per cent of Irish GNP, 40 per cent of our net foreign earnings and 20 per cent of our employment and is of greater importance to the Irish economy than it is to any economy in the Community, other than Greece. The livestock sector accounts for 80 per cent of our agriculture and is of greater economic importance to Ireland than to any other member state. And, of course, the major adjustments proposed in this package, with the exception of tobacco, relate to cereals and the livestock sector. The consequences for Ireland are, therefore, far greater than for any others, including Greece. Proposals which significantly disadvantage our agricultural sector, especially our livestock sector, will, therefore, impact adversely on our total economy to a relatively greater extent than elsewhere.

The primary responsibility of each of the Ministers in the Council is to defend the interest of is own country and of his own producers and, therefore, it requires very intense and constant lobbying for recognition of and support for Ireland's special case. I can tell the Seanad that I and my senior officials have already had detailed discussions in Germany, France, UK, Spain, Belgium, Denmark and the Netherlands and starting next week I will undertake the final stage of bilateral discussions in Italy, Greece and Luxembourg. This is the only way to lay the foundation for recognition of Ireland's special case and, where possible, to develop an understanding and common cause in the mutual interest of each others agricultural sector. This is not easily achieved with interest as diverse as those of the small tobacco producers of Greece to the highly sophisticated technological production of Holland. The negotiations will, of course, be tough and at times grinding but I have no intention of walking away from them at the start nor of isolating myself and my country's interest by a sulky stance of "total and outright rejection" as demanded by the President of the IFA. Neither will I be intimidated by offensive and outrageous allegations from the same source of betraying the interests of Irish farmers and of putting party unity before the national interest. That allegation is especially contemptible and offensive.

Let me make it quite clear. The Commissioner has his job to do on behalf of the Commission. I have my job to do on behalf of the Irish people generally and the Irish farmers in particular, and I will be bound by no other obligation nor distracted by any spurious allegations.

The alternative to negotiation is confrontation and we have seen too many examples even in recent times of the futility of this in Ireland and elsewhere. The business of the European Community is not conducted by diktat or threat and indeed it was founded to guard against any such perversity.

My purpose in these negotiations will be to ensure that a reinvigorated CAP will emerge at the end of the day; certainly not to be party to the demolition of the policy as is being alleged.

I am sure that Senators are only too well aware of the detail of the Commission's reform proposals in view of the widespread publicity which they have been given. I do not, therefore, propose to list the various elements in this presentation. In the time available I believe that it would be more informative to point out the principal areas of difficulty which I have with the Commission's plans. These can be summarised as follows: The extent to which it is proposed to switch from price to direct payment support is excessive; even with the proposed reduced price support, no, mechanism are proposed which would guarantee that the Community is prepared to defend any particular price levels in the various market sectors; further general cuts in milk quotas undermine the comparative advantages of certain regions and would very adversely affect milk processing and employment in areas such as Ireland. This is a matter of vital importance; the relative positions of red and white meat production would be seriously disturbed, to our disadvantage; and grass-based livestock production would be inadequately compensated compared to cereal-based production — this is a critical problem for Ireland. In so far as it discourages grass-based production, it goes against the aim of supporting environmentally friendly farms.

I will quote the Commission's own intentions against the proposals they are introducing. If that is to be their intention, then it should be matched in its implementation and that discrimination would operate the other way: the criteria for extensification are too tightly drawn — many family-run extensive farms could fail to qualify — and this is particularly the case in regard to farmers in the disadvantaged areas; and the degree of modulation proposed could undermine the commercial element in Community agriculture. That element is critical if we are to develop a modern and efficient agri-food sector.

More generally, the proposals do not recognise the degree to which regions particularly dependent on agriculture could be adversely affected by their impact or provide adequate compensation for the member states concerned. The provisions of Article 130 of the Treaty clearly require that this be done. The proposals would not, as required by Treaty obligations, promote cohesion. It could be argued that they could operate in the opposite direction. This will bear one of the issues we will press constantly during these difficult negotiations.

Finally, there is the question of the budget. If we decide on a new policy, we must decide on a new budgetary framework. If the policy leans more towards direct payment, that framework must provide for increased expenditure. That is not something we are necessarily looking for in itself; it is a necessary consequence of the new policy. This is an essential permanent requirement, not something for a transitional period only. I will need assurances on that point. In whatever decisions we take, it must therefore be clear that we are agreeing a new definitive guideline. Without that, reform, on any thing like the line proposed by the Commission, is impossible.

The debate on the Commission's reform proposal has just commenced. All Ministers at this week's Council were careful to preface their comments by the observation that further detailed study of the proposals was necessary in their capitals. Ireland is not alone in having major difficulties with the reform proposals. On that point, let me say I have just come from further consultations with my Department officials and Teagasc.

I reject out of hand the criticism that we have not conducted an examination at Government level of proposals which were formally presented last week. It passes any degree of comprehension that one would be expected to come up within two days with a balanced, proper analysis. The Government have already given the proposals their first consideration, I should like to assure the House, and through this House the farmers and people of Ireland, that the Government will at each stage closely monitor the impact of the proposals as presented or as changed in negotiations. Already that process is under way.

Ireland is not alone in having major difficulties with the reform proposals. All my colleagues in the Council voiced serious misgivings about many aspects of the Commission's plan. However, while all have concerns, the nature of the concerns is not the same and in some cases views are diametrically opposed. Some countries, particularly the UK, Denmark and the Netherlands, see too much of a bias in favour of smaller and what they term inefficient producers, while many others believe insufficient attention is being paid to the problems of small scale producers. The cost of the measures has also been highlighted.

The need for further clarification of the proposals were raised and this task has now been entrusted to the special agriculture committee and to the specialist working groups who will meet between now and the next Agriculture Council meeting towards the end of September. I can tell the House that the first meeting of the special agriculture committee took place yesterday evening immediately after the termination of the formal Council meeting. We are all determined to know what it is we are talking about in precise detail, and I want to assure this House, and through the House the people of Ireland, that we will know, both by our own examination and by examination at that level, exactly what is involved.

I know that all is still to play for and I am confident that the package of reforms which will emerge at the end of what can only be difficult and protracted negotiations will be one which responds to our legitimate concerns. At the conclusion of our debate, Commissioner MacSharry gave a commitment to a flexible approach on the part of the Commission with a view to meeting these concerns. This commitment will certainly be tested by me, and by the Government, in the weeks and months ahead. Indeed, I made it abundantly clear at the Council before we concluded this week that readiness to negotiate on the Commission's proposals should not be misinterpreted as acceptance of them in any shape or form.

I know there are genuine fears and concerns in the farming community at the prospect of radical change in a support system which they have grown to know so well. However, I know that farmers no more than others also see deficiencies in the present system. They also recognise that there is something wrong when, despite increasing expenditure on CAP, their incomes continue to fall. The reform negotiations are aimed at ensuring the continuation of the CAP in full conformity with the Treaty provisions and not its dismantlement. Indeed, the surest way to destroy, or, as someone said today, to demolish the CAP is to ignore the present difficulties and to say "no" to all reform. That is not the way to proceed and it is certainly not the way to serve the interests of Ireland or its vital farming sector.

As I said at the outset, I do not object to reform but my acceptance of reform is subject to several conditions being met. The present proposals are inadequate and are not acceptable to me. There are, of course, positive aspects both in relation to the compensatory elements and the socio-structural package. Nevertheless, as far as I am concerned, there can be no progress in the negotiations unless the mechanisms finally agreed effectively implement the underlying principles of the CAP and involve a clear commitment to defend particular levels of market prices; adequate financial measures or resources are guaranteed both immediately and in the longer term to underpin the policy; adequate support is given to ensure that the vital commercial element in our agriculture remains vilable; support for extensive production takes realistic account of what is required to maintain the economic basis of modern family farms; compensatory elements do not discriminate against grass based livestock production; the needs of economies critically dependent on agriculture are properly met; and any changes in the CAP are dovetailed with, and given full credit in, the finalisation of the GATT negotiations.

These are the issues which will have to be addressed and responded to by the Commission and the Council if we are to reach an outcome acceptable to me and to the Government. The road ahead will not be an easy one but Ireland's passage along that road and to an acceptable outcome can be aided provided all concerned with agriculture and Ireland's vital interests recognise that saying "no" to CAP reform is not an option and that we will have to negotiate and fight for the type of reform which addresses our essential concerns.

Negotiations should raise no fears for Irish farmers with our proven track record in recent years. Apart from the major programme of Structural Funds negotiated by the Government which benefits all of our people, including the farmers, there is ample additional evidence of our success in the long days and nights at the Agricultural Council. It is important to place some of the main consequences of those negotiations on the record to reject the sterile and negative approach of those who stridently call for total rejection as the only way to protect Irish farmers.

Since 1987, we have achieved major initiatives in my negotiations with the EC Commission, and this is not an exhaustive list. First, we have achieved a revised western package which involved a 70 per cent reimbursement rate for roads, water services, electricity and forestry. It also involved special grants for slurry silage effluent storage and for animal housing. Second, we achieved £200 million in farm price packages between 1987 and 1990. Third, we obtained agreement to extend the western drainage scheme to the end of 1988. This scheme introduced in 1979 involved field drainage of some 143,000 hectares at a cost of nearly £91 million in respect of which over £60 million was paid in grants to benefiting land holders. Fourth, an increase in the EC suckler premium from £38 to £52 was achieved. In 1988 the beef cow headage grants became payable in dairy herds in disadvantaged areas. The suckler herd increased from 406,800 cows in 1986 to 680,000 in 1990. Fifth, the country's first operational programme under the new Structural Funds was agreed for the control of farmyard pollution. This programme effectively extended to the entire country the pollution control measures which operated in the less favoured areas as part of the western package. Sixth, in November 1989 agreement was reached to increase the Irish milk quota by 1 per cent. This 11 million gallons was distributed to special category producers and young farmers. It marked the only increase in quotas since their introduction in 1984. I have to say in passing, having negotiated that increase I find it a little difficult to accept the Commission's proposal at this stage——

Mrs. Doyle

Taking it off them.

Mr. O'Kennedy

——for a reduction. Seventh, the introduction of the "safety nets" procedure in the beef sector two years ago ensured there was no free fall in beef prices last autumn following the collapse of our markets in the Gulf and due to the misfortune BSE. I do not need to tell anyone who has any experience of negotiations at the Council that that was not done simply for the asking. That involved long days and nights and resulted in our negotiating strength and strategy.

Our eighth achievement was that in the three years up to 1990, £41.7 million by way of FEOGA aid was awarded to the agri-food industry to bring it up to the highest international standards and to launch a more market driven policy. The ninth achievement was a headage scheme that will be worth £100 million in 1991 — up from £60 million in 1989 — with 65 per cent funding from the EC — up from 50 per cent previously — all negotiated by the Irish Government, by me and my officials. In the largest extension and reclassification of our disadvantaged areas ever proposed to the EC almost two million acres will now become disadvantaged for the first time compared to the previous largest extension of only 415,000 acres. The proposed reclassification of 1.5 million acres approximately is almost twice the previous largest proposal for reclassification of 869,000 acres. Headage payments will be made in the new areas this year.

The tenth achievement was a £104 million programme for integrated rural development involving such areas as agritourism, alternative farm enterprises, rural infrastructure, research, development, marketing in the food industry as well as the training activities of Teagasc and BIM.

Our eleventh achievement was our steadfast opposition at all stages in the Council to calls by the US and the CAIRNS group for further reductions in Community supports as a consequence of which my French colleagues and I were being targeted at the famous GATT negotiations in the Heysel in Brussels. That was not lack of negotiating muscle or tactics.

Our twelfth achievement was a sum of £10 million per annum in EC funding for our ERAD programme over the next three years — a programme which is vital to Ireland's export trade and in respect of which I now make a special appeal in this House to the veterinary profession to co-operate in the national interest. We cannot turn our backs on £30 million of European Community funding and we certainly cannot afford to risk the future of this major industry by anything less than the most stringent disease eradication programme. There are suggestions from certain quarters — mischievous is the least I would be inclined to call them — that the Commission's reform proposals are a response to external pressures arising from the GATT negotiations. This is clearly not the case.

The Community is embarking on CAP reform because of its own internal needs and this is of course as it should be. The GATT Round can hardly be blamed for the growing intervention stocks, the deteriorating income situation in agriculture or the increasing budgetary pressures. It is in response to these and other internal agriculture-related objectives that the Commission has brought forward its reform proposals. I believe, however, that parallelism between the Common Agricultural Policy reform and GATT negotiations would be advantageous to the Community. I believe that such parallelism is the best guarantee of obtaining full credit in the GATT for actions under CAP reform, just as we claim credit now in the GATT for reductions of CAP support since 1986 — a fundamental plank of our GATT negotiating mandate. It should also ensure that the compensatory arrangements which ultimately flow from the CAP reform and GATT outcomes are fully compatible with the Community's GATT commitments and are accommodated within the "green box" of policies permitted without disciplines. These are vital points for me and indeed for all my colleagues in the Agriculture Council and for Commissioner MacSharry as well, as was again confirmed at our meeting in Brussels this week.

It is not part of my brief to defend Commissioner MacSharry against any attacks, however personalised. However, as a Member of the Council of Ministers which has consistently and unanimously acknowledged — I do mean consistently and unanimously acknowledged — his vigorous defence of the mandate from the Council in the GATT negotiations, the latest allegation — among a series of allegations being thrown out — from a farmers association spokesman is both unworthy and extremely damaging. It is difficult enough for the Commissioner to defend his mandate with individual Ministers from other EC Governments — I am not speaking of Ministers for Agriculture, other Ministers from other Governments — undermining his position in their personal contacts with US and other Governments; it would become impossible if the very interests he is pledged to defend accuse him of conniving with other GATT interests in the presentation of the CAP reform proposals. As a member of the Council — and for no other reason — I have to place on record my total rejection of the unwarranted and shameful allegation. Let me make it absolutely clear that any reforms we undertake will not be at the behest of any outside force or pressure in the GATT negotiations. The reform of the CAP is a matter for the Community and the Community alone.

We should not always be waiting for initiatives from Brussels and elsewhere before tackling deficiencies in our agriculture industry. There are several desirable actions which we can take and indeed have been taking to develop an agriculture and food sector which is modern, innovative, quality conscious and market oriented. Significant resources have been and continue to be put into modern plants and facilities, research and development, quality assurance and promotion and marketing. All of this is essential if we are to respond to the growing challenges to producers to supply top quality products at prices which are value for money to ever more discerning customers. The ability to succeed in satisfying consumer needs will be the acid test for farmers and food processors; it is essential we do not fail this test.

