May I remind the House that, by agreement, statements in relation to the progress of negotiations now under way within the European Community may be made subject to: (1) no Member shall make more than one statement; (2) statements of the opening speakers from Government and Opposition shall not exceed 45 minutes; (3) the statement of each subsequent speaker shall not exceed 30 minutes and (4) the concluding speaker shall be a Government speaker and shall have 45 minutes. He will be called at 4.15 p.m. tomorrow.
European Communities Negotiations: Statements.
We are now less than three weeks from the European Council in Athens. The special negotiations initiated at Stuttgart last June by the Heads of State and Government have been intensifying. The member governments of the Community have the Athens Summit very much in the forefront of their preoccupations as indeed do the national parliaments and the European Parliament. It is, therefore, opportune and right that we should have this debate in this House today. Already there has been a debate in the Seanad on the present special negotiations and the Minister of State at the Department of Foreign Affairs, Deputy Jim O'Keefe, availed of the opportunity of his statement in the Dáil last week on the 21st Report on Developments in the European Communities to address himself briefly to these negotiations. Since then the Special Ministerial Council has met again in Athens, a meeting where I was accompanied by the Ministers for Finance and Agriculture. One more meeting of the Special Council is planned — on 28th November — before the Athens Summit. So the timing of our debate today comes at a very crucial time indeed.
I feel that at the outset of this debate I should sound a note of warning. The pace of the special EC negotiations has indeed intensified in the past week or two; we are indeed at a very crucial stage with so little time remaining before the Athens Summit. But it would be foolish, it would be illusory to think that member states have made such progress on the major issues in the negotiations that they are on the point of substantive agreement. Far from it. Progress has indeed been made. The issues of the greatest importance have been identified and there is a considerable amount of agreement that these are the issues on which the Heads of State and Government should concentrate next month in Athens. There are also a number of other issues on which agreement is emerging that they should continue to be dealt with under the normal Community processes and procedures — but hopefully with a renewed political commitment and impetus from the Athens Summit so as to ensure that the necessary decisions for action on these particular issues are reached in the short term.
But, above all, there is a gratifying consensus that the Athens Summit must not fail; that its outcome must not consist, as has regrettably been the case in all too many European Councils of the past, largely of a series of declarations without the essential political results reflecting the will, the commitment of member governments to tackle effectively the problems that beset the Community and to move the Community ahead towards its further substantive development. It may well be — and this view is admittedly gaining ground — that the final, definitive decisions on the important issues involved in the special negotiations will not be reached in Athens. But the very minimum that must be achieved at the Summit is a series of concrete, political guidelines which will enable, indeed which will ensure that the necessary operative decisions can and will be taken in the months immediately following, that is, during the French Presidency of the Community.
The Stuttgart Declaration is now so well entrenched in the currency of the Community that it is taken for granted. But it would, I think, be salutary to remind ourselves that the successful outcome of the European Council in Stuttgart was not by any means assured in advance and that its achievement was all the greater when one considers how very close it came to failure and what disastrous consequences for the Community and its future such a failure would have had.
How profoundly more disastrous would be the consequences of a failure at the Athens Summit. Stuttgart demonstrated that the member states were able, in the face of unprecedented difficulties and challenges for the Community, to renew that political will necessary to enable these difficulties and challenges to be overcome. The Heads of State and Government at Athens must demonstrate that they accept, seriously and unequivocably and with all it entails, the relaunching of the Community, to which they committed themselves at Stuttgart. This will entail the necessary political decisions being taken and the necessary concrete guidelines being given if the Community is not once again at best to grind to a standstill or at worst to face another crisis, but this time one from which it would find it very difficult to recover.
There must be no winners and no losers at Athens next month. If there were to be, both the spirit and letter of the Stuttgart Declaration would have been set to one side. Stuttgart spoke of relaunching the Community and of providing a solid basis for its further dynamic development during the rest of the decade. This must not be done at the expense of any one member state. To attempt to do so would be to undermine the very basis of the European Community — and we claim, justifiably in my view, to be a Community and not just a loose grouping of states.
The Treaty establishing the Community affirmed unambiguously that the essential objective of member states must be the constant improvement of the living and working conditions of the people of Europe. The text goes on to underline the need to ensure the harmonious development of the economies of member states by reducing the differences existing between the various regions and the backwardness of the less favoured regions. This is fundamental Community philosophy. These are the principles and objectives that created so much excitement, so much belief in a new start, such a short time ago in Europe. They are as relevant and as essential today as they were on the establishment of the Community. Indeed, they are more so. They are given full protection in Article 5 of the Treaty which insists that member states shall abstain from any measure which could jeopardise the attainment of the objectives of the Treaty.
I believe it essential to put Ireland's stance in the present negotiations in the above context in case there may be some who feel that our approach may be motivated only by narrow national considerations. This is absolutely not so, and I will return to this point in a moment.
Each member country has, of course, vital national interests to protect within the Community. Britain has, for instance, in pursuance of its national interest, introduced a new concept into Community language, that of net budgetary imbalances. I am not going out of my way to be critical of the British Government in saying this. Like most member states, we have a conceptual difficulty with net budgetary imbalances. But, in the endless discussions on this issue over recent years, we have shown understanding and flexibility in trying to find a fair and balanced solution for this issue.
The Federal Republic of Germany has a particular problem with the Commission's proposal to dismantle monetary compensatory amounts. At a recent Special Council, the German delegation went so far as to state, very forcefully, that the Commission's proposals in this area were both intolerable and unacceptable. Other delegations have expressed considerable concern about the Commission's proposals in other areas. Again, we understand their concern. With our partners we shall seek, where real difficulty and serious economic damage are involved, to find fair and equitable Community solutions.
All member states, in short, are motivated by strong Community considerations but we all, likewise, have vital national interests. Our respective approaches to any particular Community issue of substance must be a balance between the two. This balance can, of course, change from time to time. However, there will always be in any Community a very small number of issues where the national interest is so great— so overwhelming on any objective basis —that it must also assume a direct Community interest. In other words, a Community such as ours cannot afford to damage fundamentally and disproportionately any of its members without doing serious damage at the same time to itself. The Treaty in a sense, as I implied earlier, saw the danger of this happening and specifically spoke out against it.
All this leads me on to say that I believe that the proposals for a super-levy on milk now before the Special Ministerial Council raise a problem of the most far-reaching and fundamental importance for Ireland. Milk constitutes, exceptionally and uniquely, some 9 per cent of our GNP. The direct importance of milk output to the Irish economy is five times greater than the average for the Community as a whole and two-and-a-half times greater than in any other member state. For historical reasons, this sector has been chronically under-developed. With yields well below the Community average, and even more so below those in other comparable regions in the Community, milk production here has not yet reached anything like its reasonable potential. I cannot accept, at this stage of the development of this sector, that Community rules might be changed in a way which would have a disproportionate and indeed disastrous impact on this country. There is, in other words, a vital national and a vital Community interest involved here for Ireland.
At the Special Ministerial Council in Athens last week, I told my colleagues that the application of either of the proposals for a milk super-levy would create an unacceptable situation for Ireland. I believe I would have been failing in my duty if I had not conveyed this stark truth and reality to the Special Council and individually to my Community colleagues. During the remaining crucial period before the Athens Summit, the negotiations will obviously be at their most delicate and intense. I have made our position clear. I know that I can count on Deputies today, as in the past, to support strongly and unitedly the Government's position. Such a united voice can only give our stance added strength and credibility in the coming weeks.
I would like to say, however, that our case on the milk super-levy has been consistent, coherent, objective and statistically supported.
Rubbish.
It has, after much effort on the Government's part, won a great deal of understanding in the Community for the scale of our problem. I see this daily in the reports from our embassies; I have been told it at first-hand by ministerial colleagues in the Community. Indeed it is reflected in the Presidency document to last week's special Ministerial Council. This recognised, and I quote: "the special role of the dairy sector in the Irish economy as a whole and developments which have taken place in recent years". While the Presidency proposal that Ireland should have a guarantee threshold equal to its milk production in 1983 is not acceptable, it was, in proposing special and more favourable treatment for Ireland, a very positive indication that our case was understood and had merit. In this connection, I would invite the attention of Deputies to the European Diary in The Irish Times of 12 November last, where it is stated that “The Irish case against the super-levy now amounts to an impressive portfolio probably comprising of the most exhaustive defence of Irish agriculture ever mounted by an Irish Government”.
The Irish Times will not make the decision.
The Deputy will have a chance to contribute shortly, unless he wants to say something now. Does he?
There will be no interruptions, please.
May I continue?
The Minister to continue.
The Minister for Agriculture, who will be speaking at the end of the debate, will deal in detail with other aspects of the negotiations on the CAP. I would like to emphasise at this stage however — as I have done consistently at the Special Councils—that many of the difficulties in so far as structural product surpluses within the Community are concerned arise, in part at least, from failure to apply the established mechanisms of the CAP, from the maintenance of special concessionary import arrangements and from the operation of monetary compensation amounts. For instance, in two sectors, milk and cereals, departures from the principle of Community preference, in the form of inadequate import regimes, have been a major contributory cause in increasing surpluses. In the case of cereals, imports of substitutes are replacing domestically produced cereals, which have then to be exported at considerable budgetary cost. As far as milk is concerned, widespread use of cheap imported concentrated feed has resulted in much of the surpluses being produced by large-scale intensive units which, arguably, do not need Community support.
It was never the intention of the CAP to confer on certain producers, already well-placed geographically, advantages which flow essentially from shortcomings in the market organisations. These shortcomings operate to the detriment of the objectives of the CAP; their budgetary cost is also considerable. At the same time, regions such as Ireland, with natural advantages for milk and beef production, are adversely affected.
I will now turn to the non-agricultural issues in the negotiations. Stuttgart, as I said earlier, was essentially about a new beginning, a relaunching, a new relevance for the Community. This is about much more than action for controlling milk surpluses, although such action is understandably needed. The Community needs and needs urgently, to radicalise their range of action and their relevance. The Stuttgart Declaration, which has been deposited in the Library, speaks for itself in this regard.
The negotiations themselves can be broken down into four areas:
— future financing, including budgetary imbalances;
— adaptation of the Common Agricultural Policy;
— review of the structural funds (Regional, Social and FEOGA Guidance), and
—development of new policies.
In the special negotiations, I have argued from the beginning that parallel progress on all four areas is essential if Athens is to achieve a balanced and equitable package. This has now been accepted fully on all sides.
On the question of the future financing of the Community, the fact has to be faced that the Community are fast running out of money. Already, some payments have had to be deferred. New own resources, when agreed, are unlikely to be in place before 1986. There is going to be a major problem, therefore, on the financial and budgetary front next year and in 1985. If we can reach the necessary agreement on new own resources at Athens, we may find the added political commitment to take some interim steps to allow us to come through 1984 and 1985 successfully. But if we fail to find consensus at Athens, I would have grave doubts about the necessary political will being there to provide adequate funding for the next two years.
There is a further reality to which I would like to direct the particular attention of Deputies. The creation of additional own resources requires a unanimous decision of the Council. A number of countries — most notably Britain, the Federal Republic of Germany and the Netherlands — are insisting on certain pre-conditions being met before they will agree to give their consent to such a move. And if they do not give this consent in the near future, the implications for the operation of existing Community policies are very grave indeed. This makes the Government's negotiating task all the more delicate and difficult. Indeed, I personally believe that, given the existing financial and economic climate in Europe, and in particular the imminent exhaustion of existing own resources, these negotiations are probably more difficult than those we faced before accession. We are, however, equipped with the commitment, the very firm resolve and, most importantly, the objective arguments to face up to this fundamental challenge.
