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Seanad Éireann debate -
Thursday, 19 Feb 1998

Vol. 154 No. 7

Beef Industry: Statements.

I welcome the Minister to the House.

I am pleased to be back in the House and to open this important debate. It gives me an opportunity to inform the House about some of the initiatives I have taken recently which have resulted in the strengthening of beef prices. I also wish to inform the House of my continuing efforts to restore the position of Irish beef in the UK and other export markets.

Before I deal with the substance of the debate, I would like to outline very briefly the back-ground to the current situation in the beef sector. Unfortunately the beef sector is continuing to suffer from the negative impact of the 1996 BSE scares. This impact is evident both in the level in beef consumption in the EU and in the renationalisation of the beef market in the European Union. As far as the level of beef consumption is concerned the position is that, in spite of some recovery, consumption remains below 1995 levels, particularly in the bigger member states. Furthermore, the BSE scares have led to the renationalisation of the European beef market, with consumers displaying a strong preference for locally produced beef. I will deal with the implications of this for the Irish beef industry later.

Apart from the BSE scares, the WTO Agreement is the other main factor in developments in the beef sector. Under this agreement the European Union has undertaken to reduce the volume of its subsidised beef exports by 21 per cent over the period of the agreement, which runs from July 1995 to July 2000. When this agreement was negotiated in December 1993 there was a reasonable prospect that, because of the sharp reduction in beef production in the European Union at that time, it would not act as a major constraint on the ability of the Union to export to third countries. However, the BSE scares and the ensuing substantial fall in beef consumption in the European Union have brought about a situation where the WTO Agreement is now seen as a major constraint on the European beef industry. In effect the decline in consumption has increased the surplus in the European Union and this surplus cannot be accommodated within the WTO ceiling. In the past two years this surplus has been sold into intervention stores with the result that we now have some 600,000 tonnes of intervention beef in stores throughout Europe. Unfortunately sales of beef out of intervention for export to third countries come within the definition of subsidised exports and are therefore subject to the same WTO constraints as sales of commercial beef.

The European Commission announced last November its intention to embark on an export sales programme for intervention beef. This concerned me as there are difficulties in the EU, UK and third country markets. The last thing we wanted was the release of beef from intervention onto the market. In view of my concern about the likely impact of such a sales programme on commercial exports of beef to third countries, I intervened immediately with Commissioner Fischler to secure a postponement of these sales until the market situation improved and these sales could be more readily accommodated under the WTO ceiling on subsidised exports.

I was very pleased that Commissioner Fischler shared my concern that we should attempt to minimise disruption to commercial sales and that he agreed to confine the sale to a trial sale in order to test the market response. The first such sale has now taken place and only 240 tonnes of beef were sold. I am satisfied that my intervention with Commissioner Fischler was effective in securing a postponement of the sale, in confining the sale to a trial sale and in ensuring that only minimal quantities of beef were eventually sold. Clearly the restricted nature of the sale ensured minimal damage to the beef market. The EU can be frustrating and negative in a difficult market situation but we avoided them making a bad situation worse in this case. Even if a small proportion of the 600,000 tonnes of beef had been released onto the commercial market it would have caused great diffficulty to our industry.

Apart from accepting substantial quantities of beef into intervention, the European Union has also attempted to cope with the market imbalance created by the reduced consumption by reducing beef production. This was the main objective of the mini-reform of the beef regime which was adopted by the Council of Ministers in October 1996. In view of the fact that this reform will have a significant effect on beef production in the European Union over the next two years, it is worthwhile recalling the main elements of the mini-reform package: member states were obliged to introduce either an early marketing premium for veal calves or to implement the calf slaughtering premium and, further, the Union sought to curtail the growth in beef production through the introduction of a single premium for bulls, by measures to encourage more extensive production systems and by a temporary reduction in the regional quotas for the special beef premium.

I would like to look for a moment at the impact of these measures. Clearly the calf slaughtering measures were the most significant elements of the reform in so far as rebalancing the beef market is concerned. Together these two measures were designed to divert some two million calves away from beef production in 1997 and 1998. Recent indications suggest that these two measures will achieve this objective. Approximately 1.5 million calves have been slaughtered under the calf slaughtering scheme to date. The major contributors to this scheme are the United Kingdom and France, who have slaughtered some 1.1 million and 370,000 calves respectively. Portugal has slaughtered approximately 70,000 calves under the scheme while only 19,000 have been slaughtered in Ireland.

The position under the early marketing scheme is somewhat more complicated because of the nature of the scheme. While approximately 1.5 million calves have been submitted for this premium, in practice the number of additional calves used for veal production is estimated to be far lower at approximately 300,000 per annum. Given the nature of beef production in continental Europe, it was always expected that the effect of these two measures on beef production would not be seen for 15 to 18 months after their introduction. There is now growing evidence that beef production both in the United Kingdom and in Continental Europe is beginning to decline as a direct result of these measures. This is reflected in the absence of sales into intervention in continental member states for some time and in the relatively high cattle prices which obtain in these member states at present. Apart from the calf slaughtering measures, the other main contributory factor to reduced beef production in Europe is the over 30 months scheme in the United Kingdom. Essentially this scheme provides for the slaughter and removal from the food chain of all cattle over 30 months. The effect of this measure is to reduce beef production in the United Kingdom by approximately 200,000 tonnes per annum. The net result of the various measures adopted since the BSE crisis has been a reduction of 500,000 tonnes of beef production per annum. We are grateful these schemes have been effective in controlling supply.

In spite of these measures the European Union has had considerable difficulty in living within the constraints imposed by the WTO ceiling on subsidised exports. Indeed, the majority of the cuts in export refunds which have taken place over the past two years have been designed to reduce demand for export licences and, thereby, enable the EU to remain within the WTO ceiling. Not surprisingly, in view of the heavy dependence of the Irish beef industry on third country markets, the Commission approach to this problem has presented particular difficulties for the Irish beef industry. Apart from the uncertainty which this approach created for our beef exporters, it also led to a situation where the level of export refund made it difficult for our processors to return reasonable prices to beef producers. I made strong representations to Commissioner Fischler about this matter during the course of 1997 and I am pleased that the Commission has responded by the adoption of a more targeted approach to reductions in export refunds. This more targeted approach is being implemented through the extension of the special export refund system to male forequarter beef and it has enabled the Commission for the first time to exclude beef from male cattle entirely from reductions in export refunds. While I regret that the Commission has seen it necessary to reduce export refunds on female beef on two occasions in the past month, the reality is that in the absence of the new targeted approach there would also have been some reduction in export refunds on male beef. In view of the fact that the vast majority of our beef exports under the export refund system are male animals, the decision to target refunds on beef from male cattle is obviously extremely beneficial to the Irish beef sector.

The targeting of refunds on beef from male cattle has brought about a major transformation in the situation which faced Irish beef producers and beef processors at the beginning of the year. Over the Christmas period the Commission had suspended prefixing of export refunds in response to what they perceived to be an excessive level of applications for export licences. The suspension of prefixation is normally a precursor to a reduction in export refunds. I am pleased that in response to my representations the Commission refrained from cutting export refunds. Further-more, in the context of implementing the new more targeted approach in mid-January, the Commission increased the refunds on male boneless forequarter beef by 21 per cent. In addition the Commission introduced a new degree of flexibility into the export refund system in order to allow processors to sell the fillet, which is the most expensive cut, on the higher priced EU markets. These adjustments to the export refund system are of benefit to the Irish beef industry and I am satisfied it will exploit them to the full.

Parallel with these adjustments, the depreciation of the Irish punt against the major European currencies resulted in a 3.5 per cent devaluation of the Irish green pound. Apart from the obvious impact of the devaluation in terms of higher support prices, the depreciation of the Irish punt has improved the competitive position of Irish beef processors on the European market. While I do not wish to understate the difficulties facing Irish beef exporters on the European market because of the development of a chauvinistic attitude to imported beef, the fact remains, nevertheless, that about half of our beef exports continue to go to European beef markets and the depreciation of the Irish punt will be of considerable assistance to Irish exporters in maintaining their presence on these markets.

I am also pleased with the Commission's response to my request for reasonable access for Irish beef to intervention, particularly in mid-January when it was most needed. The volume of product accepted into intervention by the Commission has been relatively high for this time of year and this has helped to stabilise the market. As I said earlier, selling beef into intervention is not a long-term solution to the problems on the beef market because it merely postpones dealing with the problem. However, I accept that intervention purchasing is necessary in the short-term provided it is used sparingly. I am satisfied that this view is shared by Irish beef producers and processors.

The developments in export refunds and intervention which I have just described have been extremely favourable to the Irish beef industry. I am pleased that the beef processors have responded to these developments by paying higher prices for cattle. Since the beginning of the year steer prices have increased by 6 per cent, while heifer and cow prices have increased by 4 per cent and 5 per cent respectively. This represents a very considerable improvement in the situation for cattle producers and has helped to restore confidence in the industry both at producer and processor level. Senators will recall that at the start of the year prices were being quoted at 80p per pound and anybody who had the opportunity of reading yesterday's Farming Independent will see quotations of 87p per pound. The various measures which I have just outlined were painstakingly negotiated with the Commission. In addition, I called in representatives of the factories and said it seemed a coincidence that the price was dropped to 80p, which coincided with the deseasonalisation slaughter premium. I informed them it would not be tolerated and this resulted in the price increasing within a few days. I am glad it remains around 87p per pound.

A major achievement.

Shortly before Christmas the Minister promised that prices would be set——

The Minister without interruption.

Confidence in the beef industry is also reflected in the December 1997 cattle census which showed 3.5 per cent increase in overall cattle numbers. There are now 1.137 million beef cows in the country — this is the highest recorded figure since the census series began in 1854. Clearly, the industry is well placed to exploit any favourable developments in European or world trade.

I want to make it clear that I do not wish to minimise the income difficulties which beef producers have experienced in the recent past. I fully accept that 1997 was a difficult year for beef producers. Cattle prices were generally lower than in 1996 with steer and heifer prices some 5 to 7 per cent down on 1996 levels. The revaluation of the Irish green pound and the continuing effects of the 1996 BSE scare on the beef market were chiefly responsible for this situation. Losses due to the green pound revaluations were, however, partially offset by compensation from the EU and the national exchequer amounting to £45 million. In addition, the BSE compensation package of £30 million, agreed by the Council at the end of 1996, was also paid out in 1997. These payments helped to relieve what would have otherwise been an extremely difficult year for Irish beef producers. Total direct payments to cattle producers, including both premium and headage payments, amounted to £546 million in 1997. The contribution of direct payments to incomes of beef producers has become increasingly significant throughout the 1990's. Their importance to the agricultural economy cannot be overstated and this will be borne in mind in any negotiations relating to CAP reform and its effects on Irish farmers and Irish agriculture.

I regard the forthcoming regulations on CAP reform as one of the most important challenges facing all those concerned with Irish agriculture. As the House is aware, the European Commission published its Agenda 2000 outline proposals in July 1997. The main principle underlying the outline proposals is a continuation and deepening of the MacSharry reforms. We will have an opportunity this year, perhaps on 19 March, when the definitive proposals will be presented to us, to consider this and negotiations will continue throughout the year. I have already established a number of groups representing the agriculture industry to give the best possible advice to me and the Department to enable us make the most of those negotiations.

As Senators know, the Commission's strategy to deal with the beef market is to reduce beef prices by 30 per cent in order to increase internal beef consumption. First, they feel if the price is lowered then consumption will increase. Second, this measure will bring prices closer to world market levels and thereby permit exports to third country markets. The alternative to this strategy would be to reduce beef production; but, unlike other sectors such as milk or cereals, it is difficult to identify measures which can be used to reduce beef production in an effective and equitable manner. The most obvious measure is the calf slaughtering premium, but this is unacceptable to the vast majority of member states on animal welfare grounds. Other possibilities include substantial cuts in the premium quotas but such an approach could not be guaranteed to actually reduce beef production. Neither would it be of interest to Irish beef producers or the Irish economy generally.

In view of this, I believe that the general strategy proposed by the Commission is along the right lines. But that is only the general strategy and I have made it clear that there will have to be full compensation, and Ireland as the major beef exporter in Europe will have to be provided with the opportunity of exporting their product at a price which gives beef producers a reasonable profit margin. Clearly the stakes are high for Ireland in the forthcoming negotiations. I will be working for an outcome which will involve no loss or disadvantage for our agriculture and food sectors but will provide for those sectors an environment within which they can expand incomes and employment.

However favourable the outcome of the negotiations may be for Ireland, the future prosperity of each individual farmer and food processing firm will crucially depend on the productivity and competitiveness of each enterprise. Each farmer or processor will have to ensure they have the most competitive enterprise possible and they maximise their margin in taking every advantage of the situation in Ireland. The Department of Agriculture and Food will ensure that the best possible and optimal degree of support arrangements are provided for both the producers and processors and it is then up to them to maximise their productivity and competitiveness. They will be assisted by Teagasc, Forbairt, An Bord Bia as well as the Department in improving their efficiency and in maximising their marketing advantages.

I referred earlier to the implications for the Irish beef industry of the decline in beef consumption in the EU and the renationalisation of the EU market. The first effect of these developments is to force the Irish beef industry to rely increasingly on third country markets. As we all know, these markets are extremely vulnerable to dollar movements and the decisions by the European Commission on levels of export refunds.

They are also vulnerable, as we have seen over the past number of years, to restrictions on veterinary or animal health grounds. I am extremely concerned about these developments because I believe that the focus of our industry should be on the European market. In particular I am convinced that the future wellbeing of our industry depends on its ability to supply substantial quantities of top quality beef to the consumer markets of the European Union.

Recent developments in Britain are a particular cause of concern. Britain is Ireland's single largest market for beef, and exports in 1997 were estimated at around 95,000 tonnes or £200 million. As Senators will be aware, the focus of the British farmers protest campaign in recent weeks has moved from the ports to retail and catering outlets. The industry lobbying campaign has resulted in most of the major retail multiples in the UK deciding not to source beef originating outside Britain for the duration of a British beef promotion campaign recently launched by the Meat and Livestock Commission. This development is very serious and is treated with great concern by me and by the Government as approximately 40 per cent of Irish beef sales in Britain are through supermarkets. Market share loss of this order would have serious repercussions for Irish agriculture and the economy in general. As an immediate response I instructed Bord Bia to intensify direct contact with British retailers and last week I met representatives of the largest of the UK multiples to explore ways of restoring normal trading arrangements. I have also made arrangements to meet the major retailers in the UK next week. As Senators will know, the Minister of State at the Department of Agriculture, Deputy O'Keeffe, was in the UK during the week endeavouring to restore an orderly market. We are a traditional and orderly supplier to the UK market and we want to defend our market share. The formulation of the strategy to restore our share of the UK market is being discussed. I have had two meetings with Bord Bia, meat processors and farmer producers in order to have this strategy expedited. At a political level I am using all appropriate contacts, both in the UK and the EU, to express my concern at the campaign under way in Britain which has resulted in the decision by some of the multiples to stock only British beef and to exclude Irish beef. While I can understand and sympathise with the plight of farmers in the UK, the protest campaign employed is against the spirit of free trade embodied in the Treaty of Rome. Ireland has a long tradition of supplying the market in Britain in an orderly and non-opportunistic way and I feel we are entitled to a restoration of that trade and to a normalisation of the situation. This will require the deployment of significant resources to maintain a promotional campaign spread over a number of years. I believe we have the goodwill of retailers in Britain who recognise the quality of the product we offer and the commitment of our beef industry to supplying the UK market. With a renewed and intensified promotional campaign by Bord Bia we can defend and ultimately expand our market share in the UK.

The strategy for the UK market will be but one of the elements in a new marketing initiative for beef which I have requested from Bord Bia. It will have as its main objective the re-establishment of Irish beef in the markets of the European Union. A combination of market renationalisation — a consequence of the BSE scare — and the progressive liberalisation of world trade present a major marketing challenge to the Irish beef industry. I believe that failure to respond to this challenge could relegate the Irish beef industry to the position of a residual supplier to low return commodity markets. I have urged Bord Bia to present this new marketing initiative as quickly as possible.

