I welcome the Minister of State, Deputy Doyle, to the House. She is well versed in matters related to agriculture. When she was in Opposition in this House I remember her speaking for a long time on agriculture — she may well hold the record for this House.
Agriculture: Statements (Resumed).
If it is put to me tonight I will manage to reply.
The agriculture industry faces a major crisis as prices fall and the future becomes more uncertain each day. Confidence in the beef sector in particular is at a record low because prices are disastrous at present. The continued viability of thousands of farmers is in doubt and I urge the Government to take urgent action on a number of fronts or the future for these families will be bleak.
The pressure on beef prices is serious and I call on the Minister for Agriculture, Food and Forestry, Deputy Yates, to ensure an increase in beef prices to a reasonable level. A level of 98p per pound is not acceptable in the months of January and February because farmers may have bought cattle in October or November when prices were at £1.06 per pound. Irish steer prices have fallen by 6.2 per cent since mid-November and this leaves beef producers' income at an unacceptable level.
The outcome of last Friday's special beef management meeting was disappointing from an Irish point of view. The increases were disappointing for all sectors of the industry. I urge the Minister and the Taoiseach through their good offices to immediately pressurise the Community to fully restore export refunds, which are critical to Irish beef producers, given that we account for 21 per cent of EU beef exports while we produce only 6.8 per cent of EU beef output. This disastrous situation for beef producers can only be corrected by the Commission, which by its mismanagement has caused this crisis. I urge the Minister and the Taoiseach to seek an immediate increase of 20 per cent in live cattle refunds to restore some competitiveness to the industry.
It is only since the live trade has been sidelined that factories have had it all their own way on cattle prices. Many of our export outlets are no longer viable at the current level of refunds — for example, Egypt, where Australia can deliver beef for £12 per 100 kilos. cheaper than the EU. If we were to be squeezed out of this market the results would be severe.
The Minister of State, Deputy Deenihan, who is now present, and the Minister for Agriculture, Food and Forestry attended a meeting today with the IFA president and members of that organisation. They heard the genuine concerns about the current cattle price situation and the long-term effects on the industry. As we face the spring, the store cattle trade will suffer. The Government must formulate a stronger campaign to promote Irish beef as a clean, safe quality product in Britain and on the Continent. We must reassure people that Irish beef is free from BSE, which has caused a decline in the consumption of Irish beef in the UK.
The strength of the punt against sterling is causing great hardship in many sectors of the industry — beef, dairying and two sectors which form a large part of the economy of my county, mushrooms and poultry. This Government has deserted them and I ask the Minister to take action immediately to assist the industry.
Agriculture is in need of major investment but the recent budget has failed miserably to encourage any new investment. It is crazy that it is more tax efficient for a farmer to invest money in film making rather than in his farm business, where investment is the key to viability. If our farms are not brought up to current standards thousands of producers will not be able to compete in the marketplace. An example is the fact that 75 per cent of dairy farmers have failed the new EU milk hygiene controls. If they do not conform by 1999 they will be refused permission to sell milk and, to date, only a few hundred have completed the necessary improvements.
I call on the Minister to re-open applications for the control of farm pollution schemes, which are vital to many farmers. The Minister's closure of applications to these schemes was unacceptable and must be corrected urgently. This year the Government has left the REPS scheme and the early retirement scheme for farmers totally underfunded.
As we discuss the agriculture industry I ask the House to support a demand to have extra milk quota made available for milk suppliers in the Border counties under 30,000 gallons. Dairying accounts for one third of the gross agricultural output in the area on both sides of the Border. The farm family population is in decline, with a loss to the economic and social life of the rural communities. In my county — County Monaghan — in the period 1984-92, 36 per cent of dairy farmers in the county gave up farming, due to the restrictive milk quotas, and there were few new entrants. I urge the Government to support the campaign to the EU for a peace dividend. Milk suppliers in the Border counties deserve a milk quota increase due to their suffering and the underdevelopment of the industry as a result of 25 years of violence. This is a very practical measure to help communities in the Border areas.
Our agriculture industry is facing a very difficult future. As we enter a new year there is little joy in my constituency of Cavan-Monaghan because of the disappointment of the severely handicapped areas, the continued high incidence of TB, poor beef prices, the sterling crisis and a community living in fear as a result of the recent crime wave. It does not give us any joy to speak here today of the problems in agriculture. However, the Government has to take on board the seriousness of the crisis over the last six months. The IFA met over 100 TDs and Senators in Buswells Hotel today to tell us about the crisis. The Government must own up to its responsibility. Nobody knows that better than you, Sir, as you come from County Roscommon. I come from County Monaghan where the situation is also very serious.
I ask the Minister of State, Deputy Doyle, to convey to the Minister for Agriculture, Food and Forestry the seriousness of the cut in export refunds. The 7.5 per cent given last Friday was an insult to the industry. We have to put pressure on the Commission to increase it to an acceptable level — by at least 20 or 25 per cent.
This discussion on agriculture is most appropriate as it has always been an important industry, particularly in terms of exports to Britain, Europe and the Third World. Today, members of the IFA came to Dublin to lobby TDs and Senators. That gave me an opportunity to meet farmers from Offaly and Laois who are concerned about the present beef crisis. You, Sir, are also a farmer and you saw the situation in the past where, in the absence of real competition, factory owners could regulate the market to suit themselves. Cattle prices at factory gates were £1.05 and £1.10 to the pound some months ago. The price has now dropped to 98p and 96p and there is a danger of it dropping even further. Part of the reason for so many farmers coming here today is that there is no real competition since the reduction in the export refunds.
I hope the Minister for Agriculture, Food and Forestry will continue to do everything he can in regard to export refunds. The EU Commission imposed a severe cut in export refunds last September and the average drop in the price of bullocks was in the region of £75 to £80 per head. This is a very serious matter particularly as it applies to winter fatteners which is an important sector of the beef industry. Farmers buy cattle and fatten them during the winter. It is an intensive job which involves a great deal of work. The EU Commission should fully restore export refunds for carcase beef and live cattle to the levels which applied in September 1995. That is essential to maintain competition; without competition factories can name their own prices. The losses incurred by farmers cannot be allowed to continue.
Teagasc figures show that producers will need £1.05 to £1.06 per pound just to break even and up to £1.09 per pound to make a margin of £30 per head. Teagasc is an independent body and its figures are normally regarded as accurate. There are about 460,000 steers and heifers to be sold by farmers this spring and a loss of £70 per head would amount to over £32 million.
Anything which would improve the lot of the people involved in this important industry has the support of all parties in this House. In regard to bullocks, producers receive the ten month and the 22 month special beef premia and a slaughter premium as long as all the conditions are complied with. There is no subsidy for heifers. A number of heifer producers have asked me to seek a special premium for heifers as they are losing a great deal of money at present. This matter needs to be examined and it needs all party support. I hope the Minister will raise this issue with the EU Commission; he will have the backing of this House.
A number of farmers are refused grants, such as beef premia or headage payments, for one or two years because they made minor errors in their application forms. I have been approached by people with genuine cases. I raised this matter with the farming editor of the Irish Independent, Mr. Frank Mulrennan, two to three years ago. He was very helpful and highlighted some of the injustices that had taken place. Some farmers have since received back money due to them.