I said in the Dáil last week that Ireland had nothing to gain by imitating the ostrich and pretending that CAP reform would go away. Rather must we face up to it while steadfastly demanding that changes in the policy must respect the principles of the Common Agricultural Policy protect family farming, take account of the diversity of agriculture in the Community and be based on a secure and guaranteed budgetary framework. Those aspects of the proposals which do not meet these aims and which, as a result, are neither in the interests of Irish agriculture nor of the Irish economy will be opposed by me and by the Government with equal vehemence. I hope that I can rely on the backing of this House in my difficult task and that in the final analysis I shall also have the support of the industry generally and of its representative bodies. With a united front promoting a clearly identified national position, I know that we can ensure that CAP reform works for rather than against our long term interest. This now is the immediate challenge facing us as a nation. I, for one, refuse to contemplate an outcome with which I would not be prepared to return and recommend to this House and I know that your commitment in this regard is no less than my own. Negotiations in Europe and in the GATT depend to a large extent on the attitude and response of other countries. But the conduct of our own affairs is exclusively a matter for ourselves. While I pledge my full and unremitting efforts in these negotiations I also call for the same pledge from all interests at home in promoting a quality driven market strategy at all stages of production and processing.

Sabotage of the national interest by the use of what this text calls angel dust — because of a habit of speech — but which I insist on calling devil dust and other prohibited substances must not be tolerated. The preservation of our clean environment has been a priority for the Government for over four years now. It is a particular priority for me as Minister for Agriculture and Food as evidenced by the comprehensive scheme of grants I have put in place for anti-pollution measures.

It is essential to maximise the natural advantage we have as a natural producer of quality wholesome food from a clean unpolluted environment. Next week I will resume my campaign with CBF in a major promotion in Italy based on the new quality assurance scheme. I expect all interests to enlist in and support this campaign to lay the basis for guaranteed and profitable outlets for our livestock products in an increasingly competitive world trade environment.

An Cathaoirleach

I now call on Senator Raftery. Each group leader has 20 minutes and, thereafter, 15 minutes per speaker.

Professor Raftery

I would like, first of all, to thank the Minister for coming to talk to us. I agree with almost everything he said here this evening, in particular, I agree with him on the question of sabotaging the national welfare by the use of devil dust or angel dust or clenbuterol. No words of mine or of his could adequately condemn that kind of practice. Farmers must co-operate in ensuring that the practice will be stamped out. I agree, too, with the Minister on his call to the veterinary profession to co-operate in the eradication of bovine tuberculosis. Farm leaders and farmers should also co-operate by informing on the minority of farmers who are damaging the eradication programme by using materials that disguise reactors and by switching ear tags etc. However, I have difficulties in regard to the Minister's speech because there was nothing new in it. It was largely a history lesson. He did not — even when he was invited in this House — make known his objections to the leaked proposals for the reform of the Common Agricultural Policy early on. The Minister said he would not comment on leaked proposals. He must have been the only Minister in the Community who did not, I heard three of them at meetings commenting on them. In that regard I can only say that that kind of silence could easily communicate a message of being satisfied or agreeing with the proposals. It is now known that the Taoiseach was in regular touch by phone with Commissioner MacSharry during that period. I would be surprised if the Minister had not been in touch with him also. We should have made more noise, a united noise.

In that respect, too, when the Minister is calling for unity perhaps he would have a word with a few of his MEPs who are taking another line and sending a wrong message. I would like him to remind MEPs that they are elected to protect Ireland's interest. The Commissioner is responsible for the whole Community. Perhaps Mr. O'Kennedy as Minister and the Taoiseach would remind MEP, Mr. Killilea and particularly Mr. Paddy Lane, a former President of the IFA, that they have responsibilities to this country and not to the whole Community or to Commissioner MacSharry.

Mr. O'Kennedy

I have had such consultations this week and the Senator will see that they will have the desired effect.

Professor Raftery

I hope I am allowed extra time for the Minister's interruption. I agree with the Minister's comments on farm leaders, they know "not an inch" stance is not sensible or sustainable. If the public do not believe farm leaders now — and I think they do not — and if they have no sympathy for farmers — it is entirely the fault of former farm leaders, particularly Mr. Lane and Mr. Rea, both of whom were irresponsible while they were leaders of the farmers' organisations — Mr. Lane in relation to taxation and, in relation to Mr. Rea, crying wolf, even when Santa Claus was coming more than once a year to farmers. That is a matter of history.

We now have to deal with the proposals and their consequences. The non-farming sector should be reminded of the consequences. The national income will be cut by about £500 million; farmers' incomes will be cut by about £150 million per annum; independent economists have estimated unemployment at about 20,000 jobs losses in farming and between 14,000 and 16,000 in the sectors depending on farming. The ESRI have estimated that national growth will be cut by 0.5 per cent; emigration will increase by about 4,000 per annum and, above all, that the tax take by the Government will have to increase by about £700 million per annum if we are to maintain our debt-GNP ratio, which is already bad.

I cannot see how that will be done except by putting VAT on food; that is what will happen. The consumers who were expecting cheap food will be as disappointed as the car owners who were expecting cheap cars and insurance. Of course the Minister and the Government will deny that but I do not accept their denials. They will promise that it will not happen but we all know that the Government's promises are more plentiful than a snowfall in June and less durable.

Mr. O'Toole

We learned that from many Governments.

Professor Raftery

I will deal with the Senator later. We all, with very few exceptions, agree that the CAP must be reformed. It is now almost five years since I said in the European Parliament that CAP reform need not be a tragedy but that failure to reform it certainly would. That was not received well in farming circles at the time but history has borne me out. It is the type of reform that bothers me, the kind of reform that Commissioner MacSharry has put in front of us is singularly damaging to the Irish economy. The Minister has already spelled out some of this and I fully agree with him. However, I do not agree with the Minister when he says that reform is not related to the GATT negotiations. I believe that the Commission and the Commissioner have capitulated totally to American demands, not through cuts in support but in another fashion which will leave European Community agriculture less competitive than it should be against the might of the big farms in Australia, New Zealand, Canada and particularly the US. One has only to read the Financial Timés to see the number of occasions on which the Americans congratulated Commissioner MacSharry on his proposals. The Prime Minister of Canada said on television about two nights ago how pleased he was with the reform. Why not? We will not be able to stand up to the competition from these quarters when it comes. Of course for us in particular, as the Minister mentioned, it will undermine completely our red meat industry. For those who are not familiar with our farming industry, the Minister has already pointed out that 40 per cent of our foreign earnings comes from agriculture; 80 per cent, as he pointed out, comes from livestock and almost all that is from grass based products, beef, dairy products and sheepmeat.

The change to an American type policy of cheap grain will fundamentally change that situation. It will make grain fed stock, pigs and poultry and white meat, much more competitive. We should know at this stage that at the end of the day the consumer will decide whether we succeed or fail. There is no use expecting the kind of compensation that will negative the adverse effect that that kind of change in policy will have on our red meat industry. I am sorry to have to say that the Commission has made such a total and absolute mess of the beef industry to date that I have no faith in them for the future. Look at the record, look at their handling of the growth promoter issue. Consumers are now more concerned about growth promoters, six years after the ban was introduced, than they were before they ever heard of growth promoters being used. Look at the record of support for this country. In 1988 it cost the Community taxpayer £250 for every animal produced in Ireland, of which only 13 per cent went directly to the farmer. By 1990 that figure had gone up to £500 for each animal produced in the country, of which only 8 per cent went to the farmer. If things are bad in the beef industry — and they are extremely bad — the figure has to be pointed in the first instance at the Commission, after that we can lay the blame elsewhere with our producers, processors and so on. If the farmers were playing the system to their own advantage who can blame them because the rules were drawn up by the Commission? The Commission's record in that respect is deplorable.

To protect our interests — the Minister will not agree with me on this but I believe I am right — the cuts in support should only be made in the context of the GATT so that we will see pro rata cuts in other countries affected by the GATT. The Community is not the only supporter of agriculture among GATT members, nor is it by any means the largest supporter. Countries like Japan, Switzerland, Austria, Norway, Sweden, Denmark and many others give much higher levels of support. We want our farmers to get the same kind of deal in terms of total support as the farmers of those countries get and the best place to ensure that deal is in the context of the GATT round. Despite our previous concessions we would be told that negotiations would have to start from scratch and thus we would be caught again.

There is a second matter that the Minister should insist upon very strongly. He did allude to it, but not in a sufficiently convincing fashion. I do not like to criticise the Minister, because he has a difficult job to do, but I do feel that he needs to be a little more convincing and a little more aggressive in the protection of the competitiveness of Irish agriculture. If that were to be undermined and if Ireland were to become too dependent upon handouts then I would have grave fears for the whole agri-processing sector. That sector just would not survive because its viability depends upon a commercially competitive farmer.

Thirdly, we must be compensated for the excessive cuts that are hitting this country hard. Despite our heavy dependence on agriculture, we are seemingly singled out for particularly bad treatment. The Minister mentioned the cohesion principle, which was reaffirmed under section 130 (a) of the Single European Act. There is a precedent for that. In 1979 Ireland received low interest loans to help us deal with our entry into the EMS. Despite all the comments made by the Minister about his great negotiating — and let us give credit where credit is due, he did have some successes——

Mr. O'Kennedy

I was involved in that one, too.

Professor Raftery

Agreed, but the Minister is speaking about his term as Minister for Agriculture.

Mr. O'Kennedy

No, in 1979, as Minister for Foreign Affairs.

Professor Raftery

Mr. O'Kennedy

I do not wish to interrupt the Senator, and I hope that my clarification was not considered an interruption. The Senator's presentation is very objective and analytical, but I did not want him to misquote, even accidentally, what the Commissioner actually proposed. He did not use the term "maximum number".

Professor Raftery

I was not talking to the Commissioner and I did not read his official document; I am quoting what was written in the national press for everyone to read.

I thank the House for its patience, with us talking at cross-purposes. In order to give other Senators a maximum chance to express their views, I shall conclude. Again I thank the Minister for coming to the House, although I had hoped that he would give a little more news than he did.

Mr. O'Toole

The House has listened to two very interesting, comprehensive and extensive views on the Common Agricultural Policy. Being without a vested interest in the area, I think it is critical that I understand and the consumer understands why it is that we can walk into a supermarket in France or Germany and not be able to afford the beef or the red meat on sale there while in Ireland the farmer cannot get a decent price for it. The Common Agricultural Policy was introduced to bridge that gap and it did not.

We have seen too many knee-jerk reactions to proposals on reform of the Common Agricultural Policy and other related policies. We had the classic example last year during the discussions on the general agreement on tariffs and trade when the proposals coming from Commissioner MacSharry were vehemently resisted and opposed by one interest group who, six months later, were trying to get some level of agreement on what was his first proposal. The same thing is happening again. Without destroying the Minister with faint praise from this side of the House, I find myself much closer to his point of view this evening than I expected to be. I am sure that will not do him any good with the different groups he seeks to represent. He is in an impossible position. He has to represent the Irish farmer, the Irish consumer, the Irish Government and be mindful of his responsibilities as a representative of one of the partners in Europe.

The Minister has shown a clear change of ground this evening. I am sure he will deny that, but I certainly heard an amerliorated response to the position as it was. Perhaps "ameliorated" might be a debased word but I certainly see a progression in the view offered by the Ministewr as opposed to what I was listening to last week and the week before. We are now hearing that the proposals as they stand are unacceptable, that they must be changed and that we can no longer, in terms of CAP, seek to defend the indefensible or seek to sustain the unsustainable. This is absolutely right.

The Minister also seems to be trying to justify being in negotiations. I put it to the Minister that he has no need whatsoever to justify being in negotiations; his job is to go and get the best deal possible and people must recognise that there will have to be movement on all sides. It must be recognised that this idea of going in to hammer and oppose everything is Neanderthal stuff which does not work in the modern day.

I have to say to the Minister that he has left himself with an "out" and there is much "executivespeak" in his speech. He has certainly not tied himself into anything in terms of outlining those areas of difficulty. I could justify them, little and all as I know about agriculture, and I could come out of negotiations delivering all of them. In fact, the Minister could probably do that at the moment. There are phrases like, "the conditions which would determine any progress", "there can be no progress unless", "effectively implement", "adequate financial resources", "adequate support" and "realistic account" in the Minister's speech. I must compliment the Minister's advisers in that his speech certainly does not tie the Minister into any tight corners. I am sure my colleagues in the benches in front of me will take the Minister up on that as the evening wears on. I see this from the point of view of somebody who has to live through negotiations time and time again; I can read the signs.

I am glad I can read the signs because, as I said in this House last week, I felt we were heading down a cul-de-sac in the response that seems to be coming from this country in regard to the MacSharry proposals. The common ground is that the proposals as they stand are unacceptable, that the proposals as they stand are damaging all round. We agree that the CAP as it stands, particularly the intervention policy, cannot be sustained. I would like to hear all sides of the argument accepting those two points. I heard it from the Minister this evening and I welcome it. That is the reality.

From where I am all I see is taxpayers' money subsidising inefficiency. I see taxpayers' money reducing competitiveness and depressing farm incomes. Farmers are being conned at the moment. Farmers believe that the Common Agriculture Policy is managing to increase their income but that is just not true. It does not fit into any economic model that I understand. As Professor Raftery said, it does not respond to market forces; it does not respond to any of the needs of the market in any particular way. It seems that the taxpayer is subsidising increased and higher prices for themselves, thereby depressing markets, doing all the things that are worst in areas of production and reducing any sense of support for farmers.

A question I would ask of any farmers group is: why is it that every year when the Minister goes to Brussels to seek inclusion for Ireland in the intervention policy and so on, we get so much support form Holland and Belgium? They always support our inclusion, and the only reason is because it leads to inefficiency in the Irish agri-business. I am certain of it and I will need some convincing to move from that position. Every examination I make of the system confirms for me that Irish agri-business and agri-industry is inefficient because of CAP. It cannot compete in the marketplace because of interventions, the operation of price controls, price levels, price bottoms or whatever. I firmly believe that to be the case. We should look at what is happening. We now have a situation where effectively, because intervention comes into operation each year, farmers are producing for a surplus no matter what we do. Intervention only comes into operation when there is a surplus and we are, therefore, also producing for lower prices as surplus prices are lower. Therefore, our farmers have nowhere to go in terms of getting a better price for their commodities.

To make matters worse, farmers have but two options, they can sell their produce into intervention or find a market outside the Community. The market outside the Community has been completely devastated on many occasions by our own selling off at low prices, commodities or food produce that was kept in intervention. Mountains of food have had to be dumped. That is the only word to describe what has happened. It is not dumping in the precise meaning of the word although it is very close to it. It has to be dumped in the sense that it is being sold abroad at an uneconomic value or at a loss. It means that Irish farmers produce food which is put into intervention at a particular price and those who export their produce to third countries must compete with the lower prices for similar Irish products sold to countries in the second world, the Third World or in the developed world. That cannot continue. If someone can explain to me how that helps the Irish farmer I am willing to listen but it is not happening as I see it.