There is, of course, a role for increased EU spending on generic promotion of beef within the Union and I, with a number of member states, have been making a strong case for this. It is in everyone's interest to have increased consumption of beef throughout Europe and the rest of the world. There is no basis whatsoever for the reduction in the consumption of red meat and particularly of beef. It would be in everyone's interest to increase consumption of beef to pre-1996 levels. In the current climate no effort should be spared in promoting the consumption of beef. We should not lose sight of the fact that, as a food item, beef has and will always have a huge amount going for it in terms of taste, adaptability, tradition and quality. One could not find a more naturally produced product than Irish beef. It is produced in idyllic conditions, on grass, in a nuclear free zone.

Markets for beef, world wide, have been affected by the BSE scare. Due to the very low incidence of BSE in Ireland, the precautionary measures we implemented and the effectiveness of our animal health controls, we have been in a position to provide the assurances required to enable trade to continue in most of our international markets. However, a number of important markets continue to impose BSE related restrictions. It is, and has been, a priority for the Government at all levels to have any remaining restrictions removed as quickly as possible. Considerable progress has been made in this regard, notably in the case of Russia.

Russia is the second most important market for Irish beef accounting for 70,000 tonnes in 1997. Last September, as a result of negotiations with a Russian delegation led by the Deputy Minister for Agriculture, we succeeded in achieving the first easing of restrictions imposed by the Russian authorities. This was a significant outcome not alone in reducing supply pressure but as a signal to other markets. It was also agreed to review the protocol governing the beef trade again. This review is scheduled to take place in Moscow in the second week of March. While, naturally, I am hopeful that the process of lifting the county restrictions commenced in September will continue at this review, much depends on developments on BSE in this country. Each month we hear an announcement of the number of cases of BSE. We look forward to a reduction in these numbers but because of the long incubation period for BSE it is impossible to know the extent of the decline which, thankfully, commenced at the end of last year. We hope it will continue.

Iran is another important market to which we have been precluded from exporting since March 1996. The recent restoration of normal diplomatic relations with Iran facilitated the resumption of discussions with the Iranian authorities to seek to have the ban lifted. A veterinary delegation from the Department of Agriculture travelled to Teheran two weeks ago for this purpose. Additional information was supplied to the Iranian veterinary authorities and they accepted an invitation to continue discussions in Ireland. I hope that we can convince the Iranians of the safety and quality of Irish beef so that trade can resume as quickly as possible. Iran was a substantial outlet for Irish beef until 1996.

We have been confronted with bans on the export of live cattle to Egypt and Libya. In the case of Egypt, I emphasise that the authorities are satisfied with the quality and safety of Irish beef and exports last year at 55,000 tonnes were almost double those of 1996. They do, however, have a problem with Irish live cattle. We are, of course, maintaining high level contact with the Egyptian authorities to ensure that the trade is maintained and developed to our mutual benefit. As part of this process, a delegation from my Department visited Cairo last week to discuss new Egyptian beef import regulations and to further discuss the possibility of reopening the trade in live cattle. We are pleased with the level of the beef trade with Egypt but we want to reopen the live cattle trade. As regards the latter, the Egyptian authorities were provided with up to date information and further assurances on the BSE situation in Ireland. The detailed proposals for a trial shipment, which I provided to the Egyptian Deputy Premier and Minister for Agriculture in November will be considered further by the Egyptian authorities in the light of this additional information. Contact is continuing with Libya through a number of channels with a view to having the live cattle trade restored to that country. There will be no complacency on the part of the Government until all BSE related trade restrictions on exports of cattle or beef from Ireland are removed.

The future development of the beef industry will be underpinned by the national beef assurance scheme. This scheme is an important strategic initiative aimed at guaranteeing the safety of Irish beef and beef products and restoring consumer confidence, both at home and abroad, particularly in the wake of recent food scares. The final building blocks of the scheme are now being put in place and it is intended to have it up and running later this year. This will be critically important because in every country and here at home consumers are, rightly, concerned. They are entitled to the strongest possible assurances of the quality and safety of Irish beef.

There are three main elements to the scheme: to develop protocols setting out common basic standards for the industry, to enforce these protocols through a process of registration and approval and to complement these measures by an effective animal identification and tracing system.

Dealing first with animal identification and tracing, a comprehensive system of animal identification already exists for Irish cattle. All cattle are tagged at birth and all movements must be accompanied by a cattle identity card. This card has recently been expanded to include details on owners and keepers and on animal movements. We also have a central database available which records many events in the life of the animal. During 1998, we will create a fully computerised system for the identification of all cattle and the monitoring of all cattle movements. This will allow us to validate the origin, identity and movements of animals as they are presented for slaughter or export.

The scale of this programme is enormous. It begins with identification of the calf at birth and continues to the final destination. In Ireland there are many movements of cattle, from dropped calves through weanlings and stores to the finished animal at the factory, supermarket or abattoir. It involves capturing details of millions of animal movements each year between herds, marts, meat factories, farmers and into the export market and using this information to verify the life history of animals entering the food chain. We are maximising the use of electronic means to collect this data by computer links established at livestock marts, meat factories and live export points. We will use a paper notification system where electronic transmission would be impractical.

We have already established communications links at most meat plants and in 50 per cent of marts. I hope this work will be completed by the end of this month. In March we will begin the task of installing computer equipment and training industry personnel in the operation of the system. In the coming months we will create the computer programs necessary to run the system.

Traceability is only a single tool in the national beef assurance scheme. It provides important information on the origin and movements of animals but does not give full guarantees as to their treatment or assurances as to their quality. For this, standards are required. Regardless of the markets we supply — be they in Russia, Egypt, the Gulf States, the EU or the UK — representatives of the industries, consumers, supermarkets and buyers in these countries visit Ireland to ensure we have a foolproof traceability system. This must be put in place. We export nine out of ten steers produced in the country and we must satisfy consumers and our customers. It is in our best interests to be able to stand over our boast of having the best quality beef in the world.

Under the national beef assurance scheme, we are developing protocols which set out in clear and succinct terms the baseline standards for all participants in the beef industry. These will apply to farmers, meat processors, marts and animal feed compounders. To give an example of the type of standards envisaged, farm standards will cover such matters as identification of cattle, notification of movements, animal health, veterinary care and medicines, non-use of illegal substances, care of animals, clean cattle policies, feeding practices, farm safety, pollution control and good hygienic and environmental standards. Draft texts of the standards are being discussed with industry partners at present and should be finalised by the end of March.

It is of no benefit to our industry when reports of various court cases involving the use of angel dust, growth promoters and the infection of herds appear in the newspapers. Such reports are immediately faxed to our competitors worldwide. One of the first things I am presented with when attending board meetings, visiting other countries or receiving foreign delegations are photocopies of Irish newspaper reports. The newspapers should be more responsible in reporting various matters. For example, each month the level of BSE in the country is highlighted by means of a major exposé and is accompanied by old television footage of an unfortunate cow infected with the disease. This unnecessary and unwarranted reporting of a virtually non-existent problem is extremely damaging to the image of Ireland as a quality beef producer.

There are in excess of seven million cattle in Ireland. The first outbreak of BSE occurred in 1989 and in the interim a total of only 257 cattle have been found to with the disease. That contrasts with the situation in the UK where 170,000 cattle have been infected. The scale of the problem in this country is minimal. Ireland has a total depopulation policy so there is no circumstance under which infected meat could possibly enter the human food chain.

These matters may cause difficulty for producers, farmers, etc , because of the cost of testing, depopulation, restriction of herds and the new standards set for farms. I accept that the new protocols and safety arrangements will cause problems in respect of obtaining passports, identity cards and permission to move cattle from one herd to another. However, these measures are necessary and, after a relatively short period, they will become routine.

Members who have been involved in politics for as long as me will recall problems in the milk industry in respect of relatively poor quality product. Creameries sometimes refused to accept milk from certain farmers and, on seeing them going home, their neighbours returned to their farms believing their product would not be accepted. However, using a lump of bread or a shovel of lime these farmers would reduce the acidity of the milk and return to the creamery with it the following day. It was then manufactured into butter and the sour milk was sent back to the farms to feed calves. The next day a farmer might have to do some threshing or harvest a field of flax and he might drink some of the milk and not feel any the worse for it.

Things changed and we began to manufacture cheese, yoghurt and dairy ingredients which led to a requirement for top quality produce. The introduction of bulk tanks meant that farmers no longer had to drive their tractors to the creameries. Roads had to be improved and potholes filled to facilitate the passage of bulk tankers. As a result, Ireland now has a sophisticated dairy industry. We have the third largest co-op in Europe and the largest dairy ingredients company in the world. Until recently, North Kerry Creameries was an old, run down dairy disposal company and no one wanted to become involved with it. However, it is now the largest dairy ingredients manufacturing concern in the world.

The beef industry should take a leaf out of the dairy industry's book in terms of quality and providing the sophisticated product consumers desire. It must gain access to high return markets and obtain loyalty from consumers and customers. In the past, Irish beef was not sold as a distinctly Irish product. Following the BSE crisis in 1996, there was no customer loyalty to the industry and we lost out as a result of lower prices. At that time we were trying to sell Irish beef to any outlet. Problems arose with the Russian and Egyptian markets and we had to try to regain access to the Iranian and Libyan markets. These are relatively low return markets and they are heavily dependent on export refunds. Markets in the UK and the EU offer the possibility of higher return.

Everyone is aware that the price of Irish beef may range from 80p to 87p per lb, but in the UK it is 95p to 97p per lb. In France, Germany and other EU member states, the price is as high as 115p to 117p per lb. We must encourage An Bord Bia and producers to make greater efforts to regain shelf space in these high return markets. We must also retain access to other markets throughout the world.

The new standards will create a number of difficulties for producers in the near future. However, there is no alternative because they are a prerequisite. During the BSE crisis, the dairy industry suffered because the media suggested that there may be a link between milk and BSE or CJD. Despite that fact, Kerrygold managed to maintain its position in various markets at a premium. The Germans consume more Irish butter than Irish people and they pay a premium of 30 per cent over all other butters because Kerrygold holds the premium quality brand.

Irish Cream Liqueur is a naturally produced Irish product. It is a world brand leader as it is a quality product. It has been promoted and there is tremendous loyalty to it from customers worldwide. We can do the same in many other areas, especially the beef industry.

While I do not wish to underestimate the difficulties facing beef producers, the various initiatives I have outlined have contributed significantly to the recent strengthening of cattle prices. The House can be assured that the Government and I are fully aware of the importance of the beef industry in terms of output, employment and exports and we will act vigorously to ensure it continues to make a valuable contribution to the economy. I look forward to hearing Members' contributions.

I welcome the Minister to the House and hope the debate is as constructive as others on agriculture have been during this Seanad. I know there are time constraints on the Minister but I hope he waits for as much of the debate as possible.

Agriculture is the backbone of the economy and despite dwindling farmer numbers it will continue to be into the next millennium. There are approximately 140,000 people dependent on the land for a living and thousands more work in related industries. Overall farm incomes are under severe pressure, especially in the livestock sector following the UK BSE crisis in 1996. At the same time the economy is enjoying a period of unprecedented economic growth, but farm families are less confident about their futures than other sectors of the economy. Farmers, indeed, are frustrated at being excluded from our growing prosperity as a nation.

Today, as much as in the dark of the early 1960s and the GATT negotiations of the early 1990s, farmers seek leadership from the Government. I am sorry the Government is not giving the leadership agriculture so desperately needs. There are many sectors in agriculture, and all have been affected by different price increases and reductions over the past number of years.

Everybody will agree the dry stock sector has been worst hit by price reductions. However, having heard the Minister's statement, is he living in the real world when he says beef prices have increased? He referred to yesterday's Farming Independent which stated the price of beef was 97p per lb. I refer to a chart published in The Irish Times on 6 January which showed beef prices over the past 15 years. It clearly demonstrates prices in January 1998 were the lowest over that period at 85-87p per lb. The highest point on the graph was 1988-9 when the price of beef was 111p per lb. How anybody could compliment or congratulate a Government on beef prices being so high is beyond me.

The real failure is competition in the marketplace and the Government has been an unmitigated disaster in regard to opening up the beef trade, particularly the Egyptian market. A commitment was given early this year to open it up. Prior to Christmas, there was an agriculture debate in the House and we were told two beef shipments would go to Egypt on a trial basis; that never happened. As a result of the failure to open it up, cattle prices at the end of 1997 were so bad that farmers were forced into selling their stock. They lost not hundreds but thousands of pounds, because cattle prices should have been higher.

The need for competition is of the utmost importance. I acknowledge, as the Minister stated, that meat plants got together prior to Christmas to fix prices. They increased as a result but not to the level required. Ireland has the lowest beef price in Europe. I also acknowledge standards need to be improved, but our position on the graph is unforgivable. It must be tackled through marketing by An Bord Bia and applying more political pressure to open up various markets. I refer to the loss in exports of 100,000 cattle to Egypt last year.

What is the Minister doing with regard to a special package for beef producers? This time last year £75 million was negotiated for livestock producers. What is happening this year to cushion the blow for so many people? The Minister referred to traceability and computerisation. Last May, the Minister for Agriculture, Food and Forestry, Deputy Yates, announced that a traceability system and computerisation were being put in place. Where has it advanced to? We were told it would be put in place this year. It must happen and money must be in place by the Department for them.

What is happening in the British and other European markets? For instance, in Germany our slice of the market has fallen from 45,000 tonnes of beef to 6,000. Beef exports to France have fallen from 50,000 tonnes to approximately 5,000. What is the Government doing in terms of these markets? However, the most serious concern is in England. I compliment the delegation, led by the Minister of State at the Department of Agriculture and Food, Deputy Ned O'Keeffe, which consisted of members of the Irish Farmers' Association and the Chairman of the Joint Committee on Agriculture, Food and Marine, Deputy Ellis, which went there during the week. I read reports in the newspapers of what they found, that only one supermarket in England is selling Irish beef. This is disgraceful.

The Minister needs to take that matter in hand and say that the British Meat and Livestock Commission, which is being subsidised by the EU, is actually promoting English beef. Is the EU being made aware of this? Has the Government made a formal complaint about what is happening in England because Ireland, which is the biggest exporter of beef in the EU, is so dependent on it? Has the Taoiseach intervened? This situation flies in the face of every EU rule in existence because what we need is an open market.

The Minister stated earlier that we need to tidy up our act in the beef industry. I would agree, but there is no point in tidying it up if we are not allowed access to a market. We have built up the British market steadily over the years. If this situation continues, not only will it have an effect on Irish farmers but it will also have huge consequences for the workers in the beef industry. If nothing else comes from this debate, I call on the Government to take this disgraceful situation in hand because this nation and the beef industry cannot afford to allow it to continue. I urge the Minister and the Government to do something about this matter.

I want to address many other aspects of the agriculture industry, particularly the payment of premia. While a chapter of rights was put in place by negotiations between the Government and the IFA, there are still considerable delays in payment. Every week Members of the Oireachtas are met at clinics by people who have problems with their premia payments. Since these payments are so much part of people's income, we need to put in place a system of prompt payments, such as those provided for any other section of the community, so that people will be given what is owed to them. I want to make a special plea to the Minister that the Department will do better in this area than it did in the past.

I also want to touch on an other area in which this Government has completely fallen down, that is, young farmers' installation aid. Each IDA Ireland supported job costs about £12,000 to create. Young farmers' installation aid was only costing £5,600. Is there anything an industry needs as much as young people? To get young people to stay on the land requires young farmers' installation aid. That £5,600 needs to be put back in place. I know there was a commitment that some of those people would be dealt with in the budget but the number is derisory compared to what is needed.

We need to be stronger in our approach to the beef industry. The Government needs to spend money on promoting the beef industry. Ireland's green image around the world, to which I have referred in the past, needs to be marketed in relation to our beef too. The REPS is one of the most successful departmental schemes. I know there are certain areas in that regard which need to be tidied up, but it has been a good, successful scheme. I ask, as I have in the past, that a special stamp for meat produced by the farms involved in the rural protection scheme be put in place. That would be a simple way to market Irish beef.

I urge the Minister to do his best for the beef industry. Ireland depends on it. We, as a nation, need it and there are so many people dependent on it.

I congratulate the Minister and colleagues. I thank the Leader for providing time today for this important discussion so that Members can offer their support to the Minister for Agriculture and Food, Deputy Joe Walsh, on his recent initiatives which have resulted in a strengthening of beef prices and his continued efforts to restore the promotion of Irish beef in the UK and other markets.