In the past, when one contacted the Department of Social Welfare or the Revenue Commissioners about a problem their response was not as consumer-oriented as it is today. If I contact the Revenue Commissioners about a constituent's problem they go out of their way to be helpful. Inspectors from the Department of Agriculture, Food and Forestry have a great responsibility when visiting farmers. If there is a problem they should explain things to the farmer and try to ensure that the problem is resolved. It is necessary that they do this rather than submitting a bad report on that farmer thereby ensuring that he loses his grants for one or two years. That might be the difference between a farmer and his family surviving for one year and making a profit at the end of it. A farmer who loses his grants is faced with a situation where he must meet his commitments to the bank. If he does not, his interest and repayments begin to mount up. If the Minister does not listen to my appeals in this regard, I intend to take the matter further and I will continue to highlight it. This is a serious problem.
Ireland has an excellent record in relation to animal health; it is probably the best in Europe. We must ensure that our disease free status is highlighted and also our excellent record of eradicating diseases. Ireland has the finest product available and every effort should be made to publicise that fact.
In conclusion, I am unhappy with the submission prepared by the Minister for Agriculture, Food and Forestry's predecessor about a particular appeal. A group of organisations were involved with the entire appeals procedure. I cannot understand why — in the submission to Brussels — some areas were left out. I have with me a copy of the map of Camross parish and I do not understand why some of the areas were excluded. Some areas at the top of a nearby mountain were excluded; they should have been included with the most severely handicapped areas. I cannot understand the reasoning behind this.
They probably did not look at the map.
There are some areas which should have been included. I have a list of the areas that were excluded.
I am afraid I will have to exclude the Senator because his time is up.
The DEDs for Cardtown, Marymount, Clonin, Lacka and Arderin should not have been excluded; areas in County Offaly were also excluded. There has been a gross miscarriage of justice for many farmers in this regard. I am sure the people on the appeals committee have good explanations for this and that they carried out their work in a spirit of goodwill. However, I would like an explanation as to why some of the areas to which I referred were excluded. I ask the Minister to examine this matter.
I welcome the Minister of State, Deputy Deenihan. The arrangement of time for speakers' contributions is very unsatisfactory. During the debate on this issue last week each speaker was afforded 20 minutes; today, the Leader of the House, by some sleight of hand, has limited time to ten minutes per speaker. I protest. There should be consistency; all speakers should be treated in the same way. I am sure the Cathaoirleach will use his discretion to some advantage, as he did in the case of Senator Enright. The Chair will be relieved to hear that I will not supply a list of the DEDs and townlands in County Kildare which were excluded from the severely disadvantaged and disadvantaged areas scheme. Last week the Minister for Agriculture, Food and Forestry, Deputy Yates, provided a wide ranging and comprehensive analysis of the industry. We should thank him for that. However, in the time available, I can only deal with some of the aspects of his analysis.
The most urgent matter confronting agriculture is export refunds, to which Senator Enright alluded. Since November there has been a 25 per cent decrease in export refunds. Was this cynically devised by the Commission to bring market prices down to a level which, it was expected, would arise as a result of the MacSharry package of CAP reforms? This is a reasonable question. Was it a device to achieve a policy of lowering prices when part of the package agreed at the time was to give farmers compensation for the cuts that would arise?
In the course of his speech last week the Minister stated that beef is our foremost priority. It is our most important industry; it is the most important part of our agricultural production. It is, of course, his priority; it is the priority of everyone involved in agriculture. In a succession of press releases during the past six months, the Minister has always given this issue priority. He has also shown tremendous commitment to this. It is good that the Minister has his priorities and that level of commitment. The only question that arises is what does he do as a result of those priorities and commitments? It is by that that he, his predecessors and successors, will be judged.
The increases that Ireland received last week as a result of the meeting in Brussels were far less than required. They are not adequate. The real inequity of what happened in respect of export refunds is that many farmers had cattle in their sheds during the winter period when these cuts took place. They made an investment decision in good faith which was totally undermined by the unilateral decision of the beef management committee in Brussels. The Minister must impress upon the Commission the unique circumstances which prevail in Ireland. He must also impress upon it the unique degree to which, among all other member states, our economy is dependent upon agriculture. He must continually argue and stress that fact in his negotiations with people in Brussels.
Cattle prices have decreased by about 6p per pound since last autumn. According to the IFA's analysis, that amounts to £50 per head on a 700 kilogram bullock. That is very significant. Senator Enright is correct in stating that, if the market price, 97p or 98p per pound, is compared to what is required to break even, £1.06 per pound, farmers will face severe losses during the winter period.
A total destabilisation of the market has taken place. It can be argued that the factories have taken full advantage of that destabilisation. They are not the people who caused it, however. It was the beef management committee in Brussels. In many circumstances, the factories are attempting to recover the losses they sustained as a result of the movement of sterling against the punt. That is to be expected in the reality of trading life. It is most unfortunate that this is then transferred back to the producer who sustains the burden of the losses incurred by the factories.
In the 1994 farm management survey analysis, family farm income from beef was £87 per acre. That is a very modest income. If we consider the predicted loss, £50 per head, it is easy to see what will happen in terms of income per acre during the current year. Farmers are facing a catastrophe. I urge the Minister to do everything in his power to restore export refunds to the level they were at before the cuts were introduced. Otherwise, the consequences for farmers and their families are very severe indeed. According to some calculations, the economy has already lost about £10 million as a result of this cut in export refunds and, over the entire wintering season, this will add up to £30 million.
There is a huge inconsistency about aspects of European policy in this respect. At one level there is a deseasonalisation premium, which is designed to encourage people to put cattle into sheds and take them out in the spring to be slaughtered rather than to have them come on to an autumn market which is already oversaturated. At another level the benefit which it is hoped that premium will confer is taken away totally by the decision of a committee in Brussels. I do not really understand the logic of their thinking. Apart from the restoration of the export refunds, there are other questions. Will the 40 per cent qualifying trigger, which is used for the winter slaughter premium for September-October-November, be reduced? What are the prospects for having that reduced to a lower level, as was indicated by the Minister in his speech? Can that be done? If so, when can it be done?
I understand that the Irish Cattle Traders and Stockowners Association, a body which has been in existence for over 100 years, sought a meeting with the Minister some weeks ago. Not only has Minister Yates refused to meet the association but he has not answered their request. If that is true, I find it extraordinary and I want an explanation. What is wrong with these people that they were forced to picket outside the Department of Agriculture, Food and Forestry yesterday? Why is the Minister, from what I understand, not prepared to meet them?
A question arises in respect of these farmers and it has to do with the fact that they do not produce their own calves. They have never been included in the CAP reform package and they have no premium or quota rights under CAP reform. They have asked the Minister to bring this problem to the top of his agenda and to make a special case for them at the European Commission in order to seek a lasting solution to the crisis with which they are faced.
I will not repeat what Senator Enright said about beef heifers other than to say that I support his contention.
It is important.
In his opening remarks last week the Minister said that 50 per cent of total net farm income comes from subsidies. That is true and it is the reality. It underlines for us the vulnerability of the farming sector to decisions made in Brussels. To underline that point, 92 per cent of sheep farming incomes in 1994, according to Teagasc figures, came from direct income support. If that is the case it is fair to assume that more of their direct income came from direct income support in 1995. In order to explain that matter, which relates to Minister Yates' constituency, the Wexford land producer group came up with figures, when we debated the sheep industry here earlier, to the effect that the net profit per ewe in 1995 was £11.40. The subsidy was £21, so, in fact, part of the subsidy went towards funding the losses which were being sustained by the industry. Something must be done about that vulnerability.