Turning to the individual chapters, it is very regrettable that we have to date made little progress in the negotiations —even in principle — on the extent and timing of new own resources. No Community could succeed in standing still — in even maintaining the status quo— without adequate resources. This is, above all, the situation in the case of the European Community where the total budget is extremely limited in overall Community terms and the existing range of policies clearly inadequate. And it cannot just be a question of curbing agricultural spending. We cannot fund new policies — even if this were financially possible, which it is not — at the expense of the one fully-developed common policy existing in the Community. The Community is a vehicle for change, not for creeping paralysis. We have so much to do if we are again to convince the peoples of Europe that we are relevant, that we have answers, that we can act effectively through common and co-ordinated policies. And these policies should not, and will not if properly planned, overlap with national policies. They will complement and supplement them. And in doing so, because of economies of scale, there should be overall savings, as well as more effective and responsive policies at the operational level.
The amount of additional own resources to be put in place is an issue of very great importance. We need an adequate breathing space in the Community in which to consolidate after the present crisis. We need time to build on the consensus that will, we hope, emerge at Athens, and on the relaunching that will be set in motion there. We above all, need to avoid having to face again in the near future the type of crisis negotiation which we are now going through. I believe, therefore, that the Commission proposal of an immediate increase to 1.4 per cent in the VAT limit is the very minimum requirement for the Community in the short term. But, for the Community's undoubted requirements beyond the short term, we believe that an overall increase to 1.8 per cent, as proposed by the Presidency, or 2 per cent, as has been suggested by Italy, might be more realistic. The Minister for Finance will, however, be able to elaborate in his contribution to the debate on our thinking in this general area and on the question of budgetary imbalances.
It is not possible to address the central issue of new own resources without crossing over, as I have had to do, into the area of new policies. Achievement in this area will be an accurate test of the value of our negotiations. The Community at the moment is limping along on a severely limited range of common policies, however significant their individual merits and achievements may be. We urgently need to make this most testing time for the Community as innovative, and as responsive to the pressing needs and aspirations of our peoples, as any of the earlier periods. We need, as I have said before, a qualitative leap forward, and quickly. Some of these new policies may benefit this country; others may not but, if they are needed in their own right for the further positive development of the Community, we will support them.
At Athens, I would like to see firm decisions taken on a specific, selected number of new policy areas. This would include the development of a Community strategy for Research and Development and the provision of adequate resources for this purpose; the speeding up of technological development and competitiveness in Europe, in particular in the fields of information technology, telecommunications and biotechnology; and the further development of the internal market.
The Government attach considerable importance to the full realisation of the internal market. We are fully committed to the further economic integration of the Community. We believe that the remaining intra-Community trade barriers should be broken down as quickly as possible. As a trading nation, this is in our interests. There should, for instance, be a considerable simplification of frontier checks; the elimination of obstructions to trade caused by different technical standards which are being used, in effect, as non-tariff barriers to trade; and the application and extension of Community rules on state aids and public procurement.
The question of public procurement policies by certain member states has indeed, as Deputies will be aware, been of particular concern to the Government for some time now and is a matter which we are pursuing directly and bilaterally with the Commission.
We accept fully the need to equip European industry to compete effectively, especially in the areas of new technologies, with the United States and Japan. The necessary environment must be created, the necessary incentives provided, conducive to enabling European industry to so compete. There are, for example, proposals for the creation of European enterprises. But, as far as Ireland is concerned, we must ensure that, in pursuing these desirable objectives, no barriers are created which would diminish our opportunities for attracting more industrial investment from the United States and Japan to Ireland. We have made this quite clear to our partners in the special negotiations.
The Presidency document for the Athens Special Council last week argued that the policy objectives of the Structural Funds should be threefold:
(i) to help make up the ground where development is backward;
(ii)to speed up conversion in both industrial and agricultural regions in decline; and
(iii) to combat unemployment, especially youth unemployment.
The document also proposed a very considerable increase in real terms in the resources available to the three funds between now and 1990.
The detailed discussion on the Structural Funds at the Special Councils has tended to concentrate on the Regional Fund. The review of the Social Fund has recently been completed and a satisfactory outcome achieved which will be of benefit to Ireland. In general, the Commission proposal is that the Regional Fund should be concentrated more on the achievement of Community objectives. Accordingly, Community objectives themselves should be clearly specified. There should, in addition, be greater co-ordination between member states and the Commission in the use of the Fund to achieve these objectives.
A second major emphasis is on the abolition of the distinction between the quota and non-quota sections of the fund, the Commission maintaining that the substitution of Community objectives for those of the member states should lead logically to the abolition of quotas. A geographical distribution would initially be determined on the basis of quantitative, indicative guidelines rather than by quotas.
The Government's precise position on this new thinking will be finalised in the light of our detailed examination of the new draft Regulations for the Regional Fund which have just been presented by the Commission. We do, of course, strongly support the provision of adequate resources for the Structural Funds. These would hopefully enable the Community, however belatedly, to make some worthwhile impact on the grave problem of mass unemployment, especially youth unemployment, and on the achievement of convergence between the least and more prosperous economies of the member states. We want to see increased resources for the Regional Fund concentrated where they should be — on the less-developed regions of the Community.
As we enter the final stages of the Stuttgart negotiations, we must not, as I said at the outset, harbour any illusions. Many of the objectives of which I have spoken today have been before the Community for years. They have not moved forward because, essentially, the political will to take far-seeing positions, to plan for the development of the future rather than to shore-up the inadequacies of the present, were lacking.
Stuttgart tried to change all this. It gave clear-cut and far-reaching political objectives. If the European Council in June had the political will to set out these objectives, the hopeful presumption is that the December Council will ensure that this political will can be translated into substantial, concrete and imaginative decisions. The choice is clear. It is between relaunching the Community and allowing it to sink into a deep crisis of morale and of confidence. No-one who has the least regard for the extraordinary achievements of the Community over the past 25 years could possibly countenance the latter development.
(Limerick West): I would like, on behalf of the Fianna Fáil Party, to thank the Taoiseach and the Government for giving the Dáil an opportunity to discuss the proposed restructuring of the CAP with particular emphasis on the proposal to introduce a super-levy on milk production. I would like to point out to the House that this party have been looking for this debate since we came back from the summer recess and we have had a motion on the Order Paper about it. I am glad that the Government have at long last given Government time to discuss this very important subject.
I would like to say to the Minister for Foreign Affairs that this party will support every effort made by the Government but we will be critical of the Government's approach on certain aspects if they do not live up to our expectations and to the expectations of the country. During my contribution this afternoon I will be rather critical of the Government's stance and their negotiations up to date. There is a report in today's Irish Press that the Minister for Agriculture said yesterday that he remained hopeful that a deal was possible at the highest political level. So far as Fianna Fáil are concerned, no deal is acceptable apart from total exemption and total derogation from this proposed super-levy. As the dairying sector is the basis of agricultural development in the country and as the agricultural sector is the basis of our whole economy, the importance of what I have said cannot be over-emphasised. In the course of my contribution I will be placing emphasis on the super-levy and its implications for this country. Other members of my party will examine further aspects of the restructuring of the Common Agricultural Policy and I shall also deal briefly with them.
If Fianna Fáil were in Government, there would be no need for this debate. In the past, these proposals were on the table at the Council of Ministers and were resisted by Deputy MacSharry in 1980 and in 1981 when these proposals were put forward by the Commission. The negotiating hands of the Government, the Taoiseach and especially the Minister for Agriculture were somewhat weakened by the presence of the Labour Party in Government because we all know that that party opposed our entry into the European Economic Community and, therefore, perhaps any approach or defence by them now must ring very hollow. The importance of agriculture, especially the dairy industry, cannot be over emphasised. It is worth mentioning that Ireland only produces approximately 4½ per cent of the Community's total milk supplies and our dairy farmers get a price for their milk which is low by European standards. We certainly are not creating any butter or skimmed milk powder mountains.
The super-levy proposal would unfairly penalise the smaller, weaker and less well off Irish industry because the problems are caused directly by the larger, stronger and better-off Europeans. Furthermore, the gallonage of milk per cow produced in these milk factories is already so high and the financial return so great that the financial loss in their case resulting from this levy would be relatively much lighter than in the case of the Irish supplier and farmer.
With the imposition of this super-levy you are not comparing like with like. You are not comparing some of the bigger farms and producers in Europe with the smaller and less well organised producers here. These proposals from the European Commission are no longer a farmer issue only. They strike at people in towns and cities as well as those on the land. This is a national issue which calls for a unified stand by all our people. The proposed super-levy on milk, based on 1981 output, spells disaster for our economy. The huge reduction in family farm incomes would have repercussions throughout the economy, lower everybody's standard of living and add to our already massive unemployment. We all know that the dairy industry is the bedrock of our national income. The exports of dairy products and the supply of upwards of three-quarters of the calves that form the raw material for the beef industry has a significant influence on the standard of living of every home. The inequity of this imposition on dairy farmers is bordering on the criminal. In the past, dairy farmers, especially in this country, responded magnificently to the call for increased output and now they will have to face a harsh penalty for that response, especially as 1981 was below normal output as a result of adverse weather conditions.
There is no merit in point scoring. I did not do it in the past and I do not intend to do so in the future. Nevertheless, I must question the attitude of the Commission in relation to the understanding and sympathy with a small member State like ours, which, through no fault of theirs, will be penalised to a very high degree. Ireland's dependence on dairying is unique in the Community and this must be recognised by the Council of Ministers, the Commission and the Government. The magnitude of the issue is far too serious for any compromise. As the Minister for Agriculture pointed out in Strasbourg yesterday, it is far too serious for any deals. In any event, deals will not be accepted by our party. It is not a time for weakness. The fibre of our people is being put to the test and the nation expects leadership at this crucial time.
Many of the European Commission's proposals on the reform of the Common Agricultural Policy would, if implemented, be disastrous, not just for farmers but for the economy. I wish to refer to the Taoiseach's statement in this House on 22 June 1983 in which he said that the outcome of the Stuttgart Summit was strikingly positive. He also said that the Minister for Agriculture and he were successful in preventing damage to Irish interests in the Common Agricultural Policy. The Taoiseach has a total ignorance of Irish agriculture and he should have seen the writing on the wall at that stage. However, these proposals and a final decision on them will not be taken before December at the very earliest at a summit meeting of the Heads of State. There is still time, given the political will of the Government, to influence the decision that will be taken there. The other member states must be left in no doubt that Ireland sees these proposals as a disaster for our economy and that they fundamentally affect our position in the Community.
These proposals are far-reaching and relate to a number of products and to a number of measures. A major disappointment is the weakness with which some propositions are put forward by the Commission especially those that would obviously make a significant contribution ot the budgetary problem. We realise that there is a budgetary problem but the imposition of a super-levy in respect of this country is not the solution to that problem within the EEC. One example of the significant contribution that some of these proposals could make to the budgetary problem is in the cereals section. There is much but vague hope of curbing the imports into the Community of cereal substitutes. It is well known now that these imports have a doubly bad effect on the Community's funds, directly by way of their impact on the cereal economies of the Ten and indirectly by way of their influence on the production of milk in some member states.
