I would like to inform the House of the outcome of the meeting of the Council of Agriculture Ministers, which concluded in the early hours of yesterday morning. I shall deal mainly with the aspects of particular concern to us.
As Deputies will remember, the Commission's proposals on agricultural prices for 1983-84 and on related measures were put forward in December last. They were discussed by the Council of Ministers at seven meetings, during the course of which certain modifications and adjustments were made. The most important of these were in the agri-monetary sector and arose primarily from the realignment on 21 March of currencies within the European Monetary System.
Yesterday morning agreement was reached on an overall package consisting mainly of price increases, agri-monetary adjustments and various related measures. The most significant of the changes so far as Ireland is concerned will come into force next week-end.
The overall result for Ireland is most satisfactory. The green rate for the Irish pound has been devalued to give a price increase of 3.8 per cent now and a further devaluation of 1.2 per cent is in prospect after next month's Council of Agriculture Ministers meeting because of an adjustment in the ECU to take account of the recent upward trend in the value of the £ sterling. These devaluations coupled with the increases in product support prices will result in an average price increase for the 1983-84 marketing years of some 9½ per cent for Irish agriculture. The increases for our main products will be milk 7.5 per cent, beef 10.8 per cent, sheepmeat 13.7 per cent, cereals 8.2 per cent, pigmeat 10.8 per cent and sugar 9.2 per cent. I might say that, pending the further green pound devaluation of 1.2 per cent next month, the 1.2 per cent will be available to Irish exporters as a trading advantage.
In the case of beef the price increase of 9.5 per cent will apply from next week-end with the effect of the further 1.2 per cent devaluation coming along next month. This contrasts with the two-stage basic increase in some previous years when part of the increase was postponed until the end of the calendar year. The buying-in co-efficients for intervention beef here are being increased by 3.3 per cent which means that the effective intervention support price will go up by over 14 per cent, a very substantial boost indeed for our beef industry.
The calf premium and the special additional FEOGA financing for suckler cows, which were due to expire, are being continued for us despite some opposition during the negotiations. Together these are worth about £47 million.
As regards the UK variable premium for beef, I pressed for the introduction of a clawback of the premium on exports of beef from the UK. While the Commission were not prepared to take this action, they are to review all premiums in the beef sector and to report to the Council. I shall be continuing to follow up this matter and there are to be further contacts with the UK about it. I had a meeting on Monday afternoon with the British Minister and we are to arrange some talks to see if we can reach a reasonable and just solution to the problems which exist.
As regards milk, the price increase is below the standard level because of the operation of the production threshold arrangement provided for in last year's price settlement. Nevertheless it represents an extra 5.3p per gallon for the dairying industry with a further penny per gallon next month. I should like to say here that the production threshold arrangements have serious implications for future price changes. The existing arrangements for the milk co-responsibility levy and the special aid for small milk producers continue unchanged. There is to be increased FEOGA financing for school milk and for the consumer subsidy on butter. These latter changes will benefit this country by some £2½ million.
Our special AI and ground limestone subsidies were also due to expire and these too are being continued. In addition, to meet requests by me, the Commission have agreed to examine the problems of the Cheddar cheese market and to give special consideration to pig processing projects in allocating certain FEOGA grants which this country obtains for marketing and processing activities. Also, at my request, the Commission have undertaken to examine the arrangements whereby FEOGA contribute towards the interest charges incurred by member states in financing intervention purchases. At present these arrangements involve a substantial cost for the Exchequer.
In a full year the price increases themselves represent some £190 million extra for the Irish farm sector while the other measures account for a further £65 million. These are very significant advantages for the agricultural industry and should give a definite boost to farm production. The balance of payments benefit is estimated at about £180 million. These cannot but be reflected throughout the economy generally and especially in rural areas.
The effect of the price increases on the consumer price index is estimated at about 1 per cent in a full year. I have seen reports which contradict this and say that the figure is closer to 2 per cent. However, we calculate the figure on the basis that a 1 per cent increase in prices affects the CPI by .1 per cent. That basis has been used for many years past and has proved to be reliable and accurate. On the basis of that figure the CPI should increase by .95 per cent, not actually 1 per cent. Therefore, I do not see why there should be such a divergence of opinion when the system has proven to be correct in the past.
This is a modest impact for a deal which is of such substantial advantage to the agricultural industry and the country as a whole. Here I would like to stress again the favourable overall effects of the settlement. The additional money that will be brought into the country will have a most useful stimulating effect on the entire economy in terms of trade, output and employment.
Just as Ireland secured special measures for dealing with particular problems here, some other member states have obtained some special arrangements for dealing with their particular problems. In this respect we have fared at least as well as, and probably better than, the others. Indeed, when account is taken of the real value of the price increases we certainly fare better than all the others. In fact, for Irish farmers the price settlement is the best in real terms since 1978 and puts their price rise very close to our projected inflation, even without taking the special measures into account.
The delay in reaching agreement on the prices this year is regrettable but a combination of factors beyond our control resulted in that delay. I assume that Members of the House are aware of the reasons. Initially it was due to the German general election and more recently it was due to the dispute between the Germans and the French over their MCAs. Fortunately these difficulties were resolved before Monday's meeting. I should like to point out that the value to Ireland of the special improvements that arose from this week's negotiations — in particular, the further devaluation of the green rate and the rise in buying-in co-efficients for intervention beef, which together are worth about £25 million — offset the impact of the delay on farmers' incomes. Also, the date of settlement this year was in fact the second earliest of the past six years. Believe it or not, it was earlier than last year's. Several other Ministers and myself stressed the need for the Council to ensure that in future the price settlement is arrived at in time for the start of the marketing year for milk and beef at the beginning of April. One of those Ministers, the German Minister, Herr Kiechle, was President of the Council. I hope that as a result of our objections on this occasion a new mechanism which will lead to an earlier settlement will be arrived at.
In conclusion, I should like to reiterate that this is a very satisfactory outcome for Irish farmers, for those engaged in the various sectors of the agricultural industry, and for the economy as a whole. The results far exceed what very many people expected three or four months ago, particularly against the background of large surpluses of certain products and the Community's difficult financial position.
In supporting the whole package, and in particular in their immediate acceptance of the devaluation of the green rate for the Irish £ to the full extent warranted by the 21 March realignment of EMS currencies and the latest adjustment of the ECU, the Government have demonstrated their absolute commitment to Irish agriculture and their determination to ensure the continued development of the industry. Coupled with the Government's success in tackling the problem of inflation, which has had such an adverse impact on our agriculture, the arrangements agreed upon yesterday will make a significant contribution to raising farm incomes and to achieving renewed progress and expansion in the agricultural sector.
Finally, I would like to thank Members from all sides of the House for their kind, gracious words of congratulation on the result which was achieved in Brussels yesterday. It was a magnanimous gesture on the part of all of them.