The Minister mentioned that his first priority was a charter of farmers' rights; sheep were his top priority in the second half of 1995, beef is now his foremost priority and the reduction of EU refunds and BSE is his highest priority. He has a lot of priorities and I hope is successful in working them all out in an order which I can comprehend. He said that he was totally committed to maintaining and maximising the level of direct income support. We would all subscribe and be committed to that, but I do not think we should regard small concessions that we extract from Brussels as a victory.
An Leas-Chathaoirleach
The Senator has approximately one minute remaining.
That is unfortunate because a lot more could be said about all of these matters.
We now have a TB forum, a horticultural forum and a poultry meat forum. The old story of "a funny thing happened to me on the way to the forum" seems to become particularly apposite in the case of Irish agriculture.
I want to make a few brief points. There are matters which are in our own hands. The whole matter of the funding of An Bord Bia so it can compete in the increasingly market-driven situation it faces is a priority. On the whole question of Teagasc, Minister Deenihan made a point yesterday about the mushroom industry and the need to increase productivity, have better management and so on in response to the sterling crisis. That applies right across the board and the only way it will happen is through good expert advice from Teagasc which is backed up by good research. That must be a priority.
There is the question of the agricultural colleges and a specific question which I must raise with the Minister which has to do with the funding of the private agricultural and horticultural colleges. I wrote to him about the matter and he replied on 25 January, saying that he was having the matter investigated. As a consequence of the lack of adequate staff, finance and facilities, the colleges were unable to run short courses for Teagasc in 1995. These courses were the 100 hour courses for the farm retirement scheme and courses to complete the requirements for installation aid. A serious situation is facing these colleges. They made a submission at the time of the Budget which was supported by Teagasc, but nothing seems to have emerged and I wonder what sort of assurances can be given to them as to their future.
There is the question of sterling, which I could go into at some length, its consequences and the whole question of the enlargement of the EU and what we will do in terms of our Presidency of the EU over the latter six months of this year. However, that is a debate for another day.
It is most unfortunate that people had 20 minutes last week and those of us who speak this week have only ten minutes, but the Leader's expert sleight of hand managed to get that through the House earlier today without it being observed.
The Senator said a lot in that ten minutes.
I, too, welcome the debate. Since, as was stated last week, Fine Gael feel agriculture is such an important issue, we are devoting our Private Members' time to it.
I, too, want to refer to the spring cattle price situation. I discussed the situation with members of the IFA from Limerick today and feel I should put their concerns and, indeed, the concerns of everybody, on the record of the House. I know they are the concerns of the Minister too but it is important that we refer to it here. The fact that cattle prices have fallen by 6 p per pound since last autumn, the equivalent of £50 per head on a 700 kilogram bullock, is a cause of concern. I remember being involved in the meat industry in 1987 when prices were higher than they are at present. At this time of year I remember them rising to £1.10 per pound; today they are at 98 p per pound.
The main reason for the reduction in cattle prices and the uncertainty in the cattle trade is the severe cut in the export refunds imposed by the Commission since last September. The Minister must endeavour to do everything he can to ensure the situation is reversed, because the Commission has cut export refunds for live cattle by up to £8.58 per hundredweight, the equivalent of £118 per animal. In addition, the Commission has cut carcase beef refunds by 12 p per pound, the equivalent of £101 per animal. These figures take account of the refund increases made at the beef management committee on 2 February 1996. In order to compensate winter feeders for the additional costs of feeding and housing, cattle prices should be rising at this time of year. Traditionally, cattle prices were usually higher from this time of the year until June, July or August because of the cycle in the supply of beef.
Ireland's unique position should be recognised by the Commission when reexamining the situation. Since we export 70 per cent of our steer beef to world markets, Irish cattle prices are much more sensitive to cuts in export refunds than prices in any other EU member state. In other words, cuts in beef and live cattle export refunds have a greater impact in Ireland than in any other EU member state, not only because we export 70 per cent of our steer beef but because these exports have such an important role in the economy and as part of our gross national product. The contribution of the beef sector to the Irish economy is higher than the contribution of beef sectors to the economies of any of our European partners.
Despite the fact that Irish exports have significant quantities of export refunds prefixed at the higher levels applying last autumn, the massive cuts introduced by the EU Commission have destabilised cattle prices in the market. In addition, because live exporters had only small volumes of refunds prefixed and are not active in the market, competition has now been removed and cattle prices have fallen to uneconomic levels. We cannot over-emphasise the role the live exporter plays in ensuring that there is competition in the beef market. Factories play a key role in our dead beef industry and they provide a great deal of employment. They should be encouraged to develop the added value aspect of their product to ensure that the level of employment is maximised. However, we must also ensure that the farmer gets a fair price for his produce. It is important that the live export trade exists to ensure the presence of competition. We have often heard it said that "it takes the live trade to bring the dead trade to life".
Selling feeders at 98p per pound, as is the case at present, means that producers are losing £65 per head, even taking account of the slaughter premium which is worth £60 per head. Teagasc figures show that producers would need between £1.05 or £1.06 per pound just to break even and £1.09 to make margins of £30 per head over the 46,000 head of steers and heifers to be sold by farmers this spring. A loss of £70 per head will amount to £32 million and that indicates the scale of the problem. The price of 98p per pound is the same price as was paid eight or nine years ago, despite the inflation rate in the meantime. That price, in fact, is below the average price paid at this time of the year between eight and ten years ago.
The IFA placed the solution to this problem before us at our meetings today. We support its request that export refunds on carcase beef and live cattle be fully restored to the levels that applied last September. Immediate action should be taken at the highest political and Commission level to ensure that refunds are restored at the EU beef management committee meeting on 16 February. The balance between carcase beef and live cattle refunds should be restored, taking account of the £60 per head winter slaughter premium. The 40 per cent September, October and November qualifying trigger for the winter slaughter premium should be reduced to 35 per cent in order to guarantee that Ireland qualifies for the £60 per head premium in 1997. In a way we are the victims of our success in this area. We must now deal with a new situation; we need a change in the trigger mechanism to ensure that Ireland qualifies for the premium. That is the issue of the moment and it is an important one.
We must recognise the successes of the Minister, the Minister of State and the Government over the past year in the agriculture sector. Incomes rose by between 6 per cent and 7 per cent last year at a time when inflation was 2.5 per cent. Farm income is now over £2 billion for the first time since the foundation of the State. We should also recognise that direct subsidies routed through the Department of Agriculture account for £776 million or 40 per cent of the total income.
With regard to direct payments, every public representative would acknowledge the success of the Minister in obtaining a major concession whereby the 5,000 farmers who failed to submit or submitted late their area application forms will be paid on the basis of their 1994 aid applications, assuming their declared acreage did not change between 1994 and 1995. This will mean £20 million extra in premia and headage payments. That is a welcome success. It is not a common success as the EU tends to be extremely bureaucratic in adhering to its rules and regulations. It is good to see that the Minister was successful in achieving this.
I welcome the introduction of the charter of rights. It has resulted in an immediate improvement in the level of services to farmers. Since 1 September all offices are open to the public during normal working hours. Too often we rang or called offices and found that although it was perhaps halfway through our working day, the offices were closed. The staff, of course, worked a full day behind closed doors. This new development is very welcome. We also welcome the in-depth examination of all the Department's services that is currently underway. The Minister will shortly announce a reorganisation of the Department, including the establishment of executive units for particular services which will streamline those services and introduce more efficiencies. Introducing efficiencies at Department level is of vital importance because too often we see bureaucracy impeding the availability of services. This is an important development and I congratulate the Minister and the Minister of State in that regard.
