I remind the House that speakers have 20 minutes each and sharing time may be allowed.
Agriculture Industry: Statements.
Acting Chairman
Earlier this year I had the welcome opportunity of participating in a debate on agriculture in this House and I am delighted to be here again. Nineteen ninety five was a record year for agriculture with agricultural income exceeding £2 billion for the first time. Since then the BSE crisis has clouded the horizon. Agriculture has a key role in the national economy. It is our most important industry in terms of its input into employment, output and exports. While employment has declined over the last 20 years, particularly in the west, agriculture still accounts for 11.3 per cent of the labour force compared to an EU average of 5.4 per cent. Agriculture contributes 8 per cent of GDP compared to the EU average of 2.5 per cent. In 1995 beef and milk accounted for over £2.5 billion or just over 70 per cent of our gross agricultural output.
Exports increased steadily in 1994 by 16.5 per cent compared to an EU average of 8.7 per cent. About 40 per cent of net farm earnings come from agriculture. Aggregate farm incomes, which are a good indicator of performance, have increased each year since 1992 — it currently exceeds £2 billion. Family farm income, which measures on-farm income, was estimated at over £9,000 in 1994. There was a considerable variation around the average figure ranging from £1,200 to £64,000. Direct payments account for almost 36 per cent of the aggregate income and payments under the CAP reform package account for the bulk of these payments.
The 1992 CAP reform and the GATT form the context for the current debate on agriculture and they will determine the declining level of support arrangements and the international trading framework for the rest of the decade. This means we will face more intensive competition. We need to improve on our structural weaknesses in agriculture and tackle the underlying weaknesses in terms of land transfers to young trained farmers and exploiting new technology to the full.
The food industry is our single most important industry. It is worth £9 billion per annum — half of which output is exported. I launched the national food strategy last year and it will involve an investment of £640 million, comprising a public sector investment of £283 million. Up to 6,600 additional jobs will be created under this programme and it will mean overall employment of 200,000 in the sector.
The BSE crisis is a matter of topical interest. The strategy I have been operating since the crisis hit on 20 March is to ensure adequate marketability. The first step taken was with intervention with a removal of the carcass weight limits and a relaxation on the grades. That helped us over the problem of a lack of marketability of our stock with a glut of cattle in sheds. We have come through that period, and while prices dropped by about 7 per cent, they did not collapse. Substantial intervention intakes have occurred.
My second priority was to have export refunds increased. They were increased by 12 per cent so that we could achieve an increase in our competitiveness in third country markets. The Border has been sealed to protect the integrity of our national herd. We have emphasised our controls in relation to the depopulation of herds so that within Europe the problem has been ring fenced to Britain.
Apart from these market issues the big issue for farmers was compensation. I am delighted to announce that after protracted negotiations, the Florence Summit and detailed representations the original £58 million based on ECU650 million has been increased to £70 million for Ireland. However, in Luxembourg last week we obstructed an agreement on the share of this BSE compensation because we want a special deal for Ireland. When I was last in the Seanad I indicated that an essential feature of the price package would be a continuation for Ireland of the slaughter premium payable from January to June of £58 per head, known as the deseasonalisation premium or DSP.
The rules for that premium required one to have over 40 per cent of slaughterings between 1 September and 30 November to show that one had a seasonal problem. Slaughterings dropped to 35.6 per cent and we lost eligibility. If Northern Ireland was factored in we were down to an average of 34 per cent during the period. This meant we would have lost about £16 million a year. I am pleased to say that I have had the rules rewritten and there is a commitment to lower the threshold to 35 per cent. This means we have a reasonable prospect for the foreseeable future of holding on to this valuable premium. It is the most important thing I could have done for winter finishers who have had a difficult year buying stock.
Our share out of this compensation payable out of the BSE reserve will come to £86 million. This applies to this financial year which ends in mid-October. We will seek a further round of compensation and FEOGA accounts adjustments for the next financial year. For farmers this means a top up in the suckler cow premium payments in 1995 of £22.40 and a top up for the 10 and 22 month premium of £19.08. The national envelope is worth £13.3 million.
This package is more than reasonable because if the slaughter premia to which I referred are excluded, we get 10 per cent of the compensation despite only having 7 per cent of the animals — almost 50 per cent above the average. Other member states — Italy, Germany and the Netherlands — will get less compensation pro rata to their animal numbers.
With regard to the special envelope of £13.3 million, my Department is putting in place a process to ensure these payments are made speedily. My intention is that the entire package will be paid by 15 October. In indicative terms, my intention is to top up the DSP for those who suffered after 20 March to the end of the DSP period, 8 June, by about £50 per animal. That will use about £8 million and the remainder will be used for heifers slaughtered during the same period. There are a number of difficulties here because people sell through marts and dealers are involved as well. My officials are currently working on a scheme in consultation with the farm organisations. I welcome comments from Senators as to the best way to operate that.
There is no doubt that that addresses the initial need for compensation, but there is also the question of looking to the autumn. How can we ensure that there will not be a collapse in prices? I am pleased to announce that I have focused on two aspects of this, one is within the European market and the other is outside the European market in third countries. This morning I met high level Iranian scientists and vets and we had a satisfactory meeting. I am hoping for a positive recommendation from them. That will facilitate a ministerial meeting in Tehran which I hope will form the basis of a resumption of trade there by autumn. However, I cannot promise that it will be successful.
What is of greater significance is that I had planned to visit Libya but arrangements were not put in place by the Libyan authorities, which indicated that they were not ready to change. They signed contracts with Australia and others, but these have unravelled. I am pleased to inform the House that I am going to Libya on the 15-16 July and I am hopeful of a major breakthrough there which is critical for the live trade.
We will be working with An Bord Bia to look at the European market to get a recovery in consumption as best we can. We are looking to a European promotion fund to do this and I had talks with Commissioner Fischler over the last two days about that. Let us be under no illusion. The best case scenario is that consumption would reach 90 per cent of pre-March levels. A 10 per cent fall in consumption means a drop in consumption of 750,000 tonnes of beef with no market to go to within Europe. This will be a huge pressure on intervention and will cause huge overhang on the market. This is beyond the control of any one Minister. This means that under our Presidency we will have to look at restoring a balance in production, demand and consumption. We were at a 104 per cent self sufficiency; we are now well in excess of that. In my bilateral meetings we are looking at a number of measures that would cut production. There is no way out of this and some tough decisions will have to be taken over the next 12 months, as intervention is only a short term measure. However, I will be, perhaps at a later date, returning to the outcome of that.
In the milk sector 1995 was an excellent year — a record year — but things have changed. The market situation has altered. Russia is not intervening in the market and there is far less buoyancy. This year we have had 8,000 tonnes of butter and over 20,000 tonnes of skimmed milk powder removed from the market and we are back into intervention. The first thing I sought to do was increase refunds and we have a 9 per cent increase in refunds for butter and 12 per cent for skimmed milk powder. I have had further discussions with the Commission to look at the longer term price and quota policy arrangements and it is Commissioner Fischler's intention in the spring of next year to come forward with revised proposals for the dairy sector. I have put in place an expert group in relation to the future of quota after the year 2000 to plan our way in terms of what is best for Ireland. I await the report shortly, but there is no doubt that the effects of the GATT agreement and CAP reform are starting to bite, both in the context of world trade and Eastern Europe. We will have to try to ensure that the outcome to these changes is as favourable as possible.
However, there has been a controversy recently about milk quotas. The problem is that, notwithstanding the drop in price of milk and the further likely price drop, it is the most profitable form of farming at the moment. We are running 6 per cent over quota, which is a record high. We are facing a super levy bill, if things do not change between now and the end of the quota year, of £66 million. That will be horrendous. Last year we found we could not pull back production, despite all the warnings, after the grass season was over. We have run into a problem this year in the allocation of temporary leased milk. The problem is not that milk was misallocated but demand for temporary leased milk has exceeded supply by over 300 per cent. The number of such producers who participated in this year's scheme has increased from 2,500 to 8,500. Flexi-milk has virtually evaporated and people are opting for temporary leased milk instead.