Earlier, when he asked the House to support the Minister in his efforts, Senator Hayes was critical of what the Minister has done to date with regard to the drop in beef prices. Certainly, beef prices have increased. If it had not been for the Minister's intervention with the factories at the beginning of January, we would probably be taking 81p or 82p per pound for our cattle. Today we are getting 87p per pound. The Minister must be congratulated on his immediate intervention and success. While beef farmers have gone through and are going through a very difficult time at present, they are grateful to the Minister in no small way for his intervention because, as Senator Hayes rightly said, the factories got together before Christmas and created a cartel to keep the prices down, which was a downright disgrace.

The past two years have been very difficult for Irish beef producers and prices for quality beef cattle dropped by between 20p and 30p per pound in the period, leaving many farmers and their families in a very difficult position.

I welcome the recent initiative by the Minister for Agriculture and Food to assist the beef industry. His actions have strengthened beef prices at 86p or 87p per pound, and increased prices by between 5p and 6p per pound immediately after Christmas. With prices at the marts improved in recent weeks, there is a strong indication at present that beef prices may shortly reach 90p per pound in the factories. If this were to happen, it would be a wonderful achievement by the Minister and a great support to Irish beef farmers especially. The Minister has done a good job in the promotion of Irish beef in the UK, particularly given the present circumstances, with BSE hanging over the industry for the past 12-18 months. The Minister will have to continue to work hard on the promotion of Irish beef in the UK and other countries. Unfortunately, there would appear to be a bad image associated with Irish beef. However, the Minister and the Minister of State, Deputy Ned O'Keeffe, are doing a good job in trying to restore confidence in Irish beef in the UK and I congratulate them on their efforts.

Export markets are important to the success of the beef industry and any threat to the sale of beef in the international markets is serious and must be fought determinedly by the Government. The recent launch of the beef promotion campaign by the UK Meat and Livestock Commission is unfair. I support the Minister and his Department in their efforts to put in place a clear, focused strategy to ensure Irish beef maintains its traditional presence in the UK market. The actions of the MLC are unfair and totally unacceptable. I urge the House to unite in support of the Minister and the Government in their efforts to ensure that sales of Irish beef are not affected. The EU Commission must examine the actions of the MLC as they are against the spirit of free trade and the spirit of the EU itself.

Confidence in the farming community has been hit badly in recent years. With the fall in prices confidence in rural communities has fallen. The

House must send out a message to boost the confidence of beef producers for the coming year. Cattle prices in the marts have increased substantially over the past couple of weeks. Before Christmas and in early January store cattle were selling at under £50, with £1 per kilo, and over the last two weeks they have increased to up to £100 with £1 per kilo. Confidence is building and we must try to promote it and to ensure that beef prices continue to rise.

Irish beef is a high quality product, produced in a clean environment. High standards of quality control have been in place for many years to ensure that only the best is sold to customers, thereby ensuring that the position of Irish beef in the UK and international markets, built up over the last 25 years, is maintained. Sales have increased and all sectors of the industry must unite to defend our vital interests. The Department of Agriculture and Food, farmers, meat processors and An Bord Bia must work closely to defend the market position of Irish beef and to assure consumers of its high quality. We have many strengths in the market in terms of quality and the market's requirements. We must work tirelessly to market our products imaginatively.

As the Minister indicated, there have only been 257 outbreaks of BSE since 1988, which is a small number. It is sad to think that our markets have been so badly hit as a result of such a small incidence of BSE, especially in terms of its effect on the country and the farming community. The efforts of the Minister, the Department and An Bord Bia must continue until beef exports and the livestock trade reach their maximum potential. This is essential given the increase in cattle numbers over the past few years.

The live export trade must be restored. I welcome the Minister's indication that he is still trying to negotiate with the Egyptians and others to have the live export trade restored. When the live trade was active over the past few years there was competition in the market. However, when that competition was removed with the halting of the live export trade real difficulties ensued. The sooner it is restored the better.

Marketing is the key to the future success and development of the meat sector. The producers must produce what the housewives want and will buy in the supermarkets. The customers must be satisfied. The quality of the beef produced at present has never been better. Top quality produce is available in shops and restaurants. I am aware that beef prices in other European countries are much higher than here and it is unfortunate that we cannot raise our prices accordingly.

Every speaker so far has mentioned BSE and the real importance of BSE is its possible association with the new variant CJD. I felt it would be best to address that issue as it affects the beef industry. BSE was initially considered to be of small importance and far too little was done to prevent its progress in cattle herds in England and subsequently in Scotland and Ireland. However, it is perhaps possible that we are now doing far too much about it. The Minister for Health and Children, Deputy Cowen, felt it necessary to give notice that in Britain it was recommended that beef should only be sold off the bone. While we have not gone that far, it is important to mention that the infection of the dorsal ganglia in British animals only occurred in a group which was force fed heavily infected material, not in a group which was found in a routine inspection of cattle from an abattoir.

For the help I received in preparing for this debate I am grateful to my colleagues in the Department of Clinical Microbiology in St. James's Hospital, Dublin, and the Trinity College Dublin Medical School. The best I can do is to quote most of an editorial written by my colleague, Dr. Niamh O'Sullivan, of that department and published in the Irish Medical Journal of December 1997. Dr. O'Sullivan addressed the development of new variant CJD in humans and its possible association with BSE. To cheer up the beef industry, the sub-heading of the editorial reads: “There is no scientific evidence to link vCJD [or new variant CJD] with consumption of milk or muscle/meat”. That is an optimistic way to start my contribution. The editorial reads:

There is major public concern regarding bovine spongiform encephalopathy (BSE) and its implications for human health. Attention has focused on food, medical and pharmaceutical projects which originate from cattle. The spongiform encephalopathies include BSE in cattle, scrapie in sheep and Creutzfeld-Jakob Disease (CJD) which affects humans. The name stems from the typical vacuolation seen in brain sections at post mortem. These diseases challenge basic concepts in infectious disease and biochemistry. Firstly disease is spread by prions, which are proteins and not microorganisms. [One of the first people to discuss the possibility that prions could spread disease was an Irish vet, Dr. Patrick Hartigan. He said this in the early seventies but not much notice was taken of him. ] They contain no nucleic acid which is regarded as essential for life and particularly for replication. However, unlike other proteins, they are not readily destroyed by enzyme, protease digestion, autoclaving, incineration or pasteurisation. This indestructibility results in the accumulation of prion proteins within the brains of infected animals. These 'immortal' proteins initiate disease by exerting a conformational change on host prion protein, which leaves the proteins' primary structure unaltered. All mammals possess prions which are neuronal transmembrane proteins of uncertain physiological function. These prion proteins render the host susceptible to diseases. Genetically modified mice that lack prion proteins are immune to all prion mediated disease challenges.

Dr. O'Sullivan continues with a classification of CJD:

Historically, CJD has been classified into three distinct groups: (i) Familial— where autosomal mutations in the prion protein gene are inherited and result in disease later in life. To date five separate mutations have been characterised in the protein-coding region of the prion gene and genetically linked to a particular disease syndrome such as Fatal Familial Insomnia and Gertsmann-Straussler-Scheinker syndrome. However, unlike other ‘in-born errors’, these diseases are transmissable to other animals via ingestion or injection of neural tissue. (ii) Acquired— these cases are mainly the result of medical misadventure such as injection of contaminated growth hormone, transplant of infected tissue such as corneal or dura mater grafts [blood products were withdrawn recently because a donor had received a dura mater graft] or the use of contaminated neurosurgical instruments previously used in an unrecognised case of CJD. [This is important because prions are not destroyed by autoclaving. ] Ritual cannibalism among the tribes of Papua New Guinea resulted in recognised prion disease termed Kuru. [Cannibalism is not a problem here among the public, whatever about politicians.] Disease was particularly prevalent among women and children and attributed to the fact that they consumed the brain tissue. Men ate the muscle which has never been shown to harbour infectious prions.

Members may have seen television programmes about Kuru which showed that men ate muscle and women and children ate brain tissue.

Is this an appropriate subject before lunch?

I am sorry about that but it is important to know that there are plenty of facts available. The media has sometimes put forward a dramatic scenario which probably will not happen. We expected thousands of cases by now but they have not occurred. Also, there is an hour until lunch.

Dr. O'Sullivan states that the third classification is sporadic cases which

cannot be attributed to familial or acquired transmission and are believed to result from spontaneous mutations. Sporadic cases account for 85% of CJD cases identified. The incidence of sporadic cases is consistent worldwide at 0.5-1 per million population. The incidence remains constant even among populations where a vegetarian diet is the norm. [That means CJD occurs even to a person who eats what must be a BSE-free diet.]

New variant CJD (vCJD) which is distinct from all previously described cases, was reported in England in March 1996. It differs from previously described cases both clinically and histologically. To date, there have been 20 confirmed cases of vCJD in Britain and one in France. The median age of these cases is 27 years. Previously the world literature recorded less than twenty deaths from sporadic CJD in those less than 30 years of age. The sudden emergence of this disease and the clustering of cases in England suggests a common source for this outbreak.

Dr. O'Sullivan then considers whether vCJD is a new disease:

Neuropathologistst were able to identify vCJD because of the florid plaques of prion protein surrounded by spongiform vacuolation. The appearance and distribution of these lesions was distinct. When describing a ‘new' disease it is obviously essential to distinguish between newly recognised and a de novo presentation. Consequently archives of neurological tissue were reviewed to determine if cases had previously been missed. No earlier cases were identified [so it is a de novo disease]. Furthermore, given the young age at presentation it would be expected that about 50% of such cases would have a post-mortem examination. Indeed, a recent review of CJD in the UK showed that increased surveillance identified most missed cases in patients over 70 years of age. Neurological degeneration is expected in this age group and hence only 4% have a post mortem.

Therefore any cases we find will be new ones because post mortems will definitely be given to people who die young. Dr. O'Sullivan next considers why vCJD has occurred now:

In 1986 it was recognised that BSE was endemic in cattle in Britain. This problem is attributed to cattle feed contaminated with scrapie infected ovine tissue. This is believed to result from a change of practice within rendering plants, where animal bone and tissue which are unsuitable for the food chain were converted to tallow and greaves. The high protein end product, greaves, was used as a food supplement for animals. Alterations were made in this rendering process in the late 1970s which omitted the high temperature hydrocarbon solvent extraction step [I am sure some Members saw this on a recent television programme]. It has been suggested that this alteration in the rendering process permitted a particular strain of scrapie to survive and enter the animal food chain. The incubation period for BSE is about five years and hence its appearance in the mid 1980s. The identified link between BSE and scrapie resulted in the European Union legislation making it illegal to include brain or spinal cord in any food for either human or animal consumption [note we are talking about neural tissue].

I am beginning to sound as if I am giving a lecture in the medical school, but what harm. I hope Members are taking it in and will find it useful.

I hope it is useful. The article continues by addressing the question of why new variant CJD is mainly confined to Britain:

Twenty of the 21 vCJD cases have occurred in Britain. This begs the question as to whether such cases are being missed elsewhere. The publicity surrounding these cases has prompted active research. It has been admitted that diagnosis of CJD is related to the number of neurologists within a country [therefore, if there are no neurologists there will be no diagnosis of CJD]. Nevertheless, given the number of units actively seeking vCJD it is clearly not a global problem. However, given the number of cattle exported from Britain prior to recognition of BSE, the low number of vCJD cases elsewhere is surprising.

It is important to remember that British meat was exported as well. Why, therefore, when meat and cattle were being exported did these cases not occur elsewhere? The article continues:

Furthermore, extensive immunilogical examination of cattle brain stems from American abattoirs has failed to identify a single case of BSE.

I do not think one could say there has been a cover-up or anything of the kind — it just has not happened there. The article continues:

The alternative possibility is that other countries may have a similar problem induced by a different scrapie strain which does not cause such florid histology. Immune techniques are essential to diagnose cases with indeterminate histology [that refers to how the slides are tested and is not very important to this debate]. Lastly, it may be that food is not the mode of transmission. In short, the epidemiology of vCJD is insufficiently understood to explain this clustering of cases in Britain [there is a definite possibility we will never know how this happened].

Scientists began to suspect a link between vCJD and the BSE outbreak. This hypothesis challenges previous concepts regarding the species barrier. Each species exhibits its own variant of prion protein but considerable homology remains. It was believed that these interspecies variations prevented spread of disease to humans from animal sources. Human prion protein contains 254 amino acids and there are slight variations in the prion protein gene at codon 129, resulting in either methionine or valine being expressed. To date, all cases of vCJD analysed are methionine homozygotes. Only 38 per cent of the Caucasian population exhibit this phenotype, which suggests that the other 62 per cent may be immune to vCJD.

The link between BSE and vCJD is unproven, but new data supports this hypotheses. Brain extracts from BSE infected cattle have induced prion disease in mice [which shows it can jump species]. The abnormal prion protein produced in these mice yields a fingerprint on Western blot analysis, which is indistinguishable from the BSE prion protein [in other words, the analysis shows the new protein has passed to the mice]. This new conformational format of the prion protein is maintaining specificity despite transfer between species. Indeed, it remains to be shown whether sheep now harbour BSE prion protein and hence are capable of serving as a vector for the transmission of BSE [I do not think we will tell the sheep producers about that today but should concentrate on beef production]

Similarly, the incubation periods and the pattern of vaculation, termed the lesion profile, are consistent with BSE when infected brain tissue is inoculated into different strains of inbred laboratory mice. How prion diseases can ensure propagation of strain specific characteristics remains unsolved. These experiments strengthen the putative link between BSE and vCJD.

In theory, the legislation which bans brain and spinal cord tissue from the food chain should mean that current foodstuffs are safe. However, new cases of BSE continue to be identified in cattle. Vertical transmission from dam to calf is calculated to be 10 per cent.

It is very important for us to do a considerable amount of research in this area. I have never been able to find out what happened to the Moore Park herd; perhaps the Minister could tell us in his reply. I was told they were to be put down. It is a great pity if that was done because there would have been great scope to analyse the vertical transmission of BSE in a herd which had been closely monitored from birth. If another such herd arises we should consider conducting serious research work on it. Our BSE rate can be kept low by immediately slaughtering the rest of the herd. However, if we are to maintain our important place in academic research in veterinary medicine, it is important to retain some herds so that we can examine vertical transmission and possible therapies. The article continues:

Currently BSE is declining in Britain but increasing in Ireland, France and Portugal. Total eradication of BSE requires review of breeding policies [it is important for the beef industry to take that on board]. Compliance with existing legislation has been poor and stricter enforcement is required. Scientific studies into vCJD are hampered by the long incubation period of this disease, which is probably five to ten years. However [to end on a cheerful note] it remains true that neither milk nor muscle/meat has ever been shown to transmit spongiform disease in any species.

Thank you, Sir, for allowing me put that article on the record. It is important to look at the scientific side of this problem which is seriously affecting the beef industry.

In view of our excellent veterinary medicine and good neurological units, this country should do whatever it can to make progress on the treatment and eradication of the disease, and not just to bolster up the beef industry. I imagine we would receive support from all those involved in agriculture if we were to do that. Scrapie in sheep has been known about for centuries, but when diseases such as BSE develop de novo it is important to find out as fast as possible why it is happening and how to deal with it. We could easily develop a problem with Ecoli 0159. That disease had devastating consequences in Scotland 18 months ago, and we have had cases of it here. It is not a new disease, but the development of this new form causes kidney failure in humans if they are infected by it. The disease relates to hygiene, and hygiene in the beef industry, particularly the killing of animals in abattoirs, must be addressed.

We have excellent resources, including superb research facilities, and we must make every possible effort to investigate the pathology of BSE and its possible association with new variant CJD. It is of great international interest but is also of interest to us because of our heavy dependence on the beef industry.

Senator Tom Hayes would be disappointed if I did not refer to the live cattle industry. From both economic and humane perspectives it would be better if cattle were slaughtered in this country and then transported abroad. Transport costs are expensive, particularly in the new markets such as Sweden, and add considerably to the price per kilo. However, there is huge employment in meat factories and downstream industries. We should try not to resort to exporting cattle on the hoof, given what can be gained from killing and processing them in Ireland. I will not speak of cartels in the meat industry because I nearly got in trouble for doing so in the last debate, though I am speaking to a discreet audience. Live exports should be looked on as a last resort if there is no possibility of dealing with cattle here. For both economic and humane reasons I would be happier if they were slaughtered here and if downstream industries which could benefit from this main industry were encouraged.

I was pleased that the Minister for Agriculture and Food opened this debate, and I join with Senator Tom Hayes in welcoming him. Our beef industry is the single biggest industry in the country, and it is advisable not to use language that would undermine it.