The present policy creates over-supply. It also creates a surplus in a starving world. I wonder how we will explain to our grand-children that we were the legislators who presided over such a system. They will read that there was starvation in Africa and in the Far East while we were keeping mountains of butter or whatever in storage on ships in Cork Harbour. Going through our school system we heard about the couple of shiploads of grain that were sent abroad during the Famine. It is much worse now because food is being stored in the port of Cork; we are building up intervention there. Who is getting them money? How much of the money last year went to those involved in storing produce, and how much of it went to farmers? What proportion of the money went to the entrepreneurs who built the cold stores or leased the ships in order to retain food in intervention? I have no doubt that it was a significant amount of money in Irish terms. In north County Dublin recently I came across a person building a cold store for intervention produce. The company have been building the storage facilities stage by stage, and by the time the work is complete they will have paid for it with the money they receive for storing meat or butter or whatever in intervention. That is madness. That cannot continue.

The MacSharry proposals are swingeing and unacceptable — I would like to put that firmly on the record — but we will have to do something or else our farmers will be smothered by what will take place. This cannot continue. We either take control of the reorganisation of the Common Agricultural Policy so that it will take place step by step, or else it will take place in one fell swoop and what happens will become less and less acceptable.

What we are talking about in the Common Agricultural Policy, is the whole intervention strategy for surplus, the strategy for inefficiency at all levels, is making it more difficult for farmers, for producers, and for the agri-industry to compete. We will have to take a firm stand on what is going on. We should tell the Minister to protect our farmers, our industry, the consumer and the taxpayer and find balance in the middle of all of that. That means that there will have to be compromise on all sides. The taxpayer will have to continue to fund agriculture. The farmers will have to see change taking place. Let us make sure that the change takes place in a way that does not create the difficulties for them that are now being presented to us through the media and newspapers. At the end of the day if earnings in farming or in industry fall below a viable income level, people will have to be protected one way or another.

I put it to the Minister that at the moment money is simply going in different directions. It could well be that we would save money — not that I am suggesting that we use this as a model — by supporting people who are not producing rather than the other way round. The money is just being ineffectively swallowed up at the moment with no direction to it and nobody is gaining. The fact that 80 per cent of the money available goes to 20 per cent of farmers is significant and is something that has to be addressed. In a sense that fact pulls the rug from under many of the arguments. I do not want to go into that now as it raises hackles all over the place.

The consumer cannot continue to subsidise higher prices for the goods that they want. That is what is happening at the moment. The European taxpayer cannot continue to simply put money into a bottomless hole without helping anybody in the long term. It is giving a crutch just now, but that is because the whole thing has got out of kilter. We need to look at those aspects of our competitiveness which are being eroded because of our peripheral location in Europe. That is where we can make demands. In other areas, we have to be prepared to be flexible, to be prepared to make changes and to be absolutely clear that the CAP has got to change.

Whatever differences I would have with the Minister on this and other issues, I recognise that he has an extraordinarily difficult job to do. Those of us in this House and outside with different interests, should be absolutely clear that it will take change and movement from all groups and all interests before this is sorted out. If we do not move now and give a mandate to the Minister to move into negotiations, we will be back in six months time saying that we let it slip away from us.

I recognise that my colleagues on this side of the House have a political mandate to do a particular job and no doubt they will do it, but I do not have to do it. It is in the national interest to show tolerance, to show our commitment to Europe and to support our farmers with a long term policy rather than a "tomorrow" policy.

Mr. Dardis

Just before the Minister leaves, I thank him for his presence here this evening. I realise that he has had a very busy schedule over the past two days and we appreciate the fact that he has attended. It is at the core of Oireachtas activity that the Minister will come back to us and report what has been happening, so I thank him for that.

Mr. O'Kennedy

I did not realise who was in next. I should like to have waited a little longer but I may get back before the debate concludes.

Mrs. Doyle

He is not oversensitive as to when the Minister chooses to depart.

Mr. O'Toole

This is another part of the renegotiation.

Mr. Dardis

I do not presume to suggest that the Minister is beating a tactical withdrawal just because I stood up.

As the Progressive Democrats spokes-person on agriculture, I welcome this opportunity to place my party's opposition to the MacSharry proposals for CAP reform on the record of the Oireachtas. The Progressive Democrats reject the proposals as they have been formulated, not just because Irish farming would be devastated, as indeed it would, by their adoption, but also because Irish jobs, economic growth and our entire national welfare are at stake. Our position has not changed since last February when we issued our discussion paper on CAP reform. The reform proposals, the GATT talks and the continuing fall in farm incomes amount to the most serious threat to our agricultural industry and to our economic wellbeing since we joined the Community in 1973 and possibly as far back as the economic war of the thirties.

Farmers have every reason to be appalled at the prospects of the cuts which the Minister did not quote but which are worthy of being quoted. They are, 35 per cent in grain prices, a 10 per cent cut in the price of milk and a 4 per cent cut in quota, a 15 per cent fall in beef intervention prices and a cut in the numbers of sheep eligible for support. Even before CAP reform gets under way, farmers have seen their incomes fall by 12 per cent in the past year and we expect a further 12 per cent fall this year. I wonder is there any group in Irish society who would not be up in arms over a 25 per cent fall in income. Would the public sector, in our efforts to bring public spending under control, accept a 25 per cent cut in their income? I do not advocate the type of antics that we see from French farmers, but it is a wonder not that farmers have been protesting outside the gates of Leinster House, but that they have been so restrained in their protests.

It cannot be said too often that there is much more at stake than the future of farmers and their families under the CAP reform proposals. Those who believe that opposition to the proposals is simply another case of well-off farmers, or even less well-off farmers, crying wolf, need to stop and think again. It is not just farming which is threatened. The rural shopkeeper, the worker in the food processing industry, the supplier of farm inputs, in fact the whole community will feel the effects if the present proposals go through. The implications of CAP reform go well beyond individual farmers and agri-business. Ireland will be much more profoundly affected than any other country in Europe, to the extent that no Irish citizen, whether involved in agriculture or completely removed from it, will be immune from the effects of these proposals. The reason is quite simple, and it has been outlined by the Minister. The Irish economy depends on agriculture to a much greater extent than other European economies. The overall national impact of the change in EC policy will be much more profound here than in other EC countries simply because of the importance of agriculture within our economy.

The figures have been given frequently since we debated this matter in February in terms of the contribution of agriculture to economic output. Agriculture here is three and a half times more important than in the overall EC. Farming accounts for approximately 20 per cent of the workforce, but more significantly, approximately one-third of all those at work in Ireland are involved in agriculture or agri-business or related activities one way or another and 40p in every pound of net export earnings comes from agriculture. Nearly £1.5 billion net comes into this country each year through EC support for agriculture. Therefore no-one, whether Senator O'Toole, people in the media who have misunderstood what is going on, or anybody outside of farming, should have any doubts at all about the potential impact of a shift in the direction of EC policy. That is not to say that my party do not recognise the need for reform of the Common Agricultural Policy. As the Minister said in his statement this evening, we cannot support the unsustainable. Clearly, bulging intervention stores, excessive surpluses and budget overshoots cannot be tolerated indefinitely. At this stage nearly everybody, including, I would submit, the farming organisations agree that there must be some kind of reform. However, what is at issue is the nature and speed of that reform.

I have heard reservations expressed in recent weeks and months about our decision to join the Community in the first instance but I believe we made the right decision in joining. We have gained immense national benefits from our membership of the European Community. Perhaps for the first time since we joined the Community there is a divergence between what may be in the interests of the European Community and what is in the interests of Ireland and the Irish economy. That divergence needs to be resolved without damaging our national economic wellbeing. The Community has a solemn responsibility not to disproportionately penalise Ireland. That is the ground on which we must fight. We have fought successfully in relation to 1992 and the Single Market and have secured the concessions which cohesion demands we should secure.

Apart from the effects the proposals could have on the economy, the fear must be that compensation for small producers may not be nearly good enough to keep them in business, while at the same time the solid well-run commercial farms, both big and small, which form the basis of a competitive food processing industry will be hit so hard that they may never recover. How can we hope to survive in the market-led food market which is now upon us if we do not allow those farmers who are efficient and competitive to flourish and reap the return on their investment? Are we now going to tell the people who responded to the entreaties of the State and its agencies over a 20 year period, who invested money in their business and adopted the best technology that they are now no longer wanted? That is not acceptable. To go down the road of a dole cheque in the post and a redundancy package for farmers is to consign rural society and the Irish food industry to the scrapheap of history. If these proposals go through unchallenged, today's appalling unemployment figures, excessive public spending, reduced growth rate and high taxes will be seen in about ten years time as the good old days, and I am not exaggerating.

In this House last February the Minister for Agriculture and Food said that smaller producers must be properly protected and the more commercial element in our agriculture, a larger segment perhaps than is generally realised, must be enabled to continue to operate viably. He went on to say that without a commercially viable farming element we cannot have a competitive food industry or realistically expect to preserve our rural infrastructure. I hope that the Minister will keep those words, which are at the very heart of the argument, before him as he travels back and forth to Brussels in the months ahead. It will be impossible for us to build an internationally competitive food industry without a core of efficient, commercial producers. Cost-effective, environmentally sensitive production based on sound technology must be allowed to make its contribution to the overall international competitiveness of an export-orientated Irish food industry which supplies value-added products of superior quality to the world and EC markets. This is the way forward for farming and for the processing industry. We favour a shift to a more market-driven agricultural industry but only on a phased and orderly basis.

There is another fear among farmers and they are not being mischievous, as the Minister suggested they might be. I am not accusing the Commissioner of conniving with other GATT interests but farmers fear that CAP reform will effectively concede the American demands under GATT even before the bargaining starts in earnest. Under the Uruguay Round we have already agreed to substantial progressive reductions in support and protection. They are the words of the agreement. To throw in our hand before the bidding even begins seems to be a very bad card playing indeed. The Minister mentioned parallelism. If it is parallelism that is okay but it had better not be concession beforehand.

As Senator Raftery said, the MacSharry proposals are firmly based on a big reduction in grain prices. Part of the compensation to livestock producers would come through reductions in concentrate feed costs. This would have the most serious consequences not just for Irish grain growers who would become extinct but also for Irish livestock farmers. We must not forget that it would take away the advantage of grass-based beef, sheep and milk production and the effect would be to favour intensive systems based on grain and shift livestock production to the great grain growing areas of the east of England, the Paris basin and northern Italy. Because of the price they will get, cereal growers will be forced to try to add value to the grain they produce by converting to meat and milk productions. That is what happened before and that is what will happen again. During the sixties in the east of England barley beef was fed in feed lots near where the grain was produced and this will recur.

In this respect, there is a huge inconsistency in the Commission's strategy. This has been highlighted by the Minister. The Commission is saying on the one hand that it is committed to environmentally sensitive production — this would be in our interests because we have the capacity to exploit that advantage — but on the other hand it is saying that there should be cheaper concentrate feed, which can only lead to more intensive production near ports and the grain growing areas. Basing reform on cheap cereals is the biggest threat to our grass-based agriculture industry and no amount of compensation will rectify this imbalance. Neather is it convincing to argue that the Irish consumer will benefit, as has been argued by Senator O'Toole. Because we export so much of the food we produce we will merely export the benefits to consumers outside this country while at the same time the domestic taxpayer will be faced with the bill for social welfare payments to farmers who are forced off their land and onto a saturated labour market and to workers who are made redundant by a reduced volume in the processing industry.

Many of the existing problems of excessive use of intervention and poor markets are of recent origin and as a result of the Gulf War, BSE and the diversion of supplies from the Eastern Bloc countries into the European market. It does not make sense for the EC to buy this produce from the Eastern Bloc, put it into intervention and subsidise it a second time so that it can be sold on the Russian or other markets, the natural outlets for this food in the first place. It would be better to assist direct sales to Russia from the producing countries in the Eastern Bloc rather than fill the intervention stores and subsequently subsidise the exports. Of course, the 18 million tonnes of corn gluten coming into the Community is another matter which needs to be addressed in the GATT negotiations.

From an Irish point of view, one of the most worrying trends is for national Governments within the Community to use intervention to support their domestic agricultural industries. Senator Raftery has referred to this problem. It has got to the point were VAT refunds and special payments are being used by countries which, by virtue of their extra wealth and the fact that a much lower proportion of their population are involved in agriculture compared to Ireland, are in a very good position to undermine Community solidarity and the Single Market, which are central to the Treaty of Rome and the Common Agricultural Policy. This development must be resisted under the CAP reform. This is not a matter for negotiation; neither is the CAP a matter for negotiation.

While I have been encouraged by some of the points made by the Minister here today, I believe the Commission regard the CAP provision as matters for negotiation. It would be ironic if the movement to economic and monetary union were to by-pass agriculture; the one activity within the Community which traditionally is organised on a European basis. If special concessions are to be won, they must be won for the Community as a whole and not be granted as national payments by individual countries. Even though the dominance of agriculture within our own economy demands that the industry be afforded preferential treatment within the framework of reform we do not have the resources to afford the luxury of national supports. This again comes back to the question of cohesion. The arguments which prevailed in relation to 1992 are equally valid now in the context of agriculture. We must maintain equality within the Community and, as the Minister said, plead Ireland's special case. Maximisation of the gross value of Ireland's agricultural output and exports is central to our national wellbeing. That is the interest we, as a country, will have to defend within the Community and as part of the GATT round.

I note that, according to news bulletins yesterday Commissioner MacSharry said that if no agreement could be reached on this reform package by the end of the year the Commission would go ahead with its proposals and there would be no alternative but to proceed without compensation. My party favour greater European integration, greater European federalism and closer economic and monetary union, but if what I heard is correct, what Commissioner MacSharry said is totally undemocratic. I cannot believe he would suggest that the Executive of the European Community would run the Community without reference to the Council of Ministers, the European Parliament or sovereign national governments. I hope the Minister can confirm that that is not the case.

As I said at the outset, my party took such a serious view of the Commission's thinking on CAP reform last February that we issued a discussion paper on the matter. At the time the Minister was critical of those who reacted to leaks or to what he described as ill-informed and unfounded comments. Unfortunately, the present proposals do not differ greatly in their general thrust from what we heard then. The document submitted recently by the Commission to the Council stated that the Commission considers that sufficient time has elapsed for all interested parties to have presented their views and have them considered. It stated that in order to avoid uncertainty, proposals should now be presented. It also stated that the proposals follow-broadly the approach in the reflection paper — which is what we were criticised for talking about — adjusted where necessary to take account of the various concerns expressed. The Commission said we should have submitted our proposals earlier. However I hope we have not left it too late.