In all cases I have tried to act on the basis of consensus. I accepted the recommendation of the milk quota review group; and when there was a difficulty with their first tranche allocation, I called an emergency meeting last Tuesday. I am giving approval to their proposal to give priority to small producers, who had legitimate expectation based on last year's allocation, and they will get the remaining tranches. This is agreed and will be in place rapidly. We will have to favour the small scale producers in terms of allocation of quota, the 10 per cent clawback and ring fencing for disadvantaged areas; that is all in this direction.
The first half of the year in the sheep sector has been good, with prices much higher than last year. Slaughterings have been ahead of last year. Good prices have brought a steady supply of lambs onto the market. Close to 85,000 have been exported, a 6 per cent increase on the same period last year. The first instalment of the ewe premium is being paid; 48,000 will get it. There has been a hold up with the European Parliament during the Italian Presidency with regard to the 1995 extension of the rural world premium in disadvantaged areas. This will be an A point at the first Council meeting which I hope to chair later this month, and I hope it will be paid rapidly after that. The delay has not been my fault. The money has been provided; it is simply a case of getting it through. The overall value of the 1996 premium is expected to be £110 million.
The tillage sector is the one that I am most confident about. Its value increased by 46 per cent last year. We have had an increase in sowings this year of 50,000 acres over last year. I am circulating to the Council a paper on eligible land, which has some prospect of moving this issue forward for the next planting season, and we will make a decision at the July Council meeting to reduce set aside to 5 per cent. All of this means that there will be more native grains for the white meat sector and we are getting nearer to using our national base area.
Similarly, sugar had a good year in 1995 and the prospects are good for this year. Yield was up and overall sugar production, at more than 220,000 tonnes, was well above our national quota. This was a satisfactory outcome and I do not see any threat here in the price package.
REPS has been a problem, first — with its popularity. When I came into the Department in December 1993, even though the scheme had been there for months, there was a slow response. Now over 16,500 farms have been approved under the scheme, with expenditure of £60 million which will have a positive impact for farmers. Our target is 40,000 farmers. I recently reached agreement with the Minister for Finance to provide extra resources and I am reallocating resources in the Department for this. The problem was that when we did an audit check on it, there was non-compliance and invalid plans. There was a problem with over half of them. Therefore, we have tightened it up, with the agreement of the Commission, and the revised specifications are in place. We got a three year concession on the CAP, but we have to put good waste management plans in place.
I am keen on the forestry sector, although it is not the most popular thing in the world. We have the lowest level of forestry in Europe — 8 per cent. If we had 17 per cent, we would still have one of the lowest levels. This is an essential way to go. We can create an extra 11,000 jobs and can increase our annual output from £270 million to over £2 billion and that is my plan over the next 40 years. I am determined to put this in place. We have the best climate, we have no taxation, we have £3 billion of EU grants to draw down. If you look at the future of headage after 1999, when we lose Structural Funds, in part because we lose Objective 1 status, and the overall market prospect for milk and meat, this is the right thing to do. There are a million acres of land here that can produce more from forestry than agriculture. It gives a better economic return. It should be planted on the basis of increasing output from 2.2 million cubic metres to ten million cubic metres over that period. That will give us the critical mass to create the extra 11,000 jobs and have a serious competitive industry.
The Department set out to publish this 40 year framework, which is the first to have been done, on Monday. It deals with the A to Z of environmental issues, planning permission, the doubling of the distances between trees and roads or houses, the yield class, species and every aspect of the industry. Better professional farm forestry is what we want. A farmer with 60 acres should plant the worst 14 acres and produce his or her milk quota and meat from less land through better grassland production. The real benefits of this forestry policy will only be seen over a longer period of time.
Turning to the Presidency, which is upon us, our priorities in July are to pick up on the Italian Presidency and achieve agreement on the price package and setaside at 5 per cent, and to achieve agreement on the fruit and vegetable sector, on which neither the Italians nor the Spanish Presidencies could achieve agreement. If I can get that out of the way in July, I will move on to the beef, wine, olive oil, tobacco, and sheep-meat quota arrangements. I will also be putting in place a number of specific reforms with regard to the veterinary sector, and there will be a major rural development conference in Cork.
The focus of our informal Council in September will be the future of the beef sector. The Commission will be bringing forward an adjustment to the beef sector White Paper in September.
What about milk?
We discussed that earlier. The situation is that there are no proposals for change in this year's price package, but it is expected in the spring of next year. The Commissioner will be presenting proposals and I have explained our input.
I would also like to see a potato common organisation market established. It is the fourth most prominent arable crop in the Community. There are other issues such as the veal crates and the setting up of a veterinary agency in Ireland, all of which need to be adopted.
There has been no greater crisis in the history of the Common Agricultural Policy than the BSE crisis on beef and I am fearful that the crisis will get worse in a number of respects. Without being alarmist, it is important that the country which is the largest exporter of beef in the northern hemisphere and the most dependent on beef will have a pivotal role with a hand on the tiller, in conjunction with the Commission, in steering the first steps of the reorientation of beef policy. I want to make Senators aware of the fact that now we are in a minority. The situation has changed with regard to the extensive producing countries which had priority at the time of the MacSharry reforms. It was clear from the BSE debate that Germany, Holland, Belgium, Italy and Denmark are all not now in favour of pursuing a further rationalisation based on extensive production. This poses a major threat to us. Therefore, all the following factors — whether we have a calf slaughtering policy, a buy out scheme for suckler cows or adjustments to dairy cows, plus stocking rates — will be on the table within the next 12 months. We must confront it to have a substantial reduction in output and ensure it does not harm our national economy.
I look forward to hearing Senators' contributions.
I am disappointed with the arrangement that the debate will be continued next session. We were told we could share time, so I wish to give five minutes of my time to Senator McGowan.
Is that agreed? Agreed.
First, I want to compare this year's prices to those of last year. The price of milk, for instance, is 5p per gallon lower this year. The biggest problem of all is the quota situation, especially among small farmers. According to the United Farmers Association, which is helping small farmers, the present milk quota crisis brings the situation into sharp focus. There is little or no quota available to small dairy farmers because of the lack of Government regulation. The UFA adds that the organisation, formed in 1990 to fight for milk quota for small farmers, has not been given representation on the milk quota review group which advises the Minister. This must be addressed, because the changes which the milk quota review group made and the Minister sanctioned, did not favour small dairy farmers with small quotas. The UFA is anxious for the creation of a land and quota authority to enable low income farmers to get enough land and quota to survive and that agriculture gets priority over afforestation for all land that becomes available.
I raised the matter of the milk quota situation on the Adjournment last week. I mentioned that in 1982, when the milk quotas were introduced, Ireland was recognised as an underdeveloped country on the periphery of Europe and received a concession. Since then, 4.5 per cent of the quota has been taken away and we must fight to get back and increase that quota. Some countries received extra quota and I cannot see why Ireland should not be in a position to receive extra quota. The Minister must fight for it.
To turn to beef prices, bullocks were quoted at 109p per pound while cows were quoted at 94p this time last year in the Irish Farmers Journal. A fortnight ago, bullocks were quoted at 94p and cows at 70p. This week, I think bullocks are quoted at less than 90p and cows at between 64p and 65p. That is the change in a fortnight. Is that trend going to continue? This is what would worry me. That is a desperate loss to beef farmers or any farmer who is producing cattle to that extent.
The Minister said he had renewed the slaughtering scheme for next year. That scheme was grand last year and people held over cattle for the winter as finishers. The prices in October and November were about 106p per pound, but in February or March the prices were below 100p or 98p. There was a loss about which we have informed the Minister on several occasions. Can the Minister guarantee that the prices will remain static next October for the following year? The finishers want to know this to ensure they will not be at a loss. It will cost money to finish these cattle, there will definitely be a loss and the slaughtering premiums will be no good to farmers because they will still be at a loss.