The Irish Veterinary Association issued a statement recently on brucellosis. It states:

The Minister is correct to move to combat the brucellosis crisis. The new proposals announced by the Minister for Agriculture and Food to control brucellosis are welcomed by the Irish Veterinary Association. His exhortation to all interested parties to work to this common purpose should be heeded if we are to succeed. . . For many years the value of the veterinary profession has been visible in the development of the uniquely high animal health status of this island. Whether in the State veterinary service, local authorities or private practice, veterinarians have been to the fore whenever there has been necessary practical scientific advice and the physical implementation of that advice. . .

We should recognise that we have an extraordinary level of expertise protecting the agriculture and food industries. BSE is probably the single biggest factor in the downturn of the beef industry. We have had 358 cases of the disease in a cattle population of seven million since it was first identified in 1988-1989. A strict regime of supervision has been put in place by the veterinary profession and the Department which includes examination and ante — and post-mortem inspections at meat plants. It is important to acknowledge that quality standards have existed at the production and processing levels here for some time.

One can put the BSE experience in context by comparing it with standards of driving. Last year we had over 470 tragic deaths on the roads, without counting injuries. Not one death has occurred here because of BSE, CJD or related diseases.

Despite the headlines.

Dr. Patrick Wall, head of the Food Safety Authority of Ireland, stated clearly that there could be one death in coming years, but that that would emanate from the importation of cheap British beefburgers. That comes from an independent source.

The beef sector continues to suffer from the negative impact of the 1996 BSE scares. The impact is evident both in the level of beef consumption in the EU, where consumption remains below 1995 levels, and in the renationalisation of the beef market in the EU. Apart from the BSE scares, the World Trade Organisation agreement is the other main factor in beef sector developments. Under this agreement, the EU has undertaken to reduce the volume of its subsidised beef exports by 21 per cent over the period of the agreement, which runs from July 1995 to July 2000. The substantial fall in beef consumption in the EU, arising from the BSE scare, has increased the surplus in the EU, and this surplus cannot be accommodated within the WTO ceiling. In the past two years this surplus has been sold into intervention stores, with the result that we now have 600,000 tonnes of intervention beef in stores throughout Europe. Unfortunately, sales of beef out of intervention for export to third countries come within the definition of subsidised exports, and are therefore subject to the same WTO constraints as sales of commercial beef.

The European Commission announced last November that it intended to embark on an export sales programme for intervention beef. The Minister for Agriculture and Food intervened immediately with Commissioner Fischler to secure a postponement of these sales until the market improved and these sales could be more readily accommodated under the WTO ceiling on subsidised exports. Commissioner Fischler agreed to confine the sale to a trial sale in order to test the market response. The first such sale has now taken place and only 240 tonnes of beef were sold, which means there was no significant damage to the beef market.

I now turn to the mini-reform in the beef regime in 1996. The European Union has attempted to cope with the market imbalance created by the reduced consumption by reducing beef production. This was the main objective of the mini-reform in the beef regime which was adopted by the Council of Ministers in October 1996. The introduction of two calf slaughtering measures — early marketing premium for veal calves and the calf slaughtering premium otherwise known as the Herod scheme — were the main measures adopted. Member states were obliged to implement one or other of these schemes. Together these measures were designed to divert two million calves away from beef production for the two years 1997-8. Recent indications suggest that these two measures will achieve the objective. Approximately 1.5 million calves have been slaughtered under the calf slaughtering scheme to date. The main contributors to this scheme are the United Kingdom and France which have slaughtered 1.1 million and 377,000 calves, respectively, under the scheme.

Apart from the calf slaughtering measures, the other main contributing factor to reduced beef production in Europe was the over 30 months scheme in the United Kingdom. Essentially, this scheme provided for the slaughter and removal from the food chain of all cattle over 30 months. The effect of this measure is to reduce beef production in the United Kingdom by approximately 200,000 tonnes per annum. The net result of the various measures adopted since the BSE crisis has been a reduction of 500,000 tonnes of beef production per annum.

Turning to better targeting of export refunds, in spite of these measures, the EU has had considerable difficulty living within the constraints imposed by the World Trade Organisation ceiling on subsidised exports. Indeed, the majority of the cuts in export refunds which have taken place over the past two years have been designed to reduce demand for export licences and, thereby, enable the EU to remain within the World Trade Organisation ceiling. Not surprisingly, in view of the heavy dependence of the Irish beef industry on third country markets, the Commission approach to this problem has presented particular difficulties for the Irish beef industry. The Minister made strong representations to Commissioner Fischler on this matter in 1997 and the Commission responded by the adoption of a more targeted approach to reductions in export refunds.

This more targeted approach is being implemented through the extension of the special export refund system to male forequarter beef and it has enabled the Commission to exclude beef from male cattle entirely from reductions in export refunds for the first time. That is extremely important for the export of beef. In view of the fact that the majority of our beef exports under the export refund system are male animals, the decision to target refunds on beef from male cattle is obviously extremely beneficial to the Irish beef sector.

There has been an improvement in the market despite comments made this morning which did not recognise it. The targeting of refunds on beef from male cattle has substantially improved the situation which faced beef producers and beef processors at the beginning of the year when they were faced with the prospect of a cut in export refunds. In response to representations by the Minister, the Commission refrained from cutting export refunds and in the context of implementing the new more targeted approach in mid-January, the Commission increased the refunds on male boneless forequarter beef by 21 per cent. These adjustments to the export refund system are of considerable benefit to the beef industry.

The depreciation of the Irish pound against the major European currencies resulted in a 3.5 per cent devaluation of the green pound and this has resulted in higher support prices. In addition, the depreciation of the Irish pound has improved the competitive position of Irish beef processors on the European market which continues to take about half our exports.

As regards intervention, the Commission responded positively to the Minister's request for reasonable access for Irish beef to intervention, particularly in mid-January when it was most needed. The volume of product accepted into intervention by the Commission has been relatively high for this time of the year and this has helped to stabilise the market. The developments in export refunds and intervention have led to a substantial strengthening of cattle prices. Since the beginning of the year, steer prices have increased by 6 per cent while heifer and cow prices have increased by 4 per cent and 5 per cent, respectively. This represents a considerable improvement in the situation for cattle producers and has helped to restore confidence in the industry both at producer and processor levels.

The Senator's neighbours in west Cork would not agree with that.

I am trying to deal with the facts and would appreciate if I was allowed to continue to do so. I understand the Opposition being somewhat disappointed with the many successes of the Minister, the Ministers of State and the Department. There are, however, problems to be overcome and we may look forward to success in the year ahead.

As regard the 1997 outturn, it was a difficult year for beef production. Cattle prices were generally lower than in 1996 with steer and heifer prices 5 to 7 per cent down on 1996 levels. The revaluation of the green pound and the continuing effects of the 1996 BSE scare on the beef market were chiefly responsible for this situation. Losses due to the green pound revaluations were, however, partially offset by the compensation from the EU and the Exchequer amounting to £45 million. In addition, the BSE compensation package of £30 million, agreed by the Council at the end of 1996, was also paid out in 1997. These payments helped to relieve what would have otherwise been an extremely difficult year for Irish beef producers. Total direct payments to cattle producers, including premium and headage payments, amounted to £546 million in 1997.

On the reform of the beef regime, the European Commission published its Agenda 2000 outline proposals in July 1997. The main principle underlying the outline proposals is a continuation and deepening of the MacSharry reforms. In other words, the intention is to reduce prices and to provide compensation in the form of increased direct payments with a view to making European agriculture more competitive on world markets and allowing it to be developed on a sound, stable and sustainable basis.

There is virtually unanimous agreement in Europe that the beef regime needs to be reformed to enable the EU to remain within the existing World Trade Organisation ceilings on subsidised exports, not to mention any new constraints which might be imposed under the next agreement. Beef production in the EU is artificially low at present because of the calf slaughtering measures and the over 30 months scheme. However, these will cease at the end of the year. Although in view of the nature of beef production in the EU, their effects on beef production will continue until mid-2000, beef production will increase by approximately 300,000 tonnes per annum thereafter. While there is no terminal date for the over 30 months scheme in the UK, it is reasonable to assume it will not remain in place indefinitely. When it is terminated, production in the UK will increase by approximately 200,000 tonnes per annum.

The increase in production arising from the termination of these schemes will take place at a time when the ceiling on subsidised beef exports under the current World Trade Organisation agreement will be 200,000 tonnes lower than the current WTO year. This means that an additional 700,000 tonnes will have to be disposed of on the EU market. Clearly, unless there is a substantial increase in beef consumption in the European Union, which is unlikely, the combination of these developments will be to create a serious imbalance in the beef market with the result that prices will collapse or there will be a huge build up of intervention stocks. Neither development would be in the interests of Irish producers.

I will now turn to trade with the UK. Recent developments in Britain are a cause for concern. Britain is Ireland's single largest market for beef, and exports in 1997 were estimated at around 95,000 tonnes. In recent weeks, the focus of the protest by British farmers has moved from the ports to retail and catering outlets. The industry's lobbying campaign has resulted in a decision by most of the major retail multiples in the UK not to source beef originating outside Britain for the duration of a promotion campaign recently launched by the meat and livestock commission. This development is of serious concern as approximately 40 per cent of Irish beef sales in Britain are accounted for by sales to the major multiples. Market loss of this order will have serious repercussions for Irish agriculture and the economy generally.

As an immediate response, the Minister instructed Bord Bia to have direct contact with British retail outlets and he met representatives of the largest UK multiples to explore ways of restoring normal trading arrangements. He also intends to meet the other major retailers in the UK next week. I hope the Minister of State, Deputy Ned O'Keeffe, Deputy Ellis and a delegation from the IFA were successful last week. They did not rest on their laurels. The Minister of State, Deputy O'Keeffe, is known as a straight talker and I am sure he was effective in his comments to the retailers, some of whom have arrived on our shores and seek the support of Irish consumers. However, in view of the ban by Tesco on Irish beef in its British outlets, Irish consumers should evaluate the commitment of the company to Ireland. It is here for profit and nothing else.

Members on the other side referred to trade with third countries. Do they propose that we join with the US and Great Britain, send our scud missiles to the Middle East and declare war if countries in the region do not buy our beef?

I know what we would want to put at the end of the scuds.

World wide beef markets have been affected by the BSE scare. Due to the very low incidence of BSE in Ireland because of the precautionary measures implemented by the Department and the effectiveness of our animal health controls, we are in a position to provide the assurances required to enable trade continue in most of our international markets. However, a number of important markets continue to impose BSE related trade restrictions. It is and has been a priority for the Government at all levels to have any remaining restrictions removed as quickly as possible. Considerable progress has been made in this regard, notably in the case of Russia, which is the second most important market for Irish beef, accounting for 70,000 tons in 1997. Following negotiations with a Russian delegation led by the Deputy Minister for Agriculture last September we succeeded in achieving the first easing of restrictions imposed by the Russian authorities in 1996. This was a significant outcome in reducing supply pressure, which was a signal to other markets. It was also agreed to review the protocol covering the free trade gap. The review is scheduled to take place in Moscow in the second week in March. We are also involved in discussions with Iran, Egypt and Libya.

There are three main elements of the national beef assurance scheme. The first is to develop protocols setting out common basic standards for the industry, the second is to enforce these protocols through a process of registration and approval and the third is to complement these measures with an effective animal identification tracing system. It is very important that traceability be introduced as quickly as possible.

The Minister of State, Deputy Ned O'Keeffe, is doing a very good job within the constraints placed on him. We welcome his efforts and ask him to continue with them. Will he take the opportunity to change the early retirement scheme in respect of personal additionality and income levels? This would be beneficial in terms of placing young farmers on the land and in ensuring the continuance of rural life.

A layman's interpretation of Senator Henry's erudite medical and scientific explanation for BSE would be that one would have as much chance of winning the lottery as developing CJD. It is unfortunate that such publicity is being given to this subject. Public concern is being excited to such a degree that it is having an impact on the beef industry. More will be killed on our roads within the next week than will be afflicted with CJD within the next ten years. The public should be made aware of this. If even half as much interest by public representatives, the public and the media was devoted to the mayhem on our roads it would go a long way to solving that problem.

I welcome the outline of the initiatives provided by the Minister and the Minister of State, Deputy O'Keeffe. While the Minister's initiative is welcome it is an inadequate response to the serious problem that has developed in Irish agriculture. The beef sector, while very important, is only one element.

Agenda 2000 demonstrates that rural development will be at the centre of European thinking from hereon. The Government has not fully grasped what is involved here and has shown insufficient imagination in its response. It does not realise that Irish agriculture is moving into a new era. In the trade off between rural development and lower prices, rural development will be seen to become increasingly central. In this regard, the Government should consider the establishment of a new ministry of rural development. While there is public cynicism about the creation of new jobs and ministries this would get public approval because of the importance of rural development to European and Irish thinking over the coming years.

One of the five underlying principles of Agenda 2000 is to achieve competitiveness in the global economy through the Single Market, EMU, support for the WTO and reform of the CAP. This will result in lower agricultural prices, increasing numbers of uneconomic and uncompetitive farms, a greater need for rural development and to find new market niches and an increasing risk of peripherality.

The risks of peripherality are already manifest in many parts of the country and will become increasingly manifest in the future. The population of the west in 1996 was 352,000. Between one quarter and one third of this population lives in the Galway city area or within commuting distance of it. In the past four years the economy has grown at almost three times the European rate. Galway city is recognised as a dynamic centre of growth under current conditions and, therefore, must be growing at a rate which is at least the national average. Since the western region as a whole is only keeping pace with the European growth rate, it appears the entire growth in the western region can be accounted for by the development of the Galway city area.

This suggests that counties Mayo and Roscommon and most of County Galway are showing minimal if any growth and are losing ground not only in terms of the Irish growth rate, but also against a much lower European growth rate. Objective one status was given to Ireland to allow it to move upwards in terms of the European average of per capita GDP. However, it must be deemed a failure in these counties where the gap in per capita GDP between them and Europe has widened rather than narrowed. The fact that this is happening in a country which has at national level moved from 64 per cent to parity with Europe in a decade is unacceptable. It emphasises even more the urgent need for a reappraisal of the mid-term review and the impact of European funds.

The per capita GDP of the western region has remained static relative to Europe. At approximately 57 per cent, it is equal to some of the poorer regions in France and Italy. The western region is the seventeenth poorest of the 200 European regions. These points relate to peripherality and the imbalances which exist at present that must be addressed. The regional accounts for 1991, published last November, indicate that the per capita GDP of the Border region, which includes counties Sligo, Leitrim, Donegal, Cavan, Monaghan and Louth, is 81.5 per cent of the national average. The amended 1991 accounts show a marginally lower rate of 82.2 per cent. The 1993 regional accounts show a slight improvement of 3.1 per cent.

The Border region was formerly two regions. The north-west region included Sligo, Leitrim and Donegal while the north-east included Cavan, Monaghan and Louth. I could deal in detail with regional imbalances and the need to address them. However, there is a need to broaden our concept of rural development and understand its main and multiple functions. In terms of economic factors, it is a production base for agriculture and other sectors. Its environmental function is to preserve biological diversity while its social function is to conserve cultural heritage and provide attractive living conditions. A concerted effort is required to achieve these objectives. A Department should deal specifically with these issues and the promotion of environmentally sustainable production and consumption and the development of a European model of society by maintaining existing settlement patterns.

The issue is how existing settlement patterns can be maintained given the decline in rural population and the fact than an increasing number of farms are becoming uneconomical and uncompetitive. This will be a major problem for planners in the coming years. They must endeavour to maintain a level of rural development beyond the agricultural sector and give it an urban perspective. This is another aspect which should be considered. Senator Tom Hayes eloquently and effectively dealt with the mainstream issues in the beef sector and agriculture in general. I do not wish to reiterate his points and this is why I am concentrating on rural development which is the issue for the future.

If economic and social cohesion is to be achieved and regional socio-economic disparities are to be reduced, there will be less favoured areas under the CAP. A doubling of Structural Funds and increased non-market payments will be required. The loss of objective one status is looming on the horizon. Ireland will not qualify for this status if its per capita income is deemed to be high. Nevertheless, there are regional disparities. Incomes in Connacht and most of the counties I mentioned are below the national average and I am reliably informed that seeking objective one status for a region with a population of 360,000 will not mean anything if money is allocated on a per capita basis. Ireland will receive peanuts; it will be good for nothing. The Government must face this problem. There is a great clamour in the west for objective one status. However, the problem is that if it is related to national per capita income, Ireland will not receive a large amount of money and the population in Connacht is only approximately 360,000.