I join my colleagues in discussing this serious crisis in the cattle industry. I welcome the Minister of State, Deputy Deenihan. I am disappointed that the other Minister of State, Deputy Doyle, has just left because——
The Senator was always an admirer.
The Senator should hear me out; he might not be so pleased with what I will say. It is not so many years ago since Deputy Joe Walsh was Minister of State for Agriculture, Food and Forestry — I am not condemning the current Minister, Deputy Yates, for not being present because I hope he is in Brussels doing serious work on behalf of Irish farmers — and I remember the then Senator Doyle saying to Deputy Walsh that he was wheeled into the Chamber because the Minister had not got the guts to come himself. The Minister of State, Deputy Doyle, has just wheeled out now.
I hope the Minister of State will take this matter very seriously because the beef industry is in trouble and if it is not fixed within the next few weeks the entire cattle trade, including the calf and store cattle trades, will collapse. When uncertainty creeps in it takes a long time to restore confidence. I also appeal to the Minister not to allow the bureaucrats in the Commission to hold out until the new arrangements come into effect in April. If that happens there will be utter chaos and many farmers will have gone bankrupt, as has been stated by Senator Enright and Senator Dardis. People bought cattle for winter fattening at very high prices. In the best of times, with no cut in the support scheme, the margins were tight. This problem is so urgent that I would expect even the Taoiseach to go to Brussels to support the Minister; it is a do or die situation. We are in a particularly serious situation because of the vast amounts of cattle we export and the markets which could be lost if this matter is not sorted out urgently. I hope the Minister is doing solid work because only a firm hand, and not press releases from Agriculture House, will solve the problem. The Minister will have to lobby support because there are many people employed in this sector and many will be hurt if the problem is not tackled.
There should be full restoration of export refunds by the European Commission to the level which applied last September. We do not want hand outs but fair play. There must be a restoration of confidence in the cattle and sheep trades. I hope nobody in the Commission is trying to pull the wool over the eyes of the Minister or the Minister of State. Once a little uncertainty enters the sheep or cattle industries, it develops into greater uncertainty, especially at this time of the year when people are expecting a return on their investment and hard work over the winter. If this is allowed to continue until April there will be utter chaos and the calf and store trades will collapse. Even if the situation is sorted out in April there will be a backlog and we will not be over the effects of it for 12 months.
I ask the Minister and the Taoiseach to immediately make a strong case for Ireland because the situation is more serious than people realise. If there is too much dithering about in these negotiations we will lose out on our markets outside the EU, which cost a great deal to develop, and others will win them from us. I do not wish to be critical of the Minister but we have heard many promises from him in recent times about rights for farmers but they are not being acted on.
There was an increase of 7 per cent.
The Department issued many press releases but these are of little use no matter how many spin doctors are being paid for by the taxpayer. What matters is the price received by farmers for their cattle. Last year the Minister was forced to do something for the sheep industry but he has not done much since then. This problem has existed for some time and I am disappointed at the manner in which it is being tackled. Living in hope is of little good to any farmer.
Today politicians from all parties met the IFA, which, with the other farmer organisations, is taking the matter seriously. It can see the crisis which will occur in this area and in the store cattle trade if the matter is not tackled. There should be fewer press releases from Agriculture House and more action. Time is not on our side; we have only weeks to deal with this problem. If we mess it up the effects will be felt for many years and we will regret that we did not deal with the problem more seriously when it first appeared some weeks ago.
It is fine for bureaucrats in Brussels to make statements about balancing the books but Ireland is a special case. The Minister and the Minister of State, both of whom come from the country, know how much people depend on a reasonable return from their investment of buying and feeding cattle. It is poor consolation to read in The Farmer's Journal that the Minister attended certain meetings and that something may be done. He will have to hit the table at meetings and demand that action be taken immediately. Otherwise, many people will be hurt.
I hope the Minister will take our views into consideration. As I said, it is fine to issue statements but there is a time bomb waiting to go off in the cattle industry. I appeal to the Minister to act as quickly as possible. If necessary, the Taoiseach should support him in his efforts in Brussels. If the problem is allowed to continue into April, when new arrangements will be introduced, a great deal of damage will be done and I am sure the Minister would not like to see this happen.
May I share the rest of my time with Senator Finneran?
An Leas-Chathaoirleach
Is that agreed? Agreed.
I welcome the Minister. It is appropriate that we have a debate on agriculture at this time. There are many aspects of agriculture which worry the farming community and they have the knock on effect of putting the national economy in danger. The effects on employment must be foremost in our minds.
Senator Byrne talked about the problems being experienced in agriculture, particularly in beef farming. Senators were lobbied by the IFA on the difficulties experienced by its members as a result of the reduction in export refunds. This will have disturbing effects on the beef industry and cattle prices throughout the year. Cattle farmers may have to go out of business. This would be unfortunate for the country.
I am not happy with the Minister's response to date and I do not think the IFA is either. During the briefing session with the association today, it was apparent that it feels the Minister has not achieved the results it wanted and that he has allowed the opportunity to defend and promote the beef industry to slip from the political field.
I welcome the opportunity to speak on agriculture and I also welcome the Minister to the House.
I live in an area between marginal and reasonably good agricultural land. A wide variety of farming is carried out from Dersey Sound to the good land around Bandon and Kinsale. However, I want to dwell on the poorer land regions. There are many mountain, bog and waste lands in that area. Some of the valleys have reasonably good land in its lower regions but is of poorer quality higher up. Consequently, farming there is not a prosperous activity. The pensinular nature and remoteness of the area is also of no help to those living there.
During the summer, the land is rugged and beautiful but in winter it is remote and farmers there are isolated. The area is made up of small farms and many people have to eke out a living from them. In the past, large families were reared on these farms but many of them were affected by the curse of emigration. Since there was only enough land for one to survive on, the rest had no other choice but to move out. Consequently, they either migrated to the cities or left for foreign lands.
Many of these farms are currently being amalgamated. Some of them are being bought by Europeans — who find them a big attraction as they are located in a rugged and scenic area beside the sea — but this makes even poorer many in the locality who could do with that extra land to make a decent living. Many new age travellers have also occupied and renovated remote and formerly derelict dwellings and are becoming a great burden on our social welfare system. They depend totally on unemployment assistance or health board payments to survive. An examination of this issue must take place before severe problems occur with housing, health or other matters. Indeed, I spoke about this before in this House.
Many EU restrictions, such as milk quotas and others involving EU directives etc., will cause great problems to our agricultural suppliers in the near future. If land is not being used, there will be no need for machinery from agricultural contractors either. These knock-on effects will force both agricultural suppliers and contractors to lay off people and these jobs are valuable for farmers' sons.
We will have to look at alternatives. Many small farmers in west Cork supplement their income by fishing. Various sectors of this industry, such as mussel fishing, are developing well and are of great importance. Agri-tourism can also be of terrific value to farmers on low incomes. Staying on an Irish farm in a quiet rural area is a great attraction for many Europeans but agri-tourism is not being marketed properly. If we can develop it to a proper level, there will be no decrease of services in rural areas. If people stay on the land, the small country town or village and the cross roads shop will not suffer. In the past, the services, schools, social centres and the local country pub were kept going by these people.
I was glad I saw the IFA presentation calling for the restoration of the export refund. Keeping agricultural prices at the highest possible level is of extreme importance and I call on the Minister to do his best at his meetings in Brussels to get this refund restored. We need every penny we can get.