Nearly everything in the discussion paper has been repeated during the debate of the past few weeks, and the fears expressed by my party have been confirmed. I still believe that a national consensus on the direction of the Common Agricultural Policy would strengthen our negotiating position. There is such a vital interest at stake that the establishment of a national forum to bring forward a national consensus is desirable. In this House on 28 February the Minister, Deputy O'Kennedy, said that a forum would be established involving consumers as well as producers, experts, officials and anyone he felt would have an appropriate role to play.

The Minister said earlier this evening that he had consulted Teagasc, but can he now say what are his intentions regarding this forum and when does he expect it to meet. I am not referring to talks with the farming organisations under the Programme for Economic and Social Progress or the group involved in the Department's review. It would be preferable if we put our views this evening by way of resolution rather than by statement so that at least the view of the Oireachtas could be communicated to the European Commission. I want to emphasise quite forcibly that the principles of the Common Agricultural Policy are not negotiable. I note the Minister said that the reform negotiations are aimed at ensuring the continuation of the Common Agricultural Policy in conformity with the Treaty provisions, not its dismantlement. However, it is precisely the fear that the Common Agricultural Policy will be dismantled that has people so angry, frustrated, confused and fearful about their future.

Senator O'Toole mentioned the shiploads of butter in Cork Harbour. This is undesirable, but I regard shiploads of butter in Cork Harbour more desirable than shiploads of people going to America or other countries. That is what is at issue here. If we follow this road to its logical conclusion I guarantee that in 15 or 20 years' time the only people living in the West will be wealthy Germans, French or Belgians, residing in their holiday homes for a month or two in the year. How will the people in rural Ireland live in the meantime?

Mr. Hussey

I am very happy we are having this debate. It is the second such debate in recent times on agriculture. I thank the Minister and the Minister of State——

I have called Senator Hussey and I would ask Senator Costello to allow the debate to continue. Senator Hussey has been in the House since the debate started.

Mr. Costello

Reluctantly I will wait.

Mr. Hussey

The Senator will have to wait only 15 minutes. I will not delay the House unduly. I was saying that I am very pleased that this is the second such debate on agriculture in recent times in this House. I thank the Minister and the Minister of State for making themselves available for the debate in spite of their very busy schedule.

At the outset I would like to put in perspective the importance of agriculture to the Irish economy — other speakers have also referred to this. In terms of its contribution to economic output and gross domestic product, agriculture is 3.6 per cent more important to Ireland than to the EC as a whole. Agriculture contributes over one-quarter of gross exports from Ireland. Taking into account the low import content of agri-food products, the contribution to Ireland's net exports is about 4 per cent. Beef production is 9.5 times more important to Ireland than to the EC as a whole and milk production is about seven times more important to Ireland than to the EC as a whole.

One can understand from these figures why Irish farmers are concerned about the proposals for a reform of the Common Agricultural Policy. As of now they are only proposals and much discussion will have to take place before a final decision is made. However the proposals have helped to focus people's minds on the need for reform of the Common Agricultural Policy. I believe the Minister can succeed in having the worst features of the present proposals removed and in ensuring that the Common Agricultural Policy is again focused on providing farm families with the opportunity to earn a reasonable income.

The Common Agricultural Policy as it currently operates fails to do this. Every week we hear that the level of poverty in rural Ireland is increasing at an alarming rate. The farming sector is at present in a very depressed state, having absorbed price reductions of over 30 per cent in real terms since 1980. If we take a 30 cow herd as an example, in 1989 the income from such a herd was assessed at £14,730. This year the income from the same herd is £6,510. The same applies to all other sectors. A 90 acre beef farm would earn less than £3,500 at present, even if the farmer financed his store cattle purchase from his own resources. Where the farmer has to finance the purchase from borrowing he suffers a loss. In severely handicapped areas where full headage and ewe premiums are paid, a 70 acre farm with 250 ewes generates only half the average industrial wage. In the absence of EC subsidies there would be no income on these farms. It is against this background that we are now considering Commissioner MacSharry's proposals to reform the Common Agricultural Policy. If these proposals are given effect they will drive thousands of farmers off the land and create huge social problems for farming families.

The main problem with the Common Agricultural Policy is that it has allowed stocks to be built up at an alarming rate and the community seem to be powerless in dealing with them. This did not happen either today or yesterday. Between 1973 and 1988 production increased at the rate of 2 per cent per annum while internal consumption increased at the rate of 0.5 per cent per annum. Why did the Commission not take action then? One did not need to be an economist to know that within a short period the cold rooms of Europe would be filled with beef, dairy products and cereals if markets could not be found for those products. The Commission is proposing price reductions in many sectors together with some restrictions on output and a significant package of structural reform measures.

Another element of the proposals is a series of compensatory measures biased in favour of small to medium sized producers. The Commission is proposing a 35 per cent reduction in support prices for cereals over three years. Producers would receive full compensation for the price reductions through a regionalised acreage premium but entitlement to such compensation would, in the case of producers other than small scale producers, be conditional on participation in a set-aside scheme. Producers with more than 50 hectares of cereals would, however, receive set-aside payments only in respect of a maximum of 7.5 hectares. Those proposals would have a devastating effect on cereal growers in Ireland where 38,000 farmers produce cereals, 10,000 of whom are specialist growers and depend on cereals as their main source of income.

Cereal based manufacturing and processing industries employ 24,000 people with a net output of more than £600 million. A reduction in cereal growing would lead to an increase in unemployment in Ireland and to brewing, flour milling and animal feed industries becoming dependent on imported grain for raw material. I cannot understand why the Commission have no plans to tackle the importation of cereal substitutes into the European Community. Approximately 19 million tonnes of such substitutes are imported into the EC annually. Corn gluten, which is the main cereal substitute imported, is currently subsidised by the United States Government to the tune of $52 per tonne. This should not be tolerated at a time when European farmers are being asked to cut back drastically on the production of cereals.

For the beef and milk sectors support prices are to be reduced by 15 per cent and 10 per cent, respectively. In the beef sector farmers are being offered a substantial increase in premia in the case of male animals and suckler cows. The special beef premium would be increased to £156 per animal with the premium payable on the first 90 animals of every herd in three anual payments of £52 each during the life of the beast, that is, between eight and nine months, 18 and 21 months and 30 and 33 months. The annual suckler cow premium would be increased also to £66 per cow with the possibility of an additional national supplement of about £19 per head. As with the special beef premium, payment would be limited to the first 90 animals and would be payable in respect of beef or dual purpose beef only. Compensation would be conditional on the stocking rate not exceeding 1.4 livestock units per hectare in disadvantaged areas while in non-disadvantaged areas the maximum would be two livestock units per hectare.

That is where I see the sting in the tail in the proposal. The stocking rate of 1.4 or two livestock units per hectare is low and in order for a farmer with 45 acres, approximately 18 hectares, to qualify for the special beef premium or suckler cow grants he would be confined to 36 animals for which he would be paid an annual premium of £52 each if, they are male, giving a total of £1,872. That is not a great income for a farmer with 45 acres. How many family farms are there of less than 45 acres, particularly in the west? How will they survive?

In 1978, a 45 livestock unit beef farm gave a family income equivalent to the average industrial wage but in 1990 a farm of this size only had the capacity to generate about one-third of the average industrial wage. It would take approximately a 160 livestock unit farm to generate the average industrial wage today. While the grants offered may seem attractive, if the proposed stocking rate is applied it will reduce the size of the grant considerably for each applicant.

In the milk sector there are both price and quota cuts but in this case the cuts in the individual quotas would be redistributed to priority categories. This may have the effect of giving a reasonable quota to small producers who are anxious to stay in milk production. It is important that we diversify in this area and that we target value added production in an effort to move away from reliance on intervention stocks. In this regard the Minister is to be complimented for recently providing grant aid for a major new research product at Moorepark.

Ireland's proportionately high usage of the intervention outlet accounting for about 30 per cent of both butter and skimmed milk powder stocks underlines the need for structure and product changes in our dairy industry. Community stocks of butter and skimmed milk powder now stand at 381,000 and 472,000 tonnes, respectively. Something has to be done to get rid of this surplus stock. If quota cuts have to be accepted at the end of the day, can any guarantees be given that those reductions in Community quotas will not be negatived by increases in milk production by other major milk producing countries? The Minister would be right in opposing any further quota cuts in the absence of supply management policies by all the major milk producing countries. Ireland's unique dependence on dairying would have to be fully taken into account. Protection of Ireland's volume of milk production as a vital national interest was accepted by the Community at the introduction of the milk quota system in 1983-84. We are entitled to the same concessions in the present negotiations. I know the Minister will put this case very carefully on our behalf.

With regard to the negotiations themselves, the Minister has adopted the correct approach. One cannot go to the negotiating table prepared to reject everything out of hand as if one does so one will be isolated and end up with no meaningful role to play in the negotiations. Some of the proposals are unacceptable to our farmers and we expect the Minister to fight to the end to have those proposals improved or eliminated. In doing this, he will need the backing of farmers, big and small, the Oireachtas, the trade unions and workers, because we are all in this together.

In that regard I take great exception to the shenanigans of the IFA during the week and their outburst at the Minister's approach to the negotiations. The Minister is representing the Government and the Irish farmers at those negotiations and he does not have to accept dictation from any group or individual. At the end of the day it is he who has to make the decisions and stand over them. They have, of course, every right to air their views on the proposals, to make those views known to the Minister and suggest alternatives. They have no right to push the Minister into a corner and dictate how he should approach the negotiations. In any negotiations there must be concessions on all sides. I am quite sure that Commissioner MacSharry will have to concede on some of his proposals. The important thing is to have a united front in our approach to the negotiations. There should be no squabbling in public. We are all trying to achieve the same objective, namely a better deal for our farmers.

Commissioner MacShary has claimed that one of his objectives is to redistribute support from larger to smaller producers. Very few will disagree with this, except of course the big farmers. Is this possible without retarding agriculture in general? Is it possible that losses through price cuts and quota cuts could outweigh the value of compensatory measures proposed? I am not sure; that question should be answered by the bureaucrats who are making the proposals. Many people would like to hear that answer. My view is that it will be only a short term solution. There will be an increase in premia payments and so on for a few years but how long will that last? What then? Nobody seems to know.

I am worried about the effects those proposals will have on Irish agriculture, particularly on the small family farm. How many more farm families will be forced to abandon farming because they can no longer eke out a living? The Commission in any proposals for the reform of the Common Agricultural Policy must be responsive to the low income problem of farm families. I do not believe that price policy alone will be sufficient to provide reasonable incomes. There will also have to be some system of direct payments. I hope the negotiators will find it possible to work out some such deal. Something drastic needs to be done quickly if we are to arrest the decline in the rural population. The social structure in many parishes is breaking down, particularly in the west. It is time somebody called halt. Perhaps these proposals for the reform of the Common Agricultural Policy will be the instrument through which change will be brought about, change that will revitalise rural society and give the people pride and dignity and the opportunity to raise their families in the environment which they love and are accustomed to.

I wish the Minister every success in the very difficult negotiations which will be held over the next few months. He said at the outset that the proposals are inadequate and are not acceptable to him. I was happy to hear that. Neither are they acceptable to me or to the vast majority of Irish people. I hope we will see sufficient change in those proposals to ensure that the lot of our farmers will be improved.

Dr. Upton

There is no doubt that if the proposals in regard to the Common Agricultural Policy were implemented they would have a devastating effect on our agriculture. Agricultural output, it is calculated, would decline by a figure of the order of £430 million or 17 per cent. There would be a decline in farm incomes of the order of £200 million. The effect on industry and services would be enormous and it is estimated that it would result in a decrease of up to 5,000 jobs. In the long term it is estimated that if these proposals are implemented the numbers engaged in farming will decline to approximately 22,000. There will be fewer than 1,000 farmers per county if these proposals are to become a reality. There will also be a very serious increase in farm poverty.

The ancitipated effect on Irish farming must be seen in the context of this country's dependency on agriculture. Ireland depends on agriculture and the agricultural industry to a greater degree than almost any other country in the world. Our agriculture suffers from a particular difficulty because of the weakness in the market place of our agricultural produce. For some years we have been dependent on intervention to an unsustainable degree. This is a reality from which there is no escape. We must face the need for change. The present position is untenable.

We are talking about these problems in the context of considerable problems which exist in Europe. The intervention policy as practised over the past few years cannot continue. We cannot continue to produce produce for which there is no demand. The degree to which this country, and other countries in Europe, continue to dump products such as butter, other dairy products and meat into intervention drives some of our European partners to despair. They are no longer prepared to tolerate the position.

We must face up to the fact that there are a number of dilemmas attached to the circumstances in which we find ourselves. There is no purpose in continuing to shy away from the need for change. We are in an environment in which the best we can hope to do is to limit the damage which will be done by the proposed changes. The idea that we can adopt the attitude of dying in the ditches to defend the status quo is untenable and unreal. We might as well face up to that now as later.

There are many other aspects which have been alluded to already by various Senators. The first relates to the fact that the proposals for the reform of the Common Agricultural Policy are being made in the same environment in which the GATT talks are taking place. We must be realistic about the GATT talks and about some of the effects which they might lead to if they do not reach a successful conclusion. The Americans have shown themselves in the past to be quite capable of engaging in trade wars and if such an eventuallity arises it could have devastating effects on Irish industry. Ours is an open economy and we need to trade. If a trade war arises we will be in serious difficulties in terms of the effect on the wider economy. That is part of the dilemma. We cannot dissociate the reality of the GATT talks from what is happening in relation to the Common Agricultural Policy. I disagree with the Minister's suggestion that these are independent, unrelated events. I do not accept that argument. There is an interaction between them and it is foolish to believe anything else.

I was sorry to see the Minister engaging in the trading of insults with the farm organisations. It is a pity. The degree to which the Minister indulges in "mixing it" with the farm organisations is a clear and telling index of the extent to which he is on the run in relation to these negotiations. It is also a clear index of the extent to which he is subsconsciously recognising the fact that to a significant degree he has failed. One of the great difficulties is the way in which we have failed to anticipate this problem. The writing has clearly been on the wall for a number of years as far as the Common Agricultural Policy was concerned, yet little or nothing that was meaningful and significantly was done to address this problem and face up to its implications. There has been a clear need for change for many years now. Those changes which were needed clearly were dependent on changes in policy and on the introduction of new technology, yet while the need for those changes existed, the Minister presided over the destruction of the advisory and research services. Those services have been devastated over the past few years. The Minister has sat idly by and maintained a deafening silence when the chairman of Teagasc saw fit to mock and insult the people who worked in that organisation. It was a pity the Minister did not break his silence to put the record straight and set matters right in relation to the appalling attack made on the workforce of Teagasc by their chairman, when they compared them to bullocks huddling together because the wind was getting cold.

