Seanad Éireann debate -
Thursday, 21 Nov 1991

Vol. 130 No. 10

Common Agricultural Policy: Statements.

Mr. Hussey

I would like to welcome Deputy Walsh to the House. He is a very frequent visitor here for debates on agriculture. I would also like to avail of this opportunity to congratulate Deputy Woods on his appointment as Minister for Agriculture and Food and to wish him every success in his new office. I am sure he will have the interests of Irish agriculture at heart and that he will do a very good job in that Department.

I would also like to compliment Michael O'Kennedy on the work that he did in the Department of Agriculture and Food over the years and to say that we — and I think the same can be said from both sides of the House — always found him very accessible and approachable. He had a very good grasp of his agricultural brief. I want to thank him for all the work he has done at a very difficult time in Irish agriculture, and to wish him every success in his new Department.

This debate is coming at a very opportune time. We are facing into a very important meeting in Maastricht, a meeting that has been discussed here. Questions have been asked on numerous occasions about when we are going to have a debate on that issue. I am sure that meeting will have very far-reaching effects on our country and, indeed, on agriculture as well. Of course, we know that the proposals and discussions that are now taking place on the Common Agricultural Policy will have very far-reaching effects on Irish agriculture. Agriculture is of fundamental importance to the Irish economy. Of itself, it represents only 10 per cent of gross domestic product but in one way or another it impinges on the lives and incomes of practically every person in this country, not only those directly engaged in agriculture and their families but those engaged in subsidiary industries and in supply of materials, machinery, transport and sales outlets for agricultural products.

It must be remembered that the income generated by agriculture and the spending power of the farming community impacts on the economy of the country as a whole. Consequently, the welfare of all our population is affected by the ups and downs of farming. When we consider that beef production is nine and a half times more important in Ireland than in the overall European Community and that milk production is almost seven times more important than in the overall European Community, we have every reason to be worried by the proposals for reform that have emerged from Brussels. Indeed, I am again appealing to our Minister to ensure that the worse features of the present proposals are removed and that the Common Agricultural Policy is again focused on providing farm families with the opportunity of earning a reasonable income. As it operates at present the Common Agricultural Policy is failing to do this. Every week the level of poverty in rural Ireland is increasing at an alarming rate.

The farming sector has absorbed price reductions of over 30 per cent in real terms since 1980. In recent years the Common Agricultural Policy has failed those farmers and has driven many of them off the land into an urban environment which does not have the capacity in terms of jobs or services to deal with this exodus from the land.

I accept that the Common Agricultural Policy needs reform, but I do not believe that the reform proposed by Commissioner MacSharry will solve the problem. I believe that the proposals, if put into effect in their present state, would drive thousands of farmers off the land and would create huge social problems for farming families.

Over the years the Common Agricultural Policy has allowed stocks to build up at an alarming rate and seems to be powerless to deal with it. This is the biggest problem at present. This, of course, has not happened overnight. I cannot understand why the warning lights have not been seen before now. Between 1973 and 1988 production was increasing by 2 per cent per annum, while internal consumption was increasing by 0.5 per cent per annum. It was obvious that eventually the cold rooms of Europe would be filled to capacity with beef, dairy products and cereals unless, of course markets were found for those products.

The Common Agricultural Policy was set up in the late 1950s and sought to achieve its objectives by the introduction of such schemes as the intervention purchase of surplus commodities and selling them when balance has been restored, or disposing of them outside the Community; quotas levies and tariffs on imports to prevent external supplies undercutting home produced commodities, and direct subsidies to producers of certain commodities to keep them competitive with imports.

These agricultural measures proved to be very effective initially, but, as I said, major surpluses built up in dairy products, cereals and beef. The effect of this was to increase intervention costs so that in latter years support for farming put greater pressure on the Community's finances. An ironic aspect of the Common Agricultural Policy is, however, that while production is higher farm incomes generally are lower in real terms today than they were in the mid-1970s. A further difficulty is that the benefits to the agricultural community have not been evenly distributed, with smaller producers gaining least. For this reason, it has to be accepted that some reform of the Common Agricultural Policy is necessary.

I accept this, but I feel that the price cutting and the deficiency payment systems proposed by the Commission must be resisted strongly on the basis that: they will not, on their own, remove the problem of over-supply, and certainly not on a continuing basis, they will have a very harmful impact on the incomes of the majority of Irish farmers; the deficiency payments will create greater rural-urban divisions and they will not halt the flight from the land.

A feature of the proposals is that they have been rejected by all sections of the Irish farming community. They have been represented as supporting the smaller farmer but they are as unacceptable to the small farmer in the west as they are to those in the Golden Vale. I am sure that other speakers will elaborate on this during the debate.

There are, of course, positive aspects in the proposals. Substantial compensation is provided, especially for small and medium scale extensive producers who constitute the majority of farmers in Ireland. There is, at least, an acknowledgment that we should be concerned with support for family rather than factory farming. It is this same factory farming that is now creating the huge surplus problems we have. The socio-structural package has a number of attractive elements in it. There is a promise of a greater concentration on rural development policies arising out of the mid-term review of the operation of the Structural Funds.

The premia offered to beef producers may seem attractive but they are paid on condition that the stocking rate of 1.4 livestock units per hectare in less favoured areas, and two livestock units per hectare in other areas is adhered to. This is very restrictive and will militate against farmers in less favoured areas and, indeed, encourage inefficiency. The beef and suckler cow premia should be paid on farms with a stocking rate of up to 2 or 2.5 livestock units per hectare. I understand, also, that if farmers exceed the stocking rate agreed on they will be automatically disqualified from all headage and suckler cow premia. This, to my mind, is very restrictive and very severe on farmers who might step outside the guidelines set down.

It is important in the context of the reform of the Common Agricultural Policy proposals to advert to the relative importance of agriculture in Ireland as opposed to other Community member states. With the exception of Greece and Portugal, Ireland has the highest proportion of the workforce engaged in agriculture and with the exception of Greece, the highest proportion of GNP derives from agriculture. Ireland is particularly dependent on milk, beef and sheepmeat, three of the four sectors most affected by the reform proposals. Cereals, as we know, are less important in Ireland than the Community but all four commodity products together account for over 80 per cent of Irish agricultural output compared with 47 per cent for the Community as a whole. That illustrates the importance of these particular sectors to the Irish economy.

It is important, therefore, that any proposals recognise the importance of agriculture to Ireland. Indeed, we know from past experience that this has happened on previous occasions particularly in 1983/84 when the milk quota system was being introduced and Ireland's vital national interest was recognised at that time. In 1987 a further acknowledgment of Ireland's special dependence on milk was given when the Commission allowed a 2 per cent price differential in Ireland's favour when establishing buying prices through the tendering mechanism.

I mentioned the increase in poverty in rural Ireland. That, we all know, is there for everybody to see. The reform measures proposed do not go far enough to address the problems of small low income farmers. The reform proposals should include measures targeted at these groups. It has been recommended that direct support grants based on assessment of farm incomes should be instituted. I would certainly support that proposal. This scheme could be financed by the member states. In my opinion it is the only way we can maintain farm families.

The Oireachtas Joint Committee on EC Legislation recently produced a report and made counter-proposals to what the Commission set out. I would like to compliment the committee for the work they have done in that regard. They produced a very excellent report which has been circulated to all interested parties at home and in Europe. I am sure that when those people are discussing the Common Agricultural Policy proposals they will see something in that report that can be adopted and accepted by the parties involved in the discussions.

The main emphasis in these counter-proposals is on three main principles upon which reform of the Common Agricultural Policy should be based. These are Community preference, effective supply management and combating rural poverty. Indeed the joint committee are satisfied that these principles can be achieved by reducing the degree of protection now given to cereals but seeking increased protection against imports of cereal substitutes from non-EC countries; accepting a reduction in production of cereals, milk, beef, etc., but requiring the EC's trading partners to make reciprocal reductions in their production of these commodities. This would ensure that EC reforms are not negatived by increased production elsewhere which would result in a continuing fall in world prices; strict control of EC imports of dairy products, sheepmeat, beef and cattle; recognition of Ireland's peripheral position and special dependence on agriculture. This again I think should be highlighted at all times in any discussions on those proposals; promotion of consumption of milk and beef by combating adverse perceptions of their nutritional and health qualities; and an expanded scheme of research and development into product development and market development by processors in peripheral regions.

I consider that those proposals put forward by the Oireachtas committee would be less destructive than those put forward by the Commission. I hope the Minister will take them on board and that he will at all times fight for the Irish cause and the effects those proposals will have on Irish agriculture. If some change is not made I believe it will sound the death knell for many farming families in this country. This would be a tragedy for all of us.

This morning I was given a list of proposals which Macra na Feirme submitted for consideration. They highlight the need to provide access for young people who are trained in agriculture. I note what they say and, of course, we would all support the views put forward by this young farmers organisation. I am sure many of the points they raised will be taken on board.

I hope the Minister and his Minister of State — I am sure we can rely on them — will put forward the Irish case. We are all very concerned about the effects those proposals will have on Irish agriculture. We look forward to the discussions with great interest and hope that our Ministers will look after our interests at all times. I am sure we can rely on them to do that.

Professor Raftery

First, I would like to welcome the junior Minister of State at the Department of Agriculture and Food to the House. I was disappointed that the Minister of State, Deputy Walsh, was not upgraded to the senior post. The junior Minister is a past student of mine and the people of Cork would have been very pleased if he had been promoted. Having said that I wish the Minister, Deputy Woods, well. I was also a member of the staff in UCD when he was a student. He is very well fitted for the post and it was rather unworthy of the Leader of the Labour Party to refer to him in the derogative language of calling him a tomato doctor. I can assure Senators that he is very well qualified academically for his new post and I wish him well.

An Leas-Chathaoirleach

What happens in the other House is a matter for them.

Professor Raftery

I would like, further, to wish Deputy O'Kennedy well in his new post as Minister for Labour which I believe will be a rather difficult assignment.

This discussion on the Common Agricultural Policy and the GATT has continually come back to agriculture alone. It is not exclusively an agriculture problem. It is a national problem. I will not be quoting farm leaders, but I will be quoting from independent documents produced by the ESRI, the CSO and Teagasc. It is not surprising that the rest of the Community have very little interest in farming matters, or what they perceive to be farming matters, arising from the kind of irresponsible farm leadership we had in better times, not from farmers let me add but from farm leaders, particularly in the late seventies when they made such an issue of farmer taxation when lack of income and not income tax was the real issue in farming at the time. Since then there has been very little public sympathy for farming, understandably so.

As I said, this is not just a farming issue. The effects of the reforms of the Common Agricultural Policy and the changes that will come in the GATT negotiations will affect the entire economy. Already the Central Statistics Office have pointed out that in the last 12 months roughly 12,000 people in the agri-sector lost jobs, and it is estimated that a further 10,000 or so will lose jobs within the next two or three years. That is a matter for the entire economy.

I have said already, and I will repeat it, farmers will not be the first to be hit nor indeed the hardest hit by these reforms. The first people to be hit and hit the hardest are those depending for their jobs on the agri-sector. They will get no compensation such as that promised to farmers. They will get their redundancy, good-bye and that is it. It is imperative that the trade unions also take an interest in what is going on.

The taxpayer, too, will have a big problem. If we can believe the mid-term review of the ESRI, the Government will have to find an extra £700 million in taxation if they are to maintain their present debt-GNP ratio. That will not be easily found. Of course they could take the alternative route of cutting Government services, but cutting £700 million of Government services would mean savage cuts indeed. I do not need to say much more about how this matter will affect the general economy. Everybody will be hit and the farmers will not be the first or the hardest hit by these reforms.

The reform of the Common Agricultural Policy is inextricably linked with the GATT negotiations. We have been assured time and again that this is not so. I would like to put on record that I believe negotiations on the reform of the Common Agricultural Policy and the GATT are inextricably linked. I say that from experience I had as spokesman for the European Parliament delegation to the US for two and a half years, having spoken with US Congressman, US Senators and, indeed, having spoken with the Assistant Secretary of Agriculture, in Washington in June last year and with Ambassador Katz who was the assistant to Carla Hills in the GATT negotiations. They are inextricably linked and the European Community are capitulating to American demands. I can understand why this will happen.

I predicted more than 12 months ago that the outcome of the GATT would be roughly 30 to 50 per cent cuts in support for agriculture plus a reform that would satisfy the Americans. That is exactly what is happening. I gave my reasons for predicting this. I said the Community would capitulate for the following reasons: (1) agriculture is now roughly 2.5 per cent of Community GDP, so the big industrial countries in the Community would not risk the 97.5 per cent to protect the 2.5 per cent; (2) farmers as a group are now outnumbered even by the unemployed in every country in the Community with the exception of Luxembourg, so, politically, they do not carry the same clout as they did; (3) food is no longer as strategically important as it was with surpluses in the Community and in world markets; (4) the developments in eastern Europe and the Soviet Union mean that Germany in particular will be far more interested in stability and peace on its eastern flank than the welfare of farmers on the western periphery.

We have to face up to facts. The GATT negotiations will succeed. The cuts and reform that America wanted will come about and tragically, this is the country that will be most seriously hit. That is not just farm leaders' talk. That is the view expressed by independent economists throughout the whole Community.

I have great problems about the kind of reform but I have no problem with the need for reform. As a Member of the European Parliament I said that reform need not be a tragedy for Ireland but failure to reform would be a tragedy. Of course we have failed to reform and the tragedy is now upon us. It is the kind of reforms suggested by the Commissioner that bothers me for a number of reasons. As Senator Hussey has said we are very heavily dependent upon agriculture. Let me put it another way nationally. Out of every £10 we get or earn abroad £4 comes from agriculture and about £3.90 of every £4 comes from our beef and dairy products. These are the two that will be hardest hit by these reforms.

To put it simply, the reform of the Common Agricultural Policy is a cheap cereal policy which has been practised in the US for quite some time. Our beef is produced primarily from grass. Cheaper cereals will result in much cheaper pig-meat and poultry meat. If cereals are about 35 per cent cheaper, compound feed for pigs and poultry will probably be about 25 per cent cheaper and pig and poultry meat will be about 20 per cent cheaper, thereby putting extreme pressure on our beef industry which is already in serious trouble.

Additionally, the Common Agricultural Policy is supposed to be about being friendly to the environment. The one sure way you can damage the environment is to have factory-type farms and you get factory-type farms from cheap cereals. The production of beef, and possibly in future the production of milk, will go into very large industrial units as a result of cheap cereals. It has already done so in the US, with units of 60,000 cattle in feed lots in Texas, in the sun belt, and over 2,000 cows in feed lots in California. With the cheap cereal policy we could well find much of the production of cattle, and possibly in time milk if the quota is detached from the land, drifting to the sun belt areas of the Community. It is already happening in a small way in Holland. You have factory farms with pigs and pountry as a result of the cheap cereal imports. It is not the kind of policy that will be kind to the environment, as is claimed.

Much has been made about compensation for our farmers. I know that the proposals, as they now stand, are an improvement on the leaked document of nearly 12 months ago. The proposed compensation for farmers is attractive for some but I have grave worries about the permanency of these compensations. In fact, I doubt if they will last more than a few years, if they come in at all. An obstacle to implementing the proposals is that the Americans particularly, but also Australia, New Zealand, Argentina and Brazil, may object if they feel this will distort trade. That matter is still for debate. If they come in, it will not be long until the socialists in the European Parliament and the socialists in national parliaments in industrialised countries will be asking why farmers should get compensation for loss of income when over 400,000 people have lost their jobs in the steel works, not to mention the hundreds of thousands who lost their jobs in car manufacturing, ship building, coal mining. These people got no compensation. The socialists will make the point that it is not exactly equitable to single out one sector for special consideration when workers in every other sector did not get special consideration. I would be gravely concerned that these compensations which are making the unpalatable pill a little more palatable will not last for long.

There is also the question for the consumers. The point has been made that food will be cheaper. It will be cheaper but the figures that have been thrown around of over £100 million for Irish consumers — we are all consumers including the farmers — are grossly inflated. I say so for the following reasons. First, we know that the prices to farmers in real terms have dropped by nearly 40 per cent since 1977. Does anybody believe the price of food to the consumer has dropped by 40 per cent in real terms? Things do not happen that way.

Secondly, £100 million plus has been calculated on the price difference between world market prices now and Community prices, but as soon as the GATT agreement comes into place and export refunds are cut in the Community and the export enhancement programme in the United States is diminished, world market prices will certainly come up nearer to, and perhaps very close to, Community prices thereby making the saving to consumers a lot less than is predicted at present.

I said I would not quote from farmers' papers and I will not. I will quote a summary from a Teagasc document produced recently, of the impact of these measures if implemented:

The value of gross agricultural output would fall by £510 million approximately. Secondly there would be a saving of approximately £140 million in the value of farm materials purchased by farmers.

That will have a direct effect on people servicing agriculture, on machinery manufacturers, fertiliser manufacturers, contractors and so on. Compensation is estimated at approximately £255 million but I have my doubts about the compensations being accepted or how durable they will be.

The next point made was that income arising in agriculture would fall by approximately £115 million. That would be made up of £61 million in the disadvantaged areas and £54 million in the non-disadvantaged areas. The cattle enterprise would lose £77 million, dairying £37 million, sheep £13.5 million, pigs £2 million and poultry £1 million. Agricultural exports would decline by £300 million and that is a matter of concern for everybody in the economy.

The point was made that estimates of the decline in employment arising out of the proposals vary from 5,000 to 11,000. We have already had the Central Statistics Office figure for the past 12 months of 12,000 having left farming. Most of these losses occur in farming but some of the effect on farms is likely to result in a higher level of under-employment. That is inevitable. This kind of depopulation in farming and loss of jobs of those depending on farming will be almost exclusively in rural areas and the impact on such areas will be directly proportional to the extent the rural area depends on agriculture.

The further west you go the more dependent the whole community becomes on agriculture and I see these proposals leading to a further depopulation of rural areas. It would be a very serious matter indeed for the whole of Connacht, and indeed areas like Kerry, west Cork, and Donegal, Cavan, Monaghan and so on. As I have already said, these proposals are significantly harder on the Irish economy than on any other economy in the Community and some of the reasons have already been given by Senator Hussey.

They are also hard on the economy because they are specifically hitting the products on which we mainly depend. There are some details in the proposals which have been mentioned by Senator Hussey in relation to stocking rate which I believe are incredible. The stocking rate limits on farmers in disadvantaged areas now means farmers would be better off if they had not been classified as disadvantaged. We will soon have a lobby if this continues to get out of disadvantaged areas again in order that they will be able to practise the good farming they are now practising in the disadvantaged areas. It has to be wrong to penalise people who, through their own hard work, their own initiative, have built up a good business. It seems a crazy way to help any industry to penalise those who have made the effort, who have put into practice the advice they were given by Dublin, Brussels and who went to their bank managers to raise the money to put that better type of farming into practice.