We will no longer be the poor relation when the EU expands to take in many eastern European countries. There were already six well developed countries in the EU when we joined with Britain and Denmark in 1973 and we were the poorest. As a result, we benefited from being a member. While Greece, Spain and Portugal were net beneficiaries like ourselves, the three latest members, Austria, Finland and Sweden, have well developed economies and their financial demands on the EU are not great. However, from now on mainly poorer countries will be joining and they will be demanding financial assistance.
Our agriculture sector has done well from our membership of the EU. In many cases, these payments are necessary to give a reasonable standard of living to people who could not survive otherwise. Therefore, these payments are a necessity. They cover a wide and varied area. Cattle headage payments, beef cow and suckler cow payments, ewe premia, sheep, equine and goat headage payments, special beef payments and the slaughter and extensification premia are partly funded by the EU and are of extreme importance to those living in rural areas where the quality of land is not great and it helps them to make ends meet. However, will it be available in a few years time? If not, it will be bad for those living in remote parts of Ireland with poor quality land who can only derive a proper income with these payments. I do not want to spread an air of doom and gloom, but this situation could come about. If the EU does not make these payments in the future, what will these people do?
I want to speak about the horticulture sector and the tomato sector in particular. The tomato sector is in crisis. This sector is highly labour intensive. After extensive lobbying over the last number of years we convinced the Department of Finance, the former Minister, Deputy Bertie Ahern, and the present Minister, Deputy Quinn, to introduce tax incentives for the industry and they did so in last year's budget. However, tomato producers throughout the country now find their hands tied on several counts.
The industry is dealing with four major problems, of which the Minister is well aware. It has taken the industry between four and six months to get a meeting with the Minister. I have told the growers that this is because their produce does not have four legs. If these growers were producing beef they would have got a meeting with the Minister very quickly and action would have been taken.
Several factors make it impossible for our growers to compete in the market. The first relates to energy costs. In 1988 the industry was asked to change from oil to natural gas. The Department and the then Minister encouraged and supported this change. At great cost the growers changed from oil to gas. They were given commitments that gas prices would be kept at a level which would ensure their continuing competitiveness in the market. Our top growers are now paying between 30p and 35 p per therm. The Dutch are paying 20p to 25p per therm and our UK neighbours are paying about 15p per therm. It is absolutely impossible for our growers to compete in this situation.
Tomatoes are one of the few products which are not subject to control from Europe, so tomato growers from Mediterranean countries, Spain and the Canary Islands dump surplus produce on the Irish market on a regular basis. Growers also suffered this year in relation to the devaluation of various European currencies. Irish growers are unfortunately tied into the Dutch market. The Dutch had to devalue their currency in relation to the peseta, so this year our growers had to sell their produce at less than cost price.
When this crisis occurred during the summer other European Governments put together a package to help their national growers overcome the currency difficulties. The IFA, as the Minister will be well aware, has put a proposal to the Minister based on last year's crop and price structure which would help the growers get over last year's difficulties and ensure that jobs in this labour intensive sector throughout the country, and in particular in my own constituency, are protected. That package, as the Minister knows, amounts to a 50p subsidy per box on the 1995 crop. Maintenance of over 300 jobs provided by the sector would cost the Government between £500,000 and £600,000.
Given that in last year's budget the Government brought forward welcome tax incentives, which the growers availed of, it is difficult to believe that commitments that gas price structures would always be competitive were not honoured, especially when energy prices have had such a negative impact on competitiveness. It is up to the Government to deal with energy prices and subsidies. No efforts have been made to control the level of imports in this sector. Everybody must compete, but how can the Irish growers survive when confronted with uncompetitive energy prices and dumping of foreign produce on the Irish market?
I know the Minister's commitment in this area and I ask him to ensure that the interests of this sector are represented at Cabinet level. I know he realises the damage being done to the sector at the moment. I am aware of the deputations and representations that have been made to him. Some of the best growers in the Rush-Lusk area were unable to continue in business this year because of last year's crisis and the lack of Government commitment to help.
When the currency difficulty arose in 1992 the then Fianna Fáil Government, after the same type of lobbying as is occurring at the moment, recognising the level of jobs provided by the industry, was able to come up with a devaluation package. Less than two years ago flash floods occurred on the east coast and the Fianna Fáil led Government came up with a package to ensure that this industry continued.
Not to give a Minister of State specific responsibility for horticulture was a retrograde step on the part of a Fianna Fáil led Government because every report that is on the Minister's desk has proven that every job creation target set has been met by that industry. I cannot understand that there is never any comment about this from the Department. I know the Minister of State has called for a forum, but there are many reports on his desk at the moment in relation to horticulture. There is no need for another forum.
I welcome the efforts made last year in relation to extending the tax breaks to the industry. The growers are asking the Minister, as their representative in Government, to allow them compete on a level playing field — he would understand that — and to allow them to compete in foreign markets by helping them in relation to the price of natural gas. They were given a commitment when they changed from oil to gas that the price structure would allow them compete in the market.
The Minister should consider, under the review that is taking place in Europe at the moment, not allowing Mediterranean countries to dump surplus produce on the Irish market when it suits them, thereby ruining our price structure, where the supermarkets are trying to help. I also ask the Minister to look at the IFA subsidy proposal.
I have written to the Minister on several occasions — this is indicative of how horticulture is forgotten — in relation to the farm retirement scheme. The farm retirement scheme excludes horticulture because of the acreage involved and so forth, but the scheme must be examined with a view to allowing the horticulture sector to benefit. It would have the same beneficial effects it has had in other sectors of the industry.
I know the Minister has a commitment to the industry. He must show it sooner rather than later. The Minister understands the damage being done at the moment. The tax breaks that he introduced last year are to no avail; because of the other difficulties no growers will be left to take advantage of them. On behalf of all growers and the many jobs provided by the industry, I ask the Minister, for the sake of £500,000, to support the industry. The Irish tomato can compete with any other produce throughout the world. All the growers want is a chance to compete on a level playing pitch.
My interest this evening is in milk production and the redistribution of milk quotas. It is alarming to think that the current superlevy is of the order of £25 million. I have been listening for the last six months to complaints by farmers who want extra milk quotas. They believe they have an entitlement and that extra milk quotas would help them to survive in farming. I have received reports that under the table arrangements are made regarding the redistribution of milk quotas. This is a scandal and I call on the Minister to increase controls on the redistribution of milk quotas to ensure that those for whom extra quotas are essential to their survival in farming will benefit.
It is public knowledge that the Revenue Commissioners are currently investigating this matter in a wide area. While I welcome the fact that the current investigation will embrace the entire country, I ask the Minister to establish a system in the meantime whereby quota transfers are stamped by the Revenue Commissioners before they reach the Department. When a local dairy has an extra milk quota to redistribute, it appears the current system merely requires that a form is signed and sent to the Department, where it is stamped. This is the extent of the supervision of the redistribution of milk quotas.
It is vital the Minister sets up the system I suggested and involve the Revenue Commissioners. This will ensure justice and fair play for small farmers, who are being forced out of farming because they have insufficient production scope, and the current system is not being properly supervised. The allegation is that payments are made to major milk suppliers through fertiliser and feed accounts for excess milk production. This is totally in breach of EU regulations and I am sure the Minister and his Department are aware of that point. It is a bad state of affairs if it can happen in this little country which boasts so much about its agricultural system and method of production and redistribution.