The Minister has presided over the contraction of the food industry. He has presided over the close down of the sugar factory in Thurles and very little, if anything, meaningful has been done to check that. The Minister has done very little to face up to the reality that with the possible exception of Bailey's Irish Cream there is hardly an important branded Irish product on the European market. If anybody here doubts that all they have to do is go around Europe and seek and demand their favourite product. They will find it will not be on the shelves and that they will have to have it directly exported to them from Ireland. That is a index of the degree to which we have failed to meet the challenge the establishment of branded products on the European market has presented us with.

The Minister has been unable to stamp out the use of "angel dust". Certainly he has been totally unable to eliminate the damaging publicity associated with its use which, of course, creates great problems for Irish agricultural produce on the European market.

There are a number of clear priorities which should be established and which the Minister should address. There must be a determined, concerted effort to develop the food industry. I know it is difficult to establish and produce branded products; but if we continue to neglect that obligation then we are going to continue to stagger from crisis to crisis as far as Irish agriculture and our food industry are concerned. There are also new opportunities developing on the European market — and on the home market — for organically produced what are loosely termed "health foods". We are starting with a tremendous natural advantage in that regard, yet it seems the efforts we are making to develop them are minimal. At least the investment we are making to develop them is minimal in the context of the overall value of Irish agricultural produce.

In the immediate short term it is imperative that we negotiate the best deal possible for this country in relation to the Common Agricultural Policy position which now has become critical. The details of Ireland's special dependency on and special problems in agriculture are well documented. We are all only too well aware of them. I have to say that the Government's handling of the matter is dismal, pitiful and inept. In many ways it is a sell-out. The writing has been on the wall for years, yet the Government have been unable to act to change it. They seem to have been gripped in a form of political paralysis, drifting along in the belief that the present situation could never occur. Many times in the past when this situation appeared to be on the horizon somehow or other we seemed to escape the worst consequences of it. The present position is different. This is now for real and we need to take that into consideration. The Minister seems to have lost the initiative. Certainly he has lost the confidence of the farming organisations. He seems defensive, beaten and appears to be drifting towards where we will have little option but to take what we get.

I repeat that in the long term Irish agriculture can develop only if it meets the needs of the consumer and faces up to the requirements of the marketplace. We have failed dismally to do that and the clear message coming from Europe now is that we must get our house in order in this matter. I see no reason at all to believe we are making the necessary effort to face up to these problems. One small indication of the degree to which we are not facing up to the need to do what is now essential is the fact that in this week of crisis where the future is going to be heavily dependent on developing new technology, introducing and developing new Irish food products, the workforce in Teasgasc are engaged in a work to rule to ensure they will be given the pay increases which have been negotiated for them under the Programme for Economic and Social Progress. In many ways that small reality tells us the awfulness of our inability to do what needs to be done to make Irish agriculture viable and to develop a food industry that can take its place and compete on the open market in Europe.

Mr. O'Brien

First, I would like to thank the Minister for attending this House today and I welcome this discussion on agriculture.

There is no better way to come to terms with a crisis than to talk it through, logically, with a friend whom you can trust especially if that friend is experiencing similar difficulties. Irish agriculture is now in a state of crisis and in this address I want to share with the House my deep sense of fear for its future. I feel that by doing so I will not only be helping myself but also many other people who are too frightened to think about the consequences of the current CAP talks and the coming GATT negotiations. As a farmer I see my business under serious threat, but as a public representative I feel an even greater burden of responsibility because we must try to get the best possible deal for a great number of quiet, vulnerable people whose only voice is ours.

As a farmer, I responded to development in agriculture over the past 20 years. We increased milk production and beef production in response to better prices. Increased production and price stability were among the aims of the CAP and we helped to achieve those aims while at the same time we made a better life for our families. Do we now find that we have been sucked into the old glad and sad system, glad to have had good times and now sad to see them go, or can our Government rescue the situation before it is too later for many of our farming families? Certainly we must share the responsibility for the current situation but in proportion to or contribution to it, and that is very small. As a nation we should not be asked to bear a greater load than we can carry, and that is also small.

In any negotiations, skill and strength are the two main factors. In our dedicated and experienced negotiation team we have the skill required. Our strengths are many. We are still mainly an agricultural community and, as such, merit special consideration. Our image abroad is that of a clean healthy environment where food can be produced which is safe and cheap.

Our climate allows the production of grass which is in keeping with policies on environmental protection and more extensive farming. However, the risk here is that we might suffer on this account when it comes to sharing compensation. Also, the dedication of farmers themselves, substantial funding of various schemes by Government and the backup of a good research and advisory service have been a great support to the industry to help it overcome the present turmoil.

On the other side of the coin I see many pitfalls. The fact that many of our people are engaged in some way in agriculture means we have many more to protect. The proposed drop of 8p per gallon in milk will have serious consequences for all dairy farmers but especially those who have small quotas, those who have commitments and are totally dependent on farming and those who have borrowed money in order to develop over the past ten years. While the proposals regarding cereals will not have a major impact on my constituency, the proposed intervention cuts and reduction in premia will have serious effects on our sheep industry which has expanded rapidly over the past few years. Due to our history land ownership has always been a status symbol in this country. I would not like to be selling a retirement scheme to any of my neighbours. A set-aside scheme is attractive in an area where there is a large population to avail of amenities like golf, trekking, horse riding, sports, etc but we do not have such a population and, therefore, set-aside has little or no value in my area.

The proposals as they stand would mean many families leaving or being forced out of farming but where will they go? There will be compensation, but in my opinion no money could compensate for the loss of a way of life, the destruction of a family house, or the sudden discarding of skills acquired over a lifetime.

I agree we must tackle the problems of over-production and costly price supports etc. but we must ensure that as many farm families survive as wish to survive. This could mean limiting the rise of units to avoid some becoming too large at the expense of smaller farms. We must take full advantage of our image and then we can demand premium prices for our products based on quality. This would be a major factor in helping to maintain small farm units.

Finally, I ask all here to present a united front in the interest of our rural dwellers and give our negotiators the support they need to demand and get the kind of conditions we need and deserve to preserve our farming industry.

I would like once again to thank the Minister for coming in here today and giving us an opportunity to debate the Common Agricultural Policy.

Acting Chairman (Professor Conroy)

Senator Naughten, do you wish to share your time?

Mr. Naughten

I intend to give five minutes of my time to Senator Hourigan if that is agreeable.

Acting Chairman

Is that agreed? Agreed.

Mr. Naughten

Every individual who has spoken here has recognised the very serious situation facing not only Irish farmers but every town and village throughout Ireland. They recognised the tremendous impact the proposed dismantling of the Common Agricultural Policy will have not just for the farming community but for every town and village throughout Ireland. It is important that everybody in the agri-industry, in every facet of Irish life, recognise that we are not just talking about farmers' incomes; while they are the first group of people who will be hit, we are talking about rural communities.

Senator Dardis spoke earlier about the devastating effects the proposed cuts will have on the west of Ireland. I share the view expressed by the Senator in that if these programmes go ahead all there will be throughout the west will be hunting lodges for foreigners who will come and visit the country for a month and then go back to mainland Europe for the rest of the year. The farmers who will be hit most severely are the intensive farmers in the west. I wish to point out clearly to the Minister that it was those farmers who availed of the drainage grants, the land reclamation scheme and increased production to try to build up mik production at the local creamery, who increased sheep numbers to give jobs in the local factory and who used a very high input of fertilisers and feedstuffs. These are the people whose farming enterprises will be totally dismantled by the CAP proposals.

I do not know whether Commissioner MacSharry has taken leave of his senses by suggesting those proposals for an island community who depend to such a large degree on agriculture. Agriculture is the motor of this economy. Whether we like it or not, once we leave Dublin, everything revolves around agriculture. Rural Ireland depends on a thriving agricultural industry for its economy, for jobs in shops, in meat plants, in creameries and co-opertives. If you undermine — as undoubtedly these proposals will — the price structure to farmers, and farmers' incomes will be dismantled totally under this scheme, then you are also undermining the rural life of Ireland.

I had a farmer with me recently who, as a result of working closely with his ACOT — now Teagasc — adviser, reclaimed land, fenced it, drained it and built up a modern farmyard on borrowings and incomes over four years ago. That man, his wife and family are now facing bankruptcy not because of his inefficiency, not because he did not do his job correctly, but because this Government and this Minister for Agriculture and Food have stood idly by and allowed farmers' incomes to fall by 20 per cent in the past two years. That is a fact of life and nobody can deny it. This Minister and this Government have reneged on promises to the farming community. They had all the answers to the problems when in Opposition in 1986 when we experienced difficulties in the milk levy from which, by and large, we came out unscathed. Nevertheless, they are the very people who were calling on the former Minister, Deputy Deasy, to resign. Deputy Deasy was one of the best Ministers for Agriculture for quite a long time.

Acting Chairman

I am sorry to interrupt the Senator but do you intend to give some of your time to Senator Hourigan? Is another minute agreeable?

Mr. Naughten

Thank you. It is terrible that we have not tried to deal with those imports into the Community. Of course we must also remember that those countries who are pressurising the EC to reduce the subsidies to farmers are the very countries that have gone merrily along their own way and increased their production, thereby aggravating the problem.

I regret, a Chathaoirligh, that I do not have much more time but I promised Senator Hourigan a few minutes of my time. We all must, with a united voice, condemn those proposals and reject them out of hand because they are totally unacceptable. As I stated earlier, we are an agricultural based economy and we must protect our agriculture. We have a vital national interest and the Government must use the veto if necessary to protect it.

Mr. Hourigan

I thank my colleague, Senator Naughten, for giving me some time to enable me to say a few words in this debate. I emphasise that this is a major crisis. As indicated earlier, it is not something that affects agriculture only, it affects the entire economy. We are very much an economy dependent on a thriving agriculture and the present position is dismal to say the least. We have heard it stated — it could not be over-emphasised — that Irish farmers have suffered income losses of up to 25 per cent over the last two years. Many Irish farmers are now on the brink of dire poverty. Others put up a good front which is artifical.

The average farm income in 1990 was only £126 per week; 60 per cent of farmers earned less than £100 per week from farming. These figures are published by Teagasc — the farm management survey department — yet, no farmer will be better off as a result of the MacSharry proposals. There is no point in being deluded in that regard. Furthermore, we have no guarantee that compensation will be permanent in the Common Agricultural Policy proposals. The compensation talked about has inherent dangers for us. It can erode the natural advantages of our country in the production of grass and where cereal substitutes and cereals are being subsidised, providing cheap non-grass feeds for live-stocks. In this way we will lose the advantage we had in the production of products from grass.

Another very serious situation is that small farmers who have become more efficient may have to reduce production to get compensation. Maximum stock densities allowed are two livestock units per hectare in non-disadvantaged areas and 1.4 livestock units per hectare in disadvantaged areas, with dairy cows, beef cows and cattle used on the farms all taken into account. This is an extremely serious matter; the person who became efficient is now being penalised and told not to go any further if he does not want to lose any relief measures. Heifer prices, which are a very important factor for many of our beef farmers, will fall by 15 per cent under the proposals. Absolutely no compensation is envisaged to provide for that. There has been no commitment given for the retention of support measures. That is the most serious matter and I have already referred to it. It is a matter that cannot be tolerated. Furthermore, no commitment to match EC cuts in prices and production has been obtained from the United States or other exporting countries. The EC Commission has made no effort to achieve a balance in relation to cereal substitute imports. Instead, the Commission proposes to cut grain prices to world market levels——£80 per tonne ——another serious issue to which I have already referred. That would erode the whole advantage of grass production. A cheap grain policy has always been recognised as being something that would undermine our economy.

I am conscious of time constraints, and I appreciate the indulgence and tolerance the Chair has shown me. My final point is that Irish jobs are in great jeopardy at this time. We are not talking about agriculture, we are talking about the £1.5 billion net each year that comes from the EC; we are talking about the many natural advantages now being thrown away; above all, we are talking about our people. If the measures are implemented then the proportion of those working on the land, either directly or indirectly, will be reduced significantly. At present 20 per cent of the population is directly involved in farming and another 20 per cent is indirectly involved in the agribusiness. I can foresee a position within the next five to ten years where those figures will be halved, which will create very serious social and economic problems.

Therefore, I appeal to the Minister to make every effort to ensure that, as a disadvantaged island off the mainland of Europe, we are given an opportunity to survive economically and socially. We do not need to apologise to anybody. Politically, we are very important for America and the European countries. Our location is such that from a political and military point of view we should not under any circumstances be regarded as a country that does not need special measures. We do need special treatment, and we must get it.

I thank the Acting Chairman for his indulgence, and I conclude by urging the Minister to make certain that the proposals put forward in relation to the CAP and the GATT round do not materialise.

Acting Chairman

Thank you, Senator Hourigan, and thank you also for your courteous punctuality.

Mr. S. Byrne

With your permission, a Leas Chathaoirligh, I should like to share a few minutes of my time with Senator Fallon.

Acting Chairman

Is that agreed? Agreed.

Mr. S. Byrne

The CAP proposals outlined by Commissioner MacSharry last week need to be examined very seriously by every Irish person because of the consequences they could have on our major industry. The most important factor is that farm incomes are protected. Secondly, there must be potential for growth in Irish agriculture and Irish farmers must be able to develop their own business.

At the outset, it is important to state the present position of Irish agriculture. Irish farmers have at this time borrowings to the tune of £2,000 million. This money is borrowed at very high rates of interest, 15 to 16 per cent. The rate of interest is very high when measured against the rate of inflation, 3 per cent. We must note that interest rates are 12 per cent higher than the rate of inflation. Since 1987 farm borrowings have increased by 25 per cent. Interest rates in 1987 were 4 per cent lower than present day interest rates. Farm incomes since the beginning of 1990 have fallen by about 15 to 20 per cent. My respected colleague, Senator Hourigan, said that the figure was 25 per cent, but we should not paint the position worse than it is. It is bad enough at 15 to 20 per cent.

Mrs. Doyle

It is 25 per cent.

Mr. S. Byrne

That is a debatable figure. It is against the background of both high borrowings and of a 20 per cent reduction in incomes that we must examine the CAP proposals. Let us examine the situation in the different sections, which will show how serious are the consequences of the proposals.