Again, in dealing with sheep meat, the Commission suggest rather tamely that there should be an examination of the possibility of negotiating for a reduction in the quantities to be imported from third world countries. The Commission shelves the question of the imports of butter from New Zealand to the UK. I am disappointed regarding the proposals to abolish the calf premium. A former Fianna Fáil Minister for Agriculture, Deputy Lenihan, was the one who fought for the introduction of that premium. His efforts ultimately were successful. Apart from the financial loss involved, uncertainties and instabilities of this kind are damaging in terms of effective planning by farmers.
Our cattle and beef industry needs not a blow but a boost, not merely in the interest of the farmers but in the interest of workers in the beef plants who have recently been put on short time.
I am pleased with the proposal to retain the suckler cow premium. Undoubtedly, the proposal that has aroused the greatest resentment in this country is the proposal for a super-levy on milk production. This must be resisted but the arguments that are put forward must be sustainable and must be supported by strong political action. The core of the Irish case must be to demonstrate that the levy would impose an unduly severe and unjust penalty on Ireland. The dairy industry is of much greater importance to our economy than is the case in any other member state. Our cattle industry is heavily dependent on calves for the dairy herd. A fall in dairy cow numbers that would result inevitably from a penal levy would hit our beef trade very hard.
This country produces not more than four-and-a-half per cent of the Community's milk supply. The price that our farmers receive for that milk is low by European standards. Therefore, we are not creating any problems in Europe in terms of skimmed milk powder mountains or anything of that sort. Of the total milk output in the Community 30 per cent is delivered by 77 per cent of all farmers within the Community. The glut is being caused by the milk factories in Holland, Denmark and in Germany in particular. These countries base their milk production largely on the heavy feeding of cows with concentrated feedstuffs. These feedstuffs are mainly cereal substitutes imported free of duty from outside the Community. The quantities fed to each cow are large so as to force very high milk yields. The quantities fed to each animal are very much higher than the average of 15 to 16 hundredweight per animal in this country while the quantities of the concentrates that are being imported have trebled in the past decade.
The Commission, too, could attack MCAs and that would result in an artificially higher price being available to farmers for milk in Germany and in the Netherlands particularly. Therefore, the super-levy proposals would penalise the smaller and less well-off Irish industry for the problems created directly by the larger and better-off European farmers.
The gallonage of milk per cow produced in these milk factories is so high and the financial returns so large that the financial loss resulting from the levy in the case of these other countries would be relatively much less than it would be in the case of the Irish supplier. This country must be exempt from any such measure. The proposal is contrary to the spirit of the Treaty of Rome in that instead of the strong economies helping the weak, the weak ones would be penalised for the over-production of the strong.
There is still time, given the political will, to bring our influence to bear in relation to these proposals. I assure the Government that they will have the full support of Fianna Fáil in any action they take to this effect. The Taoiseach and the Minister, without further delay, must veto any further imports of butter from New Zealand. I understand that the contract in that regard comes up for renewal at the end of this year. We must seek also the elimination of all MCAs as they provide an unfair advantage for several member states at the expense of the Community. We must seek a ban on cheap feeding stuffs from third countries and we must call on the Commission to impose a levy on milk factories in Europe. In addition, the Minister for Foreign Affairs should recall all our ambassadors to EEC member states for the purpose of giving them clear instructions for a unified strategy to defeat these proposals.
The Government should make it clear that Ireland will use the veto if necessary against these proposals. Their effects would be so serious that there is no room for discussion on them. We must clearly state our position, that a super-levy on milk production will not be accepted by us under any circumstances. These proposals represent the greatest crisis for Irish economic interests in the Community since we joined. It must be remembered that the present level of income and potential for future development of our agricultural industry are at stake. The super-levy proposals would discriminate heavily against us, favouring the interests of some of the larger member states.
This proposal has arisen directly from instructions given to the EEC Commission by the EEC Summit held in Stuttgart attended by the Taoiseach and Minister for Foreign Affairs. Indeed the Taoiseach and the Minister for Foreign Affairs subscribed to the very conclusion of that summit giving the EEC Commission authority to put forward proposals of this kind. As a result the confidence of our farmers in their judgment, and that of the Minister for Agriculture to negotiate on our behalf, must have been considerably shaken.
The implementation of this proposal to impose a super-levy on milk would be disastrous for us and would have serious repercussions on output and employment in our milk-processing plants. This proposal also ignores the basic fact that Ireland is responsible for four to four-and-a-half per cent of the milk production of the Community whereas we are dependent on agriculture — this is the point completely lost by the Commission — for 48 per cent of our total economic output.
The European Commission are guilty of adopting a biased approach to the problems of dairy surpluses by refusing to take any action against other factors contributing to the problem in the form of imports, and by concentrating instead on reducing the output and income of the Community natural producers such as ourselves. Notwithstanding the fact that they have contributed to this present development the Government must now demonstrate their total determination to resist this proposal. We will give the Government all the necessary support in any efforts of persuasion. But it must be clearly communicated to our partners that under no circumstances will we allow our vital national interest to be damaged and that we shall have no hesitation in utilising the veto should it come to that point. It should be made clear that our Government will not give in on this issue of major national importance. I hope other Government speakers will confirm this point, that under no circumstances will they give in on this major issue of national importance.
Fianna Fáil offer the Government full support in their fight against this present EEC milk super-levy and will back all effective efforts made to defend our vital national interests. Our Government must not allow themselves be intimidated by the statements of members of the Commission. It should be remembered that the Commission have the right to make proposals only, that decisions are reserved for member states and that we cannot agree to unbalanced proposals which totally ignore our vital interests. The present EEC Commission appear to be increasingly responsive to the interests of the richer and some of the larger member states rather than taking into account the interests of countries with less developed economies.
If our Government decide there is no alternative — in the overall national interest — to their using the veto until equitable measures for limiting the cost of the Common Agricultural Policy are agreed Fianna Fáil will support such a decision. We totally opposed the imposition of the super-levy on the Irish dairying industry in the past. The only acceptable solution now is one that will allow the Irish dairying sector to develop and expand to a level commensurate with European production. The imposition of the levy on Irish farmers must be resisted — I repeat, and this should be repeated again and again — to the point of invoking the veto, if necessary. If implemented, this levy would spell disaster for our economy and would reduce Irish farm incomes by 15 per cent next year. That is the reason this levy must be opposed. Its impact would be particularly harsh on our small dairy farmers. Our economy could not possibly provide compensation and aid for such a reduction in farm incomes. Restricting Ireland's milk output would also curtail expansion in the important beef sector. It should be remembered that the contribution of our dairying sector to GNP is five times greater than the Community average and almost eight times more significant than in Germany or the United Kingdom. The significance for total agricultural output of the Irish dairying and related cattle industries is twice as great here as in the rest of the Community. Dairying constitutes by far the most important sector of our agricultural economy in the context of our future development as a nation. It should be remembered also that our dairy farmers have not had the same opportunity for development as have their counterparts on the Continent. Therefore the full potential of the industry is far from having being realised.
Certainly our milk production cannot be held to be the culprit in the context of EEC milk surpluses. Community average yields per cow are 26 per cent greater than in this country. Higher levels of milk output per acre, particularly in The Netherlands and Denmark, are related to high production costs, especially to purchased concentrates, while Irish dairy farms are grass-based and low-cost enterprises. It is important to point out also that most cereal substitutes imported for milk production in Europe are brought in without payment of the common external tariff, thereby encouraging expansion in milk production. Because of the principle of Community preference, non-Community activities which contribute directly to current difficulties must first be eliminated. In this context it was interesting to note that while 87,000 tonnes of New Zealand butter are imported into Britain, Britain's own production of butter has risen from 97,000 tonnes in 1973 to approximately 250,000 tonnes this year.
Ireland produces only 5 per cent of Europe's milk supplies, yet this super-levy imposition would call us to meet 10 per cent of the cost. Is that fair treatment for a small country? There is blatant imbalance when one recognises the fact that we are responsible for less than 5 per cent of total milk production in Europe, yet we would be asked to contribute in excess of 10 per cent of the total cost. The total increase in 1983 alone will be greater than our total production in any one year.
We must never lose sight of the fact that the cheap cereal substitutes coming in here account for about 3 per cent of the total surplus. Added to this is the importation of butter from New Zealand into the United Kingdom, which amounts to £90 million each year, and our average yield of 720 gallons per cow as against 1,100 gallons in Holland and more than 1,000 gallons in the United Kingdom and Denmark. From this one can see that this country is not contributing to the problems in Europe. Another fact worth mentioning is that Holland, which is the size of Munster, is producing two-and-a-half times what we produce.
Because of the effects this super-levy would have on the Irish economy this party are increasingly concerned that our total opposition to it is not being effectively communicated in Europe by our Government. The establishment of the Commission's task force is not necessarily reassuring and may indicate that Ireland is to be bought off with a few marginal concessions. It is important therefore that this country will not be bought off with any marginal concessions for the reasons I have outlined.
Recently I took it upon myself to have a meeting with the Commissioner Dalsager and found there was a certain appreciation of the special circumstances of the Irish dairy industry. However, I was left in no doubt by the Commissioner and other senior members of the Commission that the Commission intend to pursue their proposals without exemption and that they have the support in principle of all the other member states. Following my detailed discussion with several parties I was left with the distinct impression that the Irish Government have not convinced either the Commission or the member states of Ireland's vital national interest in this matter. Whatever might be said at home, the Irish Government have not pursued the issue strongly enough at European level. However, there is still time for the Government to make up lost ground by putting forward the strongest case possible not only for Irish dairy farmers but for the country as a whole and at every level and at every available opportunity. In doing this they will have the support of Fianna Fáil.
From my discussions in Brussels it is clear that there is no appreciation that Ireland would contemplate such drastic action as using the veto to protect our vital national interest. This must be brought home forcefully to the Commission and to the other member states. I am convinced that the only way out is for the Government to take a strong line and to maintain it to the end. This was done in the past by a former Fianna Fáil Minister for Agriculture and at the end of the day he won out. Provided this Government can remain steadfast to the end and maintain that strong line, we will win out, but it needs sustained effort.
I pointed out to the Commissioner that, as spokesman for Ireland's largest political party, I regarded the proposed super-levy as totally unacceptable to the Irish Parliament and the Irish people. I also said that this party would support the Government in resisting the imposition of the super-levy. As a dairy farmer I was able to show him the impact it would have on individual dairy farmers and to explain the effect it would have on the dairy processing and related industries in terms of employment and output.
This party accept that the EEC face genuine financial problems. I pointed out to the Commissioner that the levy was contrary to the principles of the Common Agricultural Policy, contrary to the accepted principles of economic efficiency and discriminatory against this country because, as I said, we produced only 5 per cent of the total milk supplies and under the super-levy we would be asked to contribute 10 per cent of the total cost. The other nine EEC countries will produce an increase in milk output this year greater than Ireland's total annual output.
As this party brought Ireland into the EEC against some opposition, and since we now feel that the conditions of entry are being dishonoured, as custodians of the interests of the Irish people there is an obligation on us to act in this matter. I explained to the Commissioner that the dairy sector was more important to Ireland than it was to any other EEC country and that we had a comparative advantage in low cost dairy production.
One may ask where we stand, because in my view this Government do not have a cohesive policy and their approach is changing daily. Ireland is losing its national will. It is sad to note that within 48 hours of the Chequers Summit with Mrs. Thatcher, the United Kingdom Minister for Agriculture was opposing very strongly the minimum concession put forward by the Greek Minister for Agriculture, which was totally unacceptable to Fianna Fáil. The Taoiseach told the House he was restoring normal Anglo-Irish relations. So much for his so-called friends in Europe.