It is not just a farming problem. It is a problem for every sector of our society. It is a problem for the taxpayer in particular, for the unemployed and for those whose jobs are being put at risk. It will impact on the services the Government can supply. I predict — as I predicted before Minister O'Kennedy and he did not contradict me — that the Government will find their way out of this loss of funds as a result of the new reforms, by putting VAT on food. The people who are looking forward to cheaper food will be as disappointed as the people who were looking to cheaper cars when we joined the Community.

Mr. Dardis

I welcome the Minister, Deputy Walsh, this morning. He is very faithful in coming to see us in the Seanad and he always makes a valuable contribution. May I also welcome the appointment of the new Minister, Deputy Woods. I know he has a great deal of expertise in this area both as a politician and a professional person. If I may enter a personal note I very much welcome the fact that a colleague graduate from the Faculty of Agriculture in University College, Dublin has become Minister for Agriculture and Food. That is a matter of some personal satisfaction.

In relation to this debate I wonder, if it is coming too late? We debated this matter in February, again in July and now once again. We are repeating the same things we were saying last February. I wonder has anything changed and are we too late to influence our partners to the degree necessary to protect the rural society which is so important to us in Ireland. I believe the Minister will have a monumental task in the coming months to ensure that our national interest and the priorities which are so important to us are fully protected. I wish him well in that task, I know he has the support of every Member of the House in trying to achieve what we all believe needs to be achieved.

The reason I wonder if we are too late is that in the Commission document to the Council in July, in which details of the reform proposals were spelled out, it stated:

The Commission considers that sufficient time has elapsed for all interested parties to have presented their views and to have had them considered. To avoid uncertainty proposals should now be presented.

In other words, at that stage the Commission had got to the point of almost fixing its position. I realise that the Commission proposes and the Council of Ministers disposes and will make the final decision. That is very worrying to me.

In all our debates, we have given figures to show the importance of the agricultural industry to our economy and the effect on our total economy of what is proposed in reform of the Common Agricultural Policy. I do not think there is any need for me to keep repeating those figures about the fact that 40p in every £1 of net exports is derived from agricultural exports, that the percentage of the population involved in agriculture and the food industry is very much higher in this country than in other European countries or that in GNP terms agriculture is three or four times more important here than it is in other countries. These figures have been trotted out over and over again. They are well known to everybody and I hope at this stage nobody in this country is in any doubt whatever about the significance of the proposals to the economy as a whole and not just to farming. I know the Minister, as someone who represents a rural community, will be as well aware as I am that if you go into any town and village there is a marked lack of confidence. Traders are concerned about their future as are workers in processing industries and it all relates back to these proposals which have come from Brussels. We have no doubt about the consequences of these proposals to us as a nation.

Everyone, including the farming organisations, accepts the need for reform. It appears to be accepted that to continue along a path where we have growing mountains of butter, skim milk powder and grain in intervention stores will not be tolerated. There is the morality aspect of having food mountains while some people starve. If we were to look ten years down the road, maybe we would see that priorities within the Community will have changed the need to redistribute that food to the people who need it most will have been accepted. I do not think it appropriate for people to suggest that it does not solve the problems of those starving in the Third World to send them Community food. If people are starving they need food; they have to live before they can start producing food for themselves.

The need for reform is accepted but the problem is the nature of the reform and what it will do. Senator Rafferty mentioned compensation. I know that one of the priorities of the talks will be to ensure that compensation is permanent, or at least that there will be a fixed time scale. That is welcomed. If there are many people here living in rural poverty, living in silent desperate poverty, miles down boreens or close to towns and if they are compensated they will continue to live in misery. That will change nothing. There is a problem at that end of the scale which is not being addressed and which is being confused with what is being done at the commercial end of the scale. If there is a transfer from the so-called winners to the so-called losers, if the so-called losers are in a position where there will not be improved, then the value for the compensation is questionable. Some of these issues relating to rural poverty have been very well spelled out in the contributions of the Conference of Major Religious Superiors both this year and in other years. The average farm income figures are well known, from that and other sources. For instance, in the Leas-Chathaoirleach's county there are people trying to live on £50 and £60 a week. As I said compensating people who live in misery does not alter their basic condition.

Then there is the propaganda element of the 80 per cent and the 20 per cent — the 20 per cent who are responsible for 80 per cent of production and who get 80 per cent of the aid. If one looks at the statistics one will see that a great deal of the aid is not going to the people for whom it was intended. It has been absorbed by middlemen, purchasers and processers of cattle and other products. There is very little of this money left by the time it gets the hands of those people for whom it was intended.

Talking about GATT, there is a presumption that the Community gives some unique degree of assistance to its farmers which is much higher than farmers in other countries get. The OECD figures on producer subsidy equivalents, which are a measure of the degree of support given to farming, show that in Australia where only 11 per cent of the value of output is accounted for by the producer subsidy equivalents, and in New Zealand where it is only 5 per cent, they are very much less supportive of their industries than the European Community. The average figure for the OECD is 44 per cent and for the European Community 48 per cent. This shows the Community is not very much out of line with the international community as a whole. That tends to be forgotten. It is suggested that Europe supports its agriculture to a degree that is highly unusual; in fact it does not. It supports its agriculture to a degree that is quite average by international standards. If you take some of the Nordic countries, 72 per cent of the value of agricultural output is accounted for by subsidy in Finland and 68 per cent in Japan. We need to destroy the myth that the Community is on the fringe in relation to the way it supports agriculture.

Everything goes back to the famous leaked document which was produced around Christmas time last year. We were all told that we were extremely naughty to base our prognostications on a leaked document from the Commission; it had no official status and people should wait for the official proposals before commenting. It was quite obvious that irrespective of the detail of the figures in that leaked document, the general thrust of it was incontestable. That was confirmed when the famous reflections paper came out in the new year and subsequently reconfirmed when the Commission communication to the Council formalised the situation in July. After the leaked document and about the time of the publication of the reflections paper we in the Progressive Democrats produced a detailed discussion document on agriculture and on the reform proposals.

One of the specific proposals we made was that there should be a national forum involving all the interests, not just the farming interests but the trade union interests, those involved on the service side and consumers, and establish a scale of national priorities because it was such an important national question. At that time the then Minister for Agriculture and Food, Deputy O'Kennedy, indicated that such a forum would be instituted. That did not take place. I said at the time that I did not mean a forum within the Programme for Economic and Social Progress or within the review system in the Department of Agriculture and Food; I meant a proper national forum.

It is quite significant that within the past few weeks SIPTU organised a conference in Dublin which was attended by the farming organisations and TEAGASC and the degree of concern across that spectrum in relation to jobs in the food processing industry and the consequences of the proposals on jobs within that industry was quite remarkable. Predictions were made about the thousands of jobs which could be lost over the coming years, and there seemed to be general agreement on this between the IDA, SIPTU, the farming organisations etc. I do not think it is wrong to suggest that in this matter a national consensus could have been arrived at.

As to the detail of the Commission's proposals, the plank on which everything else is based is cheap cereals. The proposal is to cut cereal prices by 35 per cent. At first sight that might appear to be advantageous for Ireland. I speak as a cereal grower and I know what the consequences of that would mean to me but the fact is that our competitive advantage is based on grass production, on livestock, on milk off grass. If cereal prices are marked down to the point where a ton of dry matter grain is about the same price as a ton of dry matter silage, then the conclusion for any thinking farmer is quite staightforward: one feeds grain rather than silage or grass. The effect of that will be to move the livestock production base to where grain is grown, to the east of England, the Paris basin and parts of Germany. That would be the logical conclusion. If anybody doubts that is the case all the have to do is remember back to the late 1950s and early 1960s when we had barley beef production in England. Irish store cattle went to England to barley beef units in East Anglia where grain was grown. The same can happen again. My greatest fear in relation to the proposals that our grass-based production will be eroded.

There is a fundamental contradiction — there are several contradictions in these policy proposals — in saying that on the one hand we want to move to a more market-led agriculture economy and production system and, on the other hand saying to those who have a competitive advantage they are not going to be allowed exploit that advantage. That does not seem to be logical or sensible, nor does it seem to be logical or sensible to say to those who invested £4 billion in the agricultural industry over the past 15 years and who were exhorted by the State to do so and to expand their production that they are now expendable. That does not make any sense in logic or economics. They are the people who will ensure that the Irish agricultural industry, the food processing and food exporting industries will thrive and survive into the next century. I am glad that the previous Minister Deputy O'Kennedy, at the time acknowledged that that commercial sector must be protected.

What we are doing here is throwing out the baby with the bathwater. That could be the effect of what is being proposed. I know Teagasc advisers who encouraged people to increase their stocking and production-rate now find it difficult to tell their clients to cut back. I understand the surplus difficulty and the need to address it but it is being done in the wrong way. The contradiction is that we ask people to be more market-led but, at the same time, we do not allow them to achieve that within the system.

I note from yesterday's newspapers that some progress has been made on the GATT. In The Irish Times yesterday it was stated that EC farm Ministers now appear ready to accept a GATT agreement in which farm supports are cut by 35 per cent over six years. At first sight that may not seem very remote from the position adopted by the Commissioner in the famous statement he made in Dromoland Castle where he said he would accept a 30 per cent cut but, as far as I can recall, it was proposed that the Community would be given credit for cuts it had made since 1986 and there was a ten year time scale involved. There is some slight difference as far as I can see in those two proposals. It is obviously desirable from our point of view that we have agreement on GATT but one of the basic assurances which we must look for is that the compensation aspects of the Common Agricultural Policy reform be put into the so-called “green box” and that they be regarded as income support which is allowed under the GATT.

I agree with Senator Raftery when he said the two items were interlinked. I do not think it is tenable to argue that the GATT and the Common Agricultural Policy are not interlinked. We go back to the original statement made when the Uruguay Round was in progress in Montreal — progressive substantial reductions in support and production — but within that context it did allow income support provided it did not distort production. That is one of the key areas we must protect.

We come now to the ground we must fight on Common Agricultural Policy reform and how, over the coming months, the Minister for Agriculture and Food is going to defend the national interest. For the first time there is a basic contradiction between what we want as a country and what the Community wants. Up to now there has been a consistency between the agricultural policy and our objectives as a country but now there is a head-on clash between our objectives as a country and what the Community wants. We must present our case. It was presented very successfully in relation to the Structural Funds and we are into exactly the same ballgame here.

Because of the dominance of agriculture and the fact that our economy depends on it there must be a concession on the part of the Council and the Commission. They will have to be reminded — as they are in the report of the Sixth Joint Committee on Secondary Legislation of the European Communities — of the articles of the Treaty of Rome. Perhaps after Maastricht these articles will count for nought but they are fundamental and I hope they will count for something.

Article 39 (1) of the Treaty of Rome emphasises that the objective of the Common Agricultural Policy is to ensure a fair standard of living for the agricultural community. Article 39 (2) accepts the need to take account of the position of regions dependent on agriculture in any changes in the Common Agricultural Policy. That is worth emphasising. We are such a region and if that treaty is to count for anything our concerns and our position must be accepted. We can make the same argument when talking about economic and social cohesion. It may not be as prominent on the Maastricht agenda as it has been in the past.

Senator Raftery referred to the critical importance of the stocking rate in the disadvantaged areas. According to the ICOS figures which were produced on the Common Agricultural Policy reform, based on EC co-efficients used for existing disadvantaged areas schemes it is likely that only 55 per cent of the cow herd will be eligible. If we could move the stocking rate criterion up to two per hectare that would be a very good day's work because it would allow some people who are going to be excluded from compensation at least to get compensation.

I am glad that some of these matters are referred to in the programme which was agreed between Fianna Fáil and the Progressive Democrats where it says in relation to the Uruguay Round that reform must be carried out in an ordered and balanced way and that the outcome must be such as to fully recognise Ireland's special position, to take account of the interest and the well-being of farmers and consumers alike and to enable any necessary adjustments to be carried out while safeguarding the commercial farm sector and the fabric of rural society. I hope that objective can be achieved at the talks.

I am very glad that in the programme rural development has been put further up on the political agenda. Rural development is not a panacea for all our ills but it has a role to play. The Conference of Major Religious Superiors explains in some detail how rural development can contribute to the welfare of rural society. I am glad it is in the agreed programme and I hope that it can be given prominence in Council decisions.

Despite all our concerns about surpluses and how to deal with them, about the nature of reform and the criticisms that there are boatloads of butter in Cork harbour, I repeat what I said in July: in my view boatloads of butter in Cork harbour, however undesirable, are preferable to boatloads of people leaving the country.

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

I am very pleased to make one of my regular visits to Seanad Éireann for this important debate. As a former Member of this House, I always avail of the opportunity to return here but I would like to let the Agriculture Panel in particular know that I intend to remain a former Member.

This is a very important and timely debate and I want to pay tribute, as Senators have, to the joint committee for producing their very balanced report. In relation to the topics under debate, the reform of the Common Agricultural Policy and the Uruguay GATT Round, there is now little disagreement on the need for reform. My concern and that of the Government and the joint committee is with the direction and the extent of the reforms proposed by the European Commission.

One might ask why the Community devised and continued to operate a policy which led to a structural surplus problem and which did not even have the merit of sustaining producer incomes or of providing food at a reasonable cost to consumers but we must remember that the mechanisms of the Common Agricultural Policy were developed some 20 years ago when Europe was a deficit food producer. The Common Agricultural Policy has served that purpose very well but for a considerable time now there have been problems with surplus production which led to budgetary problems and depressed income levels. The Community sought to solve these problems and throughout the eighties a number of remedial measures were introduced. These included a more prudent approach to prices, less attractive intervention provisions and the introduction of quotas and production thresholds. These measures met with some success but surpluses have recurred during the past few years in particular.

Despite rising expenditure, the Common Agricultural Policy is increasingly failing to provide a fair standard of living for the agricultural community. In Ireland's case, for example, while FEOGA guarantee expenditure increased by over 30 per cent between 1989 and 1990 farm incomes actually fell. Clearly the present support arrangements cannot fully protect our farmers from the effects of higher production, lower consumption and imports into the Community. Obviously we cannot expect to be able to isolate our farmers from all eventualities, but I would like to see whatever support system emerges from the Common Agricultural Policy reform providing better support for farm incomes and better balance all round for everybody involved in the agri-food economy.

The stated objectives of the current Commission proposals include the control of production to the extent necessary to bring markets back into balance and the retention of sufficient numbers of farmers on the land. By and large, I can go along with these objectives but there are some very major and serious difficulties in the way the Commission proposes to achieve them. The major elements of the Commission proposals include the price cut of 35 per cent, 15 per cent price cut for beef, 10 per cent cut in the price of milk, 4 per cent cut in milk quotas and a ceiling on the number of ewes eligible for premiums. There would also be a series of accompanying measures involving an improved early retirement scheme, increased aid for afforestation and the encouragement of environmentally friendly farming practices.

The Commission's proposals, therefore, would to a significant extent, switch support from a policy of mainly guaranteed prices to one with a greater emphasis on direct payments. While we can in principle accept a partial switch to direct supports, we are concerned with the extent and pace of the move while the modalities and scope of the compensatory arrangements make the proposals as they stand unacceptable to the Government. I want to emphasise the fact that while we accept that reforms are necessary, the present proposals are unacceptable to the Government.

I note that the committee share many of the concerns of the Government in relation to the Commission's proposals and I assure the House that the Minister and the Government have already made the Commission and other member states fully aware of our concerns. It is true to say that several other member states have similar problems with the Commission's proposals but it has also to be accepted that other member states can accept the restrictions proposed but not the compensatory aspects, and especially not permanent compensation. It has been said by previous speakers that the permanency of compensation is of vital interest to us. Obviously many different views will have to be reconciled in the difficult negotiations in the weeks and months ahead.

I would like now to deal in more detail with some general aspects of the Commission's proposals which cause us particular problems. I have already referred to our difficulty with the scale and pace of the proposed price cuts. If there are to be price reductions, these should be more moderate and introduced more gradually and, of course, the compensatory measures must be of a permanent nature and not just for a transition period. They must also adequately compensate producers for the reduction in price support levels. Thus, as a precondition to acceptance of the Commission proposals, we will need to be assured that adequate budgetary resources will be provided for the new regime. We have made this point on numerous occasions in the Council. I take some comfort from Commissioner MacSharry's assurances in regard to the permanency of the compensatory measures which he clearly sees as having the same status as current price supports in the long term maintenance of farm income levels. Of prime importance in relation to the compensatory measures is that they fall into the "green box", in GATT terminology. This would mean that they would not have to be reduced as part of any agreement which might emerge in the Uruguay Round.

It is also no secret that we have major difficulties with the stocking levels — this was referred to by previous speakers — in the beef and milk areas. In our view, these criteria and the headage limits should not be set at levels which would exclude well run, modern family farms. The stocking levels proposed, and particularly those for the disadvantaged areas, are set at totally unrealistic levels and are at variance with the objectives of other Community measures which are aimed at making and retaining viable units in these areas. We believe it is unnecessary to specify a stocking rate limit for the disadvantaged areas since their designation as disadvantaged in the first instance is in part due to their low stocking rates. We will be seeking more realistic and objective criteria and headage limits to better reflect the true position of family farms in all parts of the country.

It is clear that, although there is no formal link between the Common Agricultural Policy reform and the GATT negotiations, we cannot overlook the Uruguay Round negotiations in finalising the reform of the Common Agricultural Policy. It goes without saying that both go in tandem. I have already mentioned the importance of having the compensatory payments included in the "green box". There are other issues arising from the GATT which will affect Community and Irish agriculture.

The joint committee state that the threat to Common Agricultural Policy emanates in part from international reaction to the effect of EC exports of surplus production. They note that Irish agricultural groups are arguing for re-emphasis of the principle of Community preference and for an agreement within the current round of GATT negotiations which protects Ireland's interests as a country heavily dependent on exports. The point has been made that £4 out of every £10 we earn come from agri-food exports.

The record rightly identifies the need for reciprocal responses from the Community's trading partners to the efforts being made by the Community and recommends that its farmers alone should not have to shoulder the burden of reform. All parties must play a role if global problems are to be resolved.

The GATT negotiations have now entered a very critical stage and the events of the next few weeks will determine whether an agreement can be reached to conclude these marathon talks. Let me recall briefly that the negotiations, which commenced in September 1986, were due to be concluded at the GATT ministerial meeting in December of last year. This did not happen largely because of differences between the major parties — the US, the Community, the CAIRNS Group and Japan — in a number of sectors, including agriculture.

As regards agriculture, the Community's position has been that it was prepared to reduce 1986 support levels for groups of products by 30 per cent by 1995-96. The Community also offered to undertake subsidiary and related commitments on market access and export supports. On the other hand, the US position, which is largely shared by the CAIRNS Group, was until recently that over ten years specific internal supports and border measures be reduced by 75 per cent and that export subsidies be reduced by 90 per cent.

Discussions have been continuing on GATT throughout most of this year and, as far as agriculture is concerned, these concentrated mainly on technical issues. While some progress was made, the main political issues remain to be resolved. However, all parties are now committed to bringing the negotiations to an end this year or early next year and a further attempt is underway to meet this time frame. Current indications are that the US have significantly scaled down their original unrealistic demands. I do not know if that is a result of some talks I had with the Secretary for Agriculture in the US recently, but I am glad to say that progress is being made.

