I move:
"That Dáil Éireann recognises, in view of the decline in agricultural incomes and production, that there is an urgent need for special measures to aid agriculture, resolves that the following measures shall be introduced to that end:—
(1) the abolition and refund of the Resource Tax.
(2) the repeal of the Bovine Disease Levy.
(3) the abolition of rates on agricultural land.
(4) the introduction of a capital allowance against income tax for breeding stock.
(5) an interest subsidy for certain farmers and
(6) the reduction of stamp duty on transfer of agricultural property to young farmers and
therefore provides that, notwithstanding anything contained in Standing Order 119 (1) of the Standing Orders relative to Public Business or any decision made thereunder, a second reading shall be given to the Agricultural (Emergency Provisions) Bill, 1980 as presented.".
I am moving this motion after consultation with my colleagues because of the extreme gravity of the national emergency that exists arising from the situation in agriculture. We are not talking here of a sectoral problem or a sectional interest but of something which is of national importance. Having throughout my career over the last 25 years since the EEC was established looked on it as the means of this country getting out from under economic dependence on Britain and its cheap food policy and having dedicated myself to securing EEC membership for this country because of the possible benefits for agriculture. I am anxious to contribute to this debate and emphasise in doing so the gravity of the situation as we see it. I believe it is seen in a similar way by the nation as a whole. I am not speaking alone for the party but for the whole country. I am sure that most of what I have to say will be shared by Members on the Government side although on some points of criticism of the Government they will naturally wish to demur.
The policy of joining the Community as full members, which I was engaged in from an early stage when I first helped to sound out unofficially from the Government of the day the possibility of full membership in April 1961, is one which proved its worth in the seventies. From the time when membership became a probability in 1971 to 1978, apart from a brief dip in 1974 because of the temporary world cattle surplus, Irish agriculture benefited to an extraordinary degree from membership of the Community. During that period of seven years the purchasing power of income arising in agriculture rose over 70 per cent. In that period farm incomes rose four-and-a-quarter times, far beyond even the massive increase in consumer prices that occurred during the oil crisis. In 1980 farm incomes are back well below the 1972 level in terms of their purchasing power. In fact, they are almost down to the 1971 level. There is every indication that next year, unless there is a major intervention by the Government, hopefully with the co-operation of the EEC, the purchasing power of farm incomes will be below that of 1971 with farm output falling, as it is at present, bringing incomes down in money terms even if there is a significant price increase.
Before we consider what measures should be taken to deal with the situation it is worth considering why it has happened. There is some confusion in people's minds about this. A factor in the situation is the EEC farm price situation but it is not that the prices have fallen. The reality is — I have just checked the latest agricultural price index figure for the month of September — that over the two years. September to September, there was no change in farm prices. There has been a failure of farm prices to rise for the Irish farmer because of the small increases in the EEC some of which have been eroded as far as we are concerned by special factors including the effects of the measures taken in regard to dairy production. The problem as far as prices are concerned is not that they have fallen but that they have not risen. The fact is that two-thirds of the drop in the purchasing power of farm incomes is accounted for by the increase in consumer prices eating into this purchasing power and one-third is due to the drop in farm incomes.
When one comes to analysing why there has been a drop in income one finds that it is not because farm output has fallen. On the contrary over the two years, from the figures available in the Central Bank Bulletin, there appears to be no change in gross output and a small increase of 2 per cent in net output over that period. The drop in incomes is not due to a fall in output but to the very rapid increase in the price of inputs which have risen by 30 per cent in the last two years. Once again, inflation. What we have is a situation where farmers are squeezed by inflation at both ends. They must face inflation which eats into the purchasing power of incomes derived from static prices and are at the same time eroded by the fact that they have to pay more for their inputs. That has the effect of discouraging them from buying inputs and using fertiliser.
Almost all of the farm problem, therefor, is due to inflation when one analyses the situation and most of that inflation it has to be said — perhaps three-quarters —is our own fault and is due to domestic causes. Any analysis of inflation has to give a certain amount of consideration to the effect of oil prices and other import prices. When one looks at inflation over the last couple of years it is clear that much the greater part of it is due to our own domestic policies, the increase in taxes and cuts in subsidies made necessary by the cost of the Fianna Fáil manifesto and by the large pay settlements that resulted from the price increases brought about by budgetary action and which are now running at double the level they were running at in 1977. The Government must accept a primary share of the responsibility for this situation. It is not primarily due to the EEC although it would have been helpful if EEC farm prices had risen over the period more rapidly than they did. The primary problem is inflation at home rather than the EEC situation.
In addition the Government have chosen during those two crucial years of unparallelled difficulty for farmers to make the whole situation worse by such measures as the 2 per cent levy, the resource tax — both of which were payable regardless of whether there was any farm income out of which to pay them — the imposition of a disease eradication levy — the more a farmer sold the more a farmer had to pay — and by the elimination of rates relief on small to middle sized farms. It is significant of the extent that the Government were out of touch with reality in regard to the farming situation throughout that period that even when they saw the damage done by the levy and were forced to pull back from it they insisted on substituting for it another tax, also unrelated to income, the resource tax. That action was taken at a time when the adverse trend in farming was evident to anybody who knew anything about Irish agriculture. It is hard to believe that any Government could have acted with such gross irresponsibility towards agriculture or that even today that the Government would fail to face reality.
