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.