It is clearly evident that a lot of work remains to be done. One may ask if this Government are selling out the future of Irish farmers. The action of the Taoiseach and some of his senior Ministers is increasing the barriers for his Minister for Agriculture at the negotiating table. This generation does not have the right to sign the death warrant of future generations of dairy farmers by accepting this super-levy by way of derogation for a limited number of years. As I said, the imposition of this super-levy would devastate Irish agriculture bringing ruination to 8,000 dairy farmers and their families and making Ireland a barren and neglected outpost of Europe.
I want to reiterate that the only acceptable solution to the problem of surplus dairy products in Europe is one which allows the Irish dairy sector to develop to the level of its European counterparts. If total Irish milk production was to reach the current level of Dutch milk output it would result in an extra 1,500 million gallons of milk being produced in Ireland, thereby ensuring the future of 70,000 dairy farmers and an extra £1,400 million in dairy exports.
Deputy, you have one minute.
(Limerick West): That would make a massive contribution to our balance of payments and would create in the region of 10,000 extra jobs in the dairy processing industry at a time of massive unemployment. Indeed, I note with sadness that only one organisation, the ESRI, has supported the use of the veto as a last resort. Fianna Fáil policy is to protect vital interests of national importance. If the Minister cannot deliver this package it is a clear indictment of the Government's agricultural policy, and their negotiating capacity must be brought into question.
Confidence is necessary and this Government's policy with regard to agricultural policy at present has not the confidence of the Irish farmers. Agriculture can provide the mainspring for the recovery of our economy. We have a young emerging population. We have the processing facilities to develop the added value products of the raw materials available. I am calling for a united national campaign which will include farmers, their organisations, marketing organisations, all our people, all sections of Irish society, to resist this levy and certainly they will have the full support of the Fianna Fáil Party throughout the country. The dark cloud of the super-levy must be removed to allow Irish agriculture to make its contribution to the rebuilding of this great nation.
I call Deputy Mac Giolla and he has 45 minutes.
First I emphasise that we are fully behind the Government's efforts to oppose this super-levy. I said in a speech last September that we opposed it because it was penalising the most efficient and productive farmers, and also because the 1981 base for the super-levy discriminates particularly against Ireland because our agriculture is less developed than that of other EEC countries and therefore needs greater scope to expand production. Particularly because of investment in recent years in dairy farming and the still underdeveloped nature of our dairy production, we believe that the super-levy as imposed at present would be discriminatory against Irish farmers and could pose severe problems, but we believe that similar problems are brought down on us because of the Government's agricultural policies — or lack of them — pursued over recent years and because of central adopting of EEC policies without any national policies being pursued by Governments here in relation to farming. Therefore, the whole area of EEC benefits to farming has not been used to bring Irish farmers to an efficient stage and to ensure that they would survive in Europe against any competition. It was obvious from the time we joined that, while there would be some good years in the intervening period, in a decade we would be really up against more productive farmers in the other EEC countries. Therefore, a decade has not been used in the way we believe it should have been used to enable us to be in a position to compete. In the circumstances in which we find ourselves now we must oppose this super-levy in an effort to ensure that the crisis for farming which it would create and the disaster to those who have put in such high investment do not occur.
The artificially inflated farm prices under the CAP are potentially ruinous for the EEC and will swallow up the entire Community budget next year leaving nothing for the Regional or Social Funds which are vital to Irish industrial and infrastructural development. It is important that when we are discussing the super-levy we look realistically at what is happening in the EEC. What are Germany and the UK up to? Why do all the other EEC countries come down so hard on us now? What is changing in the EEC? Have we noticed what has been happening over the past two or three years when we were reaching this stage? High food prices are bad for consumers and for ordinary working people who are struggling to meet the cost of living. They are bad also for industry through pressure on wages and so on, and they are bad for the food processing plants because they make them uncompetitive in the export markets on account of the increase in costs of their basic input. Real increases in farm income, therefore, should come from increases in production rather than from regular food price increases.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Deputy Mac Giolla, you may continue.
On a point of order, we have no intention of delaying the time of the House.
That is not a point of order.
This is vitally necessary. Would the Government consider bringing in at least one of their Ministers for Agriculture? It is very disappointing that the Minister for Agriculture is not here.
(Interruptions.)
Would the Deputy resume his seat?
The purpose of the Opposition is to try to educate our Ministers.
Would the Deputy resume his seat? We are all anxious to have the debate continue because we are all concerned and I would be very grateful if Deputy Byrne would allow Deputy Mac Giolla to continue.
I think it is only right there should be a quorum.
On a point of order.
Would Deputy McLoughlin please resume his seat.
Am I not allowed to make a point of order? I was at a committee meeting on small businesses. Deputy Desmond was at another committee meeting. We cannot be in two places simultaneously.
That is not a point of order. Deputy Mac Giolla, without interruption.
There are enormous changes taking place within the EEC and in the whole CAP structure for which we must prepare and of which we must be aware and in regard to which we must formulate a policy. That does not seem to be happening with this Government; £1 in £10 of our income now comes from the EEC in the form of grants, subsidies and so on. The problem is that countries which are paying out more to the EEC than they are getting out of it are seeking cuts in their contributions. Presumably the recession is hitting them as well and they are not therefore going to continue to fund CAP to the extent to which they were. We must therefore reorganise our agriculture in preparation for the time when this support is cut down much further even than is being considered at the moment. It is obvious we must make preparations and produce what will sell. We should be discussing how we can produce what we are producing more profitably and then find what other products we can move into, that will sell on the open market. Obviously more profitable milk production is something we did not achieve in the past decade. It is something we should have achieved, namely, more gallons per cow rather than more cows to ensure the efficient production of milk.
A great deal of the EEC budget is actually spent on milk and milk products. I think it was the last speaker who said that Germany and other EEC countries have much higher incomes per farmer and can, therefore, be more efficient. That is not true. It is true of Holland but it is not true of Germany. The figures show Germany has more small dairy farmers than Ireland has. In the one to nine cow numbers, 54 per cent of Irish farmers are in that category and 52 per cent of German farmers. In the ten to 19 cow numbers the figure is 20.7 per cent of Irish farmers and 29.5 per cent of German farmers. In the 20 to 29 cow numbers the figure is 10.7 per cent of Irish farmers and 11.7 per cent of German farmers — about the same. In the 30 to 39 cow numbers the figure is 5.9 per cent in Ireland and 4 per cent in Germany. In the 40 to 49 category the figure is 3.4 per cent in Ireland and only 1.5 per cent in Germany. As it goes up to 100 cows Germany goes down far below the Irish position. There are more Irish farmers in that category; 2 per cent of Irish farmers 50 to 59; 2.5 per cent 60 to 99 and .6 per cent of Irish farmers have 100 or more cows. Nobody in Germany has 100 or more cows and only 5 per cent have 60 to 99 cows so German farmers are not bigger dairy farmers than the Irish dairy farmers. They are simply more efficient small farmers and their efficiency has, of course, been built up over a long number of years, a period during which Irish agriculture was in great difficulties.
Nevertheless, in the past decade of the EEC more could have been done to raise the efficiency of the Irish dairy farmers. That has not been done. EEC dairy experts are of the opinion that a dairy herd of at least 30 cows is needed to have efficient exclusive specialisation in the milk production area to make it profitable. Only 11 per cent of all dairy farmers in the Community come into that category. They produce 40 per cent of the milk and that is the efficient production of milk area. There is great difficulty and great inefficiency being supported therefore, and not just in Ireland but in other EEC countries as well.
In relation to EEC funds by far the greatest amount has gone to farming. What have we to show for it? In the beginning on our entry into the EEC it was widely recognised that agriculture needed a huge investment of funds and it was accepted EEC funds would be concentrated mostly on agriculture. It was expected this would build up over a period and less and less funds would be needed for agriculture and more and more could be diverted to the Regional and Social Funds, something to which we all looked forward. Right up to 1982 the European farm fund, the guaranteed section and the guidance section, amounted to £405 million. The Social Fund got £97 million and the Regional Fund £79 million. There is no comparison. The Social and Regional Funds are approximately half the amount that goes to agriculture.
We are still in a situation where our agriculture, although it is benefiting from the EEC fund, is not showing the benefit and I think people are now wondering what is happening. What have we now to show for all the EEC money farmers have received? The milk area has increased in productivity; based on 100 in 1972 farmers had reached 144 in 1980, a 44 per cent increase. What is really surprising is that cattle numbers have actually gone down. In 1973 we had 6,536,000 and in 1982 the figure is down to 5,783,000. Where was the development? Where was the productivity? Where was the more efficient use of land and so on? Where were the increased cattle numbers on the land? Side by side with that we have less development in sheep, pigs, poultry and so on. Dairy farming has developed at the expense of other areas. This is very disapointing. It is even frightening. We have not developed right across the board to improve efficiency in farming to enable us to stand up to what is happening now in the EEC where we are beginning to get the knock at the expense of European farmers.
The proposed super-levy and the escalating cost of the CAP underlines the need for a new and fresh approach to Irish agriculture and its contribution to the national economy and the policy being pursued by Government. Major changes are required to make use of our national advantages, soil and climate. These have not been used and the Government have not come up with a policy to utilise these. In the short term the use of EEC funds should be as an investment in agriculture rather than as an income supplement or a sort of farmers' dole. EEC money will be distributed whether the farmers are being efficient or showing any increase in production or not. The distribution bears no relation whatsoever to the productivity or development of farming. The investment should be in development of agriculture rather than a simple income supplement. The incomes would, in fact, increase more with farm development and expansion.
There should also be a switch from products for which the demand is falling. Demand has been seen to be falling for butter and hard cheeses in particular, and dried milk over a number of years. We do not produce soft cheeses for which the demand continues. Our vegetable processing has been on the way down rather than on the way up over the last number of years. The strengthening of our food processing industry is of vital necessity. It is the area of greatest possible job creation here. Food processing in the United States is their greatest industry while here it has generally been in decline and not putting the added value which it should to our farm production.
We should ensure at least full production for the home market, so that we do not have to import eggs, potatoes and vegetables at the present enormous rates. Our farming community and the EEC are concentrating totally on milk and to a lesser extent on beef, with a small number of sheep. After that there is no further policy, development or programme for our vegetable industry, poultry industry or any other area of agriculture. The Government concentrate totally on what the EEC decide. A net figure of approximately £500 million was received from the EEC last year and it has not been used to develop any of the areas to which I have referred. We concentrate far too much on the products which are kept at artifically inflated prices. This has been a reaction to the EEC, rather than a development of our agricultural policy.
The processing industry should be strengthened to create the added value and employment which we need at present. We have the lowest rate of downstream employment on food products of any EEC state. The export of live animals last year was up 11.1 per cent, while our meat factories were closing or on short time and many jobs were lost. Exports of raw materials and fuels, amounted to £267 million last year, every single pound being a lost job opportunity. Less than 25 per cent of the value of Irish agricultural production is added off the farm. That is way below any other EEC country. Agriculture is not making anything like its potential contribution to the national economy. For instance, our total exports last year were £5,688 million, of which manufactured goods accounted for £3,658 million — almost two-thirds. Food, drink and tobacco amounted to £1,535 million; raw materials and fuels, £167 million; live animals £169 million; and other exports £59 million. Our agricultural exports are not making anything like the contribution they should after ten years in the EEC to our economy and our exports. Food production and exports would be greatly increased if progressive policies were introduced to Irish agriculture. The massive imbalance in the EEC budget in favour of farm price guarantees makes the EEC effectively an agricultural institution. Its role as a force for industrial, social or infrastructural and even agricultural development is relatively insignificant.