Mrs. Doyle

I am sure it is.

Mr. Walsh

Thank you, Senator Doyle.

While no agreement has been reached on the level of reductions that may be part of any agreement, clearly the US are now considering figures closer to the EC position. Nevertheless, major differences will remain and the way in which they are resolved will have a critical bearing on the impact of the final agreement. These difficulties relate to credit for past actions such as milk quota cuts, the treatment of compensatory payments flowing from Common Agricultural Policy reform and the discipline on export supports. Discussions are continuing between both major parties in an attempt to resolve the differences but it must be recognised that the issues involved are of fundamental importance.

Ireland's priorities in the negotiations are to avoid excessive commitments and to ensure that any commitments are realistic, coherent and balanced and that the basic mechanism of the Common Agricultural Policy will be safeguarded — and they are the principles that were spelled out by Senator Dardis.

In regard to border protection, we want to ensure that adequate Community preference is maintained and that the Community producers' incomes are not undermined by imports. In relation to export supports, it is of major importance that the Community does not accept restrictions which would not alone limit its ability to take advantage of the expected expansion in world trade but which might also be incoherent with internal support and protection mechanisms. It is vitally important that the Community secures credit for past performance as agreed at the mid-term review of the negotiations. We will also endeavour to seek appropriate arrangements to ensure discipline in international markets and, of course, any agreement reached should not be undermined by GATT litigation procedures

The Committee's report highlights the importance of food processing to both the agricultural community and the Irish economy as a whole. The Government have long recognised the importance of this industry and have directed policy towards strengthening it to meet the challenge posed not only by the Common Agricultural Policy reform but also by the GATT negotiations and the advent of the Single European Market.

The food industry, along with other sectors of the agricultural economy, will have to adopt a sense of realism in relation to the situation they will face under a reformed Common Agricultural Policy and a freer trade environment. For far too long the ability of the food industry to reach its full potential has been stifled by a degree of laziness and overreliance on commodity trading philosophy and the protective shelter provided by market and price support systems. It is now accepted that in order to maximise its long term impact on the economy, the industry must make a decisive shift towards market-led production.

I know that in encouraging the food industry generally I have come up against the cynicism of the return from intervention being better than the market place. That is short term. Strategically, Irish companies and organisations in the food industry will have to look to the future from the consumers and the 340 million people who make up the marketplace in a single Europe. We cannot go on with the unrealistic behaviour of Irish food companies — for example, according to Central Statistics Office figures for the export meat plants, eight out of every ten steers slaughtered for export go straight into intervention. That is no basis for long term internationally competitive industry. Similarly, in our dairy industry we now convert a higher percentage of milk into butter, than before we joined the Community, notwithstanding the fact that everybody knows that butter and animal fat generally are in a declining market. So we must have a huge injection of realism if we want to make and use the advantages we have.

As I said, trying to encourage the food industry has been quite a difficult job; and it has not been for the want of very substantial financial investment with the aid of not alone taxpayers' money through the IDA but very attractive FEOGA grant aid also. In many cases food plants have been established and existing plants have been modernised with aid of up to 75 per cent as well as very attractive tax benefits. The aim is to have an internationally competitive food industry in Ireland and in order to achieve this aim the Government and the various State agencies have been working strenuously to maximise the industry's contribution to the economy. This is being done by providing the support and encouragement, both financially and otherwise, which the industry needs to ensure it is in a position to supply food of the type and quality demanded by the consumer and which can be produced and sold competitively.

Mrs. Doyle

Even with the limits on the production of raw material, can that be achieved?

Mr. Walsh

I believe that in Ireland we have an almost unlimited opportunity, even within the constraints, provided, for example, that the quality is right. I believe that if that one single factor is adhered to, that is, quality throughout the food chain, that then there is a bright future for our agri-food industry. But, unfortunately, in the area of quality we still have not grown up. As late as three years ago we did not have one single food plant which measured up to or adhered to the international standard of quality, for example, and a major amount of encouragement and work has gone into that area.

It was a disappointment for me to find that a number of markets in the United States could not be availed of because Irish food plants did not have USDA approval and could not gain access. Yet, here we are boasting about the environment, our green image, our modern high-tech industry, our excellent graduates coming out of our second and third level institutions and at the same time having sloppy work practices and poor hygiene in the food chain.

Regrettably, every now and then we read in the newspapers of organisations and companies brought before our courts for failing to measure up to hygiene and quality standards. If we cannot get those elementary matters right in the food industry in Ireland we have no chance.

Under the revised scheme of EC grant aid for the improvement of the conditions under which agricultural products are processed and marketed, member states now have much more freedom than before to select the projects which they wish to have aided. I, in consultation with the food division of the IDA, have insisted where taxpayers' money, both Irish and European, is paid at very high levels to food plants that they have a quality control programme in place, that they have their marketing in place and that the management is capable of running these concerns.

We all know in recent times of companies that within two or three years of having availed of very considerable amounts of support have folded up. That should not be the case. The grant aiding agencies should insist on a market for the product, management to go with it and quality control systems in place. That should be elementary and hopefully in the future we should see far less of this type of occurrence. There is no use throwing money either at individuals or a project if it does not stand up right across the board.

I am very pleased that in recent times it has been possible to invest very substantial amounts of money in the National Food Centre in Dunsinea and in the Moore Park Research Centre in Fermoy. We have no chance if we have not reached the highest international standards and have R & D facilities to underpin and support our agriculture and food industry. Similarly, in our universities it is enlightening for anybody now to visit the Food Faculty in UCC or the Faculty of Agriculture in UCD because they have the personnel and equipment there. The commitment and motivation there is quite outstanding and augurs well for the future of the industry.

Overall, the picture of the Irish food industry today is encouraging. I have no doubt that the measures taken by this Government and previous Governments have provided the industry with the impetus to establish it as a force not only in Europe but worldwide. There is no reason, with our relatively small amount of production, that we should not go for the premium return outlets wherever they occur. I know we are doing that to a small extent, but we should do it to a far greater extent, and we should not be using our best efforts to cannibalise one another in the Irish market when there are 340 million in the European market and a lucrative market in Japan, in the US and in many other parts of the world. We have to become more global in our outlook for the best return to our producers and to the industry generally.

I would like now to deal briefly with some of the specific sectors under the Common Agricultural Policy reform. The cereals sector is clearly the lynchpin of the Commission's proposals and the changes that are made in this sector will, to a large extent, determine the action that will have to be taken in the beef and milk sectors. We recognise that the cereals surplus has to be addressed but we believe that this can best be done by reinforcing existing set aside arrangements with full Community financing. The rebalancing proposal in the GATT negotiations would also have an important role in bringing the market back into balance. If there are to be price reductions, then these should be more moderate than proposed and there must be compensation.

Because of its contribution to Irish agricultural output — over 80 per cent — the livestock sector is by far the most important area for us in the Common Agricultural Policy reform negotiations. In relation to milk, the market has stabilised recently and the need for further cutbacks is clearly questionable. Certainly, judging from the farmers who called me, they have major objections to further cutbacks in quotas. They have suffered enough, they said, and particularly they have suffered enough when there has not been a reciprocal sacrifice made by dairy economies internationally. They point out that the New Zealanders, the Australians and the Americans can increase production while we are taking the strain here in Ireland.

Mrs. Doyle

What about a restructuring scheme?

Mr. Walsh

That is and will be part of the whole input into these negotiations.

As the House is aware, milk production is uniquely important to Ireland and further reductions in quotas are extremely difficult to contemplate. In the past the beneficial effects on world markets of any quota cuts have been quickly eroded by increased production by the Community's competitors. We have no guarantee that this situation would not recur if we unilaterally accept further quota cuts. In any event, I can assure Senators that we will strongly oppose any compulsory quota cuts and will be seeking greater flexibility in the operation of the quota regime.

The price cuts for milk and beef are proposed by the Commission mainly as a consequence of the expected fall in input costs which would arise from the cereals proposals. However, since our livestock production is in the main grass based, our producers would not benefit to any significant extent from reduced feedingstuffs prices. We will need to ensure that our producers do not lose out competitively to other Community producers of beef and milk by virtue of the Commission proposals. We have to ensure equality of treatment for Irish producers. This can best be achieved through a combination of premia in the livestock sector with realistic stocking rates and headage limits which would give an equivalent return in grassland areas to the benefits derived from the cereal proposals.

I appreciate fully the fact that we are good at producing grass in Ireland. It grows almost in spite of itself, and I know well from cutting my own garden that it grows very well indeed. That advantage has to be protected, and the point which Senator Dardis made in relation to cereals is an extremely important one to Ireland.

We promote Irish food as being grass based. We have nice videos and promotional literature showing our cattle grazing contentedly outdoors and giving us nicely flavoured, succulent beefsteak. It is not the same when they are stall fed. I strongly believe that we have to ensure that the advantage which we have here in Ireland should be retained. We have some disadvantages because of our location concerning transport, and so on, which people will readily see, but the advantages we have on the periphery of Europe have to be maximised and we have to retain them at all costs.

With regard to sheepmeat, I consider that it is premature to make further changes in the regime before the impact of the 1989 reforms emerge. In any event, any further restrictions should be related to current production levels and we must avoid introducing too much rigidity to this sector.

In relation to the Common Agricultural Policy reform negotiations generally, both Ministers — my former colleague, Deputy O'Kennedy and my new colleague, Deputy Woods — are fully committed to ensuring that agriculture continues to be the most important single sector in the Irish economy, and that its contribution to output, employment and exports is of paramount importance——

Mr. Dardis

I expect the Minister can assure us that any future Ministers will share the same commitment.

Mr. Walsh

It is a risky business in the context of recent weeks to make a forecast of any kind about Ministers.

As agreed in the Programme for Economic and Social Progress, we will be maintaining close contact with the farming organisations as the negotiations progress. We will of course also continue to explain our position at every available opportunity to our community partners and the Commission.

I would like to thank the joint committee for this most useful report and to thank the Senators for their usual well researched and balanced contributions.

Mr. B. Ryan

I have a number of points I would like to put on record. The first is that, notwithstanding my scepticism about market economics, certain facts are indisputable, one of which is that if you offer people guaranteed prices for a product you are going to have endless production. Inherent checks and balances are supposed to exist in a free market, so that as production exceeds demand there will be an inherent tendency towards equilibrium which will reduce supply. However, if you take that balance out then the inevitability of surpluses, I would have thought, is self-evident. Yet, we in this country walked into the Common Agricultural Policy and spent virtually 20 years pretending to ourselves that it would never end and that we could build a whole industry — our largest industry and what should be our best industry, but it is not — on the assumption apparently of endless guaranteed prices. The daftness of that assumption escapes me. The daftness of what our Establishment has worked out on a number of our basic positions has always amazed me in any event.

The second thing that fascinates me is the ideological flip that virtually everybody in the Establishment makes when they move from looking at industry to looking at agriculture. In industry subsidies are a bad thing, State intervention is a bad thing, guaranteed prices are a bad thing, free trade on the market is a good thing. In agriculture subsidies are a good thing, guaranteed prices are a good thing, State intervention is a good thing and the market is a bad thing. There is eloquent testimony to this in the joint committee's report in which they talk about ameliorating the effects of the market. The NESC is good on it as well. I am not an enthusiast for the market, but I am an enthusiast for logic.

Mr. Dardis

You could have fooled me.

Mr. B. Ryan

It is easy fool the Progressive Democrats; I will tell you that. We have lots of evidence at this stage on that one.

(Interruptions.)

Acting Chairman (Professor Conroy)

Senator Ryan, without interruption, please.

Mr. B. Ryan

I enjoy the interruptions. At least it means they are listening to me.

Acting Chairman

It is a privilege to protect you, Senator.

Mr. B. Ryan

Suppose it happened we had a common textile policy, we would now have this country awash with a textile industry. We would have thousands of jobs in the industry. If you told everybody in the textile industry in Ireland 20 years ago that they had guaranteed prices, guaranteed markets, etc., they would have produced thousands. That is not really an industry; that is not really a basis for development; that is self-deception on a grand scale. To produce a Common Agricultural Policy and to live in the belief that this could last forever is also self-deception on a grand scale.

Having said that, it fascinates me in the middle of this subsidised, taxpayer underpinned, non-market led industry to see farmers able to deceive themselves into believing that they are the models of private enterprise in this country and that they actually believe that what is good for everybody else is the direct opposite of what is good for themselves. They believe, for instance, in reducing public expenditure for everybody except themselves. They believe in reducing subsidies for everybody except themselves. They believe that everybody else should be market-driven except themselves. That is the farming organisations, I should say, not the farmers.

Going on from that, we look at the alleged benefits of the Common Agricultural Policy — and there have been some benefits. However, I would like briefly to remind the House what actually happened. I am quoting from The Irish Economy: Policy and Performance 1972-1981 by Peter Bacon, Joe Durkan and Jim O'Leary. They say:

However, by 1981 real agricultural income was 37½ per cent below the 1978 peak. Interestingly enough, the 1981 figure in real terms is identical to that of 1971, prior to entry to the EEC.

I think we would want to look a little more carefully at the alleged benefits of the Common Agricultural Policy. There have been some: a lot of money has come into the country, it has come to some people. However, the NESC, for instance, in Ireland in the European Community, Report No. 88, argues that the Common Agricultural Policy is one of the reasons our food industry has not developed. It is difficult to explain to a citizen, whose single greatest reality is the increase in food prices since we joined the EC, that now we are being told that reform of the Common Agricultural Policy is going to destroy an industry which they were told did not develop because of the Common Agricultural Policy. With the slight enthusiasm for logic that I have, I would like somebody to explain that to me. I do not understand why it would be impossible to develop an Irish food industry if agricultural products were to be produced and paid for at world market prices in this country. Why would that suddenly mean we could not have an industry?

Senator Dardis raised an issue about the problem of cereals. Of course, if he is correct that that would represent a distortion of the market then he is perfectly right, because market economics are supposed to operate on the basis of free, not distorted or loaded competition. As far as that aspect goes in terms of its distortion of a free market, then of course he is right and we should resist distortions in the marketplace which would undermine our inherent competitive advantages. We should not allow ourselves to be led into what one can only describe as squeals of pain and which, in a moment of irritation, I wrote on my notes as being effectively the squeals of the brakes on the Common Agricultural Policy gravy train as it finally grinds to a halt.

There are good things about letting our agriculture feel the force of market forces, one of them being the discipline of actually having to produce something that will sell in the marketplace. In that context it is worth reminding the House that, again in the NESC report, Ireland in the European Communities, they quote Professor Alan Matthews from Trinity College as saying that, and I am quoting from page 95:

The essential features of such an investigation is that Ireland's gains from the existence of the Common Agricultural Policy, or losses if all agricultural supports were abolished, are considerably smaller than the net transfers ... associated with FEOGA and the Common Agricultural Policy generally.

Professor Matthews goes on to give the reason. He says that when calculating the benefit of Common Agricultural Policy versus no Common Agricultural Policy, world beef and dairy products would increase if the Common Agricultural Policy and agricultural supports by industrialised countries were abolished. To suggest, as I think the Minister said, that the long term future of an agricultural industry in this country has to be market led is one side of the equation. If it is good for everybody else — and my scepticism on this issue is well recorded — to live in a Community of large scale free trade, then it takes a lot to persuade the rest of the Community that somehow it is not good for one industry.

I should like now to talk about the genuine concerns that many people have about this area. Senator Dardis quoted the objectives of the Common Agricultural Policy as stated in the Treaty of Rome but how far did the Common Agricultural Policy as implemented meet those objectives in this country? In that regard the reports on farm incomes are not very reassuring. I will quote from the National Farm Survey 1989, the last report Teagasc produced, which showed farm income distribution.

Dr. Upton

It may be the last they will be able to produce when their budget is taken into account.

Mr. B. Ryan

That was a good line for Senator Upton's own script. Incidentally, I have been involved in a little controversy with members of the Irish Farmers' Association and they all deny that those figures exist, they told me that I was making them up. I said that the average top 20 per cent of family farm incomes was £25,000 a year and umpteen representatives of the Irish Farmers Association nationally, in Cork city, Cork county and in County Kerry on radio programmes said I was making it up. They denied that such large family farm incomes existed but it is written here in the Teagasc survey. The horrifying part of this Teagasc survey is not so much the large incomes but the fact that the bottom 60 per cent, roughly 120,000 farmers — 37,000 multiplied by three — share 10 per cent of all farm income between them. In 1989 figures, £170 million was distributed between 120,000 farmers.

I am sick of averages which incorporate those distortions being quoted to me as an index of the relative prosperity of all farmers. As Senator Raftery told me once, if I had one foot in an ice bucket and one foot in the fire my average temperature would be all right. When you have that scale of distortion in income, distribution averages are meaningless and they are used dishonestly to protect the interests of a minority of farmers who are doing well out of the changes in agricultural income. In 1990 there was only a very slight increase in agricultural income over 1989 and in that year the top 20 per cent of farm incomes increased by 20 per cent while all other incomes dropped. Those farmers' incomes increased by 10 per cent and everybody else lost money. That is a part of the reform of agriculture and agricultural policy that nobody wants to address.

The present system has increased the imbalance of incomes between the rich and poor farmers. Let me remind the House again of the figures. Sixty per cent of farmers are left to scrabble over 10 per cent of farm income. Little tricks are played on us as well. For instance, we are frequently — I am going back to page 261 of the Teagasc report — quoted the family farm income but the cash income of farmers is rarely quoted. It is stated in the Teagasc report that cash income, as distinct from the family farm income, is about £2,000 a year more for the rich farmers than for the family farm income. That is explained by sales of stock, etc., in other words, in a bad year, there is a reduction in stocking levels to sustain cash income with the result that in 1989 the family farm income for the top 20 per cent was £27,731 but the cash income was approximately £26,628 — I am intrigued by the idea of having an approximate income of £26,628. Therefore, the actual cash income, as identified by Teagasc, is even bigger and, of course, the distortions are still loaded in one direction.

Mrs. Doyle

Was the stock relief claw-back included in the cash income?

Acting Chairman (Mr. McMahon)

Senator Ryan without interruption.

Mr. B. Ryan

Those figures are from the National Farm Survey 1989 — Rural Economic Research by Teagasc. It fascinates me, looking at people who are supposed to know a great deal more about agriculture than I do, that they have not heard those figures before.

Mr. Dardis

That is a farmers' survey.

Mr. B. Ryan

Let us get this sorted out. Every political party in this House whether in Opposition or in Government scream blue murder on the basis of the figures produced in this report. These are the figures they should talk about; it is about time they looked at all the figures, not just the tail end which suggests that incomes go up and down.

There are huge distortions in farm income. If the reform of the Common Agricultural Policy is to meet its objective — which is to keep people on the land with a reasonable standard of living, — it must address that distortion in the distribution of income. Price supports across the board cannot remedy that and universal standardised price supports will maintain, if not exacerbate, that mal-distribution of income.