Payments for milk supplies can only be made through milk accounts with the suppliers' dairy. This continuing breach of EU regulations poses a serious problem for the dairy industry, which claims to abide by the regulations. The level of over production of milk is a matter of serious concern as the superlevy imposed is very high. Perhaps it is time Ireland sought a review and considered whether it is entitled to an increased milk quota. I welcome the ring fencing of milk quotas in disadvantaged areas and I ask the Minister to do everything possible to ensure it is applied rigidly.
I am aware of a case where a wealthy Cork farmer, who was a prominent member of the IFA, was able to go to the west, buy a farm and bring home a new quota of 25,000 gallons. This was in addition to the 100,000 gallon quota he held in Cork. I do not have the figures — I am sure they are available — but I believe the number of farmers who depend for a living on milk production with quotas of less than 20,000 gallons is high. I am making a case for these people.
I attended a committee meeting this evening which received a report from An Bord Bia regarding its promotions and plans. I compliment the board for its strategy and the progress it has made in marketing food products. We must remember that, while Ireland's image is green and this benefits the food industry, the development of factory farmed produce could quickly change that image. There is a tendency towards the same type of development in pig production. I received calls from parts of the country which are devastated because tight controls were not put in place early on. I hope this will not recur on a widespread basis.
Milk production is vitally important to the vast majority of farmers. I appeal to the Minister to do everything possible to ensure a fair and equitable system. A full investigation of under the table methods regarding the redistribution of milk quotas is required. The Minister knows where I come from and the position is not difficult to identify. Many people have complained that they have been let out of the system while others have been let in and the situation is not good enough.
In speaking on this issue I am breaking a self-imposed silence. I have not contributed on any agricultural matter in the Seanad since I laid down the responsibility of Minister for Agriculture and Food. I did not feel it would be appropriate to speak on such matters and that my party's spokespersons in this House and the other House should take on that responsibility. I did not want to engage in any type of reflections or recriminations. However, I feel obliged to break my silence to address four points: the current state of cattle prices, particularly the application of export refunds; bovine spongiform encephalopathy, better known as BSE; disadvantaged areas and the significance of the food industry to the economy.
Regarding export refunds, anybody with any experience of negotiations in Europe as a Minister for Agriculture and Food — I had more experience than any other person as I held that job for almost five years — knows it is most important to win the goodwill, on a personal and national basis, of all of one's colleagues at the table. One must get to know them and understand their problems and vice versa. I am happy that, after almost five years in the job, I had their support and understanding. I also supported and understood them on particular issues. In addition, I also understood the Commission and its various services.
One is dealing with CAP principles in relation to export refunds. It is not a case of Ireland claiming something for itself but rather putting it forward in a proper presentation that a matter is covered by EU rules. Matters established on the basis of EU regulations were called acquis communautire and one always made one's case on the basis of the application of EU rules and not as a special plea for Ireland. I like to think I did that successfully over five years because when I left office the significance of our approach to diplomacy meant there was a value of almost £445 million on our export refunds.
Export refunds are based on the CAP principle that an obligation is placed on the EU when the market value in the EU falls below world prices. It is not because Ireland or an Irish Minister requested it but rather that the Minister understands the principles and communications behind it and calls on his colleagues and the Commission to endorse their commitments. It is not done with the poor mouth but on the basis of the fulfilment of commitments. When I left office the value of that to the Irish cattle industry was £445 million. I am sorry to note that it has been reduced by almost one third. There has been a loss of over £100 million to the cattle industry as a consequence of what can only be described as ineffective negotiation in terms of the rules of the EU. I never put on a poor mouth but I could always call on my colleagues to endorse their obligations. I did not confront them; I made them realise their obligations and that of the Commission under the rules of the Community. The loss of £100 million is being felt in every cattle unit at present.
I attended a board meeting today at which a board member, who is a prominent breeder in the cattle business, was more concerned about the collapse of cattle prices than about the business of the board. Every Deputy and Senator will be aware of this and it is time the Minister adopted a different approach to negotiations. He must follow the precedent he inherited and not put on a poor mouth. The Minister should point out that under the rules we are entitled to support from export refunds, support which we have not received.
When the BSE issue first arose in Britain I immediately saw the risk to our industry. I spent days and nights at the Council of Ministers and with the Commission pointing out that Ireland was in a unique position as an island country with a disease free status. My colleagues in the Council of Ministers accepted that Ireland was not to be tainted in any way by association with the UK BSE problem. They made statements to that effect but I knew it was not enough.
I said to Government that the consequences of this to our industry in the future could be disastrous unless I could demonstrate at home and abroad that we were deadly serious about this. The Government made what is now recognised as a significant decision to slaughter a herd even if only one animal was suspected of having BSE. I could then tell my colleagues in Europe that we were not affected and that we could trace the sources of BSE to pure bred cattle which had been brought into Ireland at a considerable cost. Everyone, including Senator D'Arcy, an experienced agriculturalist, will know that we import pure-bred cattle.
This Government has been too slow in advertising and on insisting that Irish beef is guaranteed quality and is not contaminated. The notion of a scare in relation to Irish beef is sad and reprehensible. It was a bit late when we decided to do a promotion in Britain. I will support anything which the Government may do to make a vigorous presentation. The Minister will be able to rely on the records in the Department of Agriculture, Food and Forestry relating to the actions we took to isolate ourselves from that awful notion.
I was happy that in my time 72 per cent of the country was designated as disadvantaged, including areas in Wexford and places which hitherto would not have been acknowledged as being disadvantaged. However, I always believed that we should go a step further if we could. I set up a special appeals body and invited three people to serve on it — the current president of the IFA, Mr. John Donnelly, who represented small farmers in that organisation; the doyen of fighters for small farmers, Mr. Dan McCarthy; and that most respected figure, Seamus Sheehy. I asked them to carry out as much research as possible on this extension and reclassification. They set about that with a will and I compliment them in that regard. We have seen the significance of this in terms of reclassification, but we still await the extension of the disadvantaged areas on the basis of their recommendations. The significance of this achievement is that over 70 per cent is paid from Europe and over 100 per cent of the premia price is paid from Europe, and we want this to be maximised.
I have always been convinced that our future lies with the food processing industry, which represents 22 per cent of total manufacturing employment. I do not need to say anything about the advantages — for example, our climate. When I was Minister there were two junior Ministers in the Department — Deputy Joe Walsh, who had responsibility for food, and Deputy Séamus Kirk, who had responsibility for horticulture. While I pay tribute to the Minister of State, Deputy Deenihan, for his diligence and application, this Government has not focused on this huge priority where we can avail of added value from primary production opportunities. We have seen a huge decline of processed products in the United Kingdom. Our industry is well equipped to avail of these advantages and to beat and compete with the best in the market. I cringed when I heard the Kerry Group had got out of the red meat processing industry, which was a most successful enterprise.
We set up a market development fund to hedge against currency devaluation in Britain against our strong currency. I have not seen evidence of a strong and vigorous approach to that recently. While I appreciate the contribution made by my Fine Gael colleagues when we set about doing what was long overdue in 1987, it is an irony that leftist elements in this Government are getting the benefit of the decision we took to bring down inflation and interest rates and that we are now paying a price for our success. Our currency is so strong that we are not able to make an impact on British markets.
I hope the Minister will reactivate the market development fund and inform his colleagues that with co-operatives like Avonmore Foods plc, the Kerry Group and Tipperary Co-op Creamery Limited, we have the best equipped units to compete with and beat anyone. They must not be penalised because of our success in establishing the base for a strong economy.