If there is any regional redeployment of resources from the higher income regions to the lower income regions, it is purely accidental. By subsidising inefficient farm structures, it has retarded the development of real output in agriculture. The easy alternative of selling into intervention has produced an undesirable concentration of production within Irish agriculture. The whole EEC system favours the production of bulk products, with minimal scope for value-added activities. The Irish agri-business sector have been encouraged to concentrate on the production of bulk quantities of, for instance, skimmed milk and carcases for intervention. The job creating potentials of consumer-ready products have been stunted in favour of the dictates of warehousing and cold storage. The overproduction of CAP favoured products, in combination with the inefficiency of much of the Irish farming sector, has contributed to the worsening of our trade deficit. We have become less self-sufficient in food since we joined the EEC under the Common Agricultural Policy. Our imports of food have increased enormously since then. That is because we are not competitive in the agricultural field and the other EEC countries can undercut us on the home market.
In a comprehensive study of the Irish agri-business sector called Output and Employment in the Irish Food Industry to 1990 published in 1979, the Economic and Social Research Institute set out what they considered to be the likely path of development over the next ten years — that is from 1979 to 1989. They said:
If present trends continue, by 1990 the Irish food processing industry could be predominantly in the hands of multi-national concerns and could be producing about twice its 1973 output with less than 18 per cent more employees. These trends can only be altered by a massive, co-ordinated effort of the major factors in the beef or dairy industry, or by large direct intervention by the Irish Government.
Expanding sales in the home market, and warding off competition from EEC partners may well become the top priority of the Irish food industry in the next decade.
This report concludes:
Sales expansion will be difficult if the European Community persists in an agricultural policy which keeps price above competitive equilibrium (so that large surpluses build up) and retains many less efficient producers in agriculture. We argue that a lowering of the real price of food would, in the long run, be most beneficial to Irish agriculture. Many of the part-time or marginal producers throughout the Community would shift to non-agricultural activities. Those farmers in Ireland who have a comparative advantage in farming would then be able to expand production, top economies of scale, increase their market share of other EC markets and get market opportunities in third countries. The food processing sector would benefit from an expansion in supplies of raw materials at a lower price and would, in turn, be able to expand markets for its finished products.
That report, issued in 1979, was submitted to the Government and was met with only a stony silence. Its projections are being shown to be very relevant today and its conclusions should be looked at again today by this Government in view of the crisis in farming which is now developing.
The Workers' Party argument is that the inflow of EEC money to agriculture should be redeployed in a productive manner, to raise productivity in agriculture and also in industry and the social sectors. The employment creation needs of the eighties will require massive investment in roads, telecommunications, urban, social facilities and so on. We argue that the £400 million which is now being paid by the EEC to individual farmers through the CAP should be redirected to promote better agriculture, to raise the capital for an efficient and cost-competitive food industry to benefit consumers and workers. A reappraisal of the EEC and of the CAP is now essential. The reappraisal has been done by the major EEC countries. Germany and the UK are very clear about what they want now. They are contributors to the fund from which we draw and they will not continue.
While we hope the Minister for Agriculture can perform a miracle this year, if that happens he certainly will not be able to do so next year. We are not just talking about a passing crisis. We are talking about a major crisis in the EEC, in the CAP and in agriculture. We need a national policy towards the EEC and we need a Government policy for agricien culture. It is extraordinary that it is only this year that the Government have taken the first steps to make some changes in the farming structure through changes in the letting system and the long lease system which is being developed now by the Minister for Lands. We have retained the same structures throughout the decade of our membership of the EEC. The Government must look at farming structures, farming production, farming output, markets for food, where those markets are irrespective of the EEC, what they do and what food we should be producing.
The cost of the CAP next year, whatever the outcome of the super-levy negotiations are, will have swallowed up the entire EEC budget leaving nothing for the regional and social funds which on our entry to the EEC we felt would be vital for the development of our economy and would be a great boost to various regions throughout the country but which never came off. We have only got fiddle sticks. The whole impetus of the EEC is now lost. There were no direct benefits to any areas in Ireland except agriculture. The other areas accepted this and said agriculture needed it and they would get the spin off but this has not happened. Consumers have paid an enormous price for the benefits to farmers and they do not want to pay them any more. That is why consumers will buy food as cheaply as they can get it wherever they can get it, irrespective of our farmers or they will stop buying meat altogether. In fact, the vast majority of the people are doing that now. There is a drop of 10 per cent in meat consumption in the EEC generally and this is probably greater here, which means less production again for farmers.
The high food prices and the whole impetus of the EEC have to be altered now. We have wasted 10 years in the EEC just grabbing what we could, with no Government policy for the development of farming to the stage where we could stand on our own. The Minister should produce a White Paper for the EEC and agriculture. We have to face up to a major change in our farming policy and in our attitudes to the EEC whatever the outcome of the super-levy negotiations is. The Workers' Party give the fullest support to the Minister in the negotiations because we believe this is a major crisis which has to be overcome.
I hope to be finished within my time limit of 30 minutes because I believe this debate should enable as many Members as possible to air their views. If I speak for less than 30 minutes there is a tendency to interpret that as meaning that I do not feel the subject is as important as other speakers do who take much longer. I hope there will not be any further calls for a quorum which loses time in this very important debate.
I do not intend to repeat the well-stated and well-known facts about the proposals to reform the CAP, the disastrous effects which those proposals will have on the country and the repercussions down along the line. I believe those are well-known and they do not need to be repeated in the House. There is a necessity to get that kind of information across to other sections of the community but that can be done other ways without going through things in the House. Agriculture is our major industry. We differ from other countries as practically our total economy depends on agriculture whereas in the case of other members of the EEC agriculture is just part of their economy. More employment and more people's livelihoods depend on agriculture and the well-being of agriculture in Ireland than in any other country in the EEC, so nobody should be surprised at the amount of concern and opposition throughout the country at the proposals to make certain changes in the CAP.
I believe there is general agreement in the House about the after effects of these proposals and there seems to be general agreement for support for the Government in their negotiations to try to prevent these proposals being implemented, particularly the super-levy. I go along with what the Fianna Fáil spokesman said that there is no merit in point scoring. Unfortunately, after saying that, he went on to make a very serious allegation which I cannot let go without comment. He said that the presence of the Labour Party in Government weakens the case of the Government in these negotiations. That is a very serious statement to make. He did not elaborate on what he meant when he said that. It is true that the Labour Party opposed entry to the Common Market on the terms that were then negotiated. I do not want to waste time by bringing out files to prove what we said at that time and how right we have been proved since, especially in this review of the Common Agricultural Policy. We are the only party who have been proved right but I only mention it now because of the serious, untrue allegations which were made by the spokesperson for Fianna Fáil.
Since the people of this country made a democratic decision to enter the Common Market, the Labour Party have worked consistently, constructively and positively to get the best possible deal at all times. I challenge any Member on the opposite side of the House to produce any evidence of where we have not done that. We have always voted for the best deal for this country in every debate and vote on agricultural matters in the European Parliament. In fact, in the present crisis, we have been very active in ensuring that all our colleagues in Europe are made fully aware of the consequences that the proposals would have for us.
I should like to point out also that, significantly enough, it was the Greek Government who have given official recognition to the fact that Ireland have a case and the Greek Government is a Labour Government, one out of two that make up the ten member states. The other country is France. Neither of those countries is causing great difficulties in our negotiations, the difficulties in the main come from the most right wing Governments in Europe. It is grossly unfair and untrue for Fianna Fáil to be creating the impression that the Labour Party in Government damaged the country's chance of getting a good deal. It is a preposterous statement and shows the depth of ignorance about the real problem which exists in Europe at present. If they were aware of the facts, they would not make such a statement.
I went to Athens last week to meet Mr. Varsis, President of the Council of Ministers, also a member of the Labour Government. I also spoke to the Prime Minister in Athens last week and, under great pressure, they made that statement. Our Minister for Agriculture has, rightly, totally rejected that type of compromise and I told Minister Varsis last week that it would be rejected. However, the significance is that it concedes the fact that Ireland have a case and when we get an admission from the President of the Council of Ministers that Ireland has a case, we are taking some steps to reach a solution. I hope that what has been said there will be the last comment of that nature because we need unity in the biggest fight which this country has ever had on its hands.
I wonder if the Fianna Fáil spokesman understands the situation, because he compares it with that which existed when they were in office and when the then Ministers, Deputy MacSharry and Deputy Lenihan, successfully negotiated a deal. He forgot to mention Deputy Gibbons although he also as Minister negotiated good deals. The deals they negotiated were made in totally different circumstances. I do not know whether it is a failure to understand the implications of the present crisis when he tries to compare what is happening now with what happened then because, at that time, there was no problem with own resources. The resources were in the Community and it was a question of negotiating and getting more money because it was there. The money is not there now and that puts an entirely different complexion on it. We must get this across to the people because there is no point in Fianna Fáil Deputies going to meetings of the IFA or any other groups and telling them that the Minister is not doing his job. The big problem is that the Community now has no more money and must reach agreement on new recourses. Until they do this where is the money going to come from? This is a new situation which was never experienced by any previous Government since we entered the EEC.
The kernel of the problem, the own resources, was passed over by the spokesman for Fianna Fáil. I am worried as to whether there is a clear understanding on their part of the magnitude of the problem which confronts our negotiators. I am glad that I got the opportunity of coming back from the European Parliament in Strasbourg where this subject is being debated today. I will be back to vote on it tomorrow but I am glad that we are also debating this question because, even among Members of this House, there is still some misunderstanding of what is involved. I must defend myself and my party against the remarks made by the Fianna Fáil spokesman. It is not a time for point scoring, it is a time for unity, but we must set the record straight. It behoves all politicians to get the population united behind the Government. From my meetings and contacts in Europe, I have no doubt that the Government and the Minister are getting the message across and there is recognition of our problem.
We must address ourselves to where the money is to come from. As we know, at least two countries, the UK and Germany, have said that they will not agree to any increase in own resources until a review of the CAP is carried out. It is a difficult situation because, if there is not a review of own resources, it will follow as sure as night follows day that there will be no more money left for agricultural development, so that one is as important as the other. This own-resources question must be faced up to so that there will be money available to develop our agricultural industry further. One of the many failures of the EEC has been the over-dependence on agricultural policy almost to the exclusion of other policies. Ironically, the crisis that has arisen now in agricultural spending has been caused by the spending in that area down through the years, spending which was to the detriment of other policies. If more had been spent on, say, the industrial policy, countries such as the Netherlands, Germany and other northern European countries would have concentrated more on industry and would have left agricultural development to countries like ourselves who are best in that sphere. We have the natural resources and we have the workers. Alternatives should have been put to those other countries instead of encouraging them to develop their agriculture and to turn them rapidly to the factory-farms type of activity. These were set up simply because there was money to be made from them and because there was hardly any industrial policy in Europe, a factor which acted to the detriment of our agricultural development. There was no food policy either.
