I welcome the Minister and thank the Cathaoirleach for the opportunity to raise this matter on the Adjournment which calls on the Minister for Agriculture, Food and Rural Development, Deputy Walsh, and the EU Commissioner for Agriculture, Mr. Franz Fischler, to address the income crisis facing lowland sheep producers. I tabled this matter because of the constant and strong representations made to me by farmers in my constituency, Roscommon-Longford, which is the base for the lowland sheep industry. Other areas involved in the industry include east Galway, Mayo, Westmeath, Carlow, part of Kilkenny, north Tipperary and parts of Offaly and Laois. The lowland sheep industry has been concentrated in these areas in the midlands.
In my constituency, there has been heavy investment by many young farmers in this category of the sheep industry. This has involved total restocking with suitable breeds, the restructuring of lands and the provision of expensive and extensive housing. These people are committed sheep farmers and they have flocks of 300 to 700 or 800 sheep. They desperately need their case explained and the serious income crisis in the industry addressed. I do not expect the Minister of State to have immediate answers but I wish to highlight the plight of lowland sheep producers in my constituency and in the midlands and west region.
Sheep farmers have identified six areas where policy reform could be introduced which would have a positive effect on sheep producers' income in the future. The proposals are a more equitable level of direct payments for the sheep sector; the abolition of the 7 per cent stabiliser; changes to the extensification premium stocking rate; changes to the EU sheepmeat import and the WTO arrangements; changes in headage payments and changes in the ewe premium retention period. These are six areas where sheep farmers consider changes are needed to address the current crisis.
The farmers inform me that the current ewe premium policy imposes an income trap on sheep farmers. Under the current policy, if lamb prices rise, the ewe premium is automatically reduced and vice versa. As a result, sheep farmers are locked in a severe income trap dilemma. As a result of the failure of EU lamb prices to converge since 1992, Irish sheep producers have been short changed in ewe premium payments to the extent of £30 million on average per year, the equivalent of £6.26 per ewe in premium payments. A comparison of direct payments across other sectors shows that sheep farmers have lost out badly in terms of direct payment support in recent years. I will outline a few of the schemes to highlight exactly what I mean by that.
Under the suckler cow premium scheme, a unit is £176.50 and the ewe equivalent should be £26.47; the special beef premium, the bull premium and the cereal premium all have a major imbalance vis-à-vis the sheep. The ewe premium of 1998 is £17.72 and the equivalent is £17.72. There has been no change for sheep farmers. They are expected to live on what was originally decided as direct payments and they are running into very severe difficulties.
They have proposed, in view of the major inequities in the current policy, that a reform of the ewe premium system should be adequate to compensate producers for the full income loss in premium payments which, in turn, will provide producers with a more equitable level of direct payments in line with other sectors. That is only fair.
In the last negotiations of Agenda 2000, I and many of my constituents were very disappointed that there seemed to be no attention paid to the lowland sheep industry in this country. It is a major industry in the midlands and a major employer. Situated beside my home is a sheep processing plant which exports practically all of its produce to France. The many people who are employed there should be considered as well as the ancillary people who are involved in transport and so on. This is a major component in job creation and in agriculture in my constituency. The bottom half of County Roscommon, in particular, is recognised as being on one of the best sheep producing areas in the country and, as I am trying to point out, there is a severe problem there now.
I want to bring to the attention of the House the stabiliser mechanism. The stabiliser mechanism was introduced in 1988 as a means of controlling EU sheepmeat production. It operated on the principle that for every 1 per cent increase in EU sheep premium production, there was a corresponding 1 per cent increase in the stabiliser. By 1992, the stabiliser had reached 7 per cent. In that year under CAP Reform 1, production quotas were introduced capping EU sheep production in the future. Despite a reduction in sheep production in Ireland and in some other EU member states, the 7 per cent stabiliser is fully applied and unfairly used to reduce ewe premium payments for all producers.
Their proposal is that the 7 per cent of the national ewe premium quota be relinquished in turn for the abolition of the 7 per cent stabiliser. That is a current proposal from sheep farmers in my region. This would be worth £4.35 per ewe in addition to the premium payments to all sheep producers. That would in some way alleviate the difficulties that they have now.
They also point out – and this has been mentioned by others – that it is clear that this proposal would in no way impact on the rural world premium payment of £5.20 per ewe in disadvantaged areas. They confirmed that would not be the case, that it would not interfere with that. I want to place that on the record also.
Extensification premium payments is an area of dispute and of concern with farmers. As a result of extensification premium changes introduced in Agenda 2000, the sheep farmers fear a major exodus of sheep from mixed lowland cattle and sheep farms. I can certainly see this happening. Their proposal is that the first 30 livestock units of sheep be excluded from the extensification premium stocking density calculation. That is a reasonable proposal considering what they and I believe to be a crisis in that industry now.
Obviously world trade plays a part in practi cally everything today, and very much so in the sheepmeat industry. Based on the full complement of EU sheepmeat imports, under the present GATT agreement of 315,000 tonnes, the EU sheepmeat market is 103 per cent self-sufficient. Further imports will reduce EU prices and increase the cost of ewe premium compensation. The sheep farmers are proposing that there be no further increase in sheepmeat imports or live animal imports into the EU in the next WTO round. In addition, the sheep producers are proposing that current volumes of imports from New Zealand be regulated by controlled allocation of import licences in order to avoid over-supply and negative price impact at the important high priced markets at both Christmas and Easter. That is when they hope they can capitalise on extra demand and take some advantage of high prices but if imports are also available, then prices level out and there is no opportunity for sheep farmers to avail of what might be two points of high season in the whole year.
Sheep farmers are proposing that lowland sheep farmers who have not benefited from headage payments in the past in disadvantaged areas, should be a priority category in the new proposals to change the existing headage payments from a per head basis to an area based system. This is logical and I hope it is something that would be evaluated by the Department and indeed by Brussels and something that should be considered in the changes.
The ewe premium retention period is a bone of contention with sheep farmers as well. Market analysis clearly shows that the current ewe premium retention period is having a negative impact on spring lamb prices. This was particularly evident, I believe, in 1999 when lamb prices fell by 25 per cent in mid-April at the end of the retention period. The sheep farmers are proposing that the application and retention period for the ewe premium be brought forward with application opening in early December. In addition, sheep farmers are proposing that the 100 day retention period begins immediately from the date on which the premium application is lodged with the Department of Agriculture, Food and Rural Development. This would allow for a staggered ending to the retention period in line with other premium schemes and reduce the negative impact on the spring lamb market.
These are the points I want to raise. I believe it is the start of a campaign on behalf of the sheep industry and particularly the lowland sheep industry for a fight for survival. While they and I do not expect the Minister to give any great news tonight, I am asking him to take on board the current concerns of the sheep industry and the lowland sheep industry. This is a major issue in the area which I represent and from where I come and which I understand.
I put down this motion some time ago; in fact, I withdrew it last week because of other matters. I put it down after the meetings I had with sheep farmers over the last two months. It is a coinci dence that this motion is being taken today when sheep farmers are protesting outside the House.
I genuinely believe, from my contact and meetings right through County Roscommon and County Longford, and some people from other areas have attended as well, that there is great concern about this. Young people, in particular, who went into the sheep industry ten and 11 years ago, on the basis of what they saw as a future in the sheep industry, are now extremely worried. Their great worry is how they can enter any other form of agriculture. They do not have the capital to do it if the sheep industry fails them. This is an area to be investigated and indeed proposals should be sought to support an industry that is important in my part of the country.