I will respond to Senator O'Kennedy, who raised a number of issues. With regard to the market development fund, unfortunately we must refund the money given to those involved in mushrooms because they had a problem with competitiveness on the British market. If I were to follow Senator Wright's proposals, the same thing would have happened. We are barred from having such a fund and those involved in mushrooms who benefited from the scheme now face repaying it, which is an unfortunate reality.
With regard to Senator O'Kennedy's remarks on the Minister for Food, responsibility for food is shared between the Minister for Agriculture, Forestry and Food, Deputy Yates, and myself. The Minister is, effectively, the Minister for Food and he has given this area high priority. He is holding one of the greatest food extravaganzas, Horizons, in the history of the State next June where he will bring buyers from around the world and representatives of agriculture to Dublin to see what we have achieved. It will be an unprecedented show case for Irish food. The Minister and I realise the benefit of food when we represent Ireland abroad. We published a strategy paper last year on how we want the food industry to go in the future. We cannot be accused of inactivity.
The Kerry Group got out of red meat because it was not happy with the profitability margin of 3 per cent.
Of course; that is my point. Our best performers got out of this area.
Other companies are still involved, such as Dairygold, who are happy to be making this kind of money. There is a difference between satisfying shareholders and looking after one's suppliers.
Regarding the disadvantaged areas schemes and the appeals body, Senator O'Kennedy, when Minister, met with some of my constituents. He treated them very nicely, but unfortunately they were not successful. It was a pity he did not attend a public meeting to answer questions regarding structuring because some of his colleagues attempted to infer that the Minister and I had total responsibility for this decision.
I did not say so.
I am aware of that and I am glad the Senator has put on record that he established the appeals board. We were successful on reclassification; one million acres were included. However, I wish everybody knew how the appeals board was set up, and of its independence. It was ingenious of the Senator, when Minister, to include the farming organisations because they made the difficult decision as to who should be included.
Senator Wright is aware that there has been a problem in the tomato industry for some time. He represents a constituency that is very dependent on horticulture; the majority of tomato farmers in the country are based in his constituency. Irish production has declined from a peak of 28,000 tonnes in 1979 to an estimated 10,000 tonnes in 1995 and is now confined, for the most part, from May to October of each year.
I have met representatives of this industry on four occasions. I introduced them to the major retailers in the country to ensure that more produce would be taken. We have also established a forum on horticulture — not my idea, but at the request of the industry and about which Senator Wright appears to be somewhat cynical. In addition, we brought this sector under the BES and the seed capital scheme for the first time last year. This was welcomed. This proposal had been made previously but was not taken up. The sector has also been included under the farm improvement scheme at 35 per cent, the only sector of agriculture to be so included.
It is pity Senator Wright is not here to listen to what I have to say on this issue. Before our accession to the EU. Ireland maintained a ban on imports of tomatoes during the Irish production season. On accession to the EU, producers faced competition, especially from the Netherlands, although the ban was maintained on imports from the Spanish Canary Islands. This ban was lifted following the introduction of the Single Market. A number of factors, such as increased Spanish production and imports from Morocco — 130,000 tonnes — at a preferential entry price free of customs duties under a bilateral agreement are having the effect of depressing prices in the EU.
The Dutch now have a major problem with tomatoes. They have had a large number of casualties because the EU Commission decided to fund the industry in Spain. As a result there is now a major supply from the Spanish market. In addition, the devaluation of the peseta last year made Spanish tomatoes more competitive. As the Dutch guilder continues to be strong, a large number of Dutch farmers are going out of business. The present situation is worse for them than it is for us.
The 1995 subsidy of 56p per six kg box of tomatoes has been requested; this would cost approximately £650,000. In response to representations made to me and following discussions with An Bord Glas, it came up with a fund of £100,000 in 1995 for the tomato industry, resulting in a subsidy of 13p per tray per grower. We gave this money on condition that growers would improve the quality of their produce to make them more competitive so that the Irish consumer would choose the Irish rather than the imported tomato. This makes a lot of sense. It is the way Irish produce will have to go in the future. The consumers will decide. If the Irish product has reached the required quality they will buy it but if not, then they will choose to buy an imported product.
I wish to acknowledge Senator O'Kennedy's input, when Minister, to horticulture. This industry has improved considerably over the past five to six years, especially in such areas as potatoes, mushrooms, the general presentation of cabbages and so on. This has resulted from the investment of £11 million on refrigeration, grading, hygiene and presentation. We now import only a small amount of ware potatoes and are now coming to terms with the import of seed potatoes by substituting for them. At one time we imported 80 per cent of Dutch cabbage but now we are almost self-sufficient — to the extent of 93 per cent.
We have improved a lot; this must be acknowledged. However, we are going to be hit with hard competition, which we must face, because of the open market, cheaper produce and the strength of the pound. The only way we can compete is if the Irish product is of such quality that it will command a premium price. I agree with Senator O'Kennedy that it is important to promote the healthy status of our Irish herd throughout the world because it is one of our most important competitive advantages. I take any opportunity I get when working with An Bord Bia to point out the fact that our herd is free from BSE and from several other diseases which inflict European herds. We have a problem with TB and brucellosis, but it is small compared to other diseases, including foot and mouth disease, in other parts of Europe.
We asked Pavarotti to promote Irish beef and he was happy to do it.
The Minister, without interruption.
And to eat it.
He is a good advertisement for it.
I am pleased to be here this evening to continue this debate on agriculture. Last week the Minister for Agriculture, Food and Forestry, Deputy Yates, gave a wide-ranging account of progress in the sectors and of the many initiatives which he and I have taken during the past year to facilitate the development of those sectors and to improve the quality of the Department's services to the farmers concerned.
As regards Senator Byrne's point, the charter of farmers' rights is working well and has been acknowledged by farmers throughout the country. They are now being paid headage and premia payments months earlier than before, despite the number of schemes in operation. The system has become more efficient. I am sure Senator O'Kennedy started that process when he was Minister for Agriculture. Farmers and customers are satisfied with the charter and the compulsion to make early payments. The number of complaints in this area has been significantly reduced.
In the future traditional farming activities must be extended in scope and diversity in order to sustain viable rural communities. As Minister with responsibility for rural development, I propose to outline some of the initiatives, schemes and services designed to promote this goal.
I want to say a few words on the critical issue of beef export refunds, the resolution of which has been a prime concern of ours in recent months and about which many Senators also expressed concern last week. I have been extremely disappointed with the European Commission's management of the export refund system during this time, but I must outline the background to this situation.
Under the GATT, a progressively declining ceiling has been placed on subsidised cattle and beef exports from the European Union to third countries. The ceiling for the current GATT year is 1.19 million tonnes and it will decline to just over 800,000 tonnes by the year 2000. Compliance with this ceiling is controlled on the basis of export licences issued rather than on the basis of physical exports in the course of the GATT year, which runs from 1 July to the following 30 June.
In view of this, the European Commission monitors the level of export licences issued on a regular basis in order to ensure that the overall ceiling on subsidised exports is not breached. Over the past number of months the Commission has taken the view that the level of licences issued was excessive and they adopted a number of measures during that period in order to discourage exporters from taking out export licences too far in advance of physical export. These measures included cuts in export refunds, a substantial increase in the rate of security for export licences and a shortening of the period of validity of the licences.