It is puzzling that the present crisis was not foreseen because the problem began to show itself about ten years ago. It has become progressively worse and we are now at this very serious crisis point. There has been reference to the veto. The present crisis bears no comparison to anything that has been experienced before because the resources are not there now in terms of using a veto. Much more negotiation must take place to resolve the situation. As a former trade union official I have taken part in many negotiations. The ultimate weapon of the trade union is the strike and the strike weapon can be compared with the veto in terms of reaching a stage where the ultimate must be considered but where a balance must be reached. I have no doubt but that our negotiators will use the veto if at the end of the day they consider that to be the correct action to take. We will all support them on that but first there must be further serious negotiations. The Heads of State meet in Athens in a few weeks' time but since there are as many pessimists as there are optimists in regard to forecasting what the outcome of that meeting may be, it is difficult to get a clear picture of whether something concrete will result from it. However, if nothing comes of the Summit, the result will be serious in terms of next year's budgetary problem in the EEC. But if something comes out of the Summit and if agreement can be reached on the question of increasing own resources, the proposals would have to be brought back to the national Parliaments of the member states. The Ministers who will be negotiating in Athens must bear that in mind. It is one matter for them to agree to proposals on own resources but it is another to have those proposals sanctioned by the relevant Parliaments. We all know that throughout Europe most Governments are trying to cut back on spending. Therefore, it will not be an easy passage for any Minister to get the sanction of his Parliament in terms of increasing own resources. One cannot imagine a representative of the German or of the British Parliament having an easy and clear course in putting through a proposal that the own-resources contribution be increased, as the Greek Presidency proposed, to 1.8 per cent. Understandably, such a proposal would get a clear passage through the House here because we are net beneficiaries of the Community. In fact, it would pay us to put a lot more into it because the return would be manifold but the situation is not similar in other countries. Time will be needed in order to persuade each of the member states to agree on such a proposal, even if it is to increase the figure to 1.4 per cent. However, if the Heads of State agree on any such proposal I am sure that something can be worked out to ensure that the necessary finances are available to fund the additional contribution required.
I would not wish the brevity of my remarks to be taken as an indication of the depth of my concern in regard to this whole problem. I am in a position to be in touch with the problem and I am frightened that while other member states appreciate our predicament, there does not appear to be any great rush to help us in that regard. I join with those speakers who have pledged their support to the Government in their efforts to bring about a solution to this very serious problem.
We are talking of a problem that concerns the entire community and that is why I consider the remarks of the Fianna Fáil spokesman this evening to be most unfortunate. We can do without remarks such as that the Labour Party are endeavouring to undermine because such remarks tend to divide the community on an issue of this sort. I cannot think of another occasion on which it was more necessary to be united. Never has it been more necessary to have the support of the trade unions and of the people in urban areas generally. Europe consists of all shades of political opinion from the extreme right to the extreme left and we receive more support from those on the left than from those on the right, a situation that is hidden from our people. We should unite in appealing to all these people to come to our aid. Unfortunately, the Community of today is not like the Community of ten or 20 years ago when there were within the EEC leaders who saw the Community as a group of nations in which the strong would contribute more in an effort to increase the lot of the weak, with those at work helping those who did not have work. The word "Community" may not be appropriate today having regard to the shape it is taking. However, I trust that there will be a return to the situation I have outlined and to the kind of confidence which our people, and particularly those in the agricultural sector, showed in Europe. We should all unite in our efforts to bring about such a situation.
I am glad to be given this opportunity of contributing to this important debate and of recapping the objectives of the Common Agricultural Policy which are: firstly, to increase agricultural productivity; secondly, to ensure a fair standard of living for those engaged in farming; and, thirdly, to stabilise markets ensuring reasonable consumer prices. Of course the cornerstone of this policy is Community preference, that is preference for products produced within the Community.
After ten years of membership it is enlightening to examine our performance nationally as a result of membership of the EEC. In 1974 our total cattle numbers stood at 7,200,000 and they dropped continuously until they reached a figure of 6,700,000 in 1983, a drop of 6 per cent. In 1974 our dairy cows numbered 1,400,000 and to date they have increased to 1,600,000.
However, also in the course of the past ten years, our beef cows dropped by 42 per cent. In addition the total number of people at work in agriculture has fallen from 261,000 to 190,000. Therefore I am sure Members generally will agree that our performance in our first ten years of membership has been fairly slow and sluggish. However, I would point out to Members — in particular Deputy Mac Giolla of The Workers' Party who is not now present — that the reason for this slowness was our lack of development before our accession, which was due to our dependence on the British cheap food policy for several decades. Therefore, we had an awful lot of leeway to make up.
In this we were not helped by the relative lack of investment in agriculture by the Department of Agriculture. In fact during those ten years real investment in agriculture dropped by 20 per cent. Despite the lip service paid to the development of our land, and the top two or three inches of our soil, the fact was that no real effort was made to fully develop that resource. The fact that we had been tied to a cheap food policy for so long left agriculture in a very underdeveloped state before our accession to the EEC.
Since joining the EEC we have virtually doubled our milk yield, but even at that we are still only at 75 per cent of capacity of the average in Europe. Our better farmers are doing better than that — the top 30 per cent — but there is still a tremendous amount of ground to be covered. The very minimum we seek is an opportunity to allow our industry to develop to the same extent as it has in the other dairying countries of the EEC. I do not think that is asking too much. We have been a full member only since 1978 and up to the year 1981 not a single pound of our butter or dairy products was in intervention — only 1 per cent of the total surplus has been created by us since our accession.
Not alone is our dairying industry under assault because of the so-called restructuring of the Common Agricultural Policy, but our beef industry faces annihilation because our beef herd has been reduced dramatically. It must be remembered also that our beef industry is dependent to the extent of 85 per cent on our dairying industry. Therefore it is easy to see how difficult the situation will be for the beef industry if there is to be any curtailment of our dairying industry. Of course, ten years ago it should be remembered we were only 90 per cent self-sufficient in dairy products and about the same in meat products, whereas today we find there is overproduction on both commodities.
It is only fair to point out that this over-production to a great extent has been caused by the importation of food products generally from third countries. Yet the cornerstone of the Common Agricultural Policy is supposed to be Community preference. That is why we are members of the European Economic Community. This chronic over-supply on the European market, which has culminated in mountains of butter and milk powder is being really aggravated by third country imports. I see no justification for that. The Minister should do all in his power, certainly more than he appears to be doing, to have that curtailed or eliminated altogether.
As far as New Zealand imports are concerned, what makes matters worse is the fact that they are imported into the United Kingdom market, which is still our largest market for butter. There the real problem is that the butter imported from New Zealand to the United Kingdom is sweet cream butter. Ireland happens to be the only other major supplier of sweet cream butter. As members of the dairying community here will appreciate, the Dutch and the Danes export ripened or lactic cream butter into the United Kingdom market, like the old farmers' butter. They are not concerned about the importation of New Zealand sweet cream butter; it does not bother them. In fact, they would be happy enough to see it come into the United Kingdom because it means that much butter removed from world markets where they are seeking export opportunities for some additional products. That situation is compounded by the fact that New Zealand imports of cheese into the United Kingdom market consists mainly of Cheddar cheese which happens to be our main variety of cheese on the United Kingdom market. Therefore with regard to butter and cheddar cheese we are discriminated against by the importation of a third country food product. I would ask the Minister and his officials to point out in negotiations that technical anomaly regarding our position on the United Kingdom market. I would ask the Minister in particular to strongly resist the increased share of this contracting market by New Zealand which is utterly unfair and discriminates against our producers.
Our meat industry, in particular our lamb industry, is affected to a great extent by New Zealand. The importation of cheap frozen lamb into the United Kingdom causes tremendous problems for our exporters in that when there is a surplus in the United Kingdom the UK itself exports fresh lamb to France where we have built up good markets, thereby disrupting that market. Of the total meat importation into Europe 400,000 tonnes came from Latin American countries and New Zealand — almost twice our total export. Any objective person examining that situation will recognise that we have a unique problem. Indeed, our negotiators should have a relatively easy job advancing our position in that regard.
Regarding the Common Agricultural Policy, there are two major problems. The first is the cost, and so far as the bureaucrats in Brussels are concerned, this cost is occasioned by increasing production and declining markets. Of course, an ideal food policy would strike a balance between production and consumption which would be of advantage to farmer and consumer alike. The present difficulty about the steps taken to sort out this problem is that only the production end appears to be tackled. We hear about super-levies, systems to curtail production, reduce output at all costs; but there is not a word about increasing comsumption, and everybody knows that consumption can be increased. We have sufficient substitute products, all sorts of substitute products coming into the Common Market and our country, that could be replaced by genuine food products. But, for some reason or another, the Commission have not put one single effort into improving or increasing consumption; all efforts are by way of curtailment of production, ensuring minimum production at all costs.
There was an interesting contribution from Deputy Pattison of the Labour Party a while ago regarding the Labour effort to emphasise our case and ensure that it is properly heard in Europe. I would refer him to a paper given recently by his colleague in Europe, Mr. Brendan Halligan, MEP, when he addressed the Irish Co-operative Organisation Society Conference at the Burlington Hotel on Tuesday, 8 November 1983. He said:
The forthcoming European Council in Athens will effectively determine whether or not Community membership is any longer of benefit to Ireland. The outcome of this historic meeting will for us depend on one factor and one factor only: the extent to which the unique problems of the Irish economy are understood and appreciated by the other member states of the Community. I greatly fear, on the basis of personal experience, that these problems are not understood and for that reason I am most pessimistic about the prospects of a special deal for Ireland.
I assume when Mr. Halligan, MEP, speaks of "personal experience" he is speaking of his experience as a member of the European Parliament because he knows what goes on there. He continues:
This leads me to the conclusion that it is odds on we will suffer a net loss of revenue unless our Government demonstrates negotiating skills of which it has, so far, shown no evidence.
He continued:
There is no perception of our difficulties and we are regarded as being signally irrelevant politically. The other difficulty is domestic. The Government has lost out by refusing to engage in a bold and dramatic presentation of our case by taking it directly to each national capital in advance of Athens. The failure to engage in a tour of capitals has been a bad blunder.
I am alarmed to think that our negotiators have not got though to Brussels the seriousness of our appalling problem and our chronic situation. Even at this late stage the Taoiseach, the Minister for Foreign Affairs, the Minister for Agriculture or some of his Ministers of State, could do a tour of all the capitals and make absolutely certain that we are not treated as irrelevant and as an irritant on the north western periphery of the Common Market. We are members of the Common Market and since we joined we have behaved impeccably. We have adhered to the rules and we are only asking for our fair share of the cake, and not to be penalised for a chronic situation which has been brought about not by other members, but by third countries.
We have not done our case any good at home for a number of reasons. Early in February the Government decided to abruptly terminate the farm modernisation scheme thereby losing millions of pounds of EEC money which could have been used to build up and modernise our farm production units. At that time we were far behind our European competitors. If we wanted to make the best use of EEC funds, we should have continued to modernise our farms because the levels of grants to Irish farmers were far behind those granted to our European counterparts, and the level of the grants had not been increased for several years. The Irish farmer investing in milking parlours and farm buildings got a substantially lower grant than his counterpart in Denmark or the Netherlands.
Or the Six Counties.
Yes. In this House we have the Joint Committee on Secondary Legislation of the European Communities, which has not convened for two-and-a-half years. This Committee is of vital importance because directives and regulations as they affect Ireland are debated and amended. If we do not take ourselves seriously as Europeans, how can we expect the European bureaucrats to take us seriously?
Two further aspects of the EEC which we do not take seriously are the Regional Fund and the Social Fund allocations which should be of tremendous importance to rural Ireland. We take the soft option and the easy way out because those moneys are paid directly into the Exchequer rather than being used for special projects in rural areas to correct some of the imbalances which exist there. It is much easier to put this money into the Exchequer and let the regions take care of themselves.