In dairying, on top of a cut of 3 per cent in quotas this year, we have a proposal under the CAP to cut milk quotas by 4 per cent and for support prices for milk to be cut by 10 per cent. In compensation, a premium of £65 per cow on the first 40 cows would be paid but the problem with this compensation is that it is dependent on the stocking rates on the farm. In the disadvantaged areas this stocking rate will be 0.56 livestock units per acre, or two acres per livestock unit. In the non-disadvantaged area the stocking rates will be 0.8 livestock unit per acre or 1.25 acres per livestock unit.

Those are very low stocking rates for both disadvantaged and non-disadvantaged areas. Most farmers who developed and have borrowings would have a much higher stocking rate than those outlined. In other words, how will they qualify for this so-called compensation? Will they lose out on premium or will they have to reduce their stocking rate? A person with a stocking rate of one acre per livestock unit will have to reduce his stock by 20 per cent to get down to 1.25 acres per livestock unit. That might sound very complicated, but in the end the farmer would have to reduce his stocking rate in order to qualify for the paltry compensation. That position would be unacceptable.

With a 20 per cent reduction in stock, a 7 per cent cut in quotas and a 10 per cent cut in price support, how will the premium of £2,600 for 40 cows at £65 per cow compensate the farmer? The argument does not stand. To reduce his stock by 20 per cent would mean a 20 per cent reduction in income, not to mention the cut in quota and price supports. If, for argument's sake, a farmer decides to reduce his stock numbers to avail of premium, will he be able to reduce his loans with that money or will he find that the tax man will take one-third of it and, if he has claimed stock relief, that the tax man will take 50 per cent of it in income tax?

It can be seen from these few points that compensation will not be sufficient to offset the drop in income. It is hard to see how small farmers will not lose, because to make an income from a small farm today would require stocking rates far higher than those laid down by EC.

The EC Commission wants to reduce the intervention price of beef by 15 per cent. To compensate for the loss, it is proposed to increase the special beef premium for male cattle to £158.30, which is a nonsensical suggestion. The premium would be paid for the first 90 animals in every herd in three annual payments of £52.77 during the life of the animal — between eight months and nine months, between 18 months and 21 months and between 30 months and 33 months. The same stocking rate applies as for dairy herds; in other words, stocking rates have to be reduced in order to qualify.

Efficient producers of beef in this country are normally stocked at one livestock unit per acre and finish cattle at 24 months. To avail of the full premium outlined above a farmer would have to reduce his stocking rate and keep stock longer. This could mean carrying 40 per cent less stock but carrying them for a longer period and through several winters. There is no compensation to cover that position, and the suggestion is ridiculous. If a good farmer finds if difficult to make ends meet at present he has not a hope in hell of doing it with the lower stocking rates and carrying cattle for an extra nine months.

It is proposed that the cereal price be reduced by 35 per cent over three years, 1993, 1994 and 1995. Small producers are those who produce less than 92 tonnes of cereals a year, i.e., about 50 acres. Above this figure, farmers will have to set aside 15 per cent of their tillage land, and for those producing over 230 tonnes of cereals, no compensation will be paid on the balance of the land regarded as producing more than that amount.

For an efficient cereal producer with winter wheat producing a yield of four tonnes per acre, this means 60 acres of cereals. Ireland's most efficient producers normally grow a couple of hundred acres. How will they finance their business with no compensation over 60 acres? It is another ridiculous situation. Will we put them out of business and import more foreign low grade cereals?

The points I have outlined underline that farmers will not be compensated. The main points I have covered were that Irish farmers have borrowed more than £2,000 million, that interest rates are 13 per cent higher than inflation; that to get this compensation stocking rates will have to be reduced by 20 per cent; that a reduction in stocking rates will reduce income apart from the price cuts and that in the beef sector, cattle will have to be kept for a longer period. To overcome these problems farmers will have to (a) get better compensation; (b) it must be based on the stocking rate the farmer is at at present and (c) an interest subsidy is required to overcome the higher borrowing of Irish farmers. This is essential and must be part of the Brussels package.

Up to now I dealt with the proposals as they affect farmers. If the money from Brussels is to replace lower production on Irish farms what effect will this have on employment? It is certain that the rationalisation of the dairy and beef industries at off-farm level will lead to fewer co-operatives and meat factories. This is bound to lead to fewer jobs. A cut of 7 per cent in meat quotas will mean less processing and ultimately less employment.

The Common Agricultural Policy at present is costing each person in the EC £78 per annum or £1.50 per week. This is not a high cost; it is the price of a pint of Guinness in Dublin. We hear this screaming from ill-informed quarters about what the CAP is costing the people.

The Irish farmer takes pride in what he does. He does not want handouts. Rural Ireland will be denuded of its foundation stones. The Common Agricultural Policy under the new proposals will cost an extra £3 billion more than at present. I believe that the markets of the developed world have not been explored properly yet to make such important decisions. We should not let the Americans walk on us, whether it is in connection with GATT or CAP.

I wish the Minister for Agriculture and Food, Deputy O'Kennedy who is here this evening, and his Minister of State, Deputy Kirk, every success in their negotiations. I have every confidence in the Minister who has experience as a Commissioner as well as a Minister for Agriculture and Food. I appeal for support from the farmers' organisations, the trade unions and the workers. This does not affect only farmers; it is a national problem and we should all row in to do what we can to save our most important industry. Squabbling will weaken our case. Let us hope that will not happen and that we will row in together and wish the Minister well. I am sure Commissioner MacSharry, a man who came from rural Ireland, will not be found wanting as an EC Commissioner and will see that we, as an island, are a special case.

Mr. Fallon

I, too, would like to make a short contribution to this very important debate. Like other Senators, I recognise that this proposal by Commissioner MacSharry is probably the EC proposal with the most serious consequences for the Irish economy since our accession in 1973. It impinges not only on farmers but on workers in food industries. If we are to believe some of the propaganda, it will impact positively on household budgets.

We are faced with two schools of thought, those who reject the proposals out of hand in what I regard as the irrational manner being advocated by the IFA and those who advocate a strong principled objection but who seek to address the negatives through negotiation. We have the lobby, including the leader writers of The Financial Times and other papers. Last week, on 12 July, the serious objection to the MacSharry proposals was that they do not lower prices enough and that the compensation they offer is excessive.

Our Government's position has been very clearly stated by our Minister for Agriculture and Food. I honestly believe that neither he nor we need any lecture from the IFA large farmer lobby as to how the national interests should be protected. We reject as unworthy and reprehensible the type of language being employed by the IFA. In my opinion, they have sunk to an all time low in levels of diatribe in seeking to suggest that the Minister and the Government would put party loyalty before the national interest.

We all know that these negotiations will be long and difficult and we, on this side of the House, are happy in the knowledge that the national interest will be uppermost in the mind of our Minister and his officials during these delicate negotiations. We are happy in the knowledge too that strident megaphone statements will not be allowed to interfere with their calm and rational assessment of how best to proceed. We are fortunate that in these most difficult negotiations we are represented by a man who has served his country for 26 years in the Oireachtas, who has held with dignity and pride some of the highest offices in the land, having been a Minister for Foreign Affairs at the crucial time of the EMS negotiations. He is a former Minister for Finance and is now the longest serving Minister for Agriculture and Food in the past two decades. I believe that these facts on top of his experience in the EC Commission will be very important and will give him a unique insight to how best to progress our national interest in these negotiations. We, on this side of the House, are satisfied that he will not fail us.

Mr. Neville

I would like to voice my concern about the seriousness of the situation. Never has the economy or the nation been under such threat. If the MacSharry proposals are passed they will be the start of the destruction of the Irish economy. Not alone will farmers be affected but the economy will also be affected. We will be going back to the 1950s. The frustration felt by farmers is understandable when they see their livelihood, their way of life and rural Ireland being destroyed. It is also understandable that the leaders of the farming organisations respond in the fashion they do in order to express the frustration of their members at what they see as the destruction of their livelihood, their way of life, as well as the destruction of rural Ireland. If we continue along the lines proposed in the present package, and if that trend continues over a number of negotiations, we will find ourselves in an almost deserted Ireland, a tourist resort, an island off the cost of Europe which is nice to visit for a few months but of no economic consequence to the Irish people. In fact, we will be just an island who rear people for the boat as we did in the forties and fifties.

I welcome the statement made today by the Minister that he will oppose the MacSharry proposals. We wish him success in that. He must succeed. There is no doubt but that the MacSharry proposals will hit the economy in many ways. They will directly hit farming. They will also hit the level of employment and the standard of living of people working in the food industry and in the agri-business. They will hit our rural towns and villages which depend on the relative prosperity of the farming community for their livelihood. Farmers go to the towns and villages to spend their money and if their spending power is dramatically reduced it will have a direct effect on employment in those towns and villages and on the number of people living in them. We will see a decline in the towns and villages of rural Ireland.

There is no doubt that the decline in agriculture will have this effect. A conservative prediction that 16,000 people will lose their employment in the agri-business if the proposals go through has been made by ICOS. In addition 22,000 farmers are likely to lose their livelihoods and that will have the effect of increasing the live register by almost 40,000 people. We cannot tolerate that. We must support the Minister in his efforts to ensure that the proposals outlined are not accepted, that Ireland is recognised as a special case on the periphery of Europe, the only island nation when the chunnel is completed and that it is recognised that the economy of Ireland is more dependent on agriculture than is any other country in the EC.

While reform of the agricultural policy is inevitable it must not be reformed at the expense of Irish farmers. It cannot be repeated often enough that agriculture has a special place in our economy. In rural Ireland that industry plays a special part in the whole social fabric. The proposals, if accepted, will change Irish society and the values we have enjoyed and hoped to keep will disappear. In fact, the Ireland we know will be changed. We must ensure that this does not happen.

We joined the EC in 1973 on the understanding that the agricultural element of our economy would be supported to a great extent. In fairness, that has been the experience, relatively speaking, to date. In 1973 because of the opening of our borders we lost many of our indigenous industries which were protected prior to 1973. We will be in a worse position, from an employment point of view, than we were in 1973, if we accept these proposals. We must not allow that. The benefit of the EC to Ireland was in its support for agriculture. To have that reversed would contradict everything which our party supported when Ireland joined the EC in 1973.

I welcome what the Minister said in response to what Fianna Fáil MEPs said in recent statements. That was positive. It was unfortunate they were involved in a campaign which seemed to support the proposals the Minister says he will negotiate against. The Minister has effectively told us that he has intervened with the MEPs concerned. We should all welcome this and look forward to silence, especially in the case of MEPs Lane and Killilea, already named in the House. They have done much damage in promoting the proposals in Europe as acceptable in Ireland when, in fact, the position is that they are totally unacceptable to anybody who understands the implications of them.

The move throughout Europe towards national support for agriculture must be seen as very dangerous in Irish circumstances. Due to the size of our agricultural industry and its contribution to our economy, it is not possible for our economy to support agriculture to the level our partners in Europe, such as France, Germany and Italy, can. The move towards national support for agriculture is very dangerous and has serious implications for Irish agriculture. It will put Irish farmers in a much less competitive position than their counterparts in Europe. Warning bells should ring in all sections of Irish society, and in Government, that this should be resisted because of its implications for Irish agriculture.

I mentioned the frustration of farmers and farm leaders with the present situation, but I wonder what would be the frustration of any leader of any section of Irish society, be it trade union or any other representative body, if their members' incomes were cut by 25 per cent with the prospect of further cuts? In fact, farmers and farm leaders have been quite tolerant in accepting the level of cuts. We must recognise that leaders of any section of society who see their members' incomes cut by that amount will voice their opposition, and rightly so, as loudly and effectively as they can.

We must be concerned at the fact that beef and milk is hardest hit. This is very serious for our economy. Beef to the Irish economy is ten times more important that it is to any other European State and milk is seven times more important to us. The fact that grain prices are collapsing will have a dual effect. First, it will eliminate the grain farmers, and more seriously for Ireland because we are a grass producing nation, it will eliminate the advantage that beef produced from grass will have. It will result in white meat production being more attractive than beef. Beef has been under threat in Europe for other reasons and the uncompetitiveness of feedstuffs will surely cause serious difficulties.

Finally, I question the Minister as to the extention of the disadvantaged areas scheme. With the price support system being dismantled, we must look to other supports to compensate farmers. These supports are only minor compensation and to suggest that they are compensatory is misrepresenting the situation. We must still seek to maximise our benefits from the indirect supports system.

I ask the Minister if there is any reason why the entire country cannot be declared a disadvantaged area? We are on the periphery of Europe and once the Chunnel is open we will be the only island nation in the Community. We are furthest from the market we have to pay the highest costs to place our produce on the market and surely we are at a disadvantage. I cannot understand how the Luxembourg Government have managed to have all their country declared a severely disadvantaged area when much of the land there is as good as much of the land in Ireland. Yet Ireland, which is on the periphery of Europe, has not been in a position to date to have the entire country declared a disadvantaged area. I find it very hard, from my experiences in County Limerick, to understand how the criteria are applied. To the educated eye, some of the land included in the scheme does not compare with some of the land excluded. While I welcome the inclusion of land which is reasonably good, some of the areas in County Limerick which are not included are clearly of poorer quality than lands that are included.

Mr. H. Byrne

It is the same all over.

Mr. Neville

It has been predicted by the farming organisations that up to 8 to 9 per cent of the land which will be reviewed under the appeals system will be found to be eligible for inclusion in the disadvantaged areas scheme. I understand that under the EC system only 1.5 per cent of the total land of Ireland can be included in the scheme. Surely there has to be a mechanism for the inclusion of all eligible land identified under the appeals system. I understand that it has been decided in Europe to increase the areas which can be included to more than 1.5 per cent. However, as the cost implications of this increase will be quite substantial it is doubtful whether the Minister will be able to get an extension of the 1.5 per cent. What approach will the Minister take to ensure that all land eligible for inclusion will be included in the extension?

The Minister had said that he will forward to Europe information on all land eligible for inclusion. I do not know what that means. It is easy to forward information on eligibility but the final decision may be based on the limitations and extent of the appeals system. For example, we may find that out of 8 or 9 per cent eligible under the criteria, only 1.5 per cent will be included. If this is so, I should like to know how this land will be selected. I look forward to hearing the Minister's reply to these questions.

Mr. H. Byrne

On the first day of this session, 17 April, in calling for a debate on agriculture I said then that farm incomes were at crisis proportions and if this issue was not addressed the fabric of rural Ireland would begin to disintegrate. I again raised this issue on 18 April. I reported on 24 April that there had been a unique occasion during the previous few days when the IFA and the Department `of Agriculture and Food had agreed on a particular issue, that is, that farmers' incomes would drop this year by 11 per cent. I said that this followed a substantial drop in their incomes last year. On several occasions since then I have sought a debate on agriculture. I should like to say to my colleague that I was not playing to the gallery on all of those occasions. I should also like to say to her that on many of those occasions I was ploughing a lone furrow.