In their submission to the joint committee the United Farmers' Association suggested a sliding scale of prices based on scale of production. They suggested, for instance, that farms producing in excess of 40,000 gallons of milk a year should get the world market price for milk with increased prices for lower production and that the same should apply for cereal production. I have not heard much noise from either the IFA or the ICMSA about that which, incidentally would leave large scale processors — the models of enterprise and efficiency they claim to be — in a position to sell their products at the world market price, which would probably be higher than it is at present because of the reduction in the distortions and subsidies that currently exist in both the EC and the United States. That is what I would like to hear debated and I invite my colleagues here, articulate as they are in the defence of agriculture, to explain that system to me and what they want to do about it. Higher prices will not solve that problem; they will simply create richer big farmers, poorer small farmers and bigger surpluses.

Mr. Dardis

Nobody was arguing for higher prices.

Mr. B. Ryan

Senator Dardis might not have but there are many people in IFA headquarters who still argue about higher prices.

Why are we so dependent on products that go into intervention? There are two reasons for this. First, they were so easy to produce that we forgot to produce anything else — this was implied in the Minister's speech. The agricultural processing industry bought what was easy, produced what was easy, and sold what was easy without worrying about whether there was a market for those products. It is no wonder we are so dependent on the Common Agricultural Policy and so threatened by the inevitable reforms. In the couple of minutes I have left I would like to address——

Acting Chairman

The Senator has one and a half minutes left.

Mr. B. Ryan

That is approximately two minutes.

Mr. Dardis

The Senator's figures are all approximate.

Mr. B. Ryan

My figures today are quoted from the sources everybody else uses, but with considerable selectivity.

I am much taken with the idea of a sliding scale of prices and of introducing a severe dose of real market economics to that sector of the Irish economy which is given to talking about how good it is for everybody else. I think most people are beginning to realise, that the Common Agricultural Policy benefits only a minority of farmers. Universal price support is a daft idea. The attempt by the NESC in one of their reports to deal with the Common Agricultural Policy is merely waffle and shows the inability of the lot of them to agree on anything.

Direct income supports of the kind proposed will lock people into poverty with little chance of getting out. There are two matters which need to be addressed. The first, which assumes we have competitive industry, is land policy. There have been attempts to address land policy but everybody, apparently, runs away from it. Land should be transferred to young people who are capable and willing to work as commercial farmers. We must develop that but it will not be easy as Irish society has deep roots.

The second point, and one the Minister mentioned, is the long run forward, the need to remember that there are two ways of making money out of a product, one by producing large quantities and the other by producing a smaller quantity of such a high quality that it commands a premium price. The alternative we should consider is quality and, in particular, environmentally friendly quality based on expanding organic agriculture.

Mr. McGowan

I welcome the Minister of State, Deputy Walsh, to the House and I have no difficulty in commending him as a very sincere and committed Minister to those involved in agriculture. I admire his contribution and am pleased that he is able to be with us.

I am glad to have the opportunity to say a few words on the Common Agricultural Policy. I welcome the MacSharry plan, however unacceptable it is to some sections of the agricultural community. If we do not get some rationalisation in EC support for agriculture, that industry will be forgotten in the west of Ireland. Small farmers in the west and, in particular, in my own county, are tired of hearing about new schemes being introduced and indications of an improvement in those schemes none of which has succeeded in rescuing those involved in small family farms. Therefore, it was necessary for Ray MacSharry to recognise that there is an imbalance and that the funding is going to those who already have multi-million pound factories or companies. It is ironic that there are huge signposts in Donegal, sponsored by a Kerry Co-operative, which tell us to smash the GATT negotiations, refuse to negotiate an GATT and refuse the MacSharry plan.

I have told IFA leaders in Donegal that they have got to have an independent mind and do not need to respond to Alan Gillis or the national Irish Farmers Association leaders. They have a special problem which is not a national one. Farmers in the west must look to themselves the same as the Welsh farmers did. Farmers in Wales are enthusiastic about the MacSharry plan and the review of the Common Agricultural Policy, whereas the large producers in Holland and England are not so enthusiastic.

The small farmer is used on every political bandwagon and he is tired of it. We have reached the stage where small farmers are forced to go on the dole, to work in industry, to emigrate or to do anything other than live on a farm and have an adequate standard of living. In fairness to Minister O'Kennedy, three years ago he said that tradition and sentiment will do nothing to sustain and keep one alive on a farm, that there has got to be a business approach and if one cannot produce and sell quality products economically then one will have to turn to something else. That was an honest statement by the then Minister of Agriculture and Food. However, it is difficult to apply that to a small 20, 30 or 40 acre farm in the west.

Many small farmers are now interested in agri-tourism. That is a welcome development and I would like to see more financial support being provided for agri-tourism because that is a vehicle through which we can help those living on farms in Ireland. If small farmers are not supported they will be driven on to the dole queues and who will support them then? The consequences are serious and, therefore, we must do more than give lip service to farmers in the west and in County Donegal.

The advice small farmers are receiving about the set-aside scheme and afforestation is confusing. Those living on small holdings are confused because it is not possible for them to plant their land and forget about farming as the income from afforestation would not be sufficient to support their families. This must be looked at realistically to see if a small family farm can be sustained by the set-aside facilities, the support that exists or the encouragement to plant their lands. A realistic examination should be undertaken to ascertain if afforestation will give a satisfactory return but I do not believe it is the solution in most of the cases.

The EC must do what Mr. MacSharry suggests, have a two-tier approach. The EC can no longer support 80 per cent of all funding going to those farmers who are in the multi-million pound category. I have said in this House and to those involved in agriculture that it was very sad to hear the manager of a substantial co-operative state that his co-operative are no longer interested in liquid milk, that they are no longer interested in investing money in Ireland or in Europe but that they are after attractive packages in America. Because they have a healthy cashflow they are in a position to buy up major businesses in America but what about the poor farmer who contributed the pound the first day to put that co-operative on the road? He is a long way behind and is long forgotten. The Government have an obligation to examine the direction the giant businesses and the co-operatives are taking when they threaten each other with take-over and when millions of pounds are involved. They talk about the economy and what is economic and uneconomic in world trade terms. That is a factor to be considered in sustaining and assisting the survival of small farmers. The giant co-operatives have moved from their initial concern. That is something the Government and the EC will have to look at.

The £700 million referred to here as a Government shortfall will have to be found from organisations already in place to support agriculture. Sadly, I have to say that Teagasc are not delivering. The structure is there and officials are getting their cheques every month but given the current farming position and the cost of running this organisation, it is difficult to understand the necessity for their existence. They are out of date, out of touch and the large producers, 20 per cent of farmers, do not need their advice; they have their own financial advisers, field advisers and technical people; they use computers and they are well organised.

Teagasc is a fairly substantial organisation costing the State and the taxpayer a great deal of money. I will try to avoid singling out individuals but recently I was at a function in the west and was sitting beside a Teagasc officer. I asked him what was happening in agriculture in his area and he said not very much. I asked him how he kept himself interested and he told me that he had a sideline. When I asked him what that sideline was, he said he had a few pigs. I asked him how many and he said he had 170 sows. I will not mention the county never mind the name of the individual, but when that sort of thing happens it is little wonder there is a question mark over Teagasc. I say this purposely in the hope that Teagasc will redirect their attention to farming. Teagsc was established many years ago to advise those involved in farming, but farmers' problems have changed and Teagasc will have to be reorganised and refocused to help those who want to stay in farming.

Senator Brendan Ryan quoted astonishing figures from a Teagasc report. He said a farmer could earn £24,431 and that his cash income would be in excess of £26,000. I wonder if the Teagasc advisory officer, and the chief advisory officer, in Donegal are in touch with the Teagasc officials who furnished that report because I have a copy of a newpaper which circulates in Donegal, dated 16 November 1990, in which a Teagasc agricultural officer said:

Donegal faces a major farm crisis. Donegal is on the brink of its worst ever farming crisis with a massive 21 per cent drop in income predicted for the county's farmers. No section of the hard-pressed industry will escape unscathed and leading local farm leader forecast this week that as much as £5 million could be lost to farming in County Donegal.

That was the warning came from a Teagasc officer whom I will not name.

Dr. Upton

We will have to look it up if he does not name him.

Mr. McGowan

It is not necessary to do that. The point I want to make is that that Teagasc officer indicated that a farmer in the west could earn £4,360 while those in the east could earn almost £11,000. I cannot comprehend how a Teagasc official could be so out of touch as to give those figures in an open statement to the press. Surely there is more rationalisation in the organisation than that, when one Teagasc officer can predict a farm income of £24,400 and another can predict an income of £4,000 — a difference of £20,000. I can readily understand why the hard pressed PAYE sector and others criticise the farmers for not paying their taxes, for getting too many grants and for living in the lap of luxury where everything is free. This perception stems from the misdirection of those sensational writers who produce reports which can result in a great deal of damage being done to an industry that is already in difficulty.

County Donegal faced a major farm crisis last year and the position has not improved. I ask the Minister to consider the possibility of reorganising the advisory service as in my opinion, this would be part of the solution.

Dr. Upton

Having seen Senator McGowan waving a newspaper during his contribution it appears that the disease of newspaper-waving by Members of the Oireachtas is obviously becoming contagious. It has spread to this House from the other House where it was initiated last week. I wonder if in a few weeks' time we will all be going around waving our favourite newspapers in different directions to make our points.

Mr. McGowan

There is a reference to the Senator's party in it also.

Dr. Upton

I am pleased to hear that because our party were not doing very well in Donegal until recently and we have made some very encouraging progress there of which, I am pleased to see, the Donegal newspaper has taken note.

I reject the attack Senator McGowan made on Teagasc. It is unwarranted because the people in Teagasc have done a very good job in very difficult circumstances in the recent past. The fact that the top 10 per cent of Irish farmers are now technically comparable with the best in the world is a tribute to those in Teagasc, the people who developed the technologies, who introduced those technologies and who created the expertise in Irish agriculture today. Teagasc have been badly treated in relation to the amount of resources which has been made available to them in recent years. I am sure Senator McGowan is well aware of the staff reductions Teagasc have had to face over the last number of year's.

May I respond to one or two points which were made by my distinguished colleague, Senator B. Ryan in the course of his speech? He expressed early on in his speech that he was an enthusiast for logic. Then, as he went through on the speech, if I remember correctly, he said he had a slight enthusiasm for logic. If he is committed to logic then I would say he is probably one of the few Irish politicians who is so committed. In my view, logic has a relatively small impact on the whole political process and I sincerely hope Senator Ryan will not be carried away in his enthusiasm for logic. I feel if that happens his future will be very limited indeed.

The Senator made some interesting remarks in relation to market economics and so on. One of the things that has struck me over the years in relation to people who have expressed an enthusiasm for market economics is the degree to which they would run from market economics if they were exposed to it. There are people in this country who see themselves as capitalists, as being in favour of free enterprise and so on. The reality in many of those cases is that they are statists in the eastern European mould and they run from free enterprise. They would run from real capitalism if they were exposed to it. They are people who really do not know who they are and seem to be quite confused.

Undoubtedly, Senator Ryan is correct when he speaks in terms of the huge distortions in relation to farming. I certainly believe he has a very valid point when he draws attention to those realities. All you have to do is to look at the gross margins for different types of enterprises, and there you have it. The figures are clearly worked out and you simply multiply by the appropriate amount of stock units. There are farms which have huge differences in terms of the amounts of stock they can carry. Anyone who has further doubts about that has only to look at the value and prices which milk quotas can obtain on the open market. Obviously, there is money in that type of production. That is why they fetch the type of money they do.

As far as the Common Agricultural Policy goes, I believe the Government are now engaged in a damage limitation exercise. There are going to be very serious reductions. In the case of milk there will be a 3 per cent quota cut and a 10 per cent cut in price. Beef intervention is to be cut by 15 per cent. There will be a cut of 35 per cent in cereals. The Minister has mentioned these things in his speech. There will be various compensations which will, as it were, limit the damage. There is going to be a serious reduction in agricultural output. That reduction will level out somewhere between £500 and £700 million and, in turn, you will see a reduction in farmers' income. I would reckon the reduction would be somewhere between perhaps £100 and £200 million. The figures I am quoting are very wide in terms of the range. That is partly due to the fact that the figures which you get vary greatly in relation to who is giving them to you and, indeed, in relation to the interest which those people who are giving the figures happen to serve.

Now a clear trend is established as far as agriculture and the Common Agricultural Policy is concerned. It has been downhill all the way after the initial golden era. the history of the Common Agricultural Policy has been one of lost opportunity for Ireland. Little planning has taken place. There has been what amounts to a total failure to address the problems of agriculture and the food industry. Despite 20 years of the Common Agricultural Policy the beef industry is in disarray. It is haunted by scandals; it is grossly underdeveloped. It is low in technology and it is quite incapable of putting branded products on the market. If that was not enough, various criminal elements in league with stupid, mean-minded kamikaze farmers have set about poisoning what remains of the beef industry with the use of products such as angel dust and other chemicals.

Over the years, the Common Agricultural Policy was seen as a solution to all our farming and food industry problems. That was particularly true when we entered the Community. We are now older, but I reckon that if our actions in recent times are anything do go by we have not learned a lot. The dairy industry has failed to consolidate, it has failed to establish branded products. The Minister's figures in relation to the amount of butter now in intervention compared to the situation in 1973 speak for themselves. the agencies of State, such as the IDA, have been effectively helpless when it comes to sorting out the problems of the dairy industry. They have been unable to force the consolidation. Our industrial policy in this matter has failed completely. The agencies of industrial development in the food industry know only too well what action is needed, but they are quite helpless when it comes to consulting local farms who defend their little, local empire to protect themselves and keep themselves important. You will see that in relation to the in-fighting which went on in co-operatives. You will see it at its most ridiculous in the case of the milk wars which are some of the most ugly and idiotic aspects of Irish behaviour in recent times. Yet, nobody seemed to be able to put a stop to that nonsense which went on for probably the best part of five to ten years. Occasionally, we still have the odd outbreak of it but I am happy to say such incidents have declined.

The realities of agriculture and the decay of the rural economy were put very well, and very simply in a newspaper article earlier on this week by Tony Connolly, in the Irish Independent when he wrote about Kilkee in County Clare and the peninsula which goes back from Kilkee to Loop Head. What he said is true of the whole of County Clare. He listed 125 pupils in one school in 1980; the same school now has 25 pupils. Most of the football team who won minor championships in 1980 are now in America. The area is crumbling. That picture is quite typical of large parts of rural Ireland.

A certain amount of attention has been paid to the effects of the reforms in the Common Agricultural Policy on the price of food for the consumers. There have been predictions of benefits for the consumers. It has been suggested that there will be a reduction of the order of £120 million in the national food bill. Indeed, it has been suggested further that this reduction in the price of food will work its way through the economy and will result in the creation of more jobs. I do not believe that will happen. There may be a transient decrease in the price of food but we will again go back to a steady increase. Rising prices are part of what we are. Many Irish business people certainly will not lose the opportunity to make a quick buck if they get that opportunity.

When these changes come it is likely that we will see a transient decrease in the price of food in much the same type of manner as when the Minister for Finance reduces VAT on the price of alcoholic drink. There is an initial decline in the price of drink when the VAT change comes into force but, slowly and steadily, the price of drink increases by the end of the year. The same pattern will follow in relation to food prices. In any case, the price of food is influenced by quite a number of factors other than the cost of the raw materials. There is the cost of the transportation and distribution of food, and the cost of manufacture and marketing. There was a question concerning supermarkets' margin. All of those factors will still be there even when the price of agricultural produce will have a very substantial effect on the price of food.

In the past when the price of cattle declined the manner in which that decline worked its way into the price of beef was sluggish. It did not work very well. In any case, even if you accept the figure of £120 million reduction, when you express that per head of population it results in a reduction of about £30 or £40 a year in the price of food to the average food consumer. It might work out as something less than £1 a week in the food bill of the average person and by any standards, that is fairly small.

The Minister emphasised the importance of food quality. This is a topic which, I know, is close to his heart. Indeed, I want to acknowledge the effort and the contribution he has made promoting food quality. He is one of the few Irish politicians who seems to understand the importance of quality. He is one of the few Irish people who has laid consistent emphasis on quality. That is very much to his credit. Indeed, it is very appropriate that he should mention it again today. I am sure the Minister is only too well aware of the need to try to improve the qualify of food. We have this image in Europe but, broadly speaking, it will not come to anything unless we set about exploiting it in a slow, systematic manner. That is going to very difficult and expensive. It will mean that we must be very disciplined in our approach to that problem.

That takes me to my final point, that is, the need for long term planning in relation to agriculture and the food industry; and this is particularly true in relation to the food industry. For most people in Ireland there is no long term planning. Broadly speaking, we make it up as we go along and we frequently contradict ourselves. That is part of Irish life. Nobody takes any notice of it. Most people simply do not remember what people said some years ago; people do not remember the contradictions and even if the contradictions were pointed out, most people would not be interested, anyway. In some ways that is a good thing, but in terms of developing an industry such as the food industry, there is no substitute for long term planning; it has to be consistent, it has to be sustained and it will require very high levels of investment. Most people would agree with these aims and yet the contradictions come back.

All politicians, including myself, have been denouncing the use of angel dust. The former Minister for Agriculture called the people who used it all sorts of ugly names. All the farming organisations and anybody else who commented on it were opposed to angel dust, yet the reality was — and, perhaps, still is — that angel dust was used on a very large scale in Ireland. Large amounts of it have been found all over the country. There is no doubt but that it was used widely. There is that contradiction — everybody was opposed to a product which was being widely used. Contradictions such as this simply will not work in Europe. The Europeans do not want to know about that stuff. They are looking for consistent, sustained, repeatable products of high quality. That is what we have to face up to. We have to face up the fact that brand images are absolutely vital.

Anybody who has the slightest doubt about the significance and value of the image of brands has only to look at the way major companies respond when their product is threatened or when there are doubts over an important product. The Perrier water company withdrew their product from a whole range of supermarkets and must have spent enormous amounts of money in so doing simply to protect the image they had built up slowly, carefully and systematically over the years. They were not prepared to shrug their shoulders and say the problem would go away. They invested an enormous amount of money cleaning up the problem. The same thing, I understand, is true in the case of Lucozade. When there were some doubts recently in the United Kingdom over the possibility that some Lucozade might be contaminated, this firm moved in and spent enormous amounts of money withdrawing Lucozade from the shelves, thus leaving the customer in no doubt that when they bought their product they were getting a quality product. We are only starting in terms of that sort of sustained effort.

I want to make a few final remarks about research in agriculture, and so on. There has been a very serious decline in the amount of money being spent on agricultural research over the past number of years and the morale of many people engaged in this research has been seriously eroded. That is a great pity. If we are to make progress and if the food industry is to develop that cannot be done without a major commitment to food research. We need to spend a lot more money on research and development in the food area. In particular, we need to spend a lot more money trying to develop new products. That is where the opportunities are but the development of new products is a very expensive and difficult process.