Other criteria must be drawn up. Cohesion Funds would be a way out for the peripheral regions which are disadvantaged at present. Political difficulties will continue in terms of maintaining direct payments to farmers. This is another issue which must be considered. There must be trade off in this area between that aspect and money for rural development and renewal. This is the only way forward because settlement patterns will not be maintained unless money is invested in these regions. A mechanism must be developed in that regard. Direct payments to farmers will be phased out in the future and an alternative must be found if the settlement pattern in rural Ireland is to be maintained and developed in a meaningful way.

There is a lack of clarity at present regarding rural and regional development. Agenda 2000 attempts to focus the imaginations of the public and politicians in this area. It is succeeding to some degree, but there is insufficient public consciousness and a lack of appreciation at Government level about the need for rural and regional development as a trade off against the declining income of farmers and the need to maintain rural Ireland.

There has been a retreat from many of the ideas put forward in 1995 and 1996. At that stage there was talk of a special rural fund. Rural development as a broad concept was to be streamlined, but nothing happened. This was a measure to accompany CAP reform, yet nothing happened in this area either. The Minister needs a greater concentration of resources in this field. He must recognise that time is passing and that farming income has dropped and will continue to drop because the underlying principle of EU policy is to achieve competitiveness in the global market. That means lower prices for farmers whether we like it or not. I impress on the Minister to look at Agenda 2000. He should realise the potential it holds for rural Ireland and the catastrophe inherent in it if this potential is not grasped and if we do not appreciate the problems looming in the next ten or 15 years. Now is the time to embark on an ambitious and imaginative programme of rural development and renewal as a trade off against the lowering of prices, CAP reform and everything else that is happening to achieve competitiveness in the global market.

I thank the Minister for coming to hear our contributions and I hope he will take back to his Department our sense of urgency regarding this problem. We could speak for weeks about beef prices, but whether they are 90p per pound today or 100p per pound next week, the fundamental issue is that they will get lower and lower. We have to accept that principle.

I welcome the Minister. The importance of the debate lies in the scale of the beef industry and its importance to the economy. It is unequalled in any other EU economy. For that reason we have to look at it in a different context to the overall EU situation.

As has been mentioned, the present situation regarding beef is bad. This is a difficult period and the prospects are not good. It has been like this for some time. The main factor which led to the depressed situation in the beef industry was the BSE crisis of March 1996. The underlying problems were there all the time. It has brought about a situation where prices have been depressed ever since.

Confidence in the market has been depressed. Minister Walsh said this morning that confidence is rising from the producers' point of view and I accept that, the figures support it, but from the consumers' point of view the confidence is not as great as we would like. It is of paramount importance that the confidence lies with consumers as well everyone else. There is no point in producing a product that people will not consume. This is one of the difficulties with beef in the EU presently.

The Minister has had some considerable achievements over the past six months and they should be recognised. The situation which exists today, where prices have increased considerably over the past two months, is a welcome development for producers; but, as Senators Callanan and Caffrey said, the problems still exist and need to be addressed. We continue to have a lack of competition in the live export market. There are not enough live exports. There are many reasons why that is the case, but unless there is a vibrant live export industry in this country beef prices will be depressed. We would all love to see whatever we produce in this country cut down and presented as ready made meals. In reality that is not going to work. This is the only country in the EU which is exporting 90 per cent of steer production. That is a very high level for any market. We must recognise that.

The problems have been compounded by the actions of British farmers over recent months. These are exacerbated by the approach of the large supermarket chains in England, Tesco in particular. These are unwelcome developments which must be addressed. They make the situation for this country and for the Minister more difficult.

Our greatest problem is the lack of confidence in the product in our EU markets. Likewise there are question marks over our products in the third country markets, particularly the live export market. Produce from certain counties have been banned by the Russian market. All sorts of difficulties have been put in our way, but we have seem some considerable improvements. The live export market has opened up to a certain extent. While I do not like to make political points on such a serious subject, it is worth saying that in the run up to the general election the former Minister announced the Egyptian market was open for live exports when it was not.

There was agreement in principle in relation to that trade.

Senator Hayes knows the market was not open. That is a fact. This is a serious situation and we need everyone on the same team.

The BSE crisis has played a role in the development of the present situation. It acted as the main trigger for the depression of prices. The scale of BSE has to be put in context. The Minister spoke about that this morning. He addressed the attitude of the media in presenting BSE as a huge problem. The scale of the problem in this country is anything but huge, it is minuscule, as can be seen from the figures. The UK problem was much more serious. When BSE is dealt with on the news on television animals are shown falling down. Do we ever see healthy animals grazing in fields of grass?

Sitting suspended at 1 p.m. and resumed at 2 p.m.

Prior to the sos I referred to the BSE crisis. The Department must be complimented for the strong and tough action it took to deal with problems on the small number of farms where outbreaks of BSE occurred. This was painful for the individuals involved but it was necessary. We will see the benefits of that measure in the coming years.

Looking to the future, it is most important to build confidence in our beef products. In that context, I welcome the great strides made in respect of the beef assurance scheme which must be supported. As stated earlier, consumers must have total confidence in the product they purchase. Without question, we produce the best quality beef. We must continue to do so and assure consumers that this remains the case.

On 4 December 1997, the House debated the Bord Bia annual report. Senator Quinn referred to a number of experiences he had in connection with his business and his comments are pertinent to this debate. He stated:

Even prior to the BSE crisis, I was aware of customers' thirst for information and as a result, my company took two steps to deal with it in 1989. First, we introduced traceability and began to tell customers exactly from which farm beef had come. We did that in response to their demands and concerns. We even put up a photograph of the farmer over the counter and this had a tremendous effect when it came to building trust. Beef suddenly changed from being an anonymous piece of meat to being the produce of an individual. The importance of this measure was not that it created a "feel good" factor but that identifying the farmer meant that each piece of beef could be traced right back to the farm gate if necessary. If a problem arose, its source could be identified easily and quickly. As retailers, we also laid down standards as to how the beef could be handled all the way down the distribution chain. We worked to inform our customers of those standards and of how serious we were about them.

My point in mentioning all this is very simple; as a result of these measures we won the customers' trust so that when the BSE crisis occurred last year, we found it had much less impact than we might have expected. We also found that, once the initial wave of reaction died down, customers began to return to eating beef very quickly and, one year later, they were buying more beef from us than ever before.

That is extremely important because it shows that consumers will purchase a product when they have confidence in it. For that reason, the beef assurance scheme is extremely important. There must be traceability so that if problems arise the source can be quickly identified and remedial measures put in place. That is important for consumers in the home and foreign markets we supply with live cattle and slaughtered beef.

There is a need to strengthen the marketing initiatives which relate to our produce. In the marketing arena, we must present our product as one of quality. We need to inform people about how beef is produced in Ireland. As previous speakers stated, the vast majority of Irish beef is produced using grass or grass-based products. We must emphasise that fact. Environmentally, this is the best way to deal with the matter and our marketing of Irish beef in Europe should be based on it.

The products we market are equally important. It is not a case of simply producing beef animals; we are producing beef for consumption. If there is a premium to be had from the point of view of quality, we are in the strongest position to obtain it. This returns to our methods of production. Irish farmers have always been prepared to produce beef on a grass-based system rather than using grain or other feeds. They must continue to do so.

Before the sos I stated that the Santer proposals are, to some extent, leading us down the road towards lower prices and greater supports. We are approaching an era when we will be at an advantage in terms of producing beef of the highest quality. If we pursue the marketable significance of that beef, sell the product as being of Irish origin and obtain the benefits which will accrue from such action, we will overcome our competitors in the European market. There is a market in Europe for high quality products for which people are prepared to pay premium prices and we should pursue that line.

There will be a great deal of debate about the Santer proposals over the coming months and Ireland will have a difficult battle to fight its case in regard to them but I have the utmost confidence that, if our strategy is right, a good deal can be won not just for beef but for all our agricultural products in the years ahead.

Ireland has a large number of small farming units on which most beef is produced and this lends itself to producing beef with low inputs. A certain section of the market must go in the direction of feeding grass and having low stocking rates. Benefits will accrue to the industry in the long-term. Producing beef for the sake of it will not lead to a situation whereby the industry will flourish. We must have a long-term strategy for the production, marketing and sale of products. We have an opportunity to pursue this now in an environment that seems on the surface to be hostile with regard to the Santer proposals but is one that will also provide opportunities. People must get together and discuss a strategy so that when Ireland goes to Europe to argue its case, it will do so in a coherent manner based on a planned strategy for the beef industry over the next five to ten years.

We can produce the best because we have the farming capability. Teagasc advisers and research workers are also prepared and capable of providing the best information to farmers. If that policy is pursued on a long-term basis, we will win out in the end. There will be hiccups along the way, such as BSE which was a major one, that will have to be faced as they arise. Now is the time to do the preparatory work and focus on producing quality products which consumers want.

At the end of the day, we are all consumers and are concerned about what we eat. Nowhere is that more obvious than in retail outlets. We can and will win the beef battle provided we focus on the approach we adopt.

I wish to share my time with Senator Quinn.

Is that agreed? Agreed.

I welcome the debate on the beef industry as it is one which should be discussed in the House on a regular basis. I regret the motion that has been tabled. Ireland has been well served by Ministers for Agriculture from both sides of the House and over the past ten years each one has left a positive mark and shown commitment in looking after the interests of the industry.

However, there is a double think, and also some reality, in the Minister's contribution. The previous speaker, when quoting extensively from the Minister's speech, carefully and strategically omitted this. The Minister stated the Commission's strategy to deal with this is to reduce beef prices by 30 per cent in order to increase internal beef consumption — that is a joke — and to bring prices closer to world market levels. I have said that for seven years. It is the first time I have heard a Minister publicly agree that beef prices in Ireland, Europe and the world are moving towards a convergence at world market level. It will happen inexorably and inevitably.

The Minister stated Ireland is now poised to take advantage of an upturn in world trade in beef. That is misleading because the reality is the only way the beef industry can survive is if we increase beef production but the world trade agreement will reduce progressively the amount of intervention or subsidised beef that can be exported from the European Union to other countries over the next number of years.

We should look at the measures to be taken to deal with that. The Minister spoke about effective measures to reduce beef consumption, such as the calf slaughter and veal market premiums and other artificial means of trying to influence market forces. More than any other the beef market is determined by supply and demand. When there is a need to maintain prices, the beef is put into intervention. It is that simple and a person studying economics for one month would know that. Every farmer knows that and it is time it was recognised.

An issue which was not dealt with by the Minister is methods of production. I agree with Senator Gibbons and others who made the point that beef tends to be produced by farmers with small or medium sized holdings. This brings me to the question of traceability. The introduction of the Abattoirs Act, 1991, made traceability most difficult because it effectively closed down small abattoirs in every town and village. Prior to that, the local producer, who was known, sold his or her beef to the local butcher. He killed the cattle in his abattoir under acceptably clean conditions and sold the beef across the counter. We did not have to worry about traceability because the cattle came off the grass at the edge of the village or town. Nowadays, we insist on cattle being moved 30 or 40 miles to a major abattoir where butchers from smaller villages go and buy meat about which they know nothing. It is not traceable and the consumer is not sure from where it originated. Retail outlets try to indicate traceability by showing the name of the farmer. We are going backwards instead to forwards. Will the Minister carefully consider the Abattoirs Act and allow people to kill cattle off grass in proper hygienic circumstances?

Market forces will deal with the fight against growth promoters. If we start killing off grass and subsidies are lost, there will no longer be an incentive, either in terms of the volume of production or subvention, to produce overly large cattle and it will lead to the nonsensical breeds of cattle which are being produced. There is a huge debate at present about people interfering with the development of beet. The argument about interfering with beet genes is totally artificial. Many strains of beef cattle which are being developed in Ireland at present have been produced artificially. The Belgian Blue, for instance, can only be born by Caesarean section because it is double-jointed to produce more meat. That is a nonsense. Think of the cost of producing those cattle. A vet is needed at every birth to operate on the cow which immediately adds to the cost at a time when farmers say they cannot produce calves at a viable rate.

We must look seriously at these issues because the future of the beef industry lies in beef being produced on grass. Naturally, they will be smaller animals but the cost of production will be cheaper. As the Minister stated clearly in his speech, a reduction in production costs is as good as an increase in beef prices.

The last time I spoke on this matter we were bemoaning the fact that beef prices were below £1 per pound. I indicated that prices would shortly be half way between £1 per pound and world beef prices. We have reached that stage. World beef prices will pertain one way or another, so I ask the Minister to introduce an element of reality into the matter. I ask farmer leaders and the Minister for Agriculture and Food to bite the bullet and tell farmers the truth. There is a great future for the beef industry. It is the best beef in the world and it can be produced profitably.

Beef farmers have gone through a desperate time over the past couple of years. I do not know how some of them have survived. It will be necessary, for instance, to subsidise calves for quite a significant period until we achieve a balance in the market. However, the export subsidy is not only driving prices up artificially, it is also killing beef processing in this country. It seems utter madness that Kerry Group had to withdraw from processing red meat because it could not compete with people who were selling it to Egypt. That is nonsense.

Ten years ago we were worried about a monopoly in the beef market and we know what we went through sorting all that out in Dublin Castle and elsewhere yet now there is the same monopoly. I ask the Minister to look carefully at the issues. We have the best grass in Europe and can produce the sweetest beef at low cost. We can produce it outdoors for longer periods of the year than many, although not all, of our competitors in Europe and we can create a profitable industry.

As regards the position with Tesco, are we or are we not in the EU? The same farmers who are talking about Tesco not buying Irish beef are those who have gained most from European money coming into this economy. We cannot have it every way. I buy Irish products where possible and I would advise everybody to do so. I would advise people to buy local products where that can be done, as I said at the outset. However, it is not right for a Government party in the EU to identify a certain company which is committed to buying a European product. We are Europeans now. If the Minister is going to down that road, I want to know why it is not buying Kerry or Cork products.

We should also look at the market for organically produced meat and food in general. As previous Senators stated, the beef assurance scheme is welcome. It is a positive measure and it gives a guarantee to the consumer. It makes the customer understand that we care and it fosters trust and confidence in the industry.

I ask the Minister to take it a little further. There is a need to control the organically produced element of the market. Consumers tend to buy on the basis of price. They are not altogether sure about organically produced foods. There should be some system of guarantees built into that and not just a personal guarantee given by an individual farmer or producer nobody knows. I am not saying these guarantees are necessarily false, but we should support that market for a while until it gets off the ground. Being an island allows Ireland to have a cleaner garden than any other country in Europe. I ask that the Minister deal with that issue.

I ask the Minister of State at the Department of Agriculture and Food, who has responsibility for food, to look closely at where European regulations inhibit the development of acceptable home produce and cottage industry. I know he has looked at this before, but it might be necessary to find a way in which that particular industry can develop as one of the offshoots of the beef industry.

I am sharing with Senator Quinn so I cannot deal with some of the other issues. I look forward to the Minister's reply.

I appreciate the opportunity to speak which Senator O'Toole has given to me. I welcome the plans the Minister is making and the attention he is giving to the matter.

When something goes wrong in an industry such as the beef industry we immediately call for a debate. We should use these occasions to look to the long rather than the short-term because there is a danger that we would concentrate on short-term problems.

As regards the future of food, basically it is the customer who will decide what will happen. We can wring our hands, moan and decide what we want, but we must listen to the customer and acknowledge what he or she wants.

There is a saying in the supermarket business when somebody comes to sell a product to us that we do not have elastic shelves. If we put a new product on a shelf, we must take off another. I well remember — I take the instance of a product which is not of a beef product because beef products do not have established brand names — when Avonmore Foods came to sell Yoplait yoghurt to us we said we have sufficient yoghurts at present and did not need any more. We had no space. If we took their product, we would have to take another product off the shelf. Within five weeks we had to telephone Avonmore Foods and say "Please, sir, would you ever come and give us some of your Yoplait yoghurt". Because it created a demand for its product and customers said they wanted the product and they could get it else where, we had to eat humble pie. That does not suit a supermarket buyer. It sticks in his craw. I give that example because this is where the solution will lie: we must establish a means by which the public, who are buying products in supermarkets in Ireland and elsewhere, begin to seek our products and not because we demand that buyers find space on the shelves for them.