As far as the cuts in export refunds are concerned, the Commission has gone too far and both the Minister and his officials have made this clear to Commissioner Fischler and the Commission services. The Minister has also raised the issue in the Council of Ministers. The Commission's response has been to increase export refunds on two occasions in the past few months — by 14 per cent on 1 December and by between 5 per cent and 7.5 per cent last Friday. The increase in the refunds last Friday was taken at a specially convened meeting of the beef management committee which the Minister requested——
The beef management committee meets almost every Friday.
——in order to ensure that an early decision was taken on the issue. It does not always discuss the beef issue, as the Senator should know.
It will if it is told about it.
It discusses a number of issues. In formulating its proposal to the beef management committee, the Commission also responded to our request for a bigger increase in refunds on male hindquarter cuts, which are of particular importance to Ireland.
While these increases are not a full solution to the price difficulties being faced by producers, they represent substantial progress on an issue on which Ireland had little support initially. In particular, these increases should give a significant psychological boost to beef and cattle producers at this sensitive time. However, I do not see last Friday's increase as a total solution. The Minister will continue to seek the restoration of refunds to levels which make Irish beef competitive on international markets and which will at the same time underpin cattle prices at a level which will give a reasonable return to producers. Cattle prices should remain relatively stable for the immediate future because beef exporters are currently operating from licences which were prefixed at the higher refund rates which prevailed up to mid November. The supply of these high rate prefixations is generally adequate to cover normal exports until the end of February.
The Minister made the point strongly today at the IFA meeting in Buswells Hotel that our factories should also look at their operations. It is well known that they are taking full advantage of what is happening at present. I am sure Senator O'Kennedy accepts that. Beef should not be bought at current prices if the factories are to be fair to farmers.
The payment of the deseasonalisation slaughter premium, which is worth up to £60 per steer slaughtered this spring, will be an important factor in maintaining returns to winter fatteners. This, in conjunction with premium payments, which have increased by £250 million since the onset of the CAP reform agreement in 1992, should help to underpin the income situation of beef producers. Nonetheless, my objective will be to continue to seek a restoration of refunds to levels which will make Irish beef and cattle competitive on international markets and at the same time provide producers with a reasonable return on their investments and efforts.
I want to address a specific point.
The Minister has only two minutes left.
The Minister will have adequate time to deliver his script.
We must allow the Minister to proceed.
He wants the Minister to be allowed to conclude his speech.
I am sure the Minister will conclude in two minutes.
It was relevant to reply to some of the questions raised.
The alternative enterprise scheme provides substantial support for the development of alternative, non-quota enterprises. It is expected that 3,000 individual projects will be assisted over the period of application of the scheme, with approximately 900 in the current year. Development of the sport horse and deer industries continues to be among the priorities in this area.
The development of agri-tourism has been a feature of alternative enterprise development in recent years. Last year I announced approval of £2.4 million in grant commitments, which represents an investment of approximately £7 million. The development of agri-tourism along with other diversification measures will continue to be one of the features of farm development in the future. It is the intention of my Department to assist these developments where possible.
The Leader scheme has been successful and it has inspired great hope in rural Ireland. Almost all the Leader groups are signed up and have started their programmes; there are about five more with whom we must sign contracts. The programme has been successful and has given rise to great hope in rural communities.
The last Act dealing with the greyhound industry was passed in 1958. I am now reviewing the legislation and hope to have a new Act in place by the end of 1996, with the co-operation of the industry and the ICC. It is time we gave the industry a boost; it needs support. It is an important part of alternative farm enterprise which needs encouragement. With the investment begun by the last Government and continued, I am happy to say, by this Administration, the improvement of facilities in Shelbourne Park, new legislation, a new, focused board, and recent developments in Thurles, of which I was reminded by the Senator——
We have not been forgotten yet.
——a new dynamism should be given to the industry. Control is always crucial and we will introduce a new controls board, independent of the main board. That is crucial to the integrity of the industry.
I have responsibility for horticulture, despite what Senator Wright may think, and I am pro-active in the area. I have met more deputations from the industry than all the previous Ministers put together. We have set up a horticultural forum at the request of the industry, not on my initiative. I cannot see why the industry — or Senator Wright, seeing himself as its representative — is now criticising that forum.
Horticulture is a sector with great potential, both as a mainstream farm activity and as an alternative or supplement to mainstream activities. Last year our horticultural output was about £220 million, up 4 per cent on the previous year. One area of particular promise is hardy nursery stock. Irish people are becoming more conscious of their gardens and of green areas in towns and villages and there is now major demand for hardy nursery plants.
There is also an export element which we could exploit. Because of improvements in refrigeration, grading, presentation, etc., Irish horticultural products can compete with imports, so this is a great source of import substitution. As I said earlier, we export potatoes to European markets, soft fruit to England and the mushroom industry has been a great success. The only thing threatening this at present are currency difficulties. I hope that through better management procedures, quality control and other measures, the industry can survive. It will have to respond to currency difficulties because it looks likely that the Irish pound will remain strong against Sterling for some time. However, if it gets over the present problems, it can continue.
REPS is also under my jurisdiction and I am happy to say the scheme has been extremely successful. When I came into the Department about 500 applicants had been approved. I accepted there had been a sluggish take off but I am delighted to say that following the Department's efforts, 11,000 farmers have now been approved under the scheme and over £38 million has been paid out, which has gone directly into rural communities. It is one of the most positive schemes ever introduced here. Some £230 million must be spent before the end of 1997 and I hope it will all be taken up because it will enhance our image as a nation which embraces environmentally friendly farming. That is important because it will send out a positive message.
The scheme for early retirement from farming has also been successful. It has released about 124,000 hectares to young trained farmers. Senator O'Kennedy will agree it is important to give young people every incentive to get into agriculture, because they will ensure its survival. Both this scheme and the farm installation aid scheme are important incentives for older farmers to retire early and for young farmers to begin at the prime of their lives, not having to wait until they are almost at pension age themselves, before gaining control of the farm.
I also urge the Minister to work with that marvellous, vigorous organisation, Macra na Feirme.
I am doing so and I agree with the Senator that it is a positive, pro-active organisation which comes up with a large number of proposals every year. I am working closely with them on leasing, an area where we can make much progress. I am happy about the developments in this year's budget, whereby concessions were made on the taxation of income from leasing. Admittedly there were not enough but at least it is a step in the right direction. The level of land leasing in this country is far lower than in any other in Europe. It is now the main way land is transferred in Europe so we will have to concentrate on making it attractive for people to take out long-term leases, because it satisfies both the lessor and the lessee.
The CSO's preliminary estimate of output, input and income in agriculture for 1995 was released today. It shows that farm income increased to £2.107 billion in 1995, 7.7 per cent above the 1994 level. Last year was the first year that incomes topped £2 billion. Total direct subsidy payments to farmers were £747 million and levies came to £36 million, giving a net subsidy figure of £711 million, 11.4 per cent higher than in 1994. In other words, 1995 was a record year for Irish agriculture and I am happy to say the outlook for 1996, apart from the beef industry, is generally optimistic. The dairy, sheep and pig sectors should be quite profitable this year.
I thank Senators for their contributions. I am glad I was in this House on the occasion of Senator O'Kennedy's first speech on agriculture since he left that Department. He was always most approachable when he was there.
When is it proposed to sit again?
Tomorrow at 10.30 a.m.
I thank the Minister for his comprehensive statement——
The debate is over; we have gone well past time.
——and I make a special plea to him. He has demonstrated his vigorous commitment and determination as leader of Kerry in the past. It may not be in his hands to do so——
We are now on the Adjournment; we should have started ten minutes ago.
——but I hope he can take on responsibility for the food industry. I hope the Government will listen to my plea.