Even at this late stage, 20 years on, we must face up to the realities of the changes which are taking place in the Common Market. We must be prepared to make adjustments arising from the changes in the Common Agricultural Policy. We will have to think in terms of fundamental changes in how we conduct our business and, in particular, how we structure the food industry.

Mr. H. Byrne

May I welcome the junior Minister for Agriculture and Food, Deputy Kirk? He is very welcome. I compliment him on the work he has done to date in the Department of Agriculture. At this stage, too, I would like to pass on good wishes to Deputy Woods who has become Minister for Agriculture and Food. He has great expertise in this area and I believe he will be very acceptable to the farming interests. He has always proved to be a very hard worker. I would also like to take this opportunity to say thanks to the outgoing Minister, Deputy O'Kennedy, who had a very good grasp of agriculture and was there in difficult times. The Seanad should pay tribute to him. Being from Wexford the model county I have to say he had a good knowledge of farming and did excellent work while he was in the Department of Agriculture and Food.

I have to say to those people on the Left — and unfortunately now they have left the Chamber — that they seem to use every opportunity in an agricultural debate to have a go at farmers. They seem to suggest that the bigger farmers who are making money are committing a crime. It is a pity that this attitude is introduced to this Chamber on every occasion possible. It is obvious that the people who make these charges are not living in rural Ireland.

The challenge posed by GATT and the changes to EC farm policy are of fundamental importance and threaten the future viability of thousands of Irish family farms. It would be better if those Senators addressed their remarks to that situation rather than constantly taking pleasure in critising the farmers. Over the past decade farmers have been told, almost constantly, that they face further cutbacks and reduced incomes, and that they must adjust to new realities. Faced with this scenario — and especially with the new threat posed by GATT — and with further reductions in EC supports, an air of widespread despondency is undermining the confidence in farming and in the food sector. From this point of view I would like to compliment the members of the Joint Committee on their report. I thought it was excellent. I agree with 99 per cent of its content but I have one small criticism. I felt they were on the defensive more than the offensive. Maybe they should change tack. I suspect that there is an air of complacency and an air of defeatism creeping into their report; indeed, this is becoming widespread throughout the country. That is a very dangerous development.

The concerns for the future in farming are particularly obvious among farmers who currently have very inadequate incomes, who are struggling and working very hard to support their families. The level of poverty in rural Ireland has almost reached alarming proportions, as will be seen in a figure I will give in a moment. The proportion of farm families living in poverty has more than doubled since we joined the EC in 1973. The Common Agricultural Policy, as operated currently, is failing in its primary obligation which is to provide farm families with a reasonable income. In 1973, 16.7 per cent of Irish farmers were below the poverty line and in 1987 that figure had changed dramatically to 35.8 per cent. The poverty line is fairly well defined in modern days. I would encourage all EC farm policies to be based on the following five objectives.

First, we must ensure that European agricultural supports are directed towards securing the future of farm families based on sound, environmentally sustainable farming practices. I would have to agree with something said by Senator Upton relating to angel dust and growth promoters particularly. The former Minister for Agriculture and Food took a very serious view of this aspect in farming. I would like to be able to say the situation applies only to few farmers, but my information from talking to very senior people in agriculture is that the use of angel dust and growth promoters is still prevalent. While none of us likes to publicise the fact, nevertheless, it will destroy the clean image the Minister of State, Deputy Walsh, speaks about so often. The clean image is very important to us now that we are the only peripheral nation in the EC and ask the Minister to take a far more serious view of the situation and to accept that the use of angel dust and growth promoters is prevalent. It has happened in my own county. People who engage in this kind of activity are guilty of treachery.

The second point relating to policies is that very intensive factory-type farming, based mainly on imported concentrated feeds, should be severely discouraged by reducing supports where necessary. My third point is that European agriculture/food industries must be organised to meet the economic and social needs of Europe, not the commercial and political demands of the US or other GATT partners. The principles of the Common Agricultural Policy must be fully put into practice. These concern the Single Market, free trade within the EC, Community preference, priority to EC producers within the EC markets and financial solidarity. Funding must be provided from the EC budget rather than from national budgets and that holds particularly in the case of Ireland.

The fourth point is that changes to the Common Agricultural Policy must provide an integrated programme to alleviate and solve the problem of low incomes and poverty among farm families. This will involve both social and agricultural policy initiatives funded mainly by the EC budget. Finally, in order to ensure that Irish agriculture improves its competitiveness so that it can exploit in full new opportunities, a properly funded agricultural development programme should be introduced. This is primarily an issue for the Irish Government.

Being a farmer, living among farmers and talking to them every day, I realise the immediate concerns of the farmer in the context of GATT and the Common Agricultural Policy and the policy issues of particular interest from the Irish prospective are the proper maintenance of the EC agriculture/food market so that farmers' incomes can be improved and protected. This means effective controls on imports into the EC, such as proper supply and control measures should be put in place. Imports must be controlled as part of an overall approach to supply management by all GATT partners. The problem of very low output and low income farmers must be solved.

I was interested in the "Bibi" show on television last night when John B. Keane was the star of the show. While I might not agree with him politically, I do not think anybody could disagree with what he said. He said reforms of the Common Agricultural Policy were basically good but they forgot the small man and that just about says it all. He went on to speak about football teams — and I can identify with this as I live in a rural part of County Wexford — and said that you would find a better north Kerry football team in New York than you would in North Kerry. It is the same in Wexford. You would find a far better team from Fethard-on-Sea in London than you would in Fethard-on-Sea at present. These kinds of things have to be taken into consideration. It is a great pity my friends from the Left are not here to take note of this. Obviously, they are not aware of the position because, if they were, they would not talk as they did.

Direct income aid should be the policy instrument for marginal farmers who, because of age or farm size, are unlikely to be able to have a sufficient output at reasonable prices to generate a reasonable income. The EC must curb and reduce the level of imports of agricultural products into the Community. In this connection I will mention cereal substitutes. My understanding is that the level of surplus in the EC of cereal substitutes is basically the same as those imported from outside. The Minister mentioned it is difficult to cope with this situation because of the GATT, but the least we might expect is that there would be a comparable reduction in the import of cereal substitutes. Indeed, the evidence is quite clear that the US, New Zealand and others have increased production and exports. Therefore, the expected price improvements consequent on the application of supply management have not materialised.

The misguided and nonsensical policy of unilateral reductions in supply which has been pursued by the EC should stop. It serves only to totally undermine the commercial viability of farming in the EC. The EC should, however, seek multilateral supply control and management of global markets. It is only within this framework that internal control measures can continue and be extended where necessary to protect the income of the family farm.

With the proper multilateral framework of supply and market management, my view is that the EC agricultural markets must be retained for the EC family farm units. That is not the case. This can, and must be, the result of the Common Agricultural Policy reform and adjustments that are now taking place. I ask the Minister to take that issue on board. When he and his colleagues are fighting our case in Europe, they must take the Irish view. As public representatives, we represent the Irish view first. As has been mentioned here so often before, when the channel tunnel is in operation we will be the only country not linked to mainland Europe. As a consequence, our special location and our special clean image should be taken into account. We should be supported to some degree in retaining that.

It would be a mistake to allow any market to get out of balance in the future. I accept that fully. The ultimate losers are always the farmers — invariably the family farm unit and, particularly, the small farmer. Farming is a long term planning business. I agree wholeheartedly with what Senator Upton has to say in that respect, but had he been born, reared and worked on a farm all his life he would understand how difficult it is to plan in the long term. All through 1977, 1978 and 1979 our agricultural instructors, on the advice of the Department of Agriculture, were telling us to invest in this, that and the other. When we did, it left many farmers in Wexford — about 2,000 out of 5,000 — in financial difficulty as a result of long term planning at that time. They are still paying for it, the consequences are still there.

Since none of us at that time could have expected what is happening now with the GATT and the Common Agricultural Policy, it was not as easy to plan long term as Senator Upton would suggest. However, the farmer is a sound businessman, has always been and will continue to be, but he needs the support of our ministerial colleagues in agriculture to put forward the Irish case as a special one.

We need sound policies to give us the security to develop proper farming practices that are commercially viable and consistent with a balanced approach to environmental protection issues. Every farmer, in his own way, is an environmentalist. Occasionally we are led to believe that farmers do not give a damn. I honestly believe that that is not the case. Of course, like every profession, you will have the few rogues but I believe 95 per cent of farmers have a tremendous interest in the environment.

The US demands that European farmers produce less, export less and import more. That must be rejected by us and by the EC. I met Mr. MacSharry recently in Brussels. While I have to say he was a political colleague of mine, I cannot accept his methods and the way he is suggesting we should go. I think he has lost the run of himself, he has lost the flair for Ireland he once had. I ask the Minister to ensure that he gets back to the views he held.

The EC farming sector as a whole has been losing ground on the income front relative to other sectors for many years. However, the relative income position of small scale farmers has worsened considerably. I predict that unless there are continued supports for the small farmer, we will see a flight from the land within the next three or four years, the like of which we have not seen. All rural public representatives will have had the misfortune of having proud farmers, good farmers, calling to their clinics — some of them will not go to the clinics because they are too proud but they come calling in the dead of the night — saying they do not have sufficient money to put bread on the table. That is sad. We have a rural fabric where farmers are living in their own areas. If they are forced off the land they will move into towns to compete for housing, social welfare and jobs. This is a savage indictment of the way the EC has treated us. It was vitally important that we joined the EC but the Minister — I know he is on our side — now has a great opportunity and I hope he will take it for the benefit of the Irish farmer.

Mr. Naughten

I join with the other speakers in welcoming the Minister of State to the House; but I regret we do not have present the new Minister for Agriculture and Food. I have known the man for a long number of years, long before either of us went into politics, and I wish him good luck in his new job. Unlike previous speakers, I welcome the change in the Agriculture and Food portfolio. It can only be for the better because to my mind the previous Minister was never able to get a grasp of that very important industry. Hence the mess we are in today.

I am inclined to share the view expressed earlier on by Senator Dardis that at this stage we could be bolting the door when the horse has gone, because I believe, unfortunately, that the die has been cast and this country will suffer severely for it. I agree totally with Senator Byrne when he said he believed the EC Commissioner, Mr. MacSharry, had lost control of himself. The man has forgotten his roots. He has become obsessed with the Commission; he has forgotten his background, the people who elected him.

Those proposals, as outlined, will have a devastating effect on all of Ireland, not just on the farming community but on every town and village, but particularly in the west. We were recognised as having a special problem and our area was classified as severely disadvantaged, but now we will be penalised by having to accept a lower headage payment and lower compensation than anywhere else in the country.

As a member of the western sub-regional review committee, I recently had the pleasure of meeting some staff from both the Departments of Agricuture and Food and Finance who attended that meeting. Our civil servants tried to justify the lower rate of payment for the west. Where in the name of God are we going? I can only assume they were speaking on behalf of their political masters; I do not know, I can only assume that. They tried to justify why farmers of the west should get less than farmers in Meath. For example, you can have two livestock units per hectare in Meath but only 1.4 in the west. Straightaway, the farmers, the people living in the west are penalised.

Whether we like it or not, farming is becoming a system where you receive the cheque in the post. No longer do people take pride in farming, having a good commodity and selling it. A lot of this is the result of mismanagement of the Common Agricultural Policy where factory farming on the Continent was allowed to develop and create major food gluts. We all recognise that we cannot keep storing beef, milk and grain. Last year we saw pictures of people in Russia queueing for hours to get food while we have food in storage and cannot get rid of it. Surely some mechanism could be introduced where some of this food could be taken out of storage. As a member of the Committee of Public Accounts I know it costs a sizeable amount of money to keep this food in storage, some of it for a number of years. It is criminal that some EC mechanism was not operated to get this food out of storage and to the people who are starving.

We must all reflect on why the Common Agricultural Policy was introduced. It was put in place to give a fair standard of living to the agricultural community. Here we see that being dismantled and we are asked to grin and bear it. As Senator Byrne said we are fast becoming the only island off Europe. When the channel tunnel is opened we will be the only island and our special position has not been recognised. The fact that 40 per cent of our exports are agricultural and that we are fast becoming the only island of Europe that has not been recognised. We must get a recognition in view of the fact that so many of our people depend on agriculture, whether directly in farming or the agribusiness.

I would like to draw the Minister's attention to the fact that when the milk quota regime was introduced in 1985-86 our special position was recognised. We were the one country that got an increase as a result of the very hard negotiations entered into by Deputy Deasy as Minister for Agriculture. We must now insist that our special position be recognised, because a large percentage of our population depend on agriculture and we will soon be the only island in the EC; therefore, we must get special recognition. If we do not, we will have the same relationship with mainland Europe in five years time as the islands off the west coast have with the mainland just now. That is a reality. I am afraid we will become totally isolated.

I do not see any future for young people in farming. In one parish in my county there are 70 farmers. You would want two young farmers starting up in this area each year to keep the basic farming community there, given the fact that the average farmer will farm for approximately 35 years. In the last 17 years only two young farmers have gone into farming in that parish and effectively, that means that within 20 years that community will be totally wiped out. It seems to be the in thing now with officials in Finance, Agriculture and Forestry, to talk about planting, afforestation and increased grants. If things keep going the way I see them going in 40 years time we will be in the very same position with timber in this country as we are with beef just now. We will have lots of timber but no market for it.

Land coming up for sale in the west of Ireland is no longer being bought by farmers because no bank will give a farmer a shilling to buy land. They will not even give him the money to stock the land because the banks have lost confidence in farming. I agree with Senator O'Keeffe, who has demanded in the past three or four weeks to have a debate on banking. It is high time we had that debate. I believe the banks have acted criminally in respect of many farmers. The position they find themselves is not of their making. We should not forget that ten years ago the banks were running after farmers trying to give them money but now the banks are slamming the door on them. If a farm comes up for sale in the west of Ireland the chances are that either a private afforestation group or Coillte will buy it.

A big farm was sold by the Western Health Board, 260 acres in five lots. Five acres of it went to a farmer. The remainder was bought either by Coillte Teoranta or private afforestation. That is criminal. That is excellent agricultural land being taken out of agricultural production and it should be used for the production of beef, milk, sheep, thereby creating jobs in our factories and in our creameries. It should not be planted, the gate locked for the next 40 years. There will not be families, schools, churches or villages in areas where that is going on. Recently at a sub-regional review committee which covers Galway, Mayo and Roscommon, it was stated that if the present trend continues and if a land policy is not implemented — I believe it is absolutely vital that the Government introduce a land policy which will clearly define what lands should be planted and what lands should be retained in agriculture — from Donegal to Athlone some 70 per cent of the land will be planted within 20 years. This will wipe out the whole of the west of Ireland. That is a tragedy. I believe very strongly that action should be taken now.

I endorse the condemnation of Senator Byrne of those people who use angel dust. They have done untold damage to our cattle industry. It is regrettable that we have a small minority who will risk the future of all beef producers by using that hormone. I have heard of a number of people who had used angel dust on their cattle, who were in the process of using angel dust, or who had angel dust in their possession but I have not seen any prosecutions and I wonder why. Those people should be brought before the courts and penalised. I would like the Minister when replying to cover that aspect.

I have referred to headage payments and the detrimental effect of the 1.4 livestock units per hectare in the disadvantaged areas. I appeal to the Minister and his negotiators if necessary to use the veto to ensure that producers in the west of Ireland who have worked in co-operation with the Teagasc service do not suffer now. I would like to dissociate myself from the remarks of Senator McGowan with regard to the Teagasc service. They have done an excellent job and have worked with one hand tied behind their backs for the past four or five years because of lack of adequate funding and clear policy. I have stated before in this House that there is absolutely no clear-cut policy on agriculture at the present time. It is very hard for those people to operate in that sort of situation.

Teagasc did an excellent job and helped many farmers build up production when we had a Government policy of increased production in the agricultural sector. However, the farmers they were helping, who invested as a result of their advice, with grant assistance from the Department of Agriculture and Food backed by successive Governments, are the people who will be penalised. People who reclaimed their land, drained it and applied fertilizers brought it to a satisfactory level will now be penalised and be wiped out of farming because of this headage limitation

It is absolutely vital that in the disadvantaged areas there should be no limitation. If a man is doing a good job on a small 40 acre farm in the west of Ireland, he should be allowed to draw whatever headage grants are available — otherwise he will not be able to survive. I know many farmers in the west of Ireland who are waiting for headage payments and I appeal to the Minister to use his good offices to help in the matter. The Department of Social Welfare are able to pay out £3,000 million per annum but the Department of Agriculture and Food are not able to pay out £100 million. There is something radically wrong there.

There was a clear commitment given by the Government in the Programme for Economic and Social Progress talks that all the headage grants due for 1991 would be paid by Christmas. We now see a back-pedalling exercise and it now appears that only about 70 per cent of it will be paid. Many of the farmers who are waiting for headage payments cannot tolerate having to wait until 1992, I appeal to the Minister to ensure that he gets those payments out now. Many farmers in the west of Ireland are waiting for those payments for Christmas.

There are more things I would like to say on this subject which will have such a detrimental effect on the livelihood of many people in rural Ireland. I conclude by calling on the Minister to use his good offices to help in regard to headage payments before Christmas and to consider the other points I have raised, I look forward to the Minister's reply.

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

At the outset I would like to say I am pleased to have the opportunity to contribute to this debate. It is timely, it is very worthwhile and it provides Members of the Seanad with an opportunity to voice their views on the ongoing negotiations on the Common Agricultural Policy reform and, of course, on the parallel negotiations on GATT.

I believe the Joint Committee on the Secondary Legislation of the European Communities has performed a very useful task in drawing up the comprehensive and well thought-out report on Common Agricultural Policy reform which is before us. The members of the committee and all associated with preparing the report are to be complimented for their detailed and timely work.

Reform of the Common Agricultural Policy has been very much in the news over the past 12 months but it is only now that the Council of Agriculture Ministers are looking at the various elements of the Commission's reform proposals in minute detail. Since the debate started there has been unanimity among Ministers that reform of the Common Agricultural Policy is necessary. However, there has always been a wide difference of opinion as to the form the changes should take. These differences are not lessened as the detailed examination gets under way.

The report, like the Ministers in the Council, concludes that major reform to the Common Agricultural Policy is necessary. Again, like most Ministers, the report expressed doubts about the reform path chosen by the Commission. Given the divergent views that exist throughout the Community and the difficulties which the Commission's approach poses for countries such as Ireland, as highlighted by the joint committee's report, and indeed from comments by many other bodies, it will be extremely difficult to get agreement on the overall reform outcome.

As I said, the detailed examination of the Commission's proposals has just commenced in the Council. On Monday and Tuesday of this week, Agriculture Ministers discussed the proposals on cereals, sheepmeat and tobacco at considerable length. At their next meeting on 11-12 December, Agriculture Ministers will consider these sectors again as well as dealing with the remaining proposals covering the beef and milk sectors and the accompanying measures relating to forestry, pre-retirement and environmental measures.

It is very likely that the Netherlands' Presidency will hold a further Council meeting in December in an attempt to obtain consensus on the broad principles of Common Agricultural Policy reform, but this is not certain at this stage. What is certain is that major differences of opinion will have to be overcome if the Presidency is to succeed and hand over the general outlines of a Common Agricultural Policy reform agreement for the considerable firming up which will be necessary under Portugal's chairmanship in the first half of next year.