When one reads the complacent terms of the Government amendment to our motion one is forced to have grave doubts as to the capacity of the Government to see something that is staring them straight in the face. What does their amendment do? It recognises that farmers generally have been experiencing serious difficulties. It welcomes the consultations that are taking place between the Government and farming organisations — so do we. It applauds — it is rather a strong word. I would have thought, for what is involved — the range of financial and other measures already introduced by the Government to relieve the difficulties being experienced by farmers. I would not have thought that the measures involved merit the word "range" and I would have thought that "applaud" is a somewhat strong verb to use in relation to them. It acknowledges that these measures will encourage investment and improve farm incomes. The measures are, of course, grossly inadequate to do either of those things as anybody who knows anything about agriculture knows. It says that they provide a stimulus for agricultural production when in fact these measures are so inadequate that agricultural production is bound to fall because of the destocking that is taking place at the moment and the reduction in the use of fertilisers on the land. It goes on to note that the Government are continuing to explore ways and means of assisting the farming community and promoting the expansion of agricultural output. It is not a question of promoting the expansion of agricultural output at this stage; it is a question of trying to stop the rot, to halt the decline in output which is looming up ahead of us not just for one year but for several years ahead.
The whole of that amendment reeks with complacency and of a failure to face reality. What we have to face, all of us in this House, however inconvenient it is — and as a party which is seeking Government and hopes to be in Government before very long it is as inconvenient for us in prospect as it is for the Government today because we will face the consequences of what is happening now if we are in Government, as we could be in months — is that if the farmers of 1980 were to have the same purchasing power as in 1978 they would need to have a family farm income of £1,216 million as against £895 million in 1978 just to stand still in terms of purchasing power because in that period this Government have managed to push the cost of living up by 34 per cent. Rather, to be fair to them, they have contributed the greater part of the 34 per cent increase in the cost of living that has taken place in the last two years. But family farm income in 1980 is not going to be £1,216 million. The figure estimated by the ESRI is in fact £755 million. That is a shortfall of £461 million compared with what they would need to stand still and have the same purchasing power as two years ago, never mind being better off, never mind having the capacity to invest in increased output. The Central Bank have similar figures. They are slightly different but as far as I could calculate from their figures they see the shortfall of farm income as £479 million. Whether it is £461 million or £479 million it is of that magnitude. Those two bodies have independently arrived at these figures and, in terms of income by comparison with what they need to have the same income and no more than in 1978, the farmers are short of £461 million to £479 million. That is the measure of the crisis we face today and those figures are ones which can be calculated by the Minister himself from the Central Bank bulletin and the ESRI report if he is prepared to do a little simple arithmetic.
This is not just a question of hardship for farmers. What we are talking about is not just a social problem, people being hard up and facing financial difficulties. Farmers are used to facing financial difficulties. They have had their ups and downs — more downs than ups here in the past sixty years. Others in the community too have faced downs as well as ups. Many of us had a difficult time in having to face the problem of a drop in income — I faced it twice in my own life. But we are not concerned here simply with a drop in income because it imposes a hardship on people. That is certainly something this House must consider. But if people are entrepreneurs — and farmers are entrepreneurs — there are bound to be downs as well as ups and they cannot expect and do not expect to be baled out every time there is a dip in income after a period of income at a higher level. What we are talking about here goes far beyond the hardship of not being able to buy a new car, the hardship of not being able to buy new clothes for Christmas or something like that. We are talking about something fundamental to the continuing output of the farming community. We are talking about something which affects the output of our whole country, employment here, the whole of our economy. There is the drop in the input of fertiliser arising from the increase in prices, in lack of farm incomes and there is the sale for slaughter of cows in-calf happening on a massive scale with one meat factory two months ago claiming that 60 per cent of the animals going through were cows in calf. This is ensuring a drop in farm output not just for next year but for several years ahead. Farmers cannot survive the pressures they are meeting from the banks and hold on to their farms unless they allow their farms and stock to be run down disastrously and that is what is happening at present. That is not just something which is bad for them; it is bad for us, bad for the whole community and the scale of it is alarming.
We can see production falling in different areas. Milk production for example looks like being down 2 to 3 per cent this year. Elsewhere in the EEC it is rising. Indeed a figure of 4 per cent has been mentioned but I think that may be on the high side. Let us ask ourselves why it is falling here in this country with its clear comparative advantage in milk production, a country in which we always believed or had good reason to believe that under conditions of fair and free competition — if we could only get such conditions — the comparative advantage of our farmers in milk production would lead to a rapidly rising output, an expanding share in the total Community market. All we needed to be given was conditions of fair and free competition. Yet in this year the output of milk is falling here when it is rising in the rest of the Community. Surely we must ask ourselves why that is happening. Surely we must be concerned that it should be happening against all the tide of probability, against all that any of us predicted or foresaw would be likely to happen.
It is not just a question of milk. The national cow herd is seriously on the decline. The level of destocking this year is estimated by one authorative source at 300,000. That would be valued at about £120 million at farm gate prices. At export prices, allowing for added value in the case of beef and some added value in terms of getting the livestock to the ports to be exported live, it is probably £140 million. In other words, our balance of payments deficit this year is being held down to the tune of £140 million by de-stocking of livestock. The figure of £550 million balance of payments deficit of which the Taoiseach was boasting in this House is in reality a figure of about £700 million. It would be that but for the de-stocking, the selling off of our herd which, in the ordinary way, we would be keeping to sell next year and much of which at the moment consists of breeding stock. The real balance of payments situation, so far as that goes, is of the order of £700 million instead of £550 million. Let me add, although it is not particularly relevant to this debate, that were it not for the fact that the Government have got the economy so depressed that imports generally are falling by 7 per cent this year, the balance of payments deficit would be another £400 million higher at £1,100 million; if we just had no increase in imports, if we had had stagnation in imports as we had in the economy, if we had no destocking, it would be a deficit of £1,100 million.