As I said, I requested a debate on agriculture on many occasions and I am surprised and shocked that we are only now debating an issue of the gravest importance not only for farmers but for every man, woman and child in this nation. I am baffled as to why this House felt it unnecessary to allocate time for this debate before now, while the situation has gone from bad to worse. As everybody here knows, this House is regarded by some people as irrelevant. Is it any wonder that this is so? I am not blaming anybody in particular but it is not good enough that our greatest industry should have been treated in what appears to be a contemptuous way by this House.

Commissioner MacSharry surely looked to Ireland when forming his proposals and having noticed that Seanad Éireann, part of the most important forum in this country, did not consider it worth while debating agriculture he then proceeded to form his proposals accordingly. Having said that, with great annoyance and anger, let me say, I would also have to say that I am grateful to the Leader of the House, Senator Fallon, for at last seeing to it that time was allocated for this debate.

Mr. McDonald

Better late than never.

Mr. H. Byrne

Yes. It is very important that we have the opportunity of debating this issue. I am also very pleased that the Labour Party have not only participated in this debate but have also found it possible to join with us in our condemnation of the proposals. When we on this side of the House put down a motion in February it was condemned out of hand by the Labour Party. They said the proposals were leaked and farmers had too much, as they have always said in the past. Let there be no doubt whatsoever about that. However, now that the general view is that these proposals are too severe they have joined with us in our condemnation of them. I am grateful even at this late stage that, having run with the hound some time ago, they are now running with the hare. I am disappointed they used the occasion to take a swipe at the Minister, Deputy O'Kennedy but I suppose it is better that they take a swipe at him rather than at those involved in agriculture.

Ireland is in a special position. I do not want to go into the details as they have already been spelled out here tonight. The fact that we are on the periphery of Europe surely puts us in a unique situation. Our farm families and, in particular, the small size of our farms are unique and all of these factors must be taken into account when any decisions are being taken.

I believe what is most hurtful to farmers at this stage —— attacks have been made on the IFA and other farming organisations in this debate —— is the state of confusion as none of us seems to know exactly what is on offer at present. I should like to quote from an article in the Farming Independent of 16 July written by Oliver McDonnell. I do not know who he is but I found the article interesting. The article is entitled “Details of the MacSharry plan give full horror” and I could not but agree with him on that. As a practising farmer in a rural area I know the situation on the ground. I talk often to my neighbours and I have to say they are horrified, shocked and anxious about these proposals.

I should like to quote a few statistics from Mr. McDonnell's article. He says that the reduction in the milk quota will be 6 per cent and not 4 per cent, a figure which has been bandied about quite a bit tonight. He claims that a reduction of 2 per cent has already been decided in the 1991-92 price package and he goes on to say that the compensation arrangements will be operated through a bond payable annually over a ten year period. The older Members of this House will know from the past what a bonding arrangement can lead to and I am very suspicious of it. What is meant by a male calf disposal premium? Are we going to slaughter male calves and be paid for it?

Mrs. Doyle

Yes.

Mr. H. Byrne

That is how I understand it. Farming is not what it was when we were young, and that is sad. It is also sad that this proposal is on the table, and I hope it is never implemented. There should be no personality clashes and no attacks on personalities. There should be no attacks on the Minister, Deputy O'Kennedy. I believe in that Minister who, on occasion, has spoken quite strongly for the farmers, when it was not popular, even among people in his own party. The Ministers of State, Deputy Kirk and Deputy Walsh, have also been criticised. Above all there should be no divisions, between the IFA and the Minister, the MEPs and ourselves or the west and the east of Ireland. We hear a lot of talk about the west, as if the farmers there are the only group in trouble. Coming from a county that is regarded as the model county, and for very good reason, I know there are many farmers in that county in big trouble, and if these proposals are implemented, God help us.

As I said, we should not engage in personality bashing. Commissioner MacSharry has a job to do and he has to look after his people. However, we, the public representatives, also have our job to do and we must look after our people. Let us be European, but our priority must be Ireland. Ireland comes first, and I make no apology for saying that. Neither do I apologise for saying that threats, from whatever source, should not weaken our resolve. However long it takes to resolve this problem, so be it; let us take that time. We should not let ourselves be pushed into a corner.

I will read from a document prepared by one of the farm organisations. It is worth quoting because it is frightening. It states that in Ireland the proportion of farm families now living below the poverty line has more than doubled in the past 20 years. I would like the Labour Party and the Independents in this House to take note that the poverty line is defined as an income equal to half the average annual income of a person employed in the industrial sector. My wife attended a calf mart yesterday, and she pointed out to me this morning that a good heifer was bought for £30. Not too long ago that same heifer would have fetched £100, £120 or more. That proves there has been a substantial drop in beef prices.

As a member of the Government party I would say that we are committed to help maximise the development of agriculture so that it can contribute to Exchequer returns. Agriculture has a solid base in our economy. Without agriculture this country would not function. It is our traditional industry in which many people work indirectly as well as directly. We are conscious that there will be a more open trade market in agriculture and that the reorganisation of the agricultural support mechanism is imminent. We will be seeking recognition of Ireland's unique and critical dependence on agriculture — farming provides over 42 per cent of our exports and 10 per cent of our gross national product.

Having said that, it is important that we fight the proposals tooth and nail. The Commissioner for Agriculture has made proposals which are about to be approved in principle. Each country will have an opportunity to submit their proposals to the Commission later this year. Ireland's case will be supported by the Government and, from what I have heard tonight, by all parties in this House. We will ensure that Ireland will get a fair hearing so that agriculture is not devastated as various farm organisation and political parties have said recently. The reason for those accusations is probably frustration, but I would ask the farm organisations to use caution.

As I said earlier, the Minister for Agriculture and Food has used his skill in putting Ireland's problems to the Commissioner, and will continue to do so. As one who has been involved in farming organisations and in agriculture, I will very definitely try to ensure that we acquire the correct measures for the Irish farmer. Ireland's agricultural structure is primarily based on the family farm which must survive. I came from a family farm which supported a family of 12 children. It would be impossible to rear 12 children on 30 acres of land today.

As my time is almost exhausted, I repeat that I agree basically with everything that has been said. It is not helpful to our case to make attacks on personalities. I plead with everybody in the country to back the Minister in fighting our case in Europe and trying to ensure that the family farm survives.

Mrs. Doyle

It has to be clearly put on the record by all of us in this House today that we accept the urgent need for reform of the Common Agricultural Policy in resolving the huge market imbalances that now exist. Any thinking person, whether urban or rural based, understands and has understood for some time that the present position cannot be justified. It has gone beyond the point when it could be justified. I thank the Minister for coming into the House this evening. I appreciate that his schedule is fairly hectic at the moment. Any criticisms we may make are meant to be helpful. I urge him not to take the criticisms personally but to use them to strengthen his case in Brussels by pointing out that he is having a difficult time at home from politicians, farm leaders and the urban and rural sectors. The Minister could use the criticisms to his advantage, criticisms that are based on our justifiable concern at what is happening in our major industry.

I find it slightly arrogant of my colleagues across the House to assume that the Ministers in their party are above criticism. I am the first to criticise but I hope I can also be generous in giving praise when I support what is happening, regardless of which political team is making the case. The criticism of farm leaders by Fianna Fáil in this House tonight borders on arrogance. I have criticised them and I will do so again. They criticise me, as they criticise Senators on the other side of the House. If the criticism is constructive and justified we strengthen one another but giving out about the fact that they have been critical of the Minister for Agriculture and Food is being arrogant. It is time that Fianna Fáil recognised that when the farm leaders agreed to the Programme for Economic and Social Progress they did not agree to be silent or to acquiesce. I was afraid for some time that the Government had bought peace and silence from certain sectors but I am glad to say that the leaders of the different organisations are now restating the concerns voiced to them at different levels of their organisations. The criticism is meant to strengthen the Minister's hand in debating the very difficult topic before him in Brussels.

We have been asked to accept the MacSharry proposals as the basis for negotiations. I have great difficulty with that, and do not throw out the suggestion lightly. However, when the principles underlying the MacSharry proposals are wrong how can we accept them as the basis for negotiations? For them to be the basis for negotiations one must accept the principle and then negotiate terms, either increased compensation or less drastic reductions, but if the principles are wrong and would undermine our major industry and employment both in rural and urban Ireland how can we accept such proposals as the basis for negotiations? I would urge those who made that suggestion to think again.

The Minister indicated earlier this evening in response to Senator Raftery that he had a word with MEPs, Mr. Paddy Lane and Mr. Mark Killilea, and had more or less reined them in with regard to the views they were offering on the MacSharry proposals and their efforts to canvass support for those proposals. The Minister stated that he had spoken to them as recently as this week and implied that all would be well in that quarter. I would like someone to tell him that on the Joe Duffy programme this morning Mr. Mark Killilea outlined his views on the MacSharry proposals once again. Therefore if the Minister had spoken to him this week how is it that he again contradicted both the Minister's and all our views on the MacSharry proposals? I would urge the Minister to use stronger tactics in handling his colleague.

Mr. H. Byrne

That would be very difficult.

Mrs. Doyle

The Minister implied that he had a word with him but this had not worked up to today.

There is another major difficulty and that is the principles underlying the MacSharry proposals are totally at variance with what we need from our major industry and in developing urban and rural Ireland. Commissioner MacSharry's, implicit threat, as I interpret it, to our Minister and other Ministers for Agriculture is that if they did not sort out what they want and come back to him before the end of the year there would be reform without compensation. That is the most worrying aspect of all. In other words, the stick is being used: we will negotiate but if you do not agree before the year is out there will be reform with all the attendant difficulties and no compensation. How can the Minister, Deputy O'Kennedy, head to Brussels with confidence and feel that he will be able to get the best deal for this country and our major industry if he knows that, ultimately the stick will be wielded and if he does not toe the line and come to Commissioner MacSharry's heel before the time is up that there will be reform with no compensation?

My problem is not that he will not make a case to the best of his ability but rather that I do not have any confidence in his ability to make his views stick. I am afraid that Commissioner MacSharry, will wield the stick and that the Minister will come home — I do not mean to be derogatory in saying this — with his tail between his legs and state that he did his best and that if he had gone any further we would have got no compensation. I do not want to hear the Minister saying that in another three months, six months or twelve months when the negotiations are concluded because we will not accept that the Minister did his best if the outcome is not in our best interest. I have no doubt that he will try and that both he and his advisers will push as far as they can but I am afraid that Commissioner MacSharry, will say to him that "I will win this battle". Put up or shut up or no compensation. The Minister will then come running home to say that he got the best deal he could. The Minister said that to us before following other negotiations and we had to wear it but on this occasion we cannot afford to wear it because it would mark the end of the road for agriculture. I have major concerns about the Commissioner's ability to wield the big stick. I could mention the old pals act but there is no need to; regardless of whether he is a Fine Gael or Fianna Fáil Minister, we have an Irish Commissioner and I am extremely concerned about an Irish Minister for Agriculture's ability to win this argument and we have got to win it. I cannot overemphasise the need for us to do so.

The principles underlying the MacSharry proposals cannot be accepted. These proposals would reward inefficient farmers and penalise efficient farmers, be they big or small. It is not a question of the big versus the small because, as has been pointed out by economists, the 80-20 argument does not apply to Ireland because even our big farmers are small when compared with farmers in other countries and some of our small farmers are big when compared to the number of acres held in other countries. Therefore the big and small argument is not relevant. Why should we support a policy which would decimate agriculture, agri-business, our most efficient competitive farmers and our capacity to earn foreign revenue, particularly in the livestock trade which is a major earner of foreign revenue, thus leading to an increase in emigration and affect our GNP by up to three per cent? We all agree on the statistics but we cannot accept a policy which would decimate the industry which the Minister presides over at present.

Many of us, including myself, vigorously supported the proposal that we join the European Community in 1973 because of the advantages which it was promised would accrue to agriculture and agri-based industries. We were a net agricultural exporting country and we looked to the 360 million consumer market in Europe to be our shop shelf and our marketplace. We knew there would be a down side. We have instanced our car, steel and shoemaking industries. We knew we were being threatened but agriculture above all else was held out as the one area that would gain. However here we are 20 years later discussing proposals which sound the deathknell for our primary industry. We are being asked to negotiate and to accept the principle involved but I am afraid we cannot do so.

Part of the philosophy of the common market, in signing the Treaty of Rome and joining the European Community, is to concentrate production in areas with the greatest natural advantage. Above all other sectors we have got to defend our grass-based production, our livestock sector and dairy production. The livestock sector should be the easiest to defend, yet that sector seems to be the one which would be most seriously damaged by the MacSharry proposals. A vigorous defence is needed with no ifs, ands or buts. We want it defended and we want results. We do not want the Minister to come home to say that he did his best and that if he had pushed it any further we would have got nothing. That will not be acceptable.

There are other areas which the Minister has to consider urgently. How can we have any confidence in the ability of the Community to guarantee a budget to pay income supports for farmers during the next 15 to 25 years whatever is the transition period in moving to world market prices, given that the budget can be changed annually? There can be no guarantee that in five years time farmers will get X per cent inflation-proofed income support if they agree to the proposals before us because the budget can be changed annually there as is the case here. We can have no confidence that farm incomes will be fully protected in moving towards world market prices for our produce. Therefore all guarantees in this area would be false if we could not see beyond a twelve month agreement in this area.

Since the Minister was appointed as Minister for Agriculture and Food national supports for agriculture in this country have declined by 46 per cent. The Minister has presided over a decline of 46 per cent in the Government's support for agriculture. In the same three or four years the support for German farmers by their national government has increased by 55 per cent. Yet we are being asked to support a package that will be applied equally across Europe and our Government will not be motivated to protect our farmers as the German, the French and all other governments in Europe will be able to do. The Minister's track record shows that he has failed to protect agriculture in the national budget for the past four years. How can we have confidence that he will do so if even a quarter of the proposals are implemented?

I must emphasise the point made by my colleague, Senator Raftery, that we need a competition policy in place. We need a word in the ear of the competition Commissioner to ensure that the final agreement on the reform of the CAP will be applied equally in all 12 member states, that the policy will be common and that national governments will not be able to thwart the whole principle of a common agricultural policy by giving national aid over and above that which some other countries can afford to give. If the Germans can compensate their farmers for any reductions in price supports under a reform of the policy and the Irish Government cannot, what is common about that policy? How will we compete in the market place if other national governments can protect their farmers and their farm produce and we cannot do the same? Above all else, a reformed policy must be common. To date there has been nothing common about the agricultural policy. National subvention has thwarted any effort to make it common. If we do not have a common agricultural policy and the reforms are not both common and an agricultural policy, we are all wasting our time in this exercise.