The Common Agricultural Policy has been a major success in bringing the Community's agriculture from a position of shortages in most product sectors to one where structural surplus exists. It has been clear for several years that the type of Common Agricultural Policy mechanisms which were necessary in an era when one of the principal objectives was to increase output and ensure adequate supplies of good quality food for consumers were not necessarily appropriate in different circumstances. As a result there have been several significant shifts in the Common Agricultural Policy mechanisms particularly since the early 1980s.

Changes have varied as between the different sectors but they have generally taken the form of a more restrictive prices approach, less permanent and more restrictive intervention availability and the introduction of quotas and maximum guarantee thresholds. In return, premia payments and other compensatory and socio-structural measures have been introduced to moderate the more serious adverse effects of the restrictive market support arrangements.

The more recent major reforms involved introduction of quotas in the milk sector in 1984, the adoption of a series of stabiliser arrangements for a range of commodities in 1988 and reform of the beef and sheep regimes in 1989. In addition in 1988, the European Council fixed an overall ceiling for agricultural expenditure and its growth rate for the period up to 1992. These decisions were designed to curb growth in agricultural production and to ensure that expenditure on Common Agricultural Policy support remained within the predetermined guideline.

The various adaptations to the Common Agricultural Policy worked in the short term leading to market improvements in sectors, milk in particular. However, they were no more than palliatives which were found wanting after a short time principally because they failed to address the underlying problems in the Community's agriculture. Supply/demand imbalances have persisted in several sectors and the continued increase in guarantee expenditure has failed to prevent the decline in producer incomes throughout the Community.

More recently, the international aspects have become more relevant through, in particular, developments in the GATT and in central and eastern Europe. For all these reasons, it is now universally accepted that reform of the Common Agricultural Policy is an essential and not an option. What remains to be decided is the nature and extent of that reform.

In its Reflections Paper of February last on The Development and Future of the Common Agricultural Policy, the Commission outlined in very broad terms how it wished the Common Agricultural Policy to develop. Foremost among a number of key objectives would be the retention of sufficient numbers of farmers on the land. Farmers would in future be seen as having dual functions of producing food and protecting the environment in the context of rural development. Another key objective would be to control production to the degree necessary to bring markets back into balance.

While the fundamental principles of the Common Agricultural Policy would be retained, the new approach would seek to ensure a different distribution of support while taking account of the difficult situations of certain categories of producers and regions. In practice, this would mean a partial switch of support away from price guarantees to direct payments targeted to a greater degree to those in greatest need and the modulation of support arrangements and quantitative restrictions in favour of smaller scale producers and disadvantaged regions.

The thrust of the Common Agricultural Policy reform proposals which have now emerged is broadly similar to that signalled by the Commission in February. Specifically, the Commission is proposing price reductions in many sectors together with some restriction on output and a significant package of structural measures. The other element in the proposal is a series of compensatory measures biased in favour of small to medium sized producers.

So far as Ireland is concerned, our principal difficulties with the Commission's proposals can be summarised as follows: the extent to which it is proposed to switch from price to direct payment support is excessive; the absence of guarantees that the proposed price levels will be defended; further general cuts in milk quotas undermine the comparative advantages of areas such as Ireland with wider adverse consequences for the milk processing and related areas; grass based livestock production would be inadequately compensated compared to cereal based production — this is a critical problem for Ireland; 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.

Finally, there is the question of the budget. If we decide on a new policy, we must decide on a new budgetary framework. If that policy leans more towards direct payments, 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. The compensatory payments are an essential permanent requirement, not something for a transitional period only. In whatever decisions we take, it must therefore be clear that we are agreeing a new definitive budgetary guideline. Without that, reform, on anything like the line proposed by the Commission, is impossible.

In the many Council discussions on the Common Agricultural Policy reform to date, we have made it abundantly clear that the proposals as they stand are simply not acceptable to the Irish Government. The Commissioner and Agriculture Ministers, and indeed Heads of Government in the other member states have been left in no doubt that reform is not acceptable on the basis now proposed.

The Government are committed to using every opportunity to present Ireland's case and to ensure that the outcome of the Common Agricultural Policy reform negotiation meets our legitimate concerns both in the narrower agriculture context and those on the wider economic scale. In summary our main objectives in the negotiations will be to ensure that: the need for economies such as Ireland's which are critically dependent on agriculture are properly met; the mechanism finally agreed effectively implement the underlying principles of the Common Agricultural Policy and involve a clear commitment to defend acceptable levels of market prices; adequate Community financial 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 viable; the compensatory arrangements for extensive grass based production take realistic account of what is required to maintain the economic basis of modern family farms; and any changes in the Common Agricultural Policy are dovetailed with, and given full credit in, the finalisation of the GATT negotiations.

There are, of course, elements in the reform proposals which must be regarded as positive from Ireland's point of view. For example, to complement the reforms, the Commission is proposing a series of measures in the agri-environment and structural areas. The measures would be negotiated with the member states so as to take account of local and regional conditions. The type of measures envisaged include compensation for extensification of production, environmentally friendly farming and long term set aside of land. In addition, there would be a more attractive early retirement scheme and increased and extended incentives for afforestation.

These so-called accompanying measures could be of significant benefit in the adjustment process and to rural communities generally and we are in general favourably disposed towards the principles underlying them. We will, however, need to ensure that such measures must reflect the real needs of member states and assist the adaptation of structures and rural areas. The need for these measures arises from the reforms of the Common Agricultural Policy and as such should be fully funded by the Community. In the current difficult budgetary situation, Ireland would have major difficulties with mandatory measures which required matching national financing.

The promotion campaigns for the beef and dairy sectors and the proposed community campaign to stamp out the use of growth promoting substances are especially welcome. Such campaigns would need to be adequately funded to ensure that a meaningful contribution can be made to highlighting for the consumer the positive aspects associated with the consumption of beef and dairy products.

The joint committee also highlighted the international dimension of the problem in the agriculture sector and gave the strongest support to the maintenance of Community preference including rebalancing, strict controls on imports and responses from the Community's trading partners to match the efforts which the Community has signalled that it is ready to make in the reform process. These concerns are of course, very pertinent in the context of the GATT Uruguay Round negotiations which are once again entering a critical phase. While there has been some advance in the GATT talks over the past two weeks and the US now seem willing to adopt a more realistic approach, there are still considerable differences between the EC and US positions.

In the ongoing discussions it is essential that the Community's interests are protected and that any commitments entered into in the GATT are realistic and consistent with the Community's determination to uphold the principal mechanisms of the Common Agricultural Policy. It is most important that we avoid excessive commitments and that there is coherence and balance between them. We must secure adequate Community preference and the other conditions, including rebalancing attached to acceptance of tariffication.

On the export side, arrangements must be consistent with overall support commitments and allow the Community to benefit from the expected expansion in world trade — a commitment from the EC's trading partners to maintain discipline on world markets would be an important element in this area. A vital point is that the compensatory arrangements flowing from the Common Agricultural Policy reform are accommodated in the "green box" of support which are not to be subject to reduction. Credit for past actions is also important.

While the GATT spans some 15 sectors of which agriculture is but one, Ireland has always insisted on Agriculture Ministers being fully involved in the agriculture aspects of the Uruguay Round. This has been the case in drawing up the Community's negotiating mandate last November and it must continue to be the case particularly in the present critical phase of the negotiations. Agriculture Ministers had a very useful debate on the GATT at this week's meeting in Brussels and the Council gave an unambiguous message to the Commission as regards all the major issues for the Community.

Ministers made clear the importance they attach to securing balanced commitments from the different parties in the negotiations; opposing any volume commitment in the export support areas; securing Community preference and rebalancing and establishing "green box" criteria which would accommodate the Community's compensatory payments. This development is clearly positive from Ireland's point of view.

I conclude by expressing appreciation for the work of the joint committee. The report and our discussion here along with that in Dáil Éireann on 8 November are important contributions to Ireland's consideration of Common Agricultural Policy reform and the GATT question. They promote deeper appreciation of the issues involved and can only be helpful in securing Ireland's essential demands in both areas.

Mrs. Doyle

As a member of the committee that drew up the report we are discussing, I thank the chairman of the sub-committee on agriculture and fisheries, Deputy John Ellis, who chaired extensive meetings we had on this most important topic, all those who serviced the committee and our consultant. I hope all Members consider it a useful document. Not everyone will agree with everything in the report but it is a very good reference document from which we can draw material and follow this most important debate on the reform of the Common Agricultural Policy that will unfold even further over the next few months. My thanks to all whether at the executive or public representative level who helped compile this document.

The need for reform of the Common Agricultural Policy is not questioned at this stage. Why we are reforming it is less clear. Two reasons are usually given: first, the great increase in intervention stocks and, second, the projected costs of an ongoing unreformed Common Agricultural Policy in the years to come. I am in some disagreement with the latter view but none of us could sustain the ongoing increase in intervention stocks with surplus being piled on surplus without adequate marketing outlets to ensure that what we were producing was needed, in other words, without a market-led approach.

I understood the philosophy behind our joining the Community was one of concentrating production in areas of greatest natural advantage. Virtually the only natural advantage Ireland had when we became a member of the European Economic Community, as it was called then, was our grass based agricultural production. If the philosophy of concentrating production in areas of natural advantage means anything, it means that we defend with all our power grass based agricultural production. That is the natural advantage we have and that is what we joined the EC with in 1973. That is what we maintained our membership of the EC Twelve in the Single Market with and that is what we must protect in the future. Eighty per cent of Irish agriculture is grass based and we need not apologise to anybody, not even to Senator Brendan Ryan, for defending grass based agriculture production.

Senator Ryan's contribution was interesting because it gave the view of others who have a different approach to this topic. I would like to point out to him that the difficulty is not that we do not want a market driven agricultural economy — we would all love that — but how we get from what we have today with internal subsidies, export refunds and limited access to the European markets to an open market, and how those transition years will be handled without causing a crisis on family run and commercial farms.

There is no point giving out about the subsidies and supports that have been given to agriculture. We have protection and support for our agricultural products because that is what we have to offer. Other countries have protection and supports for different areas. We must look at what we have and where our natural advantage lies and decide to stick firmly to grass based agriculture. If we are honest and logical it is harder to defend cereal production with the same vigour and vehemence, even though we will endeavour to do so, because we do not have the same natural advantage in the production of cereals in this country. We do not have the economies of scale either in terms of machinery or farm size as the Paris basin or East Anglia where there are enormous ranches. We will defend cereal production but it is far harder to be as logical and vehement in our defence of cereals as we can and must be in our defence of grass based production.

Like many of my colleagues we must decide what is common about the Common Agricultural Policy at this stage. How can we have a common policy for the Twelve if some national parliaments can give 60, 70 and 80 per cent national aid to their farmers while, in the last four years, national aid to agriculture in this country has been reduced to 46 per cent? What is common about that? How can it be a common policy if the wealthy nations in Europe can subvent their farmers virtually to any extent? We will be left here on the periphery of Europe and we will not be in a position to aid our farmers through the transition period. If there is to be anything common about the agricultural policy we are now discussing we will have to have an agreement in Europe that national aid is the same in each of the 12 member states. If not, we are talking about a distorted policy. There is nothing common about Irish farmers, their spouses and children who will have to abandon agriculture as a way of life.

We have a national unemployment level of 20 per cent. It is 23 per cent in County Wexford. How can we offer alternative employment to those who will be driven off the land by reform of the Common Agricultural Policy despite the best will in the world on the part of Ministers? How can we offer hope to the people? In Germany the unemployment level is 5 or 6 per cent. There is nothing common about the prospects and possibilities facing young people reared on the land here compared with those in Germany today. They do not have the same chance of employment if the land is closed off to them as an option for earning a living.

I feel very strongly that if we continue to talk about a Common Agricultural Policy it should be truly common in terms of alternative employment prospects and national aid. We must be sure we are talking about an agricultural policy because most of what is being offered from Europe would be better discussed in the context of social policy, not agricultural policy. We must ensure a future for family farms when we close off the main enterprise options open to them by production controls of one type or another. We must also ensure that our commercial or developmental farmers survive or we will not have the raw material for a future agri-business and agricultural industry that the Minister of State, Deputy Walsh, talked about this morning in such glowing terms and with such hope. We will not have an agri-business sector if we do not produce the raw material for 12 months of the year on an even supply basis.

It is often forgotten that perhaps those on whom reform of the Common Agricultural Policy will impact hardest may not be farmers, but the industries linked to agriculture, the upstream supply industries, those supplying feedstuffs, fertilisers, the marts, the services industry, those supplying professional and advisory services. We have about 20,000 jobs at the moment in the agri-food sector and whether we can hold that number is extremely doubtful. The projections are that number will decrease because if you have control in production you will have a reduction in the raw material produced and, therefore, a reduction in the number of downstream value-added jobs be they in the creameries, cheese-making, meat factories or wherever. The proposed reform of the Common Agricultural Policy will have an enormous impact on the PAYE sector.

The message must go out loud and clear; we are in this together. It is not a matter of the farmers whining yet again. Unfortunately they cried "wolf" too often in the seventies and eighties at different stages and no one knew when there was really a crisis or whether they were just moaning again. The difficulty is there are major problems with the proposals to reform the Common Agricultural Policy or the MacSharry proposals as they now stand. I am not sure whether the public generally are listening, even though it is the public generally the changes will impact on as much, if not more than the farmers.

Deputy Walsh also mentioned the need to revert to more environmentally sensitive farming. I could not agree more. I have used that expression over the years many times myself wihtout really being sure that there was sympathy for the concept. I ask him and the Government to explain how the MacSharry proposals to reform the Common Agricultural Policy could lead to more environmentally sensitive farming. If the proposals will reduce the cost of cereals and make it more competitive to have factory-based animal production in the red meat sector generally, how will that be more environmentally sensitive? How will it be environmentally sensitive if we will tilt the balance away from grass-based agricutural production towards factory-based animal production? It just does not sit with the wishes of the Minister this morning. He made a fair point but it was not logical in terms of what reform of the Common Agricultural Policy will mean in practice. I would love to know how the two would sit side-by-side.

My plea is for environmentally friendly farm practices. Organic farming will not feed the world but there is a happy medium somewhere between strict organic farming and factory farming which will feed the world and, at the same time, will be sustainable in terms of agricultural production and the environment generally. That is the happy medium we need. We must produce a quality product that will sell worldwide. We need to look further than the supermarket shelves of Europe to sell our produce now. I agree with the Minister that we need a market-led and market-driven approach. We need to look at Japan and the world generally and ensure that we can market our products and that by calling it Irish in the first place means it is a quality product produced by way of environmentally friendly farm practices. We talk about that at the moment. We are getting away with murder in this area but we must ensure that concept is translated into economic reality so that we can compensate for the reduction in production of our main agricultural enterprise products by having a premium on what we produce.

The concept of the "green box" is relatively new. It has become part of Euro-speak in recent times. Can we not request our Minister to insist that all grass-based production in this country is put into the "green box"? Anything less will be unacceptable. If we cannot defend grass-based production and if cereal fed animals are made more competitive and the balance is tilted in their favour, we are at nothing. Therefore, my request would be, if we are into the "green box" business, can we please take all grass-based agriculture out of the proposed reforms and support reductions and put it into the "green box"? Anything less is unacceptable.

I will return to the report and briefly go through a few points to underline how important agriculture is to this country. I refer to page 26 of the report because the recommendations of the joint committee are worth reading. The contribution from the agricultural sector to GNP, to exports and to employment is so singularly important that we must defend what we have with all the vigour possible. Macra na Feirme were annoyed they were not requested to make a submission to the joint committee. That must have been an oversight. I cannot say the reasons for that oversight but I would like to put on the record their views and how much they sit happily with the recommendation of the joint committee.

I fully support a viable farm retirement plan and a system in the reform of the Common Agricultural Policy that will allow young educated farmers into mainstream enterprises. Alternative farm enterprises will help on the fringes but they will not make any major impact in relation to grass-based production and cereal production which are the main areas. We must ensure viability and competitiveness of our agriculture as a commercial sector as well as look after the whole family farm area in whatever reforms take place. When it comes to general production controls the debate will be between supply management or price reduction.

In the long term, price reduction would probably have been the best way for Ireland but in the short term that would mean so many farmers would go to the wall we could not cope with it and we could not inflict that on our farmers. Being an agricultural exporting country if we could jump 25 years down the road and operate controls on a price reduction basis, it would be in our long term interest but our short interest definitely lies with supply management and quota controls. We must look again at tying quotas to the land and the capitalisation of quotas. We must be very careful with the introduction of quotas for sheep and cereals and, above all we must ensure that young farmers who are not in a position to inherit land but who are interested in agricultural production can become involved in the industry not only in this country but in Europe. We could be talking about an EC with 24 members and in that case Ireland would not be at the bottom demanding priority funding and compensation. There would be many eastern European countries who would have greater priority in regard to funding and any guarantees we might try to nail now for compensation would be very thin when Europe expands beyond the Twelve.

We must be careful about what is agreed now. The guarantees must be nailed down and I am not sure how that can be done with a system that has annual budgets, but we must try. We must ensure that the commercial farmer has a future and that the family farm is part of the Ireland we have always known.

Acting Chairman (Mr. Foley)

Before calling the next speaker it gives me great pleasure to welcome the Minister of State Deputy O'Donoghue on his first official visit to this House. I congratulate him on his appointment to his new portfolio.

Mr. S. Byrne

I am delighted to get an opportunity to say a few words about this serious issue and I, too, would like to congratulate the Minister and wish him well. I am sure he will do a good job.

I thank the former Minister, Deputy Michael O'Kennedy, for his hard work over the years in agriculture and in the many other portfolios he held. From 1973 it was very easy to be a Minister for Agriculture. They were the golden years but recently it has become a very difficult area. The former Minister for Agriculture and Food was unfairly criticised because the world scene completely changed in the last couple of years and the very serious issues that surfaced were not of his making but made his job more difficult. I wish him well and I thank him for the energy he displayed in tackling these problems. I am sure he will do an excellent job as Minister for Labour. The Ministers of State at the Department of Agriculture and Food, Deputies Kirk and Walsh, are very dedicated people.

I compliment everybody involved in the production of this report and I agree with Senator Doyle that it is very important for anybody who has an interest in agriculture. I compliment her on her very positive attitude towards this debate. We are all in this together, Opposition and Government, farmers, fishermen etc. We are at a serious crossroads and every man, woman and child will be affected for years to come.

We have a special case to make. Our chief industry is agriculture and I have confidence in Commissioner Ray MacSharry, regardless of what the media may say about him. He has a very difficult job and I am sure he is putting all his energies into it. He is not just a Commissioner for Ireland but for the EC and I am sure he will take our special case into consideration. Rather than knock him we should support him and outline our needs and our worries to him.