There is a spectrum which ranges from low value-added commodity products at one end to high value added products at the other. For 30 years, despite the best advice to the contrary, we underplayed the potential of the high value end of the market and concentrated instead on selling food into intervention or just as a commodity.

A good example is Golden Vale's ability to create a product, cheese strings. We still sell cheddar cheese in Britain and they buy cheddar, but it has not established itself as much different from cheddar which one can buy anywhere else. Golden Vale decided to come up with a different product and it developed cheese strings. The product may not be to everyone's taste but I am sure the Minister of State will have seen it on every supermarket shelf in the UK. The people who buy the product do not know that it comes from Ireland; they do not care where it is from; they just like the product offered to them. It is a high value added product.

My concern is that we have become price takers rather than price makers, and takers of whatever problems go with generic products such as beef or cheese. That is what is happening at present to Irish beef. It is being targeted in Britain because it is easy to so do. As a generic product it is distinguished only by its country of origin and that leaves it open to action of the kind taking place.

Branded added value goods with a strong identity of their own are not open to such treatment. People go for the name of a product without paying much attention to the country of origin. The problem with beef is that we have not found a way to establish that approach. Some years ago I talked to Waterford Crystal about trying to associate it with an Irish venture. However, the company told me that it does not associate its produce with Ireland. It is a marvellous product and in its advertisements abroad it does not emphasise its Irishness. People demand Waterford Crystal because of the standard of the product, not because it is made in Ireland. Indeed, many people who buy it in America do not know that it comes from Ireland. People seek an established brand. I do not suggest that we hide the Irishness of products but that we seek to build an identity for products where the Irishness is incidental and may not even be perceived by the customer.

When one moves a product up the value added scale it becomes more difficult for somebody else to readily substitute their product for it, as has happened recently with beef. A generic product by definition exists side by side with other products that are perceived as being the same. An individual high value added product can be much harder to substitute. There is a price to be paid by the customer — he or she must give up something that is liked or preferred to the alternative. The more individual the product the more protection it has.

I do not suggest that we should not sell beef to Britain. However, the balance continues to be wrong between the low value added and the high value added food. We tend to take a "farming" rather than a "food" approach. Today's foods are increasingly value added and tomorrow's foods will be overwhelmingly so. Our share of the markets in the future will be too small if we continue to focus our attention on the markets of the past. We must take a national approach to the food industry. This is not just an issue for the agricultural sector but also for the industrial sector. The value we can and should add will not be added by the farmers, but it is in their interest that the value is added. It is even more in the interests of the economy that we find a way to do so.

In the past we spent too little time considering the long-term and too much time concentrating on the medium term and the short-term. The result is that opportunities are lost. There are many examples to show that we can develop high value added food products and sell them successfully around the world. It should be a priority to ensure that a higher proportion of our food products and exports fall into this category. We can achieve it if we set our mind to it as our target. It will not happen unless we are committed to it.

Senator O'Toole made a serious sweeping statement about the Belgian Blue cattle and he alleged there were problems with calving in the breed. He is wrong and he should withdraw the remarks. I am a cattle producer and the Belgian Blue cattle are excellent. One can have problems with any breed of cattle but they do not cause problems to the extent outlined by the Senator. Members have spoken recently about Senators going on visits to St. Ita's in Portrane. We might do well to bring some Senators on a trip to a rural area to show them what farming is about.

A day out in the country.

I hope the Senator does not mean a one way ticket.

There are problems facing the winter feeders and this is a pressing issue. A realistic price of 90p or more for winter finishers would be required for beef farmers to stay in business. This price must be achieved taking into account the recent changes in the green pound if we want our beef finishers to stay in business.

Increased consumption is a solution to many of the problems in the beef sector. It will also require a major beef promotion by An Bord Bia and other organisations. I have no doubt the Minister will take that point on board. Extra funding may be required by An Bord Bia and I am sure the Minister will not be found wanting.

Our priority must be to reopen the live trade to Egypt and elsewhere. This is crucial for competition in the marketplace. Recent Teagasc farm incomes figures indicate that approximately 56 per cent of the livestock farmers have incomes from farming of under £5,000. That does not make farming viable. The problems in the cattle industry are of such a magnitude that a detailed review of policy and practices in the industry is required urgently. A supply management approach is an option and the EU Agriculture Ministers are examining such an approach as an alternative to the proposed drastic 30 per cent price cuts on top of already low prices. Perhaps a 20 kilogram reduction in the weights across the EU would largely balance out our production.

To support beef producers we could consider a premium payment for the heifer producers. Those farmers are disadvantaged in beef production. Farmers producing male cattle have at least a part income from premium payments but that is not the case with the producers of female cattle. There is a need to shift the output of the industry to the commercial consumer markets in Europe. Price transparency is important from the producers' point of view. Producers should also be concerned about the need to reduce costs in the industry. That might give rise to increased payments to them.

The overall objective of the review would be to ensure a viable income for farmers combined with improved market returns and premia. Such a review must be completed as soon as possible. In a European context we must redress the imbalance for the producers associated with the large food producers. Individual producers with sales of £25,000 to £30,000 are no match for the corporate processing sector with annual sales in excess of £1 billion. Producers are losing the battle at present and figures published last year show a widening gap between prices paid by consumers and what producers receive.

Beef producers state that cattle prices in Ireland are between 15 and 20 per cent below the EU average. Farmers are bearing the cost of weak marketing by our processors. If we want to ensure that we produce top quality beef on our livestock farms we must remove the guessing game on livestock prices. The factories' propaganda has much influence on market returns.

In 1998 we must introduce a beef price audit in conjunction with the meat factories and the Department. This was mentioned before but nothing has been said recently — perhaps the Minister is in a position to say more about it. This measure would independently audit beef price returns across our markets and provide a proper basis for establishing a transparent return from the marketplace. This price audit system must be extended to other sectors in the food industry but today we are concerned with the beef price, which is important if we want to keep producers on the land.

The dominance of a small number of large players is a major challenge to producers. In the future the Department must closely monitor the commitment of these players to a proper price for their produce. Many supermarkets are issuing loyalty cards to their customers but they in turn must be loyal to Irish food producers, particularly the beef sector. We must also make resources available to monitor the performance of our marketing people in promoting and selling Irish produce. In particular beef must not be sold below cost, as it is in some cases where it is subsidised from other areas.

Production of beef from grass in summer is fine but beef must be produced all through the year to achieve a balanced supply for customers and to maintain employment in our factories. If prices remain at the level of the last few winters, more people will move into production of beef from grass and that will cause not only a major glut but unemployment in our processing plants.

There was an attempt recently to move a large amount of beef out of intervention. I thank the Minister and Minister of State for securing a reduction in this sale. As I said earlier, something should be done to level the playing field for producers of heifer beef. The Minister mentioned the calf slaughter scheme, which was worthwhile in that it removed from the market place poor quality stock from which it was almost impossible to produce beef. All beef producers are faced with the problem of world market prices. In Australia, for instance, the selling price for heavy bullocks is £250 and for finished sheep, £25. We must do something about our cost problem. The Irish farm organisations should make contact with their fellow organisations abroad. In the English market particularly, Irish farmers have problems getting their beef sold in supermarkets. Perhaps farm organisations are intervening but they should play a major part for Irish farmers.

I compliment the Minister on the animal health control measures. Standards are high, which is welcome and will stand us in good stead. The reduction in BSE cases will be to our advantage in the future. I thank the Government for making money available to establish the cattle boat from Cork which facilitates exports to Libya and Egypt.

The animal registration system is causing some problems but it is a good scheme because it means the Department has complete control over location and movement of animals during their lifetime. Traceability is extremely important. Farmers will also improve the cleanliness of cattle, but it is a cost factor. If a farmer is unfortunate enough to have problems it may affect him but we need uniformity. Some farmers have brought cattle for a two day inspection and those which were rejected on the first day were passed on the second day. There should be proper grading and inspection across the board. If an animal fails a cleanliness test it should not be passed on the second day. I have no doubt the Minister will examine and rectify this.

Our problems were made more difficult by newspaper reporting of minor issues. The papers may not have had all the facts but they printed large headlines nonetheless. Often they had to retract what they printed but they did so in small print where it was not noticed. These points are important and I hope the Minister takes them on board.

This morning the Minister said we had approximately seven million cattle but less than 250 BSE cases, and this number is falling. That is a move in the right direction and I hope the number falls quickly due to the steps taken over the last 12 months. In England there were approximately 17,000 BSE cases last year. We must assure customers that we have the best quality beef in the world. I have no doubt that is the position here and I compliment the Minister for assuring that is the case.

I thank the Minister of State on behalf of myself and many farmers on the initiative he took this week in going to England to assure supermarkets there about the quality of our meat. I have no doubt that will benefit our farmers in the future. I compliment him sincerely on taking that step and I look forward to increased prices.

I am sorry Senator O'Toole was not present to hear my comments on his remarks about beef cattle but I hope he will hear about them. Perhaps the producers of continental cattle might bring him out and show him the exact situation in farmyards at the time of birth.

I appreciate the opportunity to speak in this important debate because we must keep this subject under constant review. My remarks will be made in a constructive spirit.

The Minister's address this morning was comprehensive and I commend any efforts which he and the Department are making to improve the situation for beef producers. I appreciate the difficulties which arise for him and his officials. He is an experienced man and, unlike some people, he did not engage in three card tricks about easy solutions during the debate this time last year. It was suggested at that time that if the then Minister hopped on an aeroplane to Tehran or Egypt he could open those markets. We know the reality is much more complex. I know the Minister and his officials are working very hard and I hope the efforts which have been undertaken over the past year and a half will bear fruit quickly. The proposal made to the Egyptians is worth trying by them and the improving relations between Tehran and the rest of the world should assist our markets there.

Senator Moylan and I come from the same part of the country. I am aware of the importance of agriculture and food production in our area and the pressure on many farmers, particularly in the beef sector. If this pressure is not addressed in a comprehensive and consistent fashion many of them will go out of business over the next three to five years.

I am also aware of the large number of small and marginal farmers in our area who receive little or no benefit from the current support system. I compliment the initiative of the area based partnership companies in County Offaly, the west Offaly partnership and the Oak partnership, which, in conjunction with Teagasc and the farm organisations, are addressing this need. Many of these partnership companies — those in Kerry, for example — have identified the problem of rural poverty and the fact that many small and marginal farmers do not benefit from the existing supports, even those to which they are entitled.

A small farm advisory service has been set up in Offaly with the support of the agencies I mentioned and I wish it every success. Every county should consider providing a similar service because, no matter how well off some farmers are, there are many who are not. Teagasc's brief was changed in the late 1980s, when everything was put on a more commercial basis, and those who were unable to avail of ongoing advice have as a result fallen behind.

Given the number of organisations and the amount of money which has been put into agriculture, it is a pity it has taken projects which were set up to address rural poverty to target this need. In my county 1,000 farmers were identified who were not availing of supports to which they were entitled. I am glad the service has been established but I am sorry it took an anti poverty programme to do it. I wish the small farm advisory service success and I compliment the organisations involved in it. The Department should ensure that service is extended to every county.

I am very aware of the disincentives for young people entering farming or continuing on a family farm. Only four of the 60 people who sat the leaving certificate with me in 1981 work in farming, two of whom are very marginal and are in farming out a sense of commitment — certainly not for the money they are making out of it. That is a frightening statistic for a rural county such as Offaly. These pressures and disincentives must be dealt with effectively in any CAP reform package. If they are not, any such package will be judged a failure.

The Minister stated that the Agenda 2000 proposals published last July, including CAP reform, aim to address the implications of EU enlargement, particularly in Central and Eastern Europe. That will be a very big challenge for us. There is also concern about the ongoing liberalisation of world trade under the WTO. We must keep a very close eye on that organisation — I often wonder if it is in the pocket of the US Government and the US Department of Commerce. The US seems very keen to enforce the application of rules by Europe and elsewhere through the WTO but it is not so keen on applying rules on clean and green food production to itself. I would not take what the WTO says at face value. The Irish and European cases must be put very strongly. Globalisation and liberalisation are not good in themselves. They have certain benefits, but there is no point in liberalisation unless we ensure safeguards for our producers and the provision of maximum stability and security for our markets.

The 1992 MacSharry reform of CAP was ambitious in its aims, with which I agreed. However, when Commission proposals go through the wringer of consultation and decision making they can emerge as a horse of a different colour, and sometimes as a different animal. That is what happened with the MacSharry proposals and why the end result fell far short of the intended outcome. CAP reform has failed in many of its main aims. It has failed to maintain the maximum number of family farms; to give consumers food at affordable prices, as shown by the steady decline in beef consumption; and it has had little overall success in combating surpluses. The Commission expects there will be 1.5 million tonnes of beef in intervention in seven years' time.

Progress has been made in relation to environmental protection, particularly with the REP scheme and the promotion of environmental awareness. I hope that will be continued and properly funded post 2000.

The agriculture industry is highly aware of the need to ensure the supply of good quality food and of the ever increasing expectations of consumers. That is a good development. While food scares are never welcome, they highlight the need to have a clear and reliable chain of supply from farm to table. I welcome the work of the beef assurance scheme and I hope it is put fully in place as quickly possible. It will be a very good aid to marketing beef.

I hope the failure to maximise the number of family farms, particularly those engaged in beef production, especially dry stock, can be looked at for the next CAP reform. I mentioned my local experience of this failure, which is borne out by the national figures. According to the official statistics 5,000 people leave farming each year, many of whom are young people who do not see it as a viable long-term career. This is leading to low morale, not just in individual families but in entire rural communities which are losing heart. Last week I spoke to a dry stock farmer in my area who has struggled for almost 30 years to keep the show on the road. He is now close to selling up because nobody in his family wishes to take over the farm. Who can blame them for refusing an average income of £5,000 per year when they can make three or four times that amount in Intel or Hewlett Packard? It is important to get this message across to those in urban areas who believe all farmers are rolling in money. If the trend is not reversed, I fear this country will end up like New Zealand. We will have a small number of big farmers, further depopulation of rural areas and even more pressure on our towns and cities, where young people are already being priced out of houses.

The scandal of this trend is that it is taking place during the biggest ever sustained transfer of funds to agriculture. This year is the 25th anniversary of our entry into the EEC and the CAP. Approximately £1.6 billion is injected into our agriculture sector, yet 5,000 people a year leave farming, the agricultural colleges cannot fill their places, green certificate courses are becoming fewer and smaller and the majority of farmers earn £5,000 per year or less. If the Santer proposals do not address this, the next decade will see further social and economic devastation of rural areas. Companies such as Seagate, Apple and Digital, which come and go, will have to cater for greater numbers of young rural people. One would be forgiven for saying the disease is terminal, but politicians know they can never give up, and farming is the same. The renegotiation of the CAP gives us some chance to redeem the situation.

I hope the Minister challenges the Commission's proposals and ensures that they are amended to provide the greatest possible support for the form of agriculture practised in Ireland. Our agriculture is not factory based. It is environmentally friendly and, if given the right support, has a long-term future. It is vital that the beef sector be targeted for extra support under CAP reform and that the means of qualification be fundamentally reformed to address the blind spot that currently exists. The Santer proposals envisage the special beef premium for ten and 22 month old cattle more than doubling. The current system ignores the reality of the Irish beef industry but is ideally suited to the big continental beef producers which have integrated beef systems. The suckler cow herd is the basis of our system. Teagasc has shown that only 15 per cent of animals are fattened on the farm where they are born. The present premium payments are therefore only suited to 15 per cent of the cattle in our pure beef industry. As they stand, the Santer proposals make this worse.

The proposals' other drawback is that they do not tackle the need to address quality beef production properly. This is disregarded as the same premium will be paid for the poorest quality dairy bred steer as for the highest quality beef bred steer. Pure quality heifer beef is totally ignored. Furthermore, the proposals offer a very poor increase in the suckler cow premium, and this will put further pressure on the small beef producers who provide the raw material for the entire quality beef industry.

One cannot hope to renovate a house while undermining its foundations at the same time. The Government must achieve a substantial increase in the suckler cow premium to preserve the foundations of the industry. Because our system of farming is unlike that of most EU countries, we must ensure that the revised CAP offers a support system tailored to our needs. Through my party's agriculture spokesperson, Deputy Penrose, and his contacts with Commissioner Fischler, I feel there is an increased understanding in the Commission of the need for flexibility and a greater willingness to allow member states to tailor available funds to their needs. Given what we hear from Brussels, that recognition seems to be stronger. This opportunity must be grasped by the Government, which must not only seek the highest possible level of Commission funding but also the greatest degree of flexibility possible for the Minister in dispensing these funds.