To return to the heart of the present problem, namely, over-production of agricultural products and declining consumption, I would ask our negotiators to demand that the Commission put some effort into increasing consumption because, to use a cliche, they have not looked beyond the farm gate. As a start I suggest that the title "Common Agricultural Policy" be changed to the "Common Agricultural and Food Policy".
If you produce a product, it must be processed, marketed and made available to consumers. There is no point getting 1,000 gallons of milk and converting it into the easiest product, namely butter, and making powder out of the remainder, dumping them into intervention and expecting everybody else to look after them. I would ask the Commission to begin by improving processing and marketing facilities.
Here at home we could make a start in this regard. We convert 80 per cent of our milk into butter, which is a larger percentage than before we joined the EEC; we convert the skim milk into powder and most of the remainder into cheese, maybe a little into casein and a very small percentage, about 1.5 per cent, into liqueurs and yogourts and high added-value products. I realise we have only a small home market but we could use it as a test market to develop and improve our products and then sell them in Europe. If anybody doubts what I am saying he should go to the shops in this city or in any town in rural Ireland and look at the varieties of cheese and yogourts which are imported. We have to get our house in order so far as consumer-oriented products are concerned.
A start could be made by paying for milk on a total solids basis. We are still paying for milk on its butter fat content. As I pointed out butter is no longer wanted. It is piling up — 800 million tonnes. It is associated with heart disease. The nutritional values are ignored as is the lactose which, in my constituency, is converted into alcohol. This could be further refined and converted into energy of various kinds. We should start paying for milk on its total solids content — fat, protein and lactose.
This super-levy will be introduced at a 75 per cent rate on the increased volume of milk. It is the constituents of milk that cause the mountains — butter, powder and protein. As our milk has lower fat and protein contents than our European counterparts, we are being even more severely penalised. If there is to be any degree of a super-levy at a future date, it should be on the solids content and not on volume because it is the contents on milk which have raised these problems.
I ask the Taoiseach and the Minister to make this tour of the European capitals and to ensure that our position is recognised and appreciated. The total support not alone of the Dáil but of the Irish people is behind them because this is the single most serious matter likely to affect us that we have encountered since our accession to the EEC.
If the Minister returns empty-handed from the negotiations regarding this matter we may as well put RIP over his desk when he is leaving because he will sound the death knell not alone for the dairying industry but for the whole economy.
The job situation will be affected also because of this imposition. When it comes to making a reasonable income there is virtually no alternative to dairying for the vast majority of Irish farmers because of the size of their farms, and the gross margins are lower in most of the other farming enterprises available to them. Ireland must secure a derogation from the super-levy sufficient to allow further development in our dairy and agricultural industry at least to levels of output approaching European average levels.
Ar an gcéad dul síos ba mhaith liom a rá gur cúis áthais dom go bhfuil an deis seo agam labhairt sa díospóireacht seo i dtaobh fadhbanna an Chomhphobail. Tá a fhios againn go léir go bhfuil fadhbanna an-mhór ag Comhphobal na hEorpa faoi láthair, fadhbanna go háirithe a bhfuil baint acu leis an tír bheag seo ar imeall na hEorpa. Tá súil agam go gcabhróidh an díospóireacht seo, agus an chaoi in a bhfuil gach páirtí agus gach Teachta aontaithe, go gcabhróidh sé go mór leis an Rialtas i leith na ceiste seo agus nuair a bheidh an Summit ar siúl in Athens roimh Nollaig.
I am glad to have this opportunity of contributing to this very important debate and I welcome very much the opportunity provided to debate some very crucial matters. This is the first in-depth discussion on the EEC and particularly on the CAP that I can recall for a considerable time here. Before going on to deal with the Commission's proposals particularly in relation to the CAP and, more specifically, to the milk sector, I would like to say how much I welcome the opening speech by the Minister for Foreign Affairs here this evening. The significance of his speech and the manner in which he approached the negotiations in the context of Article 5 and Article 44 of the Treaty have been overlooked in most of discussion that has taken place here. Some of what he said is worth repeating, and I quote:
The Treaty, establishing the Community, affirmed unambiguously that the essential objective of member states must be the constant improvement of the living and working conditions of the people of Europe. The text goes on to underline the need to ensure the harmonious development of the economies of member states by reducing the differences existing between the various regions and the backwardness of the less favoured regions. This is fundamental Community philosophy. These are the principles and objectives that created so much excitement,...
The Minister at the time rightly said that in 1972 on the referendum before our entry into the EEC. Further on the Minister went on to deal with various aspects of Community policy in relation to financing and own resources, and he made reference to major decisions which will face the Heads of State in Athens next month. Very relevant to this country, the Minister has put the whole question of the super-levy and the CAP in their proper context of European regional policy and particularly in the context of the philosophy of the Treaty of Rome which pledged the Community to formulate and implement a coherent regional policy which would ensure that the gap between the richer regions and the poorer regions would be continuously narrowed.
Looking back on the Community and remembering what the Minister has said, after four years as an MEP I believe it is time to call a spade a spade. Despite the wonderful philosophical concept enshrined by the great architects of the Treaty of Rome, Konrad Adenauer, Schumann and De Gasperi and the pledge to help the poorer regions bring up their economies and so forth, improve the social lot of the people and try to narrow the gap, after a quarter of a century in existence the EEC has had one notable characteristic. The various policies implemented, the various Community finances implemented, have all contributed to the situation whereby the rich regions of Europe have continuously become richer while the poor regions have continued to become poorer. If there were a coherent regional policy and if the Community had given practical expression to the philosophy of the Treaty of Rome whereby the economic and social problems of poorer regions, particularly of the peripheral regions like Ireland had been taken into account, the Commission would never have come up with a concept of a super-levy which would be applied right across the board from the richer German and Dutch agricultural regions without any differentation between rich farmers, factory farmers and the smaller farmers in the poorer regions such as Ireland.
The concept and proposal of the super-levy are symptomatic of the total failure of the EEC to put forward and implement a coherent regional policy. I am delighted that the Minister has adverted to this and has indicated his position in relation to the battle we are fighting now in relation to this super-levy, something which we must emphasise again and again. We have special problems in this country and, apart from the Treaty of Rome, it should be remembered that in the protocol to the Treaty of Accession at the end of 1972 special recognition was given to the entire island of Ireland. The entire island was recognised as being an under-developed region in need of special assistance under various Community instruments, under the Regional Fund, the Social Fund, FEOGA and various other sources of finance. In practice this has not worked out. The proposal to introduce a super-levy right throughout the Community without taking into account the special economic and social factors operating in the poorer regions of the Community, such as this country, is a clear indication of an absolute departure, particularly by the bureaucrats in the Berlaymont building in Brussels, from the basic philosophy of the Treaty of Rome and also a flagrant breach of the protocol to our Treaty of Accession in 1972. This must be emphasised again and again.
In Athens the EEC will be at the crossroads faced with enormous financial problems. The Summit in Athens in December will determine whether this Community will progress and develop as was envisaged by the Treaty of Rome or whether it will continue to be as it is now, in a financial quagmire, drifting from crisis to crisis and trying to find ad hoc and temporary solutions to major problems. In the debate on the budget for 1984 two weeks ago in Strasbourg we saw this type of stop-gap measure of robbing Peter to pay Paul financial policy where there were cuts in agricultural spending in order to increase the Regional Fund and Social Fund. This is the type of day-to-day ad hoc policy.
I sincerely hope that the problem of our resources will be tackled vigorously and provision will be made. I fully reject, and so do my colleagues, the argument put forward over the past two years that agricultural funds must be cut so that there can be an increase in both the Regional and Social Funds. In the context of this country and its economic problems it is somewhat ludicrous to talk about a regional policy exclusive of agriculture. Remember a regional policy must be based on the agricultural industry and special recognition must be given to the role of agriculture in our economy. All financial resources should be applied in a co-ordinated way for the social and economic development of the country.
One of the biggest stumbling blocks is the proposal vis-á-vis the Common Agricultural Policy. Indeed there are several proposals including that of the super-levy. This latter has caused the greatest worry and anxiety. There are good grounds for that anxiety. As I said, this country is dependent on agriculture more than any other member country of the EEC. The dairy industry is the foundation of our agricultural economy. It provides employment on the farm and in the processing industry. I cannot understand how anyone in Brussels could have come up with a proposal like the super-levy nor can I understand how that super-levy could be applied fairly.
Agriculture is vital to our economy. According to the Treaty of Rome equal opportunity and fair play are guaranteed so that farmers can make a decent living. We have been in the Community only ten years. Other member states have been there 25 years. I am certain that my Irish colleagues in the European Parliament all agree that the policy adopted by the Government since last August has been the correct policy. Deputy Pattison referred to the continuous efforts made by the Minister for Agriculture, the Minister for Foreign Affairs and the Minister for Finance. All have used every means available to them in an effort to get a better understanding. Only yesterday in the European Parliament the Common Agricultural Policy was debated. That debate continues today and it will continue again tomorrow. I shall be leaving in the morning in order to participate in the debate. There are several amendments.
We have a serious problem. We cannot accept the super-levy. That is the biggest problem with which we are confronted. Looking at the reaction in the different member states I am satisfied that ours is the correct approach. It has got massive publicity in the media and a better understanding has been created. Negotiations are going on all the time and I am satisfied, and I am sure my colleagues will endorse what I say, that both the Taoiseach and the Government have left no stone unturned in ensuring that the Commission, and particularly the Council of Ministers and the different national Governments, understand why we are so worried about the proposed super-levy. There has been remarkable unity and solidarity among the Irish Members of the European Parliament irrespective of party affiliation and irrespective of what group they are affiliated to in Europe. We have used every means at our disposal to get a proper appreciation of our problems. There was a significant announcement by the Greek President in the past week. Even those who may not have a full understanding of what we are looking for nevertheless recognise there is a serious problem in Ireland in relation to the dairy industry and the super-levy. We shall be speaking, both Mr. Richie Ryan and I, on a number of amendments tomorrow. We shall be leaving here at 7.30 in the morning.
The Currie Report is a report prepared by Mr. Currie, a Tory member of the European Parliament. He was the rapporteur appointed by the Agricultural Committee to produce the report reflecting the views of that committee of the European Parliament in relation to the recent Commission proposals vis-à-vis the Common Agricultural Policy. Unfortunately, that report is most unsatisfactory as far as this country is concerned in that, while it contains many good things and is in many ways a realistic assessment of the problems confronting the EEC at the moment in relation to the Common agricultural policy, there is no reference in this significant report to the special position of Ireland and other peripheral regions of the Community. A number of amendments were put to the agricultural committee in the hope that they might be incorporated in the report, but that did not happen. Other members of the European Parliament will have similar amendments to ours to put down.
Our first amendment insists that any adaptation of the CAP on the basis of proposals put forward by the Commission should not be to the detriment of the viability of the family farm or of small farmers in the poorer regions of the Community such as Ireland. The second amendment is seeking to insert a new paragraph, the text of which is that we believe the most practical way of regulating production in certain sectors is through the application of flexible guarantee thresholds which respect the following criteria — and these are very important — firstly, the importance of the sector in the economy of the member state and, secondly, the state of development of that sector in the member state concerned. These are two vitally significant and fundamental factors in this debate with relation to the super-levy.