There are so many problems we could speak for a week about them. Many of the supports that were given to agriculture over the years in particular in the beef sector, have been a disaster. We have the finest quality beef in the world but the intervention system did not encourage meat factories to market their products. High quality beef was dumped into intervention. Now that that is coming to an end we go across the world to try to build up our markets. The meat factories should have worked harder to market their products. We can be proud of our quality products. I compliment the former Minister for Agriculture and Food, Deputy O'Kennedy, for his efforts to combat the angel dust tragedy — that is what I call it. Those who use angel dust are doing a great disservice not alone to our image but to those farmers who are responsible enough not to engage in that practice. I hope it will end soon because it is in the national interest that we have clean grass produced products. There is a great market in the EC. I hope those who are misguided enough to make a profit in the short term will see that and stop that practice.

We had Ministers who were classified as successful but millions of pounds rolled into Ireland in the first few years of our entry to the EC. It is grossly unfair to attack the Minister, Deputy O'Kennedy, because in the last few years the Agriculture portfolio became a most difficult one. He handled it with great dignity and experience and I wish him well in his new post.

I reject out of hand most of the GATT proposals. I heard something on the radio last night that would lead me to believe that the ice is starting to break and there is a change on the way. It will have to be great change to save the family farm and to save our most important industry. Farmers have borrowed up to £2 billion at very high interest rates and the burden on them to make ends meet, to rear and educate their families must be taken into consideration. In the UK they have bigger farms and their industrial base is stronger. Many people in Ireland depend on the family farm. Since 1987 farm borrowings have increased by 25 per cent. Farmers were encouraged to modernise their farms and they did so. Now they will be penalised if the Common Agricultural Policy proposals are agreed. They will have to reduce their stocking rate to qualify for the various compensations. That is crazy.

We have a problem in the dairy area with surpluses and so on. Low quality grain is imported into the EC and dairy and beef factory farms are responsible for these mountains of beef, pork and dairy products. That is where the problem lies. We must not hit the family farmer and tell him he must cut back on production.

Compensation will not solve the problem. Farm incomes have dropped since 1990 by 15 to 20 per cent, and I fail to see how any sector of society could tolerate that. There is an outcry when people's incomes drop. However, as a result of high borrowing and a reduced income, many farmers fear facing their bank managers from week to week and they are not very pleasant gentlemen when it comes to putting in the boot.

I wish the Minister, Deputy Woods, well. He has proved himself in other Departments as a very hard working, conscientious Minister and has done an excellent job in the Department of Social Welfare. I have every confidence that, with his interest in agriculture in his younger days and his qualifications in horticulture and agriculture, he will put his knowledge to good use and that we will not find him wanting in any area. He is an approachable man and listens to people's problems. I wish him every success.

There is a 3 per cent cut in quotas under the Common Agricultural Policy proposals; and to cut milk quotas by 4 per cent and the support prices for milk by 10 per cent is crazy. The compensation for the premium of £65 per cow for the first 40 cows will be paid, but the problem with the compensation is that it is dependent on the stocking rate. In the disadvantaged areas the stocking rate will be .56 livestock units per acre, or two acres per livestock unit. In the non-disadvantaged areas the stocking rate will be .8 livestock units per acre, or 1.25 acres per livestock unit. That is a crazy suggestion and cannot work. Most farmers have borrowed to develop their holdings and to increase their livestock numbers. If they have to go backwards to qualify for compensation it does not make sense. Whoever thought that out must have said to themselves — they will live some way. The farmers will lose out on the premiums if they do not reduce their stocking rates. There will have to be a lot of hard bargaining done there.

There is also to be a reduction in the beef intervention scheme. There lies another problem. I could go on and on. It is a serious situation. People have borrowed heavily and are getting less for their produce. The people who grow quality winter wheat and barley are also in trouble. In my own constituency there are some of the best cereal growers in Europe. They, too, will be penalised. I am not going to go into details of the suggestions I made here some months ago, but the proposed reforms are crazy.

As Senator Doyle asked earlier, what is going to replace that quality home grown material that provides many jobs for people on and off the land? Is it going to be replaced by low quality junk imported into the EC?

Borrowings are over £2 billion and interest rates are very high, 13 per cent higher than inflation. To get the compensation, stocking rates have to be reduced by 20 per cent; livestock have to be kept for a longer period to qualify; and beef cattle have to be kept longer to qualify. That is a backward step because people have modernised their system of farming over the years and they are able to produce a finished animal at a younger age. Now the EC tells us we will have to hold the cattle for a longer period to qualify for headage payments or compensation. That is a backward step and will have to be resisted. In my opinion there is a need for better compensation for people in these categories and it must be based on the present stocking rates. An interest subsidy is also required to overcome the high borrowings by Irish farmers. This is essential as part of the package from Brussels because many farmers are in serious difficulties with their banks.

As other speakers have said, this is a valuable report. There are over 160,000 people directly employed in agriculture and many more thousands in industries supplying the inputs and processing the output from agriculture. This constitutes one-third of our exports. Whatever Govenment are in power we have Ministers for Industry and Commerce and various other Ministers trying to generate employment. Every Government have done their best and the present Government over the last four years have worked hard to create jobs for our unemployed, especially our well educated young unemployed. In the heel of the hunt, the jobs that are created on the farm will be there when many of those modern industries we search the world for, will have gone by the board — industries in which jobs are created at enormous expense. A special case can be made for Ireland. I hope we get special concessions as an island because the cost of exporting our products is so great. I wish the Minister for Foreign Affairs, the Minister for Agriculture and Food, the Taoiseach and Commissioner MacSharry every success in these negotiations. This country is at the crossroads not alone for farmers, but for everybody and for future generations.

An Leas-Chathaoirleach

Before I call Senator Hourigan I want to welcome Deputy O'Donoghue to the House and wish him every good luck in his new appointment as Minister of State at the Department of Finance.

Mr. Hourigan

I too would like to welcome the Minister of State, Deputy O'Donoghue, and wish him well in his new office. I would also like to congratulate Deputy Michael Woods, a graduate of University College, Dublin of the same discipline as myself, on his appointment as Minister for Agriculture and Food. I am sure he will do a good job in Agriculture in the years ahead.

We have before us today an extremely important subject for discussion. Much of the ground has been covered already, but there are a few points which need to be emphasised again and again. As was stated earlier, we are talking about the position of Ireland in the years ahead in the context of our membership of the EC. We joined the EC in 1972 and the basis of our joining was that agriculture had unlimited prospects and that we had untold potential to develop and to expand. Unfortunately, we find now that that is not the case. Our wings have been clipped, and clipped very seriously. We have been put into a very restricted area at the moment.

The advisory services, for example, had a function primarily to get the farmers of Ireland to improve their production, to become more efficient and, as one noted Minister of the past said, to grow two blades of grass where only one grew previously. Now the reverse is upon us; in fact, one is penalised for being efficient, for a high level of production, for a high stocking rate and so on. There has been a complete turnabout, I believe — and I have stated this in this House previously — that we, as a country, deserve definite and special concessions as an underdeveloped nation on the periphery of Europe, a nation that is very new in the context of our partners in the EC. For that reason I do not think there is any way we can compete with our partners — the Dutch, the Germans, the French and so on — in the EC in the future.

The GATT and the Common Agricultural Policy are so intertwined that it is not possible to segregate one from the other. When we talk about the Common Agricultural Policy we are indirectly talking about the GATT and vice versa. This is a new dimension, one we did not have when we had the Common Agricultural Policy in 1972. On 30 October last the four major farming groups — the ICOS, the umbrella organisation of the co-operative movement; the IFA, the ICMSA and Macra na Feirme — came together after several months of study and research work and made some quite telling statements with regard to the present position of the Common Agricultural Policy and the proposed reform. They talked about alternatives to that reform.

It is pregnant with meaning that we have a coming together of these four major farming groups — and their agreeing very positively about the disaster that would befall Irish farmers, Irish agriculture and the Irish economy if the Common Agricultural Policy went through as proposed at present. As I said, fundamental and quite far reaching alternative proposals to reform the Common Agricultural Policy have now been agreed by these four major groups. In a detailed policy document resulting from some months of research and study they indicate quite an unusual common basis for lobbying by the farming organisations at home and at EC level during the coming months. This policy, as the Minister will know, has been submitted to Government and to Commissioner MacSharry.

The farming organisations have been seeking bilateral meetings with the social partners to develop the best strategy for Ireland not alone in a farming and food sector perspective but from an overall economy aspect. In this regard the leaders of the farming groups point out that agriculture and the food sector are more than twice as important to Ireland relative to the average for the EC. The farm leaders have highlighted the need for Ireland to safeguard its vital national interest during the Common Agricultural Policy and GATT negotiations. In unveiling their proposals the leaders of the various farming organisations have specifically referred to the so-called reports and statements made in recent times which attempt to suggest that the current EC Common Agricultural Policy proposals are not harmful to Ireland. This is something that needs to be hammered very fully — that people are out there suggesting that the present proposals are not harmful to this country. It is established quite emphatically and with quite strong evidence that the statements that have been made are extremely damaging to this country as well as being totally untrue in themselves. I believe that all of us, together with the Government, must make a joint fight to make sure that that message does not get across.

These analyses I referred to carried out by the farming organisations, and which are now available to anybody interested in them, demonstrate the enormous challenges posed by the Common Agricultural Policy and the GATT. As I said, these two are intertwined. For example, farm output is projected to fall by £684 million, or 20 per cent annually, as a result of the Common Agricultural Policy reform proposals and recent changes introduced by the EC. Even after taking full account of the proposed compensation, farm incomes would fall by £160 million if the losses arising from the recent changes are also taken into account. Total farm losses would be about £280 million per annum, which is equivalent to fall of over 16 per cent in farm income realative to 1990 as a base year — and any of us with a knowledge of or involvement in farming would know that 1990 as a base year is not a good one from a farming point of view.

The farming organisations have talked and put forward proposals, the details of which I do not propose to go into. They have dealt with the whole area of cereals, milk, beef, sheep and all the other vital areas. There is one thing that I believe is fundamental to the whole argument and that is that those who are pushing the GATT proposals — the Americans and the CAIRNS group countries — do not get their way. If, for example, the proposals of the Americans and of the CAIRNS countries were to be implemented, it would mean essentially, putting it very simply, free trading throughout the world, and this in a relatively short time. We as a country would not be in a position to compete or to participate in that kind of arena. Therefore, it is vitally important that we do not under any circumstances accept what is now on the table. We have gone a fair distance already. I will acknowledge that a certain measure of compromise has been accepted by the GATT countries in an effort to get agreement. The Americans appear to have eased their demands from their initial demand of a 75 per cent reducation, for instance, in internal supports and a 90 per cent reduction in export refunds. The Community's initial offer was, as we know, a 30 per cent reduction in internal supports with no specific commitments in the area of export refunds or market access.

The negotiations have reached an advanced stage and are concentrated now on the following areas. On support reductions, all internal EC supports are likely to be subject to reductions except for policies causing minimal distortions of trade and productive rebuffs. Dependent on the timescale for reduction and base year, agreed figures of somewhere between 30 and 35 per cent are now forwarded as a basis for negotiation.

However we must not lose sight of the point to which I have already referred — the question of access to the market. We do not have the same access to a market in Europe or throughout the world as many of our competitors in the EC or our partners enjoy. We are distanced a long way away from the market. We are an island, which in itself presents a problem. We have a small population, something in excess of 3.5 million. All these are very limiting factors and imposed major and fundamental problems for us. For that reason I do not believe that the future of farming can withstand the onslaught that is about to be launched on it.

There is no question but that Irish farmers, be they of large acreage, medium or small acreage are under severe strain at the present time. There was a time in this country when people talked about a big farmer and a small farmer: a person with 100 acres or its equivalent was regarded as being a big farmer while a person with perhaps 40 or 50 acres was a small farmer, and even with a smaller acreage farmers made quite a worth-while living. But now we have a situation — and, unfortunately, we have plenty of evidence to support this — where farmers with not 100 acres but 200 acres cannot make a living. It is not possible for many farmers to live on the equivalent of 200 good acres of land. I speak particularly of those farmers who do not have a milk quota — in other words, those farmers who do not have the licence to produce milk for sale, liquid milk or milk for manufacturing purposes, but who produce beef, sheep, cereals or various other tillage crops. It is quite evident that as the years go on there will be fewer and fewer farmers. In fact, I know, from first hand experience and knowledge dealing with farmers, that many farmers are in dire straits at present with the lending institutions and that there is no hope that they can farm their way out of their difficulties. It is as simple as that. I accept that the dairy farmer is in a better position than his fellow farmers in the non-dairying area.

In the very near future, perhaps in five years or ten years, the number of farmers will have reduced dramatically and this country could finish up with perhaps no more than 30,000 to 40,000 farmers. In the eyes of many this might seem a very drastic assessment but I am quite satisfied that that is the most we are going to have as full-time farmers. While part-time farming is the answer to many of our problems — even those farmers with sizeable acres must have a certain proportion of off-farm income — the reality is that there is no scope for employment out there. I am not blaming or condemning the Government for this, but the reality is that it is not there and unfortunately the safety valve of emigration no longer exists. It will take very specialised treatment in the context of Common Agricultural Policy reforms and of GATT arrangements to ensure that the maximum number of farm families continue in the time ahead.

Acting Chairman (Mr. O'Reilly)

Before I call on the next speaker, Senator Ó Cuív, I would like personally to welcome the new Minister, Deputy O'Donoghue, to the House and wish him good luck.

Éamon Ó Cuív

Ba mhaith liom i dtosach báire comhghairdeas a dhéanamh leis an Aire Stáit agus fáilte a chur roimhe go dtí an Teach. Tá a fhios agam go gcruthóidh sé go maith sa phost nua atá tugtha dó.

There has been much talk during the day on Common Agricultural Policy, on the technicalities on percentages and figures. There is a great temptation in this debate to get stuck on minor figures without standing back and looking at how we arrived at the situation we are in and where we should go from here. One of the biggest problems with various policies is that they are stand-alone, isolated policies, that certain things become sacrosanct just because they are there, and also that we are unwilling to shake the status quo.

If one wanted to just take agricultural production in isolation, it would mean that for effectiveness the simplest thing to do would be to draw a line, say, from Lough Swilly down to Cork and cut out the west of the country and forget about it because the farms are not viable as they are too small. That would be a simple and effective thing to do; and, in terms of transport, it would be an efficient thing to do. Of course, in doing anything like that you would be missing the whole point of any human endeavour, and that is to serve other people. There is a grave danger in this debate that we will get so caught up with figures, with production, with overproduction, and underproduction, with quotas and levies, that we will never go back and ask "What is all this about in the first place?"

The Common Agricultural Policy came about as an effort to ensure food supply, and of course as technology developed it became easier and easier to produce more and more products leading to oversupply. I have felt for a long time that we are not willing to examine where this oversupply came from, which countries, per acre or per hectare of land, are producing the goods in this totality which is creating this situation in the market. Until we are willing to face that particular dilemma head on, I do not think we will be able to tackle in a human and realistic way the problems we face regarding the Common Agricultural Policy.

Quite rightly, the Commissioner has pointed out that something like 80 per cent of the Common Agricultural Policy money is going to 20 per cent of the richest farmers in Europe. We all know that when new grant aids came out for modernisation etc. those who were best able to avail of them were those with the greatest resources. Since they are the people who have benefited most, it is absolutely vital that that is where the axe falls now. However, I am in grave doubt whether that will happen, because I think to bring it about you would be against all the vested interests and the powerful lobbies in Europe. We should at least strive to make it happen that way. As I said before here, it is very important that those who are producing in an organically or environmentally satisfactory way, which most Irish farmers are in relative terms, should not pay the price for overproduction.

We have always looked at monetary mechanisms for controlling or stimulating things. We use grants and subsidies to stimulate; we use quotas to try to hold back production. It is worth examining at the moment whether there are not other ways of curtailing production that would have a greater environmental impact. Something that may be worth thinking about is rather than putting a quota on the actual production of milk or beef, to put a quota on the production of artificial fertilisers and hit it at source. Obviously, without these artificial aids — and I understand, for example, that Dutch and German farmers use five times to the acre as much as we would on average here in Ireland — we could not reach the production levels we have at the moment.

That said, of course we also have to tackle the problem of the cereal substitutes, because much of the surplus production in Europe is produced with third country cereal substitutes. It is very important that in the Common Agricultural Policy reform the question of the viability of as many family farms as possible is addressed. We must also ensure that the greater part of the income of any farmer comes from the sale of agricultural produce. The rural economy is not only an agricultural economy, but often uses agriculture production as the powerhouse for its industry. We have to address the question of disparity of income. We must also ensure that income redistribution in the form of grants is more evenly spread over all farm sizes.

I have been provided with figures that make very interesting reading when one gets down to the nitty-gritty of the proposals. If one looks at milk production in the disadvantaged areas, and then looks at the situation that would pertain if the current proposals on acreage limits were implemented, one will find that a large number of producers, even in areas like the north Connaught farmers area, particularly the bigger producers, have a stocking rate over the proposed stocking rates. This seems farsical by any definition. We have to accept that already many farmers are over the stocking limit. We know that those farmers are not only important in their own right, but are also important to the health of the industry in that area due to transport and collection charges and so on if we inhibit the larger producers in areas like Connaught the whole milk industry there will not be viable. We will have cut the viable in its back and left a greater percentage of small suppliers with uneconomic collection charges.

The question of sheep policy has come up. To date, where we have had no quotas on sheep. I remember, when the original ewe premium was introduced, arguing with the then Minister for Agriculture, who is now the Commissioner, that I did not agree with the ewe premium. I predicted at that time — and unfortunately this has come true completely — that what we would have would be farmers producing ewes, not lambs. It is ridiculous that for many hill farmers it would be more beneficial in the short term not to let the ewe to the ram. They would have a much lower mortality rate and farmers could collect the ewe premium and forget about breeding lambs. Hill lambs are selling for £5 and £6 each. The ewe premium is £20, and a farmer receives a subsidy on top of that of £10. It is obviously much more valuable to have a ewe than to have a lamb. In areas where the annual loss from mortality is about 10 per cent, the cutting of that mortality rate to about 5 per cent by restricting lambing, particularly in the case of ewes found to be vulnerable in lambing, would result in a greater income.

We cannot blame any farmer for following the logical situation which is going to leave him with the maximum income in his pocket. Having created the monster, the EC now want to turn and put a quota on sheep production. If the quota was to be applied on a national basis, I would have no objection. In my view sheep numbers will never reach again the 1990 level, particularly if there are changes in the structure of how premiums are paid out. Many lowland farmers who went into sheep production because they thought they were a simply way of making money, now regret that move. People who went to mountain areas and bought cheap mountain ewes thinking they were on to a good thing, would not get involved in that again. Therefore, I see no danger on a global level of sheep numbers being maintained at the present level. If we introduce a quota on an individual level we will recreate many problems.