I hope our contributions are not a ritualistic effort, an occupational therapy following which we will go back to our constituencies and insert our speeches in the local newspaper. Like my colleagues, Senator Hugh Byrne, Senator Neville, Senator Hourigan and Senators on all sides of the House, I have been asking for such a debate for the past six months. Nobody can claim credit for this debate. It is weeks too late and hours too short to do justice to our major national industry. Given the time we have got, we will do the best we can.

I hope the Minister for Agriculture and Food will be able to reply at some stage to some of the points raised. Provision has probably not been made this evening but it would be interesting to have a two-way flow of information. It would be far more useful if he could use our comments and criticisms, as well as our support, in framing his defence in Europe.

I support the Minister on two points he mentioned. The first is the difficulty being experienced in the TB testing scheme. I cannot emphasis enough the importance of finding a resolution to the problem between the board of ERAD and the veterinary unions. Farmers are paying through the nose and getting nothing for it. Many of them do not realise the post-1992 implications if we have not resolved the major dilemma of TB eradication. What is the point of saying that in some way we will protect milk quota holders under 43,000 gallons? How will dairy farmers be able to sell their produce if they have an outbreak of TB? If we do not even have our annual round of testing we are not doing a service to those farmers who are trying to be efficient and to minimise disease in their herds. I do not believe the implications of the stalemate in the ERAD programme are properly understood by a sufficient numbers of farmers and members of the urban and rural communities. There would be a huge economic impact nationally and on individual farmers caught by an outbreak.

There are major difficulties in the MacSharry proposals even for milk producers who have reasonable quotas. The demands that will be made on them in terms of buildings, equipment and modern technology that will be needed will far outweigh any profit they will receive. Most of them have not analysed the financial implications of complying with the new requirements in this area.

I support the Minister's plea to those farmers who support the use of angel dust. They are destroying the industry for themselves, for other farmers and for the country. It is foolish to consider using angel dust or, as the Minister calls it, devil dust. We will not get into the hormone debate now. The decisions made a few years ago regarding the use of natural hormones and implants are perhaps causing the black market trade in other areas which are far more serious. That is a debate for another day. I urge the Minister to stick to the line he is taking now in Europe.

Mr. R. Kiely

I wish to share my time with Senator Ó Cuív.

An Cathaoirleach

Is that agreed? Agreed.

Mr. R. Kiely

I welcome the opportunity to discuss agriculture at this time of tremendous change never before experienced by our economy and our farming community. During the sixties we supported our own agricultural industry and in 1973 we entered the EC with the expectation of a more secure trade for our products. This has led to over production and poor marketing. Ireland has been a major contributor to intervention. There is a major job to be done in marketing our produce.

CAP reform and GATT changes should be taken together so as to rid the farming community of insecurity. We may see no option but to opt for world trade but at what price? The price may be very great and I urge that no changes be made in the CAP without considering the GATT round in the same court.

The value of agriculture to Ireland is often stated. Agriculture accounts for 23 per cent of our gross exports. When imports of raw materials are taken into account, agriculture earns over 40 per cent of our income. Cutbacks in supports will result in suffering for everyone in Ireland but the farming community will have the greatest burden to bear. Within the Community there are ten million farmers feeding 350 million people. If policies continue as at present, we may end up with three million farmers in the Community. In America two million farmers feed up to 260 million people. Such a reduction in the number of farmers would destroy the expectation that the Single European Market will lead to more jobs. Some farmers are frustrated because they cannot make ends meet and they are looking for jobs. Our unemployment problem is already massive.

If the family farm is to be maintained as a integral economic factor, there must be reform of both the CAP and GATT. If the family farm is lost, the social and economic fabric of rural Ireland will be destroyed. We must base the future of the CAP on a proper budgetary footing so that incomes will not be reduced over a period of time. Otherwise the massive movement of the rural community to large centres of population will lead to higher unemployment there. These are the two basic factors the Minister should face. We should lay down a clear, defined message of what we want.

The agricultural document released recently has advantages and disadvantages and I would say the disadvantages outweigh the advantages at present. I understand we have two choices in this reform and one is to stay as we are. In the early seventies when we entered the Community the number of dairy farmers was about 130,000. Today it is down to 45,000. Last year we spent £6 billion on the CAP in Europe, yet farmers' incomes fell. Farm numbers are declining even under the CAP at present. More farmers have left dairy farming in the past 15 years than there are dairy farmers remaining in the sector. If we stay on that road we are doomed, as history has proved.

The only choice we have is to get as much as possible of the common agricultural budget, which is about £25 billion, into farmers' pockets without middlemen, storage into intervention and low cost selling. At this stage we need Community help to market our produce because we are a peripheral island off Europe with two seas between us and the mainland of Europe and with problems of distance and transport that will increase our costs enormously. We should get preferential treatment as a peripheral region of the EC and because of the importance of agriculture to Ireland. Ireland is more dependent on agriculture than any other EC country and I am sure that when he is negotiating on the CAP reform the Minister will take that into consideration and he will do a good job for us.

Let us look at some of the reforms. I am delighted that, despite what the leaked document says, more ewes are eligible for the ewe premium than in 1990. The massive reduction of 35 per cent in cereals is going to affect the whole area of agriculture. We are a grass-based country environmentally suited to raising products through grass but we are moving away from that. We must make sure that Ireland's environmentally friendly farming is not turned into a cereal-based production model. We will be on the road to destruction if any alternative to grass or dairy farming is introduced under these proposals.

Milk quotas are to be cut by 4 per cent, and nationally we will probably lose 3 per cent of that, amounting to a loss of 30 million gallons of milk or £25 million. The compensation proposed for the reduction of 15 per cent in butter and 5 per cent in skimmed milk powder is insufficient. We need a higher premium and we could have difficulty in meeting the stocking grade criteria.

If the price of beef comes down to 85p per lb——

An Cathaoirleach

Senator Kiely, I want to remind you that the time allocated is 15 minutes per speaker and I think you suggested you were going to share time with Senator Ó Cuív. I do not wish to suggest how much time you are going to share with him but there is five minutes left.

Mr. R. Kiely

We should ensure that the farming organisations and the farm support services sit down and discuss what we can best achieve from these proposals and how to adapt our industry to face the new circumstances.

Éamon Ó Cuív

Ba mhaith liom ar dtús fáilte a chuir roimh an Aire go dtí an Teach.

I will not be able to do justice to the subject in hand in five minutes but I would like to make a few points. I thank Senator Rory Kiely for agreeing to share his time with me. The first point is that anybody who looks at the position in agriculture in the EC would have to agree there is need for reform, that we cannot go on storing excess production forever. That is something we have to face. Perhaps, however, the debate to date has not been fundamental enough and has not taken into consideration some basic issues that have to be addressed before specific proposals are made. I will point out a few basic facts.

First, we would have to question the fact that while we are putting food into storage every night a third of the world goes to bed hungry. While one normally would not associate this with an agriculture debate, if we take the world as a whole we cannot ignore this fact.

The second point is that it would appear that European policy has lurched like a drunkard from side to side. We have over-production of milk, and then everyone gets into sheep. We have over-production of sheep and we go off on another tangent; we are now talking about forestry. We always seem to be chasing new rainbows but we cannot achieve long term stabilisation.

We also have to look at the overall effect of monetary compensation. There seems to be a simplistic belief that monetary compensation is the same thing as giving people extra money for animals etc. Any of us who has been working on the ground, particularly in areas where the monetary compensation became the main income, saw huge distortions and problems arising as a result. For example, there were the problems of filling forms correctly, matters of bureaucracy, where regulations became more important than the production of livestock and farming. If somebody died payments could be delayed which could cause severe problems with family income. We had the lack of connection between monetary compensation on the one hand and the social welfare code on the other hand.

There is also a mistaken belief that if the price of raw materials or the farm gate price of goods drop, automatically the price drops to the consumer. Anybody who notes the price of a woollen pullover in a shop today and looks at the price of wool in the markets, where I understand lowland wool is making about 25p and hill wool is making about 13p to 17p per lb, will see that the price of garments has not dropped in proportion to the price of the raw material. That is also borne out in the case of meat. Therefore, it is fallacious and simplistic to say that as commodity prices drop the prices drop significantly to the consumer.

On the question of intensification, if people are going to pay the price it should be the people who practise factory farming. It should be directed at those people who are using cereal substitutes from Third World countries. On that question in the case of this island this should be treated as a problem for the whole island of Ireland — grass-based agriculture is basically our major industry and anything that affects that has a deadening effect on the whole fabric of society.

I would like to make a very quick reference to the comments in various documentation about other farm or rural enterprises and about early retirement. It seems that the statistics provided by statisticians are taken in a very simplistic manner. If the owner of a farm, according to a land deed, is somebody over the age of 65 it is presumed that that farmer is farming on his own. Those of us who are familiar with rural patterns know that life is much more complicated than that. Therefore, what actually suits the people on the ground and the reasons farmers over the age of 65 maintain land in their own name have to be examined before simplistic proposals are put forward.

The question of alternative enterprises is one of great interest. As somebody who has been involved in rural development for 17 years it is my view it will not succeed unless a vibrant farming economy exists. If we are to have rural development it cannot be directed by technocrats and bureaucrats. However much we are told it is the bottom line approach, it is, in our experience, an approach from the top telling people what is good for them and giving them a menu of possible aids to things that central authority approves of.

Mr. McDonald

I should like to share some of my restricted time with Senator O'Reilly. This EC package is, indeed, of great concern not just for farmers and farm families but for our economy in general. As has been said many times this evening farm produce makes up 42 per cent of our exports and accounts for approximately 10 per cent of our GNP. This attempt at CAP reform by Commissioner MacSharry will regress Irish farming and Irish agriculture to the forties. If, as Senator Hugh Byrne suggested, there is a provision for the slaughter of calves in this new package then that will bring us back to the stark and bleak days of the economic war in the thirties.

The proposals seek to reduce the price of grain by 35 per cent, pigs by 20 per cent, poultry by 20 per cent and milk and butter and so on over the next few years. In each of the years that the Minister has held his present portfolio, agricultural incomes have declined. Has the Minister, and the Commissioner, estimated or quantified the number of people whom these policies will adversely affect and how many farm families will have to wave goodbye to their last son or daughter who will be forced off the land over the next few years? I should like also to ask if Commissioner MacSharry has quantified the number of jobs losses in our co-ops and creameries, in the farm machinery sector, in garages, in mills, in food compound industries and all the sectors serving agriculture? How can these policies not affect every aspect of Irish life? I read somewhere that an estimated reduction of £500 million in agricultural income was on the cards. Of course, this will be reflected not just in the incomes of Irish farmers but in the pubs, in church collections, in grocery shops and supermarkets and in every facet of rural life with the sole exception of the rural post offices because they will not exist next year.

This country will come under very severe pressure on prices and it will prove very difficult for our grass-based livestock farming, as has been adequately described by my colleague, Senator Doyle, this evening. Many farm families who have, through hard work and continuous reinvestment, joined the category of the smaller intensive commercial producers may find themselves in the near future in a hopeless situation.

One of the great achievements of the Common Agricultural Policy over the years was that it produced a surplus of food in a world where four out of every ten people are underfed, are under nourished, with millions on a single food diet and millions starving. The agricultural Commissioner's response to starvation in Africa, in the Far East and elsewhere is to drive thousands of Irish farm families from their job of producing high quality fresh wholesome food in one of the few wholesome environments left on earth. I ask the Minister for Agriculture and Food to look again at these policies in the light of the facts. I wish the Minister success in this difficult task but there is much ambiguity about the Government's policy and in what direction we are going.

Our colleague, Senator H. Byrne, bemoaned the fact that we did not have an agricultural debate here sooner and we all agree with that. After all, Senator Byrne is a party colleague of the Leader of the House and he should have been able to insist —— as he comes from a strong agricultural base —— that we bring our problems to the floor of the House sooner. I pay tribute to him for representing the views of our profession: like him I am a farmer. One has to experience the cutbacks and the reduction in the price of cattle at the marts, from one year to another, to appreciate fully the problems.

An Cathaoirleach

Your colleague has five minutes of your time to share with you.

Mr. O'Reilly

At the outset I thank my colleague, Senator McDonald, for his consideration in this matter. As somebody who comes from County Cavan I have witnessed over the last number of years the decay of the community from which I come, a decay in terms of population, income and infrastructure. I am saddened that this news was brought to our region by a person from that region. I am not being petty or silly when I say to this House that Commissioner MacSharry, in a very real sense, took the Queen's shilling when he sounded the final death knell of the rural community.

There can be no ambiguity at Government or Opposition level in vigorously opposing this package. It must be opposed for a number of reasons. First, I believe the compensation element is a myth because it is contingent on the goodwill of a Commissioner at a given time. Given the pressures from Eastern Europe, from the poorer areas of Europe, a changing international political climate, all of which were highlighted very accurately at the G7 meeting, I believe the compensation element is a temporary dimension. Second, nobody in the trade union movement or in any sector of our society should have the gall, in any sense, to identify themselves with these proposals. When trade unionists address these proposals they must accept the reality that the major employment sector here has to be the agri-sector — the food industry. We have not done enough to market our food or to diversify in agriculture, and that is a natural omission which must be corrected. At the same time we must address the reality tonight that the whole employment in the agri-sector is threatened by this legislation.

We must also address the frightening reality that if the proposals are passed in their present form, or even in anything like their present form, as Senator Neville said earlier, our country will have no potential other than tourism. We have a very varied climate and we all pray that we can make our tourist industry work. However, it is not enough to keep our population for future generations.

I thank the Cathaoirleach for his indulgence because this is a most critical matter. Compensation is a myth and the sooner we realise that the better; employment for our young people is under real threat, a further death knell to rural Ireland. I wish the Minister well and I want to use this House to say that we must have a national consensus. This concerns the unemployed, the old aged pensioner, indeed everybody throughout the length and breadth of this country. It is not a matter to be treated jocosely. It is the biggest threat to our national economy, to our way of life and to our island since the Cromwellian invasion. That is how serious it is and on that basis I rest my case. I wish the Minister well. However, we must have a national consensus. I want ambiguity eliminated from the Minister's policy.

An Cathaoirleach

That concludes the statements in accordance with the arrangements made this morning on the Order of Business. Will the Acting Leader of the House indicate when it is proposed to sit again?

Mr. Lanigan

The Seanad will adjourn sine die.

Seanad Éireann debate - Wednesday, 17 Jul 1991