We have put down amendment No. 11 which we will fight to have carried by the Parliament, which is of vital and fundamental importance to this whole debate. We are asking for the addition of a new paragraph seeking to have the European Parliament to agree that, firstly, because of the low levels of production in the island of Ireland, secondly, because of the degree of dependency on agriculture, thirdly because of the fact that the GP of Ireland is only half the Community average; and, fourthly, because of Ireland's dependence on milk, cattle and beef, the setting of levels for guaranteed thresholds should not be imposed until production in the island of Ireland reaches the average level of production of the European Community as a whole. This is the basis of our entire case. We are entitled to that chance under the Treaty of Rome and under the conditions of our entry into the EEC. We are entitled to an improvement in our agricultural production and milk outputs up to the Community average.
I took part in the campaign along the west coast and the southern regions to get the farmers to agree to entry into the EEC in order to give a new impetus to our dairy industry. If this super-levy goes through we will have conned the dairy farmers of Ireland in 1972, misled them and given them false expectations of great things. Nevertheless, I am cautiously optimistic, even though the battle is far from being won, that out of the summit meeting in Athens will come a formula which will be satisfactory to our dairy farmers and will give them scope to develop their output per cow up to the European level. This will ensure that our dairy processing industries will develop, expand and provide more employment.
I carried out a survey among some of the major co-operatives and am frightened at the social aspects of the impact of the super-levy. Two top economists and one expert in the dairying industry whom I have consulted in the past fortnight have informed me that the imposition of the super-levy would lead to a loss of 1,000 jobs in the milk processing industry. That is if the base line of 1981 were adhered to.
There has been a 15 per cent increase in milk production between 1981 and 1983. Most of the major co-operatives have surplus capacities. They are targeting for increased milk production and milk intake in the coming year. One co-operative is targeting for as high as 8 per cent of an increase in milk intake. The whole structure of the dairying industry would be absolutely destroyed if this super-levy were imposed and that is no exaggeration.
I shall have an opportunity in Strasbourg tomorrow evening to deliver much the same speech as I am delivering here in our national Parliament. I welcome the speeches from the opposite side of the House. They have displayed great unity and solidarity. We European Parliament Members of all parties have done everything in our power in lobbying support for Ireland's case. This debate will serve to demonstrate loudly and clearly to the powers that be in the European Community that this small nation is determined to ensure the viability of our dairying industry which is so vital to the national economy.
One thing which worries me greatly is that because of the world recession it is becoming virtually impossible to attract major industrial investment from abroad, as had happened in the sixties and seventies. If we are to tackle the unemployment situation we must rely on our own resources and our only real resources are agriculture, the land of Ireland and the fisheries. We must develop our agriculture, our food processing and added value in both agriculture and fisheries. These are the only areas which provide hope for the generation of new employment to meet the aspirations of our young population, the youngest in western Europe. I am cautiously optimistic that the outcome will be OK.
Mr. Leonard
I am glad to hear an MEP saying that he is optimistic that it will be OK. It is only right that an opportunity was afforded to discuss this issue, which is certainly one of the most serious which has faced this Parliament since the setting up of the State. This debate is important, because it will strengthen the hand of those men who are going out to Brussels to put our case. Their muscle has up to now been a bit weak.
Hear, hear.
Mr. Leonard
The campaign, from the Taoiseach down, has been indecisive. The Taoiseach said at one stage that we should prevent damage to the Irish interests and then the Minister for Agriculture conceded the situation later. We are facing a very serious situation at national level. When we, as elected Members, bring it down to parochial level it is much more serious, with practically 50 per cent of the farmers dependent on milk production and about 73 per cent in my constituency. The dairy industry has shown substantial growth since 1965. It was then 24 per cent of the gross agricultural output. It has risen since then to 32 per cent and that in a time when there was a reduction in the number of suppliers, but to offset that an increase in cow numbers and in yield per cow, which still stands at 680 gallons per cow and which is low in comparison with European standards. Our average cow herd is only about 14½ cows. When we compare those figures with the other EEC milk producing countries of Germany, France, the Netherlands, Belgium, the UK and Denmark this chart shows some of the areas where the dairy industry in Ireland is inferior to all the other member states of the EEC. In most of the other states the yield is 1,000 gallons, but it is only 680 gallons here. The seasonality of the milk supply has always been a problem here, and we find we come out very badly in that respect. Deputy Walsh spoke earlier about paying on solids rather than butter fat content. This has been discussed very frequently over the last few years. With regard to the butter fat content we are the lowest. We find that in Denmark the butter fat content is 4.22 per cent and in Ireland it is 3.49 per cent.
Another question which was discussed at Question Time before the summer recess is milk recording. It is generally accepted that it would be very desirable if there were more milk recordings. We are at the bottom of the scale. In Germany the figure is 44 per cent, France 25 per cent, Netherlands 66 per cent, Belgium 27 per cent, UK 36 per cent, Denmark 65 per cent and the Irish Republic 3 per cent. We have failed to keep record of the recordings. We are far down the scale in relation to the price of milk, only two thirds of most of the other milk producing states. We are behind in every aspect. We could blame many things for this. We could blame the problems created by brucellosis when so many herds had to be disposed of and in other cases many animals in herds had to be disposed of. We also had very high inflation and, most important of all, we started from a very low base.
When we look at the dairy situation we also have to look at beef production and our factories. We find that 85 per cent of beef supplies come from dairy herds. It is generally accepted, whether it is single, double or treble sucklings, that it is not profitable because there are fewer people engaged in that as an enterprise. The ideal situation is to have a viable dairy industry and aligned to it calf to beef and a beef industry. Reference has been made here to the number employed in the dairy industry. There are 11,000 people employed and it is accepted that if the super-levy is introduced 15 per cent of the suppliers will go out of business and there will be a decrease of 10 per cent in the work force employed in the dairy industry.
Previous speakers have referred to the problems caused by factory cows. There are massive imports into the EEC of cereal substitutes. Ireland, France, Italy and Denmark account for 55 per cent of the total agricultural production in the EEC but they import only 12 per cent of all the cereal substitutes. Germany and the Netherlands are in the business of factory cows and account for 70 per cent of the cereal substitutes. I saw lately that 20 million tons of cereal substitutes were imported and that 10 million tons of that went directly for feeding factory cows. This is one area where it is very hard for a country like Ireland to compete. There should be some concession given to us in relation to the super-levy.
There is also the problem of New Zealand butter. Despite all the discussions and all the pressures to reduce unnecessary imports, when we have a large amount of butter within the EEC, we find that in 1974 Britain imported 25 per cent of her butter consumption but this has now increased to 34 per cent. In the case of milk as a percentage of the final product the figure is 32 with an average of 19 per cent in the EEC countries. We all welcome the strategy for the development of agriculture processing in Ireland by the IDA. This had great potential of higher value added products to provide employment. We had the raw material in the dairy and beef production in large quantities. In their report they stated that they estimated the increased level of processing which could be achieved over the decade by the dairy subsector would be 30 per cent increase in the level of raw material imports. They hope that 83 per cent of the commodity products of butter, milk powder, chocolate crumb and casein in 1980 would be reduced to 65 per cent in 1990. This would increase those higher added value products from 17 per cent to 35 per cent in that period. The dairy industry was developing in that context. The people in the industry felt there would be a ceiling to the amount of milk which could be produced for the more common products like butter and cheese. They were aiming at the higher value added products and the baby and diet foods, canned milk powder, processed cheese, whey and dairy desserts. They were pinning their hopes on those areas. If the super levy becomes a reality it will leave us in a very serious situation.
When we look at the Irish agricultural figures for any of the years I have been talking about there is only a slight change. We find in relation to the gross margin per acre in certain enterprises creamery milk is £2.93 for 1982 and it came in second to sugar beet at £3.40. The sugar beet is restricted because it is on a quota system and the people cannot improve or increase their acreage because they would be getting a much lower price. Munster and Leinster have alternatives but because of the soil in my area, where only 3 per cent is under cereals, we have a problem because there is no other line of farming which we can opt for if milk became unprofitable to produce.
When ACOT were set up they set their own guidelines and said what they intended to do for that region which covers Monaghan, Cavan, Longford, Leitrim, Sligo and Donegal. They recognised that Cavan, Monaghan and Longford were dairying counties and the others were more concerned with livestock, sheep, etc. In the guidelines in their booklet they spoke about grassland management and production. They said that, with tightening economic margins, the aim must be to optimise levels of production with properly developed livestock enterprise systems and that there could be a balanced and sustained increase and stocking to a level of 25 per cent above what was being achieved. They went on to say that the coming decade should see a 50 per cent increase in output in dairy produce in this region. Present indications seem to suggest a 25 per cent increase in cow numbers with a 20 per cent increase in milk yield as the most readily achievable way to this goal.
That area is severely handicapped and, if the EEC means anything, they must take into account regional difficulties and problems. They must also take into account the social as well as the economic aspects of any region. That is what we expected under the Treaty of Rome but it looks as if we will not be getting that treatment. I believe that the policies will be sufficiently flexible to take into account the stage of development of regions such as that because, in the region which I represent where dairying is so important, An Foras Talúntáis did a farm survey in 1981 and they stated that the family farm income for Cavan, Donegal and Monaghan was £3,048 per annum for a full time farmer as against £6,210 for the Leinster counties. That gives an indication of the problems which would arise if that area could not develop their dairy industry.
In a survey carried out by ACOT in Cavan last year of 382 farmers, 73 per cent listed dairying as their main source of income. As 70 per cent of the land is marginal, it gives an indication of how it would be a practical impossibility to change over to any other type of farming, because the soil is heavy and retains moisture. As a result of surveys carried out by ACOT it was disclosed that a neighbour of mine, although he had less than 40 acres, was making a good livelihood from milk production only. He was able to rear a large family and was paying income tax because his valuation was slightly in excess of £40 because it was good quality land. That gives an indication of how a brake would be put on more productive farmers.
We have two co-operatives in Monaghan and two in Cavan and there are a number of other milk plants like Abbott in Cootehill and MacCormack Products in Killeshandra. These co-operatives are giving massive employment and there is a very big spin-off in terms of related employment. In all those cases there is a diversification to value added products. If there is any stay put on milk production, no one would be inclined to set up business in value added products in the area. I am in a position to know what would happen to the co-operatives if this came to pass because I spent practically all my working life, prior to coming into politics, attached to a co-operative. At that time the co-operative structure was weak, we had small independent co-operatives, Killeshandra, Lough Egish and others. In those small independent co-operatives the milk intake was 400 to 600 gallons a day. Now in Cavan, with about 8,000 holdings, 73 per cent are engaged in milk production with 61,000 cows and in Monaghan there are 6,100 holdings and 41,000 cows.
Over the last year in the Monaghan area — I have not got the figures for Cavan — they increased their milk production from 36 million gallons to 40.3 million gallons. They increased their production from 1981 to 1983 by 10 per cent and by 4.3 million gallons. If restrictions were based on the 1981 milk supply, it would mean that those farmers would be losing about 7p per gallon. In that area 70 per cent of farmers have less than 10,000 gallons of milk. It may seem a very small amount, but it is the produce of 12 or 14 cows and it provides a livelihood. It would decrease their income by about £56 per cow, in an area where there is no alternative livelihood. I believe in the phrase that the world does not owe any man a living but it does owe them an opportunity.
We would be denying people in regions such as Cavan-Monaghan the opportunity of making a living from an enterprise that has potential for development. The situation is, therefore, very serious and involves also the co-operatives. It is very difficult to understand EEