In 1989, while Minister for Agriculture and Food, I introduced a slaughter policy for any isolated incidents of BSE and banned the use of meat and bone meal, whether indigenous or imported. Despite my firm actions, which demonstrate that Ireland does not have a problem with BSE-infected cattle, the crisis with BSE in the United Kingdom has affected Ireland's beef and livestock sector, which is worth £1.7 billion, and created an unprecedented crisis at farm level, particularly for winter beef finishers.
The pre-Christmas BSE scares in the United Kingdom, in addition to the severe reduction in the level of European Union export refunds last October, resulted in a dramatic decrease in the price of cattle in December 1995. The UK announced the existence of a problem with BSE on 2 March 1996. We all regret and deplore the manner in which that announcement was made. With the subsequent virtual collapse of beef markets in the UK and European Union and the imposition of export bans in many of our international markets, cattle prices collapsed to 92p per pound. This gave rise to an income crisis for winter beef producers who play an essential role at the end of the beef production chain.
At a steer price of £1 per pound, Teagasc calculates that producers were losing £71 per head of cattle even with the £60 per head winter beef slaughter premium. This price operated from 1 January to the announcement of the BSE crisis on 20 March. Following that announcement cattle prices fell to 92p per pound. Teagasc, taking account of the £60 per head slaughter premium, calculates that producers are losing £138 per head at that price. Premium compensation is required. The UK BSE crisis and European Union reductions in export refunds inflicted heavy income losses on producers during the current year. Both problems were outside the control of farmers and were in no way related to the stringent and effective actions I took in 1989 as Minister for Agriculture and Food.
The Luxembourg BSE farm council acknowledges the need for producer compensation if required by the market situation. Point 10 of the council's report states that, if justified by market conditions, additional specific measures will be proposed by the Commission for suckler cows and male bovines. The beef sector is three times more important to the Irish economy than any other agricultural sector is to other European economies. When I was a member of the Council of Ministers I argued for specific support for the Irish beef sector. I constantly reminded my European colleagues that no matter how important was cheese to the French economy or wine to the Italian, Ireland's beef sector was three times more important to its economy. Full premium compensation is required to offset the severe losses endured by winter beef producers in 1996.
Premium compensation should be very specific and should be paid to producers who incurred losses during the current year. It should be paid in the form of a beef finisher premium based on beef animals sold between 1 January and 9 June 1996. The level of premium compensation must reflect the cattle market price and differentiate between the periods 1 January to 24 March and 25 March to 9 June. The compensation must cover steers, heifers and young bulls slaughtered at meat plants and exported live during the period 1 January to 9 June. As calculated by Teagasc, the beef finishers premium rate should be £71 per head for January to mid-March and £138 per head mid-March to June.
I will now explain what I propose by way of deseasonalisation premium. As a result of the BSE crisis there was a significant reduction in steer slaughtering at beef export plants from 25 March. The European Union deseasonalisation premium was reduced from £60 per head to £45.07 per head on 15 April. It was further reduced to £35.05 per head on 29 April. In view of the fact that animals could not be sold because of the BSE crisis, it is now essential that the full level of the deseasonalisation — £60.09 per head — be paid on all eligible steers slaughtered up to 9 June. This proposal is neutral in terms of the European Union Commission budget.
To give an indication of the calculation of losses, 305,763 disposals took place between 1 January and 24 March. The total losses calculated by Teagasc, at £71 per head, were £21.7 million. From 25 March to 9 June there will be 260,455 disposals and the losses calculated by Teagasc, at £138 per head, total £35.9 million. The overall number of disposals will be 566,208 at a total loss of £57.5 million. Teagasc calculates that winter beef producers have incurred the following income losses as a result of collapsing beef prices in 1996: January to mid-March £71 per head and mid-March to June £138 per head.
Compensation for these losses is required in the form of a beef finisher premium. Premium compensation must be paid to producers of steers, heifers and young bulls who sold cattle between the dates of 1 January and 9 June. The full rate of £60.09 per head of the deseasonalisation premium must be paid on all eligible steers slaughtered up to 9 June. The IFA has calculated that total premium compensation will amount to £57.6 million. This money must be paid in the form of beef finisher premia at the following rates: £71 per head for the period January to mid-March and £138 per heard for the period mid-March to June. That is the only basis that this essential link in the chain of cattle and beef production in Ireland will be protected against complete decimation.