My party and I will unreservedly support any action that will ensure a fairer distribution of EU support and the survival of the maximum number of Irish family farms. This is what the Government committed itself to in its programme for Government, and it must pursue flexibility, drawing down as much as possible from Europe in the national allocation. That should be distributed fairly and equitably. The higher the percentage we can get, the better it will be for Irish agriculture.

A scheme for a national allocation should be drawn up through a process of open debate and consultation with all farming organisations. We are best placed to know what is best for Ireland. This debate could regenerate a genuine national policy on agriculture, which has been sorely lacking for many years. Policy is made in Brussels, and our Department is reduced to the status of branch plant of the Commission. It has been left to maximise the take, process claims and make claims to head office rather than being allowed to make fundamental decisions. I would welcome greater thought being put into agricultural and rural development policy.

The current system of supports is clearly not working in the interests of those for whom it was intended. If the Santer proposals are implemented without major changes, Irish agriculture will be considerably worse off. The method of supporting producers must be changed to achieve greater equity and fairness. This can best be done by getting more flexibility in deciding how to distribute our share of funds and allocating them in a way that meets the real needs of Irish producers, promotes a quality product and ensures the maximum number of family farms. I wish the Minister and his Department well in the negotiations. This is a subject all Members would like to see reviewed regularly in the House.

I am pleased to support the motion, which outlines the initiatives taken by the Minister for Agriculture and Food to support the beef industry. At a time when the meat industry is going through a difficult period, the Minister is to be complimented for the decisions made to support and underpin the meat sector.

BSE scares have had a continuous negative impact on the consumption of beef throughout Europe and the world since 1996. This has created enormous difficulties for the beef trade and huge costs to the Department of Agriculture and Food. New regulations have also been introduced. The Minister referred to the seven million cattle in Ireland. Considering the substantial reduction since the 1960s in the number of people employed in agriculture and the equally substantial reduction in the number of farmers, that figure represents a very strong national herd.

It is important that the Government rebuild the loss of confidence in the consumer area with its national beef assurance scheme. This puts a huge workload on the farmer, Department, retailer and exporter. The decision to proceed with this scheme is an important step in the future development of our beef industry. When fully in place it will be the standard bearer in the development of the beef trade.

Britain and Europe have traditionally consumed most of our beef exports. I welcome the Minister's decision to instruct An Bord Bia to promote top quality Irish beef in Britain. It is a pity that the market designed to be open and free is beginning to become parochial. One can see where the pressure is coming from, but it is important we support the quality of Irish beef by providing money through our development board.

I welcome the Government's promotion of the national food and drinks exhibition which takes place here and the quality of the presentations made by some exporters. It is interesting to see the product developments about which some Senators spoke. Senator Quinn referred to the quality and development of added value products. Many of the fine quality products being developed by the Goodman Group were noticeable at the RDS. It is interesting to see the possibilities in anticipating consumer trends and needs. Such developments are very welcome. Without getting into the nitty-gritty of the beef industry, it is sad to see groups of the quality of Goodman concentrating on and developing in other countries than in their home base. Investment in the 1980s and 1990s did not result in jobs and product development but it is important available resources are concentrated in this country rather than elsewhere.

We all recognise the live trade is an important aspect of agriculture. Farmers believe the live trade is important in terms of price arrangements. It strengthens the value of the product and introduces greater competition. Sometimes we do not realise the extent to which it is subsidised by Europe but there is strong feeling within the farming sector on its importance and its development. I particularly welcome the Minister of State, Deputy O'Keeffe's, interest in this section of the beef industry and his efforts in that regard are important. Over time developments will improve the outlets available for beef sales.

The previous speaker touched on an important point in relation to the World Trade Organisation and the Common Agricultural Policy. Sheehy's report on the structure of the Common Agricultural Policy said that, to a great extent, it was innovative at the time and provided the opportunity for farmers to get direct support from Europe. That principle was right. It did not, however, answer everybody's problems. It is important that this is reviewed because it has helped to create surpluses. We must look again at direct supports to farmers and not in the context of the system of the Common Agricultural Policy prior to this. If changes are to be made and there is to be flexibility in terms Government expenditure on agriculture, it is important the Government introduces the rural development scheme if it is serious about maintaining family units on farms. That must be an integral part of maintaining economic viable farms and rural villages and towns.

There is a concern among butchers, abattoir owners and victuallers about the restrictions which are necessary in the context of the national assurance policy that is being developed and it is important that it is seen to stand on its own. The change taking place is costly for victuallers and butchers who provide a great service and excellent quality food for the consumer. They need a certain amount of reassurance.

The decline in the number of people remaining on the farm is not a trend confined to agriculture but it is affected by the general trend of development and job creation throughout the country. People make intelligent decisions and balance one option against the other. Opportunities in the industrial sector and the trends in agriculture are decisive factors. Because of job opportunities in towns, young people go for the most suitable option. Job opportunities and social changes have effected change in the agriculture sector. I support the Minister and welcome the commitment to the future development of the beef industry.

May I share my time with Senator Coghlan?

Is that agreed? Agreed.

This item on the Order Paper reads: "Statements on the recent initiative by the Minister for Agriculture and Food in the Beef Industry". This morning the Minister read a long missive about the problems of agriculture but I failed to find a statement on any initiative he has taken on the crisis in agriculture. Before Christmas we had a lengthy discussion on this subject in both Houses yet the problems remain. The Minister said at the time that he was satisfied with the price of cattle. It was the most extraordinary statement a Minister for Agriculture and Food could have made given that the price of prime beef cattle for new grade steers in the factories was at best 86p per pound. Those prices fell to 80p per pound immediately after Christmas on the introduction of the deseasonalisation scheme. The problem was that the factories were taking advantage of the situation. The Minister, however, did not do much about it and the factories held the price at about 80p per pound for at least five or six weeks, if I remember correctly. I have good reason to remember because I trade in beef cattle. It was because of market pressure only, because cattle numbers were perceived to be scarce, that the price is currently running at around 96p per pound — and that is the best quote.

The problem we face has not been addressed. I will go back to what the Fianna Fáil spokesperson on Agriculture said to the electorate last April when he did everything possible to eviscerate the policies and actions of Deputy Yates, one of the finest Ministers for Agriculture——

He was good at clinics.

——at a time of great difficulty for Irish agriculture. In 1996 BSE introduced a difficulty for the industry the likes of which we have not seen before.

When the Taoiseach addressed the IFA conference in Dublin Castle in the new year he said his greatest priority after Northern Ireland was solving the beef crisis, or words to that effect, yet he has done nothing about it. He said in the Dáil last April that on return to Government Fianna Fáil would immediately embark on an action programme which would confront the issues highlighted. He said its first step would be to embark on a tour of the capital cities of third countries to reopen the beef and live cattle markets. The Minister for Agriculture and Food, never mind the Taoiseach, has not undertaken a tour of these capitals to try, above all, to open the live cattle trade. The Minister referred to Egypt. Given the nature of Egyptian politics, the Egyptian Minister for Agriculture is not a major member of the Egyptian Cabinet, despite the fact that Egypt has a major food problem and must pursue a strategic food policy. It is accepted by all as a political reality that the Egyptian market will never reopen on the basis of an intervention by the Minster for Agriculture and Food. It will only be reopened following a meeting or direct contact between the Taoiseach and President Mubarak. Yet there is no indication that the Taoiseach will travel to Cairo to negotiate the reopening——

What about the previous Minster's activities at Dublin Airport? The Senator has a short memory.

What did the Taoiseach, Minister for Agriculture, Food and Forestry and Minister for Foreign Affairs in the previous Government do? Did they travel to Egypt?

Acting Chairman

Senator Connor without interruption.

I call on the Taoiseach to honour his promise to the Dáil and his implicit promise to the IFA when he told it that solving the beef crisis was his biggest priority after Northern Ireland. He should travel to Cairo and engage in direct negotiations with President Mubarak.

As a result of the BSE crisis, the price of beef accruing to beef producers this year is as bad as it was in 1997 and 1996. The response of the previous Government was to seek measures to augment the incomes of beef farmers in 1996. The former Minister for Agriculture, Food and Forestry, Deputy Yates, negotiated a deal worth £75 million which included a BSE top-up and other measures. Has the Minister of State commenced negotiations to get another BSE top-up for this year? Doubtless he will agree that if it was deserved for 1997 it is also deserved for this year.

Has the Minister or Minister of State any plan to open negotiations with Commissioner Fischler for the transfer of approximately £75 million as part of a 1998 compensation package? In 1997 incomes fell by approximately 30 per cent and the best predictions indicate that that they will fall by a similar percentage this year. I hope it is not the intention of the Minister of State to preside over that situation. If Commissioner Fischler and the EU Commission were amenable to giving Ireland special assistance for what happened in 1996, most of which was payable in 1997, they will be similarly amenable in respect of this year. We are told they recognise Ireland's special position and the fact that Ireland must get rid of nine out of every ten steer animals it produces outside its borders. Part of that recognition was manifested in 1996-97 by the BSE top-up.

The 1996 BSE compensation scheme negotiated by the former Minister for Agriculture, Food and Forestry, Deputy Yates, was paid to farmers. The application year was 1996 but the reference year was 1995. Many farmers had smaller numbers in 1995 than in 1996 and consequently were paid on their 1995 figures. It appears that the Department has taken no further action on this. There was to have been a rebalancing. For example, farmers would be compensated if in 1997 it was proven that they had a greater number in 1996. What is being done to assist them in this regard?

The Minster appeared to be optimistic on Agenda 2000 and the Santer proposals. However, I am unable to be optimistic on Agenda 2000. It is proposed that the general EU budget is to remain constant at 1.27 per cent of EU GDP for the years 2000-6. While average EU growth has been much lower than in this country, it must be assumed that there will be some growth in EU GDP in those six years. Nevertheless, by 2006 new member states will receive at least 8 to 9 per cent of the farm budget. What will this mean for Ireland? What are the Government's proposals to ensure that this country will not suffer a major loss if 8 per cent of the farm budget is to go to new member states, such as Hungary or Poland, which have far worse farm structural problems than us, or if between 2004 and 2006 up to 30 per cent of the Structural Funds will go to new member states? We already face the problem of losing Objective 1 status because by 1999 our per capita income is expected to be between 100 and 103 per cent of the EU average. In such circumstances we can only hope for Objective 1 status for certain severely disadvantaged parts of the country.

Are we making an argument at EU level to increase the own resources of the EU? Unless these are increased Ireland will suffer in a major way. We should not fool ourselves about that. If the general EU budget is kept to 1.27 per cent of EU GDP and if allowance is made for GDP growth of a few per cent, the probable inclusion of new member states such as Poland and Hungary early in the new century will cause huge difficulties. For example, Poland has enormous structural problems in agriculture.

Is the Senator opposed to their inclusion?

No, I promote their inclusion but I wish to protect Ireland's interests. What is the Taoiseach, the Minister and the Minister of State doing at EU level to protect the national interest? We cannot lose out and continue to hunt thousands of people off the land and dwarf and downsize the food industry, which is a major industry in this country. We are not only concerned here with primary agriculture but with the food industry, which employs thousands of people, both directly and indirectly, from the service industries to the agricultural industries. That is why it is in our national interest, perhaps to a greater extent than other member states, to ensure that we argue for a greater increase in the own resources of the EU to cushion us.

We cannot take less in real terms than what we have received to date. Our market has been opened and trading has been reorientated. This was the price we paid and thousands of jobs in traditional industries were lost as a result of our membership of the European Union. We took on board that risk on the basis that the Common Agricultural Policy would deal with Ireland's unique and often peculiar problems. It will be viewed as nothing short of a national betrayal if that issue is not addressed.

There are many issues relating to agriculture and its problems, some of which the Minister mentioned. However, he did not inform the House of any initiatives, and that is regrettable. From a political perspective it gives me no joy to make that point, but it is regrettable.

I welcome my good friend, the Minister of State, Deputy Ned O'Keeffe, who is from a neighbouring county. He is long suffering today because he must listen to the debate on behalf of the Minister, who left earlier.

He scampered away.

I compliment the Minister of State as a farmer who has managed the success of the Celtic tiger better than most of his fellow farmers. The increasing difficulties being experienced by farmers who are under severe pressure has highlighted the urgent need for dramatic remedial action which the Government has failed to take. The prices being paid are totally inadequate.

There is a crisis as a result of the failure to reopen the live cattle export markets. What happened to the Government's strong commitment to farmers when in Opposition that it would reopen and expand live export markets, such as Egypt and Libya? We were promised a high powered offensive but it did not happen. The Government's efforts have been ineffective and beef producers have been at the mercy of factories. Farmers in other EU countries are faring much better regarding prices. Live exports are much needed; it is the only way farmers will obtain better prices from factories.

The Government made a pre-election promise to restart and expand the control of farmyard pollution and dairy hygiene schemes. When in Opposition the Government promised to continue installation aid for young farmers. Apart from funding existing applications, why was this scheme abandoned? No long-term commitment has been made in that regard. There have been huge delays in all categories of payments to farmers. Under the charter of rights, farmers are entitled to payments on time. Many farmers awaiting payments had to make arrangements with bank managers for extra borrowings on which they had to pay interest although the delays are the responsibility of the Department. Will the Minister give a firm commitment that payment schedules will be met in 1998?

Beef production is of paramount importance and the British multiples' "Buy British Beef" campaign has had a hugely detrimental effect on confidence in the sector. This campaign makes a mockery of the proclamation of the European ideal as enshrined in Article 40 of the Treaty of Rome governing the free movement of goods. The campaign also embodies anti-competitive practices contrary to the spirit of Article 85 of the EU Treaty. In Britain Tesco loudly proclaimed its pro-British policy despite the fact that Irish beef is 20 per cent cheaper and of the highest quality. Why did it do this? It is amazing from a chain that has a 25 per cent share of the Irish grocery market and has its eyes set on a much larger share. Having failed to secure a toehold in France and having been prevented by a planning directive in Britain, it is attempting to put in place a large number of superstores in Ireland which will be 80,000 square feet each. How sure are we about the origin of all its packed meat in its Irish stores? The advertisement campaign it ran in Ireland following its faux pas in Britain had a guilty look. The Director of Consumer Affairs should be asked to ensure that consumers are getting what they think they are getting and what they want.

The activities of these multiples amount to a curtailment of consumer choice. They decide exclusively what they will stock and put items of their choice on the shelves. They effectively make customers' choices for them. This makes a mockery of the freedom of choice principle. Ireland traditionally supplied 20 per cent of the requirements of British multiples and 5 per cent of the total market. It is vital that a strategy is put in place to regain our traditional presence in that market, which is our fair share.

Is anything sinister involved in events in Britain? We were denied unimpeded access to our traditional markets in Britain by the ports blockades in contravention of Article 85 of the Treaty of Rome. This blockade mentality then invaded and took over the boardrooms of Tesco and other British multiples. The British campaign was extremely negative and it is particularly reprehensible that Irish beef was singled out for such discriminatory treatment. The Minister for Agriculture and Food, Deputy Walsh, whimpered about these issues. A more focused and forceful policy is required to ensure matters are put right.

This debate on agriculture is most opportune and I am delighted the Minister of State, Deputy Ned O'Keeffe, is in the House. It is his first visit since he became a Minister of State and I congratulate him on his appointment. The senior Minister took the other debates and the Minister of State is most welcome, given his experience in agriculture and his vociferous stances on various agricultural issues when he was in Opposition.

Does the Senator remember them?

It is delightful that he is now in a position to execute the wonderful promises he made when in Opposition.

The Senator should not worry.

Unfortunately, we are still waiting for the major initiatives that were promised during the last election. The list was extensive and entertaining and I hoped the Minister would take the opportunity today to give a green light to at least one of the promises made at that time. We are hearing about the reality of the position on the ground, particularly in the beef sector, from farming organisations and constituents.

One of the promises made by Fianna Fáil during the election campaign was that as soon as it went into Government, the live export trade would be immediately reopened. However, nine months later we are still waiting for that to happen. In the meantime producers are suffering. Those in a position to buy their beef are limited because the Government has not reopened the live export trade. There are advantages to producers in exporting carcases, but the primary concern of the Government must be the protection of farmers. If that does not happen, there will be a further reduction in the number of people engaged in farming.