We have enough problems in the hill areas at the moment with farmers not being able to collect either their cattle headage or ewe headage because of title to land and commonage. There may be 20 farmers in a hill commonage with only ten using it. It is because 20 people having a legal right that one twentieth of the commonage is the stocking rate allowed. A commonage may have 50 owners and only 15 people using it. Up until now that was no problem; they could divide the commonage by 15 and share it out between them. Under the new regulations, unless they can prove leases, and so on, to the parts of the commonage, or shares of the commonage, they will not be able to increase or maintain their stocking rates. This will cause a serious problem. The authorities are not willing to accept this on a global level. They are going to insist on taking this on a person by person basis.

I have made the case frequently that where there is monetary compensation rather than it being based on price, it has another spin-off effect. The farmer becomes vulnerable to clerical error, to delays in probate and to all sorts of problems which can occur when he goes to collect his cheques. Those involved in constituency politics in the west will testify to this, and will testify to farmers being owed £2,000 or £3,000 while legal people muddle through getting legal title to land after the death of a parent. In those cases there is no way that that farmer can get his income. As I have often pointed out, if we asked PAYE workers to wait from a Friday to a Monday for a cheque that was owed on a Friday they would, obviously, object. To ask farmers to wait two to three years for legal affairs over which, in many cases, they have no control to be sorted out in order to get their payment is totally unacceptable. Week by week it is becoming a greater factor of life, and is something which people are beginning to resist. If monetary compensations are to become the rule, it will be vital for the vibrancy of rural communities that there be a relook at how they are going to be administered. Furthermore, we have cases where because of cards and cattle being punched, people are caught in a myriad of rules. Even though I am reasonably familiar with some of them, I could not quote each one to any farmer. With all these rules, farmers are making genuine mistakes in filling in forms, and as a consequence lose two years' headage payment. That is wrong and is something we must resist.

Tá go leor plé le déanamh fós ar chúrsaí talmhaíochta agus go leor smaoinimh ar cá bhfuilimid ag dul maidir leis an bpolasaí seo. Caithfimid a chinntiú ag deireadh an lae nach í an fheirmeoireacht ach na feirmeoirí agus muintir na tuaithe a dhéanfaidh brabach as aon athrú a thiocfaidh.

Mrs. Jackman

This is not the first time we have debated the Common Agricultural Policy proposals in the Seanad. Many times in recent months we have debated this issue. We were told here — I am checking the records for July — that the proposals were a bit difficult and protracted. Indeed, that is coming to fruition. The protracted battle in the Council of Ministers will continue into next year and that is 1992. It is likely that Commissioner MacSharry, as he has said, will propose significant reductions in next year's farm prices if his proposals are not meeting with approval. The development of agriculture and its safe guarding have been mentioned repeatedly by the Senators who have spoken during this debate so far. The protection of our agriculture is vital to the economy. That is understood now, I think by both rural and urban communities as a result of the debate on GATT talks and also on the Common Agricultural Policy. That is one important thing that has come from the debate. Farming problems are not just the problems of farmers, a point that has been reiterated here during the day. They affect each and every one of us. One positive effect, I suppose ironically, out of the negative discussions in this area is that the divide between rural and urban people on this issue has been mended. This is because of the enormous implications for all of us. Everybody agrees that there is a need for reform of the Common Agricultural Policy. That is accepted by the main farming bodies — the ICMSA, the IFA, Macra na Feirme and the ICOS. I am not leaving out the small farmers' organisation which emerged not so very long ago and which is sometimes rather humorously referred to as the UFOs. The number of people employed in the industry directly is about 160,000. We can talk about figures forever, but when we remember that there are 260,000 people unemployed, we must realise the significance of agriculture in terms of employment. In addition, there are many thousands working in associated industries, processing and so on. Agriculture, too, represents a third of our exports. People may tire of listening to figures but in this case it is important to repeat them over and over again. There is now an acceptance that the Common Agricultural Policy has been a vital support of the industry since we joined the EC. Figures have shown that the transfer figures from the Common Agricultural Policy to us were equivalent to about 80 per cent of agricultural income. Obviously, that is not to be sneezed at. Some Senators today referred to the background to the establishment of the Common Agricultural Policy which was to replace the agricultural policies of the original six Community states. Some of those Senators asked whether the original objectives, as stated in Article 39 of the Treaty of Rome, are being met and whether there are some that are causing problems.

The first objective, increased agricultural production, has been met. The second objective was to ensure a fair standard of living for farmers. Unfortunately that has not happened. The third objective, the stabilisation of agricultural markets has not been met either.

The next objective was to guarantee regular supplies of food. There was success in that respect. The last objective was to ensure the availability of food at reasonable prices to consumers. That has happened. In a sense, perhaps, three out of five is not a bad record.

The most important objective so far as we are concerned in this country in relation to those five objectives is that we are talking about the livelihoods of so many of our people. At the end of the day that must be our base line. Of course, it is difficult, but that is the most important objective. The three principles adopted eventually — and I will not go into detail on them — were the Single Market community preference and financial solidarity. The means adopted at the time to effect that policy were intervention, quotas, levies and tariffs on imports, direct subsidies, flat rate aids and structural measures aimed at modernising farms, the consolidating of holdings into viable units, the switching of production from surplus commodities, encouraging older farmers to retire, and making available differential rates of incentives in less developed areas. These were all laudable steps.

We are aware of how output increased as farmers responded. Of course, those were the years of intense production — the late fifties, the sixties, the seventies and the eighties. It is interesting that sheep meat and fresh fruit were the commodities that were referred to as being in deficit in the eighties. We are aware, too, of the increases in farm spending. There was storage and disposal of surplus stocks, as opposed to price supports. In reality farmers gained relatively little.

I will not speak today of the starving people of the Third World vis-á-vis the growing mountains of commodities in the Community. The solution is not a simple one as anybody involved in development education will realise. Some people in Third World countries are not lactosetolerant. It is not a question that “a” equals “b”. At the same time, from a global perspective, when this planet is supposed to be able to support our teeming populations it is sad that we have overproduction in one area and famine in another area. That is something we will hear more of as we approach Christmas and think of the less well off.

The irony, I suppose, is that regardless of all this, EC farm incomes are, in real terms, less than they were in the mid-seventies. The benefits have not been evenly distributed. We are aware that farmers have benefited disportionately. Those with access to capital, obviously the larger farmers, have done well. All of us here are concerned with the plight of the smaller farmers in disadvantaged areas who have not had the resources to benefit from the Common Agricultural Policy. For them low incomes have remained a feature of their lives.

Reference was made today by Senator John Dardis to the comments from the Conference of Major Religious Superiors in their submission on the 1992 Budget. They have again highlighted the deploring low level of incomes in rural communities. They have set out five or six points on how rural development can be addressed from their viewpoint. They have made the point that disparities have worsened. The impression is being given that nothing has been done in the past in relation to over-production.

I am a farmer's daughter from what is technically the Golden Vale, even though the farm I came from certainly was not a very rich one, being on the foothills of the Slieve Phelim mountains. It was a dairy farm. There was an imposition of quotas on dairy farmers in 1984.

Because of various problems such as the deterioration in world markets, Common Agricultural Policy spending, despite efforts to curb it, continued to soar. It is not as if the farmers have not addressed the issue. They have. Again in 1988 there were incentives to farmers, to set aside land. At that time, I suppose, people really did feel we were moving towards cohesion and the removal of disparities in the EC. Because of that, farmers did accept certain measures. They looked forward to the doubling of the Structural Funds in preparation for the Single Market. To a degree those measures have been successful, but there have been hiccups. We cannot, of course, be blamed for the Gulf War but it happened as did the Soviet Union withdrawal from the market. Again, despite efforts to cut down on production, stocks are piling up.

I have barely touched on the proposals put forward in July. Because of the area I come from I am particularly interested in milk production. The proposal is to cut milk prices by 10 per cent, butter prices by 15 per cent and skimmed milk powder by 5 per cent.

There have been the most extraordinary attractive advertisements over the last while, supported by EC funding, for the promotion of olive oil. I was amazed to see such advertising. The power of advertising is accepted now. I am glad that the former Minister for Agriculture Deputy O'Kennedy, said that he will be looking for the same type of support for our milk and dairy produce. There is no doubt but that people can tire of the alternative to butter spreads.

Good marketing is essential for our country. Approximately 80 per cent of our milk is converted to butter. We could encourage people to use butter if we had adequate funding for such a campaign. There are conflicting health reports regarding various products. By and large, at the end of the day, the purer the product the better it is, if taken in moderation obviously. We go back to its importance and its acceptance by the housewife. The housewife is the arbiter of what she will buy at the end of the day. I am not saying the advertisements will decide what one buys in a supermarket. Traditional eating habits die hard but, equally, I know there is a great response following media handling of those products which are good for us — I cite the success of the olive oil advertisement.

The beef intervention price is to be reduced by 15 per cent and cereals cut by 35 per cent. The ewe premium is to be limited to 750 ewes in disadvantaged areas, and 350 ewes in other areas. There are three rural development initiatives. First, there is the agri-environmental programme aimed at encouraging farmers to use low risk production methods and engage in environmentally friendly management of farmland. Senator Ó Cuív referred to that. Those farmers need supports, obviously, if they are going to take up the initiative there. It does mean money at the end of the day. Secondly, there is the afforestation of agricultural land and the grants for afforestation will be increased. That has a negative impact, of course, as more and more people will be driven off the land. It has a plus and minus factor. It depends on the priority. Thirdly, there is the early retirement scheme on which we must concentrate.

While we are discussing farming and the immediacy of the issue, we must remember that we have a problem of emigration, perhaps not this year but in the future. All politicians are very aware of the decline of small villages. We hear of the problems and see that the general population is at a particular age level. There is a problem regarding early retirement. I applaud young people, male and female, who have the guts and the commitment to stay in their rural areas in the hope that they will be able to make a living on the land. They can see their parents scrimping and saving to survive but there is always that enthuasism and wish to remain on the land among our young people.

The early retirement scheme, obviously, must be made mandatory in all the EC countries to ensure that we will have young people wishing to go into agriculture. They, at least, must have the opportunity. The land released by the early retirement scheme must be used by young farmers. They must be encouraged. There must be special mechanisms to ensure that they are able to have milk quotas and access to entry to all sectors. They must have training: this is more essential now than in the days of their forefathers. They can be trained, but it is sad that they may not have the opportunity to use that training. Japan is recognised as the technologically advanced giant of modern economies. On a visit there recently and a couple of visits in the last while, I noticed a switch off from the consumer urban-style living to a wish to go back to the land. I hope we will not be negative in relation to our young people working on the land.

When we accepted the Single European Act, we accepted it because we thought it would bring cohesion but the proposals from Brussels, as I read them, seem to be contradictory. The impact on our farming means that what we are actually doing is reducing our main asset. We must get some commitment to help us in this area. Next year we will have a referendum, post-Maastricht. I wonder how genuinely supportive our communities, both rural and urban, will be to the idea of Europe being good for us. I think we will have to work hard.

Mr. O'Reilly

It is clear to all the Members of this House that the Common Agricultural Policy reforms have major implications for us. They have major implications in the farmyard and the farm home, but also outside.

There is nowhere in Ireland that the significance of the agricultural industry is more clearly crystallised in microcosm than in my own County of Cavan. There not only does farming provide a way of life for many families throughout the rural areas but virtually all employment in that county is farming related employment. It is employment in the food processing sector. This is the case in the Lakeland Co-Op which is a well known co-operative on the national scene. It is the case in McCarron's bacon factories. It is the case in Bailie Foods in Bailieboro. Throughout my county of Cavan, all employment is virtually linked to the land. There is a large amount of employment in the engineering sector also which has a link-up with the farm.

My county's dependence on agriculture is particularly marked. There are many reasons for that. Any changes in the Common Agricultural Policy will have massive implications for the people. That is why I wanted the opportunity, a Leas-Chathaoirligh, of addressing the issue today and why I am absolutely delighted that it has come to the floor of this House. It will only serve to enhance the image of this House in the country that we are dealing with the issue.

I have a couple of difficulties with the Common Agricultural Policy reform proposals. My first difficulty is that I feel that this is targeting a country where farming is a way of life. Farms have been handed down from generation to generation. We know the significance of the land so vividly depicted by John B. Keane in "The Field" or in the literature and folklore of this country. We know the significance of the land and how much it is a way of life in Ireland. We must take account of the fact also that, relative to other parts of Europe, we are pollution free. We produce good healthy food.

The direction of the reforms should be focused totally and specifically on the factory farms of central Europe and places like Holland, Germany and Belgium. Nobody questions the need to reduce agricultural production. Certainly, nobody questions the need to end the absurdity of having masses of good food in intervention in Europe, literally under the ground. While that life-giving food remains under the ground millions of people across the globe die of hunger. Obviously, something has to be done about this.

Something must be done to change the production situation. It is my view that the focus should be on the factory farmers, the mega farmers in the centre of Europe for whom it is business. They are the people who not only are contributing to pollution in a massive way but they are not producing food as healthy as our products. Those people have no attachment to the land. It is just another business venture to be in farming. We should focus the direction of the cuts to that area. This is a view that has been touched upon and advanced quite substantially by Professor McNulty of the Department of Agriculture in UCD.

I am of the view that we should preserve a way of life in Ireland, preserve healthy food in Ireland. I am heartened that there is talk now of a focus marketing of food in a keener way, particularly our beef products. I believe we have wholesome, excellent food in a very pollution-free environment. That is a wonderful asset to Europe at the moment and a great resource. Rather than trying to halt the production of that we should focus our attention elsewhere.

I have another difficulty with the present proposals on the Common Agricultural Policy. My second difficulty — maybe it is something to do with my background that I tend to be naturally cynical — is that I am a little worried about the compensation mechanism. I am genuinely worried that the compensation will be initially good but that there will not be compensation for people in the agri-related industries who lose their jobs.

I am amazed at the lack of seriousness given to the Common Agricultural Policy reforms by the trade union movement. I am genuinely shocked that SIPTU and the national trade union movement have not been making serious propositions on it and debating it at national level. It affects the trade unions in a massive way and has potential to affect them much more than many of the issues they are highlighting at the moment. I would use the resource of this House to publicly appeal to the trade unions to take this matter seriously.

I fear that the compensation will be at the whim of a given European Parliament, of a given Commission, at a given time and that the compensation may not last. Maybe a parliament or Commission in five or ten years time with a different political cue might look at the hard political reality that the number of unemployed in Europe at the time exceeds the number of farmers in Europe, that massive numbers of people are being dislocated in other areas of industry, as massive numbers of people in the car and steel industry in Europe were dislocated from their jobs only ten or 15 years earlier. In those circumstances a future Commission might decide to remove the compensation.

The Minister here in this House, who comes from a neighbouring county of mine and whom I know has a keen awareness of these issues, should put it to the Commission that they redirect their focus to the factory farmers on the mainland of Europe and that they look for cuts in production there. The Commission should see the potential and the worth of Irish wholesome food produced naturally.

The Commission should recognise how embedded farming is in Ireland, that it is a way of life, a cultural and social activity that is rooted in people and that to remove people from the land is to remove their very existence. The Commission should further recognise the high dependency on agriculture in this country. I use County Cavan as an example because it very sharply focuses that consideration, in that virtually all employment in County Cavan is farm-related employment. If the Commission are to give us a compensation machanism, I suggest that we use the Maastricht Summit — the Spanish have already addressed this issue for the summit — to get a legally binding statement on compensation for the poorer areas, because I am not confident that, if compensation is left to the goodwill of a Commission or parliament at any time, it will last.

Those are the main points I want to make. I hope there can be adjustments with these considerations in mind. I hope that farming, as a way of life, can be maintained in Ireland, because the family farm has been so much part of use and something that we will have to try to maintain. Europe will have to accept the reality of the value of our produce and the environment in which it is produced. We will have to sharpen up our marketing strategies to achieve that.

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

I had an opportunity of speaking earlier. There were a number of points raised during the debate and for the information of the House and for the purpose of clarity, it might be useful if I deal with them.

An Leas-Chathaoirleach raised earlier the question of the number of prosecutions for the usage of angel dust. A reply to a Parliamentary Question in the lower House last week stated:

In the course of 16 seizures from suppliers and farmers, a total of 32 kilograms and 770 litres of products containing clanbuterol 17,493 doses of hormone implants and 25.35 litres of injectable hormone cocktails were seized since 1 January 1991. As the products concerned have no legitimate value it is difficult to assign a value to the seizures but the farm gate value was believed to be between £250,000 and £500,000. Clanbuterol was detected in samples taken from 350 live cattle on farms and 15 samples taken in slaughter houses this year. Hormones were detected in 338 cattle during the same period. In regard to traces of clanbuterol found in Irish meat exported to the UK, the position is that the meat plants in question have been notified by my Department. Five prosecutions have been initiated as a result of these activities and further prosecutions are in the pipeline. A Bill is being prepared as a matter of urgency to amend the Animal Remedies Act, 1956. The new provisions will provide greater powers to the Minister to control all aspects of the manufacture, availability and use of veterinary medicines. The major provision of the Bill is to provide for the introduction of indictable offences for which maximum penalties of £50,000 fines or ten years imprisonment will be available.

In the course of my speech earlier I referred to the importance which the community attaches to rebalancing under the GATT arrangements. It would be as well if I said a little more about this because it is a very simple word which has a great meaning in regard to the ongoing negotiations. It concerns, essentially, the imports over the years into the Community of cereal substitutes from the United States and other countries.

Under older agreements made in the GATT the Community's right to impose duties on these imports has been very much reduced. Imports have to be charged at as low as nil duties. There was no way in which the Community could change these duties short of having a rearrangement of the GATT, something which is now ongoing of course.

Over the years the quantities of these imports increased very much with damage to the internal cereal market of the Community. The idea now in the course of the negotiations is that the level of imports at a fixed date will be settled and any quantities in excess in future years would have to pay at agreed rates of tariffs.

Reference was made to changes over the years on the Common Agricultural Policy. The suggestion has been made that it is now common social policy. One could accept a description of that kind but I would not think it reflects in full measure what is involved in the Common Agricultural Policy both in its beginnings and in the development which it has reached in the present years.

I always looked on the Common Agricultural Policy as a very essential part of the original Rome Treaty. That treaty of course, in its essence, had far more to do with the building up of Europe after the war, the means of making sure that there would never again be a war between western European countries than just being a simple social policy. Over the years the Community has gone from a state where certain foodstuffs were short to a state of great abundances, great surplus and great cost.

Other developments have been taking place in the meantime. In Europe and in other parts of the world people were becoming more and more conscious of the environment. The need to developand preserve the rural community has become more and more an issue. I look on the Common Agricultural Policy today as the basis on which rural development can be carried out taking into account, in the first instance, the need to preserve the family farm and to maintain farm incomes at a high level. Perhaps a better title for the Commissioner with responsibility for the Common Agricultural Policy would be the Commissioner for Agriculture and Rural Development, so that the policy could be called the Common Policy for Agricultural and Rural Development.

I would like to take this opportunity to thank the Senators who contributed to this very worthwhile debate. At a time when there is much focus on what the future will be for the agricultural industry, it is timely and worth while to have this debate.

Acting Chairman (Mr. Fitzgerald)

When is it proposed to sit again?

Mr. Hussey

Next Wednesday at 2.30 p.m.