As far as afforestation is concerned, I know the Minister outlined a big programme a day or two ago; but there is worry that Coillte or people other than farmers will acquire all this land. There are complaints that local farmers do not know about land which is for sale. The priority must be to encourage small farmers and give them more help to develop their land for afforestation to ensure rural Ireland is not undermined altogether. If Coillte is acquiring land in rural Ireland and non-farmers are buying land on speculative grounds to invest in forestry and benefit from it while the local community is hunted off the land, that is the wrong policy and it must be addressed. I do not think the programme which the Minister launched a few days ago addresses this problem.
In The Examiner yesterday, an IFA rural development chairman urged the Minister for Agriculture, Food and Forestry, Deputy Yates, to immediately intervene in the Department's dispute at local Department development services offices and allow the processing of REPS payments and compliance checks for second instalment payment to resume. That is of concern to the people involved in REPS.
There is also a delay in the payment of the control of farm pollution scheme grants. Inspectors do not have the time to visit farmers who have undertaken to develop their farms and to comply with the EU regulations. There are also delays in relation to other grants. Officials in the local offices say they are too busy.
When the Minister for Agriculture, Food and Forestry came into office 19 months ago he said that the crisis facing sheep farmers was his priority and reviewing the last 19 months, the Minister's number one priority is as good a place to start as any. In December 1995, one full year after he came into office and identified his number one priority, the Minister finally negotiated a compensation package in Brussels. To this day not one penny of that package has been paid to sheep farmers. The promised payment of the rural world premium has not materialised. In reply to a recent parliamentary question all the Minister could say was that payment would be made soon. That is not good enough. In fact, payment has still to be dealt with by the European Parliament and the prospect of payment being made soon is slim. Clearly the Minister has politically failed to get this deal which was agreed last December through the administrative hoops in Brussels. After 19 months in office the Minister's number one priority is still outstanding.
Across a number of key issues the Minister has conspicuously failed to pull his weight. Through last autumn and winter he consistently misread the clear warning signs as export refunds were repeatedly slashed. So completely was the Minister at sea that he not once but repeatedly assured farmers that farm gate prices for beef would not be affected by the cuts in exports refunds. We should not forget that before the beef industry was floored by the BSE announcement on 20 March it had been brought to its knees by cuts in export refunds over the previous winter.
When he was finally awakened to the dire consequences of what was happening, all the Minister could do was launch broadsides against the beef management committee and the Commission. The Minister's ballyragging of the Commission earlier this year was clearly counter-productive. Indeed, his comprehensive failure to exert any influence in the administration of EU beef policy was illustrated again last week when the beef management committee effectively disbarred up to 40 per cent of our beef from intervention.
To date, in so far as there has been any resolution of the BSE crisis, it has been enunciated at the Florence Summit and at the follow up Luxembourg Council. In the words of the Taoiseach "the lead in to the Florence Council was overshadowed by the BSE crisis and the related British policy of no co-operation on EU business". In his statement to the Dáil last week the Taoiseach said that compensation was not a long-term response to the BSE crisis. He went on to say that the long-term solution lies in restoring consumer confidence and in regaining markets. Examining today the entrails of the Florence Summit produced at Luxembourg by the Minister, Deputy Yates, by the Taoiseach's criteria the Florence Summit, from the point of view of Irish agriculture must be seen as a very serious disappointment. Neither at Florence nor in Luxembourg at the follow up Agriculture Council was any attempt made to address the crucial issues of consumer confidence and world markets.
What has been provided is an entirely inadequate measure of compensation. The final sum available to farmers is £70 million. The Farmers' Journal described the £70 million as half a loaf for the autumn. Supposing a best case scenario of total losses to farmers of £150 million — of which £70 million is less than 50 per cent — farmers are looking at compensation of 50p in the pound. In fact, losses may be much higher and this compensation may represent as little as 25p in the pound.
The Florence Summit failed even in its objective to provide short term respite from the worst of the BSE crisis. It must surely count as a colossal political failure on the part of the Taoiseach and the Minister for Agriculture, Food and Forestry that, from 20 March until last Friday week, they were totally unable to have the vital concerns of Ireland addressed at EU level. When finally something was done it proved to be too little too late. By the criteria the Taoiseach laid down last week, with which I agree, the most important issues arising for Ireland from the BSE crisis were not addressed at Florence or, since then, at Luxembourg by the Agriculture Council.
A long-term and stable solution to the BSE crisis must involve restoring consumer confidence. There was no move at the Florence Summit to put in place a marketing fund. Irish exports to the EU are still down this week by 45 per cent. If, at the end of the day, beef is not being eaten the crisis will be ongoing. This issue has a scale and urgency for Ireland unparallelled in other EU countries.
I was very pleased by the display at the Horizons exhibition in the RDS this year. I am sure the industry will benefit from such a showpiece for Irish beef and other products. Our beef industry is 80 per cent dependent on exports. If markets are not greatly improved before the autumn, when the bulk of beef comes to the market, the entire industry could be irrevocably dislocated. I am very worried about the maintenance of prices in order to qualify for the slaughtering premium, which the Minister was so proud of getting from the EU the other day.
Why the Taoiseach and Government failed to even seek, let alone achieve, having the Commission mandated to examine on its own authority those aspects of GATT which are now strangling the Irish beef industry is beyond comprehension. Clearly, in the light of the BSE crisis, the EU must urgently seek a revision of the relevant aspects of GATT, and given the extraordinary circumstances prevailing, we would be well within our rights in doing so. What has been conspicuously lacking is the political will from our Government to push the issue.
With the Irish Presidency of the EU now upon us there is an urgent agenda to be addressed. The issue of consumer confidence must be addressed. This means that resources must be set aside to ensure the necessary marketing and educational campaigns can be carried out.
If the above matters are not successfully addressed as a matter of urgency by the Irish Presidency, the beef sector will face calamity in the autumn. If confidence in cattle rearing is not quickly restored, finishers will not buy store cattle in the autumn and, in turn, there will not be buyers of stock from suckling farmers. The short-term result will be the possibly irreparable dislocation of our cattle trade.
Those who are most dependent on beef for a living are also most likely to be among the most marginal in agriculture. Any further substantial damage to the beef industry will have dire prospects for the viability of family farms. The Florence Summit, as proven by the results of the Luxembourg Council today, did not address the core issues in the BSE crisis. The compensation offered is, at best, a short-term respite. The Irish Presidency must urgently address the underlying issues. The BSE crisis has dominated the last few months. Perversely, the crisis has given the Minister a useful camouflage to deflect attention from a range of ongoing matters.
The farmers' charter was the Minister's main initiative during his term of office. Its implementation lay entirely within his personal remit. It was launched in a blaze of publicity at a cost of some £250,000. The Minister must agree that the charter is a proven shambles today.
The cost was not even £2,000.
Staff relations in the Department, already strained by the failure of the Minister to consult his Department over the decision to relocate to County Wexford, were brought to breaking point by the charter. The Minister promised in his charter a plethora of new services from his staff. The problem was that he did not consult with them on how this might be done.
According to the Ombudsman's report, in 1995 complaints against the Department rose by one third over 1994. On the league table of complaints against Departments, the Department of Agriculture, Food and Forestry is now the target of 20 per cent all complaints as against 15 per cent in 1994. Far from improving the situation, the delivery of services from the Department of Agriculture, Food and Forestry during the tenure of this Minister, and after the implementation of the charter, has seriously deteriorated.
The short-term approach, always geared to the next headline or the next news bulletin, has characterised the Minister's time in Government. The dispute with the district veterinary officers continued for too long and disrupted farmers. I had to bring to the notice of the Minister that Department officials would not issue results of blood tests, etc. It caused desperate problems for farmers.
The Minister has failed to win the respect and co-operation of his colleagues on the EU Council of Ministers. His unfortunate and ill chosen spars with the EU Commission has left an enduring bad taste in Brussels. When Irish farmers most needed the co-operation and understanding of our European partners it was not forthcoming. The Minister's mé féin approach to dealing with these bodies has reaped a bitter harvest at home.
In 1995, when the full effects of the MacSharry reforms and the consequences of seven years' hard work in the Department were flowing, resulting in record incomes for farmers, the Minister could apparently do no wrong. Now we can see that it was not so much a case of doing no wrong as doing nothing at all. The Minister has let the grass grow beneath him and has let events catch up with him. The teflon factor is peeling off him. When the going gets tough he is simply not up to it.
I call on Senator McGowan. The Senator has three minutes.
Is the Minister aware that we export substantial amounts of fresh liquid milk to Northern Ireland which sells at a price of 75p for two litres while the price in this State is between 99p and £1.16? I raised this on the Order of Business. Farmers are not getting all of the money. There is an ongoing racket which is unfair to consumers. Will the Minister comment? I am sure he understands that this is a serious matter. Milk is a very important part of one's diet. Why should consumers here pay one third more for it?
With regard to the BSE crisis, despite all the remedies that are being put in place, the restoration of consumer confidence is the biggest achievement we could make. The Minister has visited County Donegal and has met many committed farmers. They tell me that in the present climate, real confidence will not be restored until we in Europe and the UK decide to take cows out of the food chain.
Some consider this to be a sensational proposal. This is far from the case. Approximately only 8 per cent of cows go into the food chain. Those putting them into the food chain could be compensated. The life expectancy of cows is eight to ten years. They are drugged continually, whether it be by mastitis treatment or whatever. There is a bold, courageous step to be taken to get meat back to the consumer and I ask the Minister to consider taking it.
I differ from my colleague, Senator Rory Kiely, in supporting the Minister's afforestation policy, de Valera said that the economic problems of the country could be solved if we grew sufficient quantities of timber. He made mistakes, even though he was a visionary. We have a lot of land, including in my own county. I do not want to see it designated for bird watchers. One third of west County Donegal is proposed for designation, which will not be accepted by the county. I ask the Minister to help us ensure that we are allowed to plant the land.
I visited Finland two weeks ago. Its economy is booming, largely because of its timber production, which includes pulp and paper. Finland produces a different species of tree, which is the same thickness from top to bottom. Can it be introduced here?
I support the Minister's programme to increase the acreage of timber. I hope he and his Department will recognise that there must be care in selecting afforestation areas. It should not be a question of bidding for land from local people who wish to buy it. There must be a balanced approach. There are thousands of acres of wasteland in my county and I hope, therefore, the Minister's policy is implemented with care and concern and that the fears expressed by others can be allayed.
The Senator is a man for long questions. I call on Senator D'Arcy.
I welcome the Minister. If he had sent his Minister of State, Deputy Deenihan, to the House any more we would have had a permanent seat for him, given how much we have seen of him. He has done an exceptionally good job in debating agricultural issues.
I am disappointed so far with the trend of debate among the Opposition benches. I had hoped to hear some new ideas. We have debated agriculture inside out over the past six months. I wish to address the early retirement scheme, sound investment in rural development with regard to agri-tourism and the development of land suitable for forestry.
I welcome the Minister's statement on the expanding area he hopes to have under forestry. We must be careful as to how it will proceed. While there is land which is not suitable for planting, much land which is unsuitable for intensive agriculture is very suitable for forestry.
It is essential that every activity taking place in rural Ireland today has access to funds at reasonable interest rates. There is good availability of money at present, but interest rates are still hovering around the rate of 10 per cent. Building societies can hire out money at rates of 7 to 7.5 per cent. Agriculture is just as important as industry and it should receive the same benefits on interest rates.
Many organisations now represent rural development. The Leader programme has 16 companies across the country and Bord Fáilte operates through the Department of Agriculture, Food and Forestry in the area of agritourism. In addition, there are the new county enterprise boards, the county development organisations and the latest community groups under the auspices of the Minister of State at the Department of the Taoiseach, Deputy Gay Mitchell. These different organisations should be brought together under one heading with the establishment of a mother organisation. This would ensure co-operation and consistency in respect of the areas to be developed.
Teagasc is involved in all the schemes, and disadvantaged areas must be examined in terms of reclassification and the various headage payments. It is vital that the manner in which these matters are operated by the various departments is examined. We must try to pull the strings together and ensure the organisations are more cohesive. Five organisations are working in County Wexford — the Minister's county — in the same jurisdiction. They are doing the same thing and there is much duplication and wastage. I do not suggest the boards are not doing a good job, but five or six organisations are working in the same place in the same area and dealing with the same people. In some cases people applied to all the organisations to see which came up with the best deal. That is a mistake.
Agriculture is still the cornerstone of the rural economy and will be for some time to come. I argued in the past, and I continue to do so, that when import substitution is taken into consideration, agriculture contributes between 30 and 40 per cent of the total economy. As far as rural areas are concerned, its contribution is essential and fundamental not just to farmers but to villages and towns and the shops and other small businesses in those areas. By and large, they are sustained by the agricultural community. These aspects should not be overlooked when agriculture experiences difficulties from time to time.
There is much talk about the creation of jobs in the services area. Agriculture is one of the biggest consumer of services and a huge number of people are employed directly or indirectly in the agri-business sector. In terms of agritourism we should not forget that the country can only sustain a certain level of tourism. If there is over capacity and a heavy expenditure of money without proper planning, worse problems will be created.
There is a planning and marketing strategy, but the tourism industry is very competitive at present not only on the home front but also abroad. I support packages which involve bringing people from one area to another and activities such as heritage parks, hill climbing, pony trekking and other types of tourism attractions. These aspects are important to rural areas and help to keep people there, provided they receive a fair deal and good value. Some people tend to take advantage of bus loads of visitors, particularly from outside Ireland, and we should not pick up that habit. I appeal to people working in the industry to give good value, particularly to visitors from abroad.
Ireland faces much competition from Scotland and Norway, but Bord Fáilte has not adequately sold tourism in this country. Much more emphasis should be placed on the European rather than the American market. American visitors are most welcome, but greater emphasis should be placed on Europe, given Ireland's stronger links with it. We are closer to that market, and fares nowadays are competitive and encouraging. Ireland should have a tourist information office in every major European city. Such a move would be worthwhile and provide a good return and I encourage such a development.
The EU early retirement scheme is fundamental to the development of rural Ireland and to ensure the number of people living there is sustained. It ensures older people have a reasonable income when younger people take over farms. The current retirement scheme is working well and it has added considerably to the wellbeing of a huge number of small farmers.
The beef crisis has been thrashed out in many discussions, but it cannot be overlooked in debates on agriculture, particularly in view of the current situation. It is sad to note that, according to today's newspapers, the problem still exists. The EU is working on it. I hope that Britain will come to a reasonable arrangement so the problem can be resolved and consumer confidence can be won back.
The origin of the problems in the sector relate to the GATT agreement which was concluded in 1993 and which came into force on 1 July 1995. Under those proposals, export refunds were to be reduced by 36 per cent over six years, a cut of 24p a pound on a beef side. In practical terms, it meant the export of beef from the European Union had to be reduced from 1.3 million tonnes in 1993 to 1.12 million tonnes in the first year of the agreement, which runs until 30 June 1996. This is a serious reduction in volume on top of everything else. In addition, the UK BSE scare in the last six months has seriously affected consumers and reduced considerably the consumption of beef in the State. By and large, these three items together have created the current problems in the beef industry.
The long and protracted GATT negotiations started in 1986 and were scheduled to conclude by December 1990. However, that did not happen because sufficient progress had not been made in many areas, including agriculture. They concluded in 1993 and, as I stated previously, the United States, New Zealand and Canada are in a much more favourable position than the EU. In several agricultural areas the position of the EU will deteriorate. For example, the EU was asked to give guarantees to its partners of access to its market without receiving similar guarantees itself.
The GATT agreement came into operation on 1 July 1995 when the beef industry was being handled by the EU beef management committee and not by the Minister. People tend to blame the Minister and the Government for the difficulties, but they did not make the arrangements. The management committee's actions and decisions have proved negative for Irish beef producers. I cannot understand why the price of cattle from July to December was kept artificially high. It then proceeded to cut export refunds in November, particularly for the live cattle trade, creating an imbalance and also a non competitive situation when there was no competition in the market, thereby reducing the price of beef by approximately 6p a pound around 1 December. These are the hard facts of the decisions taken in the latter half of 1995.
I am most critical of the decisions taken by the EU beef management committee in view of events over the past six months. The GATT proposal, as far as the agreement is concerned, is that the refunds should be reduced by 36 per cent over six years. However, there was a 25 per cent reduction in the first year of operation and this was ridiculous. It makes no sense and it is a warning to the entire Community that the actions and decisions of the committee must be monitored. I ask the Minister to ensure it is monitored closely, given that he will chair the agriculture section during Ireland's EU Presidency.
The live trade must be encouraged. The Minister said the position in relation to Iran is looking reasonably good. He met veterinarians from Iran today and I hope the market will reopen. The Minister also stated that deals done with Canada have unravelled.
That is Libya.
The position regarding Iran is just as important, if not more so, because the volume is higher. The Iranian, Libyan, Egyptian and Russian markets are most important. I am not sure of the position in relation to Russia; the Minister visited there and I understand the deal is reasonably good. However, it is important to encourage increased live cattle exports to those four countries. The Egyptian market has opened up reasonably well and I understand there is a further increase of approximately 10,000 tonnes in the volume of exports to that country. I welcome that development, but the Libyan and Iranian markets are important. These markets will be terribly important between now and October because there is the danger of a collapse at the moment. Such a collapse would only come in the autumn. I appeal to the Minister and his officials to see that these markets are opened. We will give them every support. It is all right to talk about losses to the feeders, but if there is a collapse, everybody will take advantage of it.
I would also like to use this occasion to ask the meat factories to be more generous to farmers. This week they dropped the price of cattle by 2p per lb for all grades and there was no need to do so. I checked before I came into the House this evening and my information is that there was no real reason to reduce the price by 2p per lb, except that there is a slight oversupply at the moment and once there is an oversupply, the factories take full advantage of it. I ask them to be generous.
By and large, the producer will take the greatest share of the losses in the beef industry brought about by the BSE scare. It is not just a scare in Europe, it is a global scare which is having very serious effects. In recent times BSE has become the subject of enormous media attention internationally. A great deal of inaccurate information, and even misinformation, has been circulated, some of it in relation to Irish beef. It is of critical importance that Ireland's trading partners be made aware of the facts. The facts, which are verifiable by the appropriate international organisations, are that our beef is and remains clean and that the Department of Agriculture, Food and Forestry has taken every step to ensure that it remains clean.
I ask the media to stop using the term "mad cow". I do not know why they use it. The cows do not go mad; the disease affects the brain. It is very difficult to pronounce the full name of the disease and I am not going to try to do it, but the term that should be used is BSE. I appeal particularly to our television announcers to use the term BSE and not "mad cow". The consumer is frightened easily enough without using that particular term.
It is very important that our levels of inflation and interest rates remain low. Inflation is running at approximately 1.6 or 1.7 per cent at the moment and interest rates are stabilising at between 8 and 10 per cent. We cannot afford to lose sight of these two factors if we are to plan properly for investment in the economy. We have had some very bad experiences over the last ten years. Interest rates were running in the region of 12 to 20 per cent at the beginning of the 1980s and inflation was running at between 6 and 10 per cent. This was disastrous for the development of the economy.
I am glad our Taoiseach, Deputy Bruton, insists that demands made on any sector of the economy, whether for a decrease in taxes for the PAYE sector or an increase in social welfare payments, must be based on these figures. I fully support his approach in this regard. Low inflation and interest rates are fundamental as far as the economy is concerned.
I appeal to the Minister to pay all premia as soon as possible. It is most important that the ten month premium and the 22 month premium are paid prior to the buying in of cattle in October. It is also important that financial institutions make all their facilities available to farmers because of the huge losses suffered last year and that individual bank managers do not take it upon themselves to be judge and jury in these cases. If this were to happen it would seriously damage the whole beef industry, and enough damage has been done already. It is vital that the premia are paid promptly. If possible the Department should start paying from the end of September, and certainly not later than 15 October. This would help farmers' cash flow. The banking institutions should be generous with those who suffered heavy financial losses over the past 12 months.
I wish to talk about milk and milk quotas. We have had a running debate about quotas of one kind or another. The proposed 21 per cent cut in the volume of EU dairy exports will mean a cut of 24 per cent to milk producers over the 1991 levels. That is a very serious reduction. These matters cannot be lost sight of because this is what is happening. The quota reductions agreed for CAP reform will not be sufficient to meet GATT requirements. It is proposed that the level of dairy imports will rise to 5 per cent of the domestic market. The combination of quota reductions and increasing imports will result in the necessity for a 5 per cent cut in the national milk quota. This is a very serious cut. The position will be especially critical for cheese exporters. GATT may allow an increase in EU butter exports, but there is little demand for this.
We have had an argument about how much of the milk quota was available for small producers. My understanding is that 42 million gallons are available and that 20 million gallons have been distributed. Producers under 35,000 gallons received 70 per cent of the quota already distributed, producers under 55,000 gallons received 20 per cent and producers over 55,000 gallons received 10 per cent. This was a fair distribution. However, as a milk producer — I am being generous — in view of the very large demand for milk quotas at the moment the Minister should distribute the remaining 42 million gallons to producers under 35,000 gallons. Nobody would disagree with that. I am prepared to accept it. There has been a huge demand for the quotas and these people are more entitled to it.
I had intended to say a few words about forestry but as I have only one minute left I will make a few remarks about the Presidency of the EU. The Minister said that our priorities for the next six months in the agriculture sector will be to get agreement on the agricultural price package for 1996-97. I appeal to the Minister to conclude this agreement as quickly as possible so as to tackle the difficult situation pertaining in the beef sector. We have said enough about that. This matter has often been debated in this House and the Minister of State is aware of all the problems.
Another priority will be to progress the reform of the organisation of the market and of a number of sectors; that is very important. The Minister also wishes to deal with a number of measures in the veterinary sector regarding food safety, animal health and welfare and also to progress trading rules and rural development. I wish the Minister every success, because they are all very important to rural Ireland.
I take this opportunity to wish the Minister for Agriculture, Food and Forestry, Deputy Yates, every success as President of the Council of the Agriculture Ministers during Ireland's Presidency of the European Union.
The continued crisis in the beef industry is becoming more serious daily for all Irish farmers and presents the greatest challenge to the industry for many decades. This week again we see cattle prices falling at the factories with quotes for heifers having fallen as low as 83p per lb and cow prices to 64p per lb. These prices, if allowed to continue for any prolonged period without adequate compensation, will spell the death knell for many family farms. To lose £150 on a single animal is crippling. Ireland took over the Presidency of the EU this week and for all those involved I wish a successful Presidency. It is vital for our image in Europe that the Government takes up the challenge of the BSE crisis and works to ensure that the problem is resolved immediately.
The Minister is now President of the Agriculture Council and is in a position to act swiftly on a number of issues to assist the industry. The compensation package of £86 million agreed with the Government, in respect of losses which could total almost £200 million, is completely inadequate. The news that compensation might be paid on 1996 applications would make payment unacceptably late. I urge the Minister to ensure that payment is made on 1995 applications and is targeted at small farmers and those in greatest need.
The announcement from Brussels that the intervention weight limit will be lowered to 390 kilogrammes must be reversed because 40 per cent of Irish bullocks will be excluded as a result. This can only lead to chaos when supplies of cattle peak in the autumn because all factories are currently reporting low kill figures, steer disposals to date are running 8,000 head behind last year and heifer and cow slaughterings are running 29,000 head lower than last year. There are also very few live exports. The Government and the Minister must act swiftly to have the limit increased, because any attempt to restrict market support at this crucial time would have disastrous consequences in light of the current market situation.
The continued failure on the part of the Minister and the Government to have export refunds increased has made the situation relating to beef prices much worse than it might have been if such refunds had remained at early 1995 levels. Prior to the unreasonable cuts made by the Commission, which resulted in a fall of over 40 per cent in live exports to third countries in the first half of this year, such exports brought real competitiveness to cattle markets which was good for the industry. It is very disappointing that the Government has not made any real effort to have these refunds increased and has allowed Australia and other countries to fill contracts much needed in Ireland. The Government's failure to launch a major sales drive to third countries or send a trade delegation to Libya is also disappointing in light of the current market situation and the hardships endured by many farmers.
Consumer confidence in beef produce is the key to increased sales. Price confidence must be restored to the consumer in respect of the unquestionable quality of Irish beef, which is produced in a clean, green environment. International studies have shown that BSE is not a problem in Ireland. Had earlier action been taken in Ireland to ban meat and bone meal from feedstuffs and an immediate slaughter policy put in place, it would have necessarily and correctly protected Ireland's image as having a white, disease free status and provided a guarantee for consumers at home and abroad about the unique quality of Irish beef.
During the Irish Presidency of the EU, the BSE crisis must be our first priority. The Government must ensure that there is an increase in farm budgets for next year by securing an intervention scheme along 1992 lines, increasing export refunds and restoring consumer confidence in the quality Irish beef. The Taoiseach and the Minister for Agriculture, Food and Forestry must during this Presidency redress their recent policy failures on behalf of Irish farmers and the agricultural industry. Confidence is at an all time low in beef farming and thousands of jobs are on the line.
I appeal to the Government to take immediate action during the coming week on the points I have outlined. Thousands of Irish farming families are dependent on its success. I appeal to the Taoiseach, the Minister for Agriculture, Food and Forestry, Deputy Yates, and the Minister of State, Deputy Deenihan, to do everything in their power to address this crisis immediately. The cattle industry is at an all time low and is continuing to slide on a daily basis. We must do everything possible to restore confidence, ensure that people return to eating beef and make foreign customers aware that Ireland is not attached to Britain and did not adopt the same policies as the British authorities during this crisis. We should stand proudly over Irish beef. The Minister and the Taoiseach will be in the driving seat during our Presidency of the EU and I believe they can take the necessary action.
There are four problems in the beef industry, which is worth £1.7 billion to our economy. I do not believe that those problems will be solved by laying the blame on the BSE crisis. There are four elements to our present predicament, namely, problems experienced within the beef processing industry, the CAP/GATT agreement, the BSE crisis and, most importantly, the lack of consumer confidence in beef.
This week there was much discussion about drug barons, a handy name for criminals. We should not forget their first cousins the beef barons, another handy name for criminals. The beef barons brought the industry to its knees through straightforward fraud and robbery. Along with some farmers, who insisted on using growth promoters, hormones, angel dust, etc., they gave beef a bad name. I congratulate the Tánaiste, Deputy Spring; Tomás Mac Giolla; the Minister of State at the Department of Enterprise and Employment, Deputy Rabbitte, and Deputy O'Malley, who blew the whistle on the activities of the beef barons. They acted in the national interest in doing so and deserve our thanks.
The CAP/GATT agreement came into effect before the present Minister for Agriculture, Food and Forestry took office. This agreement reduced export refunds and also reduced the volume of beef exported to countries such as Libya. A reduction greater than that agreed in respect of export refunds came at the worst possible time for winter fatteners. At the time of the CAP/GATT agreement, area aid was introduced to subsidise the expected fall in the price of cereals. However, that fall did not materialise, leaving the winter fatteners caught on both fronts. They faced high cost feed inputs and a reduction in export subsidies. In January, before the BSE scare, farmers protested about this outside the House, and rightly so.
We were then faced with the BSE scare. I would like to take this opportunity to congratulate the Minister on the Luxembourg beef compensation package. He did an excellent job. Those who criticise him are making cheap political capital out of an industry valued at £1.7 billion, or else they do not know what they are talking about. If the price of cattle remains as it is at present, everything will be all right. However, if it drops significantly, the Minister will have to go back to Brussels to look for more money. Nobody knows with any certainty what will happen, but I hope prices do not drop.
I do not know how the Minister proposes to spend the £13.27 million special measures payment, although money will be used to assist farmers who sold bullocks and heifers between 20 March and 9 June. I am delighted that the Minister has succeeded in getting assistance for factory type heifers. Will this include butchers' heifers?
I would like the Minister to look at the submission made by dry stock farmers. Most are entirely engaged in dry stock farming and do not produce calves. They make a convincing case for help. The price which they must pay for calves or stores takes account of the subsidies which they later get. This category of farmer gets no area aid, sugar beet, suckler cow or milk quotas. They have nowhere to turn when the price of their product drops and they need urgent compensation.
While the Minister has done an excellent job for farmers, he must do everything possible to restore consumer confidence in the industry. He should start by putting farmers who add angel dust and other such rubbish to cattle feed behind bars, which would also act as a deterrent. We must be in a position to give cast-iron guarantees to the consumer that there is no risk from consuming Irish beef. The ability to assure consumers will ultimately decide the eventual fate of the beef industry, since the consumer is all important.
It is generally recognised that the BSE epidemic was probably caused by feeding cattle with meat and bonemeal contaminated with scabies pathogen, which was helped by the processing of carcasses in plants which did not guarantee that the casual organism was completely inactivated. I accept Irish rendering plants did not operate in the same way, so the risk in this country was greatly reduced. However, we have had 124 cases too many. We must strive to reduce this number to zero as soon as possible, which can be done.
When the connection between feeding animals with meat and bonemeal and the occurrence of BSE was recognised a ban on feeding cattle with meal produced from all ruminants was introduced. I congratulate a former Minister for Agriculture, Senator O'Kennedy, on that. There is now general agreement in the UK that, even with this ban, some contamination of cattle feed with meat and bonemeal occurred in storage bins used to store feed previously.
A ban on feeding ruminants with meat and bonemeal is essential. However, I disagree with the recent call to the pig and poultry industry to recommence feeding meat and bonemeal to pigs and poultry. This would be a retrograde step and, while solving some of the problems for the renderers, it would be very unwise in the long term. From speaking to constituents, I know this is completely out as far as they are concerned.
I ask the Minister to urgently consider the possibility of using animal offal and meat and bonemeal for incineration with a view to generating electricity. The Minister of State at the Department of Transport, Energy and Communications, Deputy Stagg, recently requested tenders for the commissioning and running of a 30 megawatt biomass power plant. The core utilisation of various feed stuffs, including animal offal, would enhance the viability of such a product. A significant by-product of the processing industry is tallow or animal fat, which could be used for liquid biofuel production — for example, biodiesel. This House should send a strong message to the Government to consider these options rather than trying to encourage the refeeding of meat and bonemeal to pigs and poultry, which might solve a short-term difficulty but which would have many long-term consequences.
Factory offal is a consequence of beef processing and if at the end of the day the industry must contribute to its disposal, then so be it. With imaginative thinking we can help to minimise any hardships involved. To those who will ask what will happen to the rendering industry, it is my opinion that these companies will still need to be part of the solution. Instead of making meat and bonemeal, they could use their facilities to process offal to a stage where it can be used for electricity generation or biofuel production.
We can capitalise on the quality of Irish beef if we can convince consumers of its freedom from disease. We need innovative thinking in this regard and, above all, to give the facts. The existence of a credible research infrastructure has never been more needed. We must ensure that this valuable national asset is strengthened and that necessary resources are provided. I congratulate the Minister on the way he has handled the beef crisis. We are lucky to have such an excellent Minister in charge of agriculture. Long may he continue in office.
I would like to wish the Minister well at the start of his Presidency of the Council of Agriculture Ministers. I thank him for outlining the present state of the agriculture industry. I also express good wishes to the Minister of State, Deputy Deenihan, and I am glad he will have responsibility for a very important conference in Cork. It is good that the agriculture Presidency will involve other parts of the country in discussions at Europe level because it is important that other areas benefit from it.
This is an important time for Ireland and the Government has done substantial work in setting the agenda for the Presidency and in outlining Irish priorities. While wishing the Minister and the Minister of State well, I reserve the right to be critical of areas which need attention. While there is consensus as regards the importance to the economy of the agriculture industry and the need to strengthen it, there will always be areas of disagreement between us. The Minister is well used to debate with the Opposition on many important matters in the agriculture arena.
I would like to express our gratitude to the farming organisations which have kept us informed, particularly during the recent crisis in the beef industry, and for the sound guidance and leadership which they are giving. Most constituencies have had the benefit of meetings with the farming organisations who were willing to brief us on the issues and how they believed matters could be resolved. It was enlightening and educational to have the opportunity to discuss with them the intricate details of the agriculture industry.
I am critical of the Minister's speech this evening from the point of view of the serious problems in the dairy industry. My main objective in participating in this discussion is to highlight the severe problems in the south-west and particularly in County Clare, an important dairying county where many farmers depend on a viable dairy industry to enable them to survive in a severely handicapped region. I am disappointed that the Minister, in outlining the priorities for the Presidency — there were a number of important items on the list — did not include milk, milk quotas and the future policy for the dairy industry. I hope it might be possible for the Minister, in the course of the Presidency, to bring this issue to the top of the agenda.
It is well known that many member states regularly flout the EU regime governing the production of milk and dairy products. Prior to the Italian Presidency Italy snapped its fingers at that regime and apparently behaved in a most irresponsible manner. In the west and south-west of Ireland the future stability of farmers' incomes from dairy production is vital to the future survival of the small farming community. The Minister spoke of the importance of direct payments and said that 36 per cent of aggregate income for farmers comes in direct payments from the EU. That is most important. However, if a time should come when, as a result of policies being pursued in Brussels or elsewhere, the income of the small dairy producer in the western counties is undermined to the extent where it becomes unviable for them to be involved in dairying, it will sound the death knell of the small farm family and of the small communities which are trying to survive in limited circumstances in those areas.
The seriousness of the situation of dairy farmers who produce milk for Golden Vale must be underlined. In County Clare 500 farmers are faced with a fine of more than £1 million because of difficulties in the co-operative and with milk quotas. When the Minister of State was dealing with An Bord Bia legislation last week I availed of the opportunity to bring this problem to his attention. I am disappointed that the Minister did not refer to the problems in that area tonight.
In the most severely handicapped areas of the west coast of Clare, 500 of the smallest milk producers in Ireland are being penalised to the tune of £1 million at a time when they are finding it almost impossible to survive on their small holdings. It is one thing to say that the problem is for the management of the co-operative, but the point is that the Government and the Minister for Agriculture, Food and Forestry have a responsibility to come to the rescue of these farmers either through direct Government action or through action at EU level.
The efforts that have been made to date have left the small farmers in my constituency very disillusioned with the Minister, the Government and their co-operative and in a situation where they are almost faced with bankruptcy. Not only are severe fines being imposed on farmers for producing milk above their quota but many of them have already paid substantial sums to lease the quotas. Now they are being hit on the double, first with repayments on the leasing arrangements they negotiated and, second, with a huge fine which will cost up to £13,000 in some cases, even though their milk quotas might be as little as 5,000 to 7,000 gallons. The Minister may respond that farmers with quotas of that size should not be involved in the dairy business. However, small as that income is, it is important income for those farmers and their families. They need to be given an indication by the Minister of whether he can do anything for them and if there is anything the EU can do by reorganising milk quotas in a way that will take account of the special hardship being faced by these farmers at present and the difficulties they will face during the winter months if their incomes are severely restricted as a result of the fines for over-production.
It is difficult to explain to a small farmer who works very hard with his wife and family to increase production and make extra money why, after all their effort and work, they are penalised. The Minister might say I have given a simplistic assessment of the situation but the reality is that people are faced with a real dilemma. They must decide whether to continue in dairying and, if they cannot, there is no prospect or future for them on their farms. The decline in the rural population, in the number of farm families and in the number involved in agriculture in the past will be nothing compared to the haemorrhage that will occur in the west and particularly in County Clare unless something radical is done.
There is a feeling in agriculture today — it has been expressed at the meetings I have attended throughout the country — that small farming family communities are being sacrificed on the altar of large farmers who are being catered for by the co-operatives. The small farmers are being sacrificed to secure substantially increased quotas and volumes of income for huge dairy producers. It is difficult to convince the small farmers otherwise. I will not go into detail about what has happened in milk production in the last couple of years but it is a matter of serious concern and needs to be explained. If small farmers cannot be protected, there is little point is us making speeches and holding debates on these issues.
I appeal to the Minister of State to take an interest in this issue. He is from north Kerry and is aware of how critical the situation is for many small farmers. He can resolve some of them if he sits down with the co-operatives, the farm leaders and the European Union and finds a mechanism by which support or assistance can be given to people who are being put to the pin of their collar to survive. Following this evening's debate I want action to deal with the situation in County Clare where 500 small farmers in a most severely handicapped area are being penalised to the tune of over £1 million because they work and produce milk. It is unrealistic and unfair that they should be penalised and it is impossible to explain why to the people involved.
Senator O'Brien, Senator McGowan and Senator Kiely have already highlighted the problems in our beef industry and I do not want to go over them again. However, there is a genuine fear, especially in western areas — there are many western Senators here — of what will happen to the store cattle business at the fall of this year. The Department and the Minister have a responsibility to maintain confidence in the store cattle business. The Minister made a speech recently which in no way would restore confidence; it would undermine it. I am not sure why the Minister did this — it was widely reported on television and in the media — where he predicted dire consequences for our beef industry. That may well be the case, but it is not the responsibility of the Minister for Agriculture, Food and Forestry to make predictions about dire consequences but to take action to ensure it does not take place. An indication must be given, even with the present problems in our beef industry, that some mechanism will be put in place to maintain the income of the small store cattle producers who are and always have been the backbone of our beef industry.
If calves are to be sold at £1 a head like 1974 and our whole beef and dairy industries are threatened at the fall of this year, we would be in a dire situation. However, there is one major difference between the situation in 1974 and that in 1996. We now have a booming economy. The finances of this country were never in a healthier state. If there is any reason to have a healthy and thriving national economy, surely it is to take action to protect those who are vulnerable in that situation. We speak almost every week in this House about the plight of the unemployed and the handicapped, many of whom are picketing our gate today. We are speaking against the background of an economy which was never so wealthy. Never in the history of the State have the finances of this country been in such a sound position.
Many sacrifices were made to bring about that situation. When things were bad in 1974, efforts were made to secure farmers' incomes. When things are bad in 1996 and if there was to be any threat to the store cattle business, we would expect this Government to take action to ensure that the incomes of the small and vulnerable western store cattle producers and that of their families would be protected. We are not encouraged by what we have seen to date with the dairy and milk industries. It is hard to see how assistance will be provided for the store cattle producers, many of whom are the same people I speak about in relation to dairy products. A more vigorous effort must be made by the Government and its agencies to get to grips with the marketing of beef and beef products.
Reference was made earlier to beef barons and irregularities in the industry over the last few years. The whole rationale behind the drive to develop our beef industry, which went on for a number of years under successive Governments, was to try to establish a way in which jobs could be provided. Mention was made about the provision of 20,000 jobs by the proper reorganisation and development of our beef business. If that can be done, it would certainly create opportunities for those people leaving agriculture. This is the way in which we should be heading.
Last year the British beef industry exported over £1 billion worth of beef to European markets. Who will fill these markets at present and in the next few months? The British beef market is in dire straits and its industry is in chaos. Even allowing for a fall off of 50 per cent in beef consumption in these markets, this still leaves £500,000 worth of business. We could organise our beef industry to capitalise on those markets, but are we doing that? We have all had the experience of marketing boards which had no money to promote their products and we have heard the objections and complaints from the farming industry and its leaders on this matter. We are not satisfied on this side that action is being taken to ensure we protect not only our markets in Third World countries but that we vigorously promote the opening up of these markets. We have not seen this from the present Government since the beef crisis erupted.
We need to invest heavily in the industry. We now have the revenue to do this; we did not have it in 1974. The Government decided yesterday to invest £50 million to deal with crime. Why can it not invest a similar amount of money to boost the beef marketing industry to capture these markets that are not being filled by other producers? Why can the Minister for Agriculture, Food and Forestry and his junior colleague not lead a campaign to win back the third country markets which we seem to have lost? Why can we not make a more vigorous approach in identifying and marketing Irish quality beef and not have it tagged as coming from the United Kingdom or elsewhere?
Anything I have said here is in no way meant to be personally critical or to shower any derision on the Minister or the Minister for State. I am trying to be constructive and to indicate clearly the urgency of dealing with specific areas of importance that need to be tackled. I ask the Minister to do something for the small dairy producers in my constituency who are faced with bankruptcy and to ensure that action is taken now, and not in September or October, to protect the store cattle business so their prices will not collapse come the autumn.
I wish to share my time with Senator Neville.
An Leas-Chathaoirleach
Is that agreed? Agreed.
Last week I attended a meeting given by Teagasc leaders. I do not have to quote from what was stated because it remained indelibly in my mind and I have no reason to doubt them. They said that to be viable in the near future and to stay in farming, a farmer will either need to have a 30,000 gallon quota or 100 herd of beef. The Minister should take that statement seriously. We should have a revolution. We are allowing farmers with a milk quota of under 30,000 gallons to be forced out of farming. This is happening because of the farming organisations, which pretend to look after the interests of small farmers. The co-operatives and the PLCs do not want to know about small farmers. Everything they do and plan is designed to push them out by stealth. In the 1970s Mansholt told everybody what he would do, but they are now withdrawing his plan by stealth.
What alternative system is there for people in agriculture if they are forced out of farming? Are there alternatives in tourism or in venison production? All over Ireland there is dissatisfaction with the manner in which this was promoted as being an alternative to farming and the way in which it is being handled. I recently received correspondence from the Kerry Deer Producers' Association. I was not satisfied with the reply I received on 18 March, which mentioned the work and finance put into the production of venison and slaughtering of deer. The reply contained no answer to my question about where the deer were being slaughtered in the Cork/Kerry area. I have yet to receive an answer. My opinion is that they are not being slaughtered there, because the system is not working as An Bord Bia and the Department believe it to be.
When speaking in my local area, I said that milk quota transfers have been unfair and biased against small farmers and that strict control by the Revenue Commissioners was now essential. I said this because the PLCs and co-ops could redistribute milk quotas and excess milk quotas with no supervision as to whether they went to people who deserved them most or to those with the greatest influence. I demanded a radical overhaul of milk quota regime controls to protect the interest of small and struggling farmers, which is what this evening's debate is about. I ask the Minister to establish a system whereby quota transfers are stamped by the Revenue Commissioners before they are submitted to the Department of Agriculture, Food and Forestry, so that the authenticity of the arrangement will be known. I have seen red faces in my area — I have not verbally confronted those involved but they know I have spoken about this issue. I know exactly what is going on but there is nothing I can do other than to appeal to the Minister to act.
Payments are alleged to have been made to major milk suppliers through fertiliser and feed accounts for excess milk production, which is in breach of EU regulations. The Minister may not be aware this is happening, but presumably reports have been made. The system favours the bigger milk producers and it is worrying, given the influence wielded by the major farming organisations and PLCs.
Those who have recently bemoaned the state of agriculture are paying and have been encouraging the payment of £5,000 per acre for land, when its agricultural value is in the region of £2,000. What is this but people with excess capital investing in land and increasing their holdings at the expense of those who wish to create a viable holding?
I have received correspondence from the Castleblath area of Ballyhooley. I do not wish to be parochial but it is disconcerting that this area has again been excluded from the disadvantaged areas scheme. A number of sheep farmers in that district, between Ballyhooley and Rathcormac, should qualify for this scheme. I ask the Minister to inquire about this matter. We must take this area seriously and defend our small farmers.
I welcome the Minister of State to the House and I wish him and the Minister, Deputy Yates, every success during our EU Presidency. They have the capability and energy to make achievements for agriculture in Ireland and across Europe.
As Senator Sherlock and others have said, milk quotas are a live issue in the south-west. There is much dissatisfaction among smaller milk producers about the distribution of quotas and oversupply of milk. Many of them were badly advised last year by some co-ops — I will not say which. It was hinted, or even overtly stated, that there would be no problem if people oversupplied the co-ops in the expectation that everything would be all right in the end. Now the producers have bills for several thousand pounds and I know one person who did not receive a cheque last May. I am sure the Minister has experienced this in his area also. There is great concern.
Clearly, this year will be extremely difficult also as milk deliveries are again running far ahead of quota. I understand that by the end of May they were over 6 per cent above the quota and some 2 per cent in excess of deliveries during the same period last year. The demand for quotas from the temporary leasing pool has been far greater than anyone could have expected. In the first stage demand exceeded supply by over 300 per cent. Demand from smaller scale producers has mirrored this — the number participating has increased from 2,500 producers in 1994 to 8,500 in this year's scheme. It is this huge increase in demand rather than changes to the scheme which was the major factor in the reduction of the quantities allocated to individual small scale producers in the first stage.
I welcome the new procedures for temporary leasing. These will apply in the second and third stages, so that total priority will be given to producers with an available quota of under 35,000 gallons, with a view to focusing that quota on those whose needs are greatest. I am also glad that total priority will be given within this category to those producers allocated quotas under the first priority category of the 1994-5 and 1995-6 schemes, that is, producers whose available quota in those years was less than 30,000 gallons. That tackles the problem highlighted by Senator Sherlock, which is that people with quotas under that level do not have a viable income. Some people are trying to manage on quotas of 15,000 to 20,000 gallons, but they do not make a decent living. As the position develops they will have less opportunity and a worse standard of living, so it is important that the priority remains at that level.
Something must be done for those people to ensure they remain in farming. We are always discussing rural development; and the recent announcement of loans for inner city dwellers to transfer to the country is welcome, because we need them. Most importantly, however, we need farmers to stay in rural Ireland. There is a massive movement out of agriculture and we must do as much as we can to stop it. Inevitably it will continue, but we must reduce the rate of movement because if there are no farmers in a rural area the community will have lost its backbone.
The Minister's decision on quotas should ease the position of those small scale producers whose needs are greatest. The final allocation will depend on the amount of quota available and the current demand is such that it will be extremely difficult to satisfy the requirements of all those small scale producers who will apply for additional quotas. I welcome the Minister's reaffirmation of his intention to ensure that the operation of the milk quota system will continue to be biased in favour of smaller producers. He has already made a commitment to arrange that the outcome of the second stage of the temporary leasing scheme will be carefully analysed after its completion in August to establish whether further refinements are necessary in the operation of its third stage. In addition, the Minister recently announced the introduction of a further scheme subsidising the purchase of quota by small scale producers under this year's restructuring scheme. Every avenue open to the Minister must be explored to ensure the needs of small scale producers are addressed.