There has not been a clear agricultural policy in this country since we joined the EEC in 1973. Since then we have reacted to events in, or direction from, the EU and world markets. That is unfortunate because in the meantime thousands of small farmers have left the land. There is an exodus of small farmers in every county. They are becoming extinct. That automatically changes the fabric of society. It is imperative to draft an agricultural policy to protect those who remain. An action plan to that effect should be put in place. I hope Minister O'Keeffe, who has experience of farming, will see to that. He is a large farmer but I know that as a Deputy and a Minister he appreciates the situation for small farmers. Will he address that issue within the Department in the interests of equity for the rural community?

The Minister promised installation aid for young farmers would be put in place. There are parents considering transferring farms to sons or daughters but because installation aid is not in place that process is being slowed down. It is a retrograde step that young farmers are not being given control of the family farm. The sooner the installation aid is put in place the better. I ask the Minister to deal with this as a matter of priority.

Since the Government took office, just as when Fianna Fáil were last in government, there has been a delay in headage payments, suckler cow premiums and REPS payments. The delay in payments was exacerbated at the end of 1997. When we were in Government, 95 per cent of payments were made before Christmas. The situation has deteriorated. It is unfortunate that the charter of rights introduced by Deputy Yates during his term as Minister for Agriculture, Food and Forestry does not seem to be operating as effectively as it did. Minister O'Keeffe should tell Minister Walsh to show some enthusiasm and initiative. The action stopped when Deputy Yates left the Department in June of last year. That is no reflection on the officials of the Department because if the senior Minister does not show initiative neither will others. I ask the Minister of State to convey that message to the Minister. It might be an unpalatable message for a junior Minister to convey but I am sure he is more than capable of doing so.

The rate at which the IR£ enters EMU and the effect that will have on farm prices and the agriculture industry is important. It is vital the Department of Agriculture and Food remains in constant contact with the Minister for Finance when preparing for EMU so any decisions made take into account the interests of small farmers.

The most recent type of assistance provided to farmers is REPS. In the first year of the scheme payment was prompt. Last year, however, was a disaster. Many farmers are still waiting for payments they should have received last November. Many of them are waiting for compliance inspections. I suggest any farmer who passes the compliance test but does not receive his payment because of a delay in inspection should be given interest on the money which should have been paid to him last November. If the case were reversed and a person owed money to the Department of Finance or the Revenue Commissioners they would pay interest. It is about time farmers were paid interest if payment is delayed. That accommodation exists for the small business sector. It should be introduced in the agricultural sector. I ask the Minister to address that issue.

A much stronger negotiation stance is needed when we go to Brussels as far as cattle producers are concerned. The stance taken has not been as forceful or convincing as it could be. Ireland is a special case: we are an island nation heavily dependent on cattle exports. This is a case that needs to be strongly put when negotiating in Brussels.

I urge the Minister to take these points on board. I was interested in the Minister's speech and thought we would hear some good news for farmers. All it contained was a history of the agricultural situation in Ireland and Europe for the past few months. It was not constructive. Knowing that Minister O'Keeffe is a man of action, I have every confidence he will ensure the action plan is put in place by the Government.

I thank those Senators who contributed to the debate, especially the last speaker who was very boisterous in her outbursts in many areas. This is my third visit to this House. Previously the Senator was here herself.

Coming to the end of this very worthwhile debate on the beef industry I am pleased to set out some of the key issues which will impact on the sector in both the short and long-term.

For the 140,000 or so producers involved in cattle production the price which they get for their product is all important: at the beginning of this year cattle prices had fallen to the lowest levels in years. I am glad to say that this was only temporary. We succeeded in putting measures in place which, since then, have resulted in cattle prices increasing by almost 7 per cent to a level which should provide a reasonable return on the investment and efforts of our producers. It is my earnest hope that the degree of stability now being enjoyed will continue for the remainder of the year.

I do not need to remind this House that predicting possible price and market movements for any sector is not easy, particularly for the beef industry. However, there are some positive indicators for a relatively stable position ahead. The imbalance created in the EU between beef supply and demand as a result of the BSE crisis is being corrected: there is a recovery in beef consumption and the measures introduced in the wake of the crisis, such as the calf processing scheme and the cattle cull in the UK, are reducing production; intervention purchasing is now at a trickle compared to this time last year and it could vanish entirely after the spring; cattle prices in EU markets have recovered fully since the BSE crisis and world market prices continue to strengthen. All of these factors point towards improving market prices and greater stability in the sector. While all these factors give positive signals the Irish industry is, nevertheless, in a very vulnerable position.

As the largest beef exporter in the northern hemisphere, the BSE crisis has left us particularly exposed to the changes in the marketing environment at international and EU level. At international level, while some markets still remain closed, particularly for live cattle, and some restrictions have been imposed on our beef exports, most of our markets remain open.

At Community level the move towards the renationalisation of beef consumption, which is being assisted by Community law under the new beef labelling regulations, poses serious challenges to our industry. The more recent developments in what has always been our biggest market across the Irish Sea is particularly disturbing. These developments call into question the fundamental principles of the single market and our right to trade freely. These pose serious challenges to the Community and its institutions to protect those principles at a time when the Community is on the path to further enlargement.

First, I compliment of the leader of the Fine Gael Party here on his comments on agriculture. His speech was very interesting. Much of it was very helpful to this side of the House and, like other contributions, shows a very positive approach. I must query a few things. Is it right to say you fork out 111p per pound for beef, because now a cheque comes in the post which has been a major compensatory factor for many farmers and has become a fact of life at farm level? As much as farmers may dislike it, it is based on productivity and is part of their income now and will be in the future. As we move into the Santer proposals in Agenda 2000, this Government is fully committed to maintaining farm incomes with proper compensation. We will not stand idly by and allow Irish farmers not be fully compensated.

Live exports are vital for competition. I remember when the previous Minister for Agriculture, Food and Forestry, Deputy Yates, was in his clinic in Enniscorthy when he should have been signing an export document in Dublin airport.

Deputy Yates got an agreement with the Egyptians. You took your eye off the ball and did not come back until August.

To make such a statement was an insult to the farming community. I do not want to be hard on Deputy Yates because he was dealing with the beef industry at a difficult time when BSE was first discovered. Every effort is being made to make sure we have a live trade. I know the year does not augur well, but perhaps live exports will improve in May when good cattle will be on the market.

Live horse and you will get grass.

You are the west of Ireland Minister.

An Bord Bia is doing excellent work, perhaps they could do more. As Senators will be aware, the Minister has set up a pioneering group. They have had two meetings with interested parties, the second of which was held last week in Agriculture House and presided over by the Director General of the organisation, to put in place a programme of new initiatives and measures for the beef industry. I look forward to it and it will be in place very soon.

By its results we shall judge it.

The greatest challenge facing Irish farmers and the beef industry is that we must have traceability. All sides of the House support the idea of full animal traceability. As an exporting country we export 90 per cent of the beef we produce, which is worth £1.5 million to our economy. That must be protected and computerised traceability must be provided.

When will we get computerised animal traceability?

Everyone is in agreement on this. Do not be making politics out of it. Computerisation was promised by the previous Minister, Deputy Yates, but it has not happened yet. We must inform the other beef producers throughout the world that we can identify and trace animals.

Yes, we can do that when you provide resources for a computerised beef assurance scheme.

Acting Chairman

The Minister without interruption.

We provided £6 million in the budget for the beef assurance scheme.

You should start spending it quickly.

While the UK is one of our most important export markets we have lost a proportion of the German and French markets, through the BSE scare. On Tuesday I was part of a delegation on agriculture which visited London. I compliment Deputy Ellis from the Oireachtas Select Committee on Agriculture, Food and the Marine Committee who also attended. He has a great interest in agricultural business and the beef industry and is a very competent man. I also compliment the IFA livestock chairman, Mr. O'Malley. I met both men at the Meat and Livestock Commission. We also visited four supermarkets. The people we met understood our position and were very co-operative, especially the members of the Meat and Livestock Commission. This organisation is similar to An Bord Bia. The UK beef market consists of 57 million people with a value of £200 million and they are about 75 per cent sufficient. The Irish share of the market is around 100,000 tonnes of prime high quality beef. As my Departmental official, Mr. Martin Hegarty, will witness, I was disturbed by the fact that we only found Irish beef in one of the four supermarkets we visited, namely, Sainsburys. Irish beef is of very high quality and in recent years we have invested heavily in its processing and packaging. As you will be aware, it is an added value product. It is a product to which it is difficult to add value. It is a fresh product that can only be chilled or frozen. We can compare with the best beef in the world, whether it comes from South America, Argentina, Bolivia, Prague or wherever. Our beef is excellent. As the Minister of State for Agriculture and Food, I can assure people we have a reliable product because we have the proper safety procedures in place.

Hear, hear.

No one has a keener interest in or knowledge of the agriculture business than the Taoiseach.

East Limerick here we come.

The Taoiseach always wants to know the day-to-day concerns of the food business. As late as yesterday morning the Taoiseach had to briefed on my visit to London.

(Interruptions. )

The Taoiseach would not know a pig from a hen.

On Monday the Minister for Agriculture and Food, Deputy Walsh, will meet the UK multiples in London. The charter of rights introduced by a Minister was mentioned today. It was a fire brigade decision.

It was a charter of rights with several interested parties.

It was a hasty decision. Anything done in haste does not work. Mention was made of installation aid for young farmers. The Fine Gael Party suggested suspending it. In conjunction with Macra na Feirme, we are now introducing a new scheme.

Fianna Fáil suspended the scheme.

It took The Farmers' Journal today to identify all the farmers you failed to deliver to in the last election.

Put the facts straight.

In regard to the UK multiples, we are a food producing country and are not in the business of confrontation. We want to sell our food and beef products all over the world in the free market.

That is not what you said in Opposition.

I am glad Senator Ryan can be with us now. He was absent all day. There are a lot of agriculture votes in north Dublin.

We are not into confrontation. We just want a level playing pitch to sell our product. It is a well known fact that we can compete with the best. Let us trade freely throughout Europe as is our right under European law. If we get this we will be satisfied. I have mentioned many innovative products which are stocked on the shelves of the UK supermarket multiples because we have a reputation for good food.

What about Libya?

I have already referred to Libya and I will not repeat myself.

The Minister would like to forget about it.

Senator Quinn went into great detail about the food industry and mentioned a variety of products. I have already mentioned An Bord Bia.

Senator Henry referred to the complex area of the Ecoli 0159 issue. Of course we are concerned with it. We have clean cattle. The law demands that cattle are clean. I congratulate the farming community on their adherence to these regulations. Only a small number of cattle have not qualified.

Senator Connor referred to BSE compensation. We did not get BSE compensation in 1997.

It was a carry over. We are not going to split hairs about that.

The only BSE compensation was promised in 1996 but £30 million was not paid until 1997. Because of the 4.5 per cent increase in the green pound and because of the strength of our economy it will be worth approximately £45 million in a full year to Irish farmers.

Will the Government introduce BSE top ups?

Senator Callanan referred to the early retirement scheme for farmers and suggested some changes which might be made in that scheme. I share his view on that matter and the matter will be brought to the attention of the Minister.

Senator Callanan was primed.

A little pat on the back for Senator Callanan.

Meat processing is a major industry. We have more than 80 meat factories. A study is being carried out of a beef rationalisation programme similar to a study of the pig meat industry which was done some years ago. It is likely that that report will be completed by the end of this year. The industry is re-shaping and needs rationalisation. A consultant has been appointed to examine the industry.

Our international obligations also set constraints on our exports. Under the GATT Agreement the ceiling for subsidised exports is falling each year. For the current year the limit is a little over one million tonnes and by the year 2000 this will fall to just over 800,000 tonnes. The management of this quota has been a major issue for us. In the past the Commission used the very blunt instrument of export refund cuts to keep the level of subsidised exports within the limit; in 1997 refunds were cut by between 30 per cent and 50 per cent across all categories. As the country with the highest dependence on third country market business, these refund cuts left Irish cattle producers more vulnerable than those of any other member state within the Community. I am glad that the efforts of Minister Walsh at my Department to change the system have been succesful.

Since last October we have succeeded in preventing any refund cut on steer beef, which accounts for the bulk of our third country exports. Indeed, in the past month, the refund for male beef has actually been increased by the Commission which, along with the currency revaluation, has put an effective floor price under cattle. The corollary of the strategy for male refunds is that the refund for beef from female cattle has been considerably reduced and, should the Commission continue with this approach, it could lead to female beef being sold without subsidies very soon. While this could lead to some problems in the cow beef sector. The overall strategy, however, provides the Commission with greater flexibility in managing the GATT licences and targeting the refunds at the most vulnerable producers within the EU. I am extremely thankful to Commissioner Fischler and his officials for acknowledging the difficulties in Ireland and responding to our request by adjusting the export subsidy system in a manner which so far has been to the benefit of our producers.

The other issue discussed today is the restoration of the position of Irish beef on export markets. As has already been outlined this morning by the Minister, there has been a very significant shift in our exporting profile over the past two years since the BSE crisis. In 1995 almost 60 per cent of our exports went to the EU market and the balance to third countries: in 1997 the converse applied. The fall in consumption within the EU and renationalisation of markets have all contributed to this situation. Nearer home, Irish exporters have been steadily regaining market share on the UK market: last year approximately 90,000 tonnes was exported to that destination which has always been a traditional outlet for Irish beef. This figure is well up on the 1996 figure of about 60,000 tonnes. Because of the over 30 months scheme, in particular, self sufficiency for beef in the UK has fallen from 92 per cent in 1995 to the current level of 78 per cent. Forecasting experts have put the UK import requirement at somewhere in the region of 250,000 tonnes of beef for 1998. The increase in Irish exports is only a repositioning of Irish exports in response to an improving market and not, as has been depicted, the dumping of beef. Because of currency factors Irish exporters do have a competitive advantage on the UK market at the current time but this advantage has not been abused. Our exporters have continued to concentrate at the high quality end of the market through the major multiples, markets which they have built up painstakingly over the years. The current efforts by the UK beef industry and its marketing arms to dislodge Irish beef from these outlets give rise for concern. As the Minister for Agriculture and Food said this morning, every effort is being made to counteract this development and we are confident that we will be succesful with a new marketing strategy to be submitted by An Bord Bia. The introduction of new beef labelling requirements from April 1, makes it incumbent on us to defend our product on all markets and market it as beef produced to the highest standards of safety and quality. The new assurance scheme which will be coming on stream this year will underpin these standards.

My long-term aim is to regain market position on the high valued stable EU markets. International markets will of course remain extremely important and every effort is being made to have access to all markets for Irish beef and cattle assisted with adequate market supports.

Clearly, the Irish negotiations on CAP reform will be of crucial importance to the; future of the Irish beef industry. As Minister Walsh said this morning, the Commission's detailed proposals are expected to be published on 19 March. However, we can expect the negotiations to continue well into next year. While my Department is reasonably supportive of the overall strategy proposed by the Commission, which is to reduce prices and compensate producers by way of increased premium payments, we have considerable difficulties with elements of the Commission's outline proposals as published last July. In particular, the level of compensation proposed will have to be improved upon, particularly for cattle reared in expensive production systems. Our approach to these negotiations will be to secure full compensation for any cuts in prices and to ensure that the Irish beef industry can continue to make a valuable contribution to the Irish economy in terms of output, employment and exports.

What is evident in relation to reform of the beef regime is that, whatever about the nature of the eventual reform adopted, reform cannot be avoided because the BSE scares and the resultant decline in beef consumption have brought a serious imbalance in the beef market in the EU. If this imbalance is not dealt with in an orderly fashion through a reform of the beef regime it will create an enormous problem on the EU market because, unlike in the past, the increased surplus cannot be disposed of in third countries because of the GATT ceiling on subsidised exports. Neither is selling beef into intervention a long-term solution to the situation. The alternative to reform would be to allow the market to find its own level. Given the scale of the surplus, the level at which market prices would settle down would be far lower than at present. In view of our dependence on exports, failure to deal with the problem would have very serious consequences for Irish beef producers.

In conclusion, I would like to thank Senators for their valuable contribution to the debate. The three Ministers working at the Department of Agriculture and Food will ensure that agriculture in /reland is safe and well and will survive for a long time.

An Leas-Chathaoirleach

When is it proposed to sit again?

Tomorrow at 10.30 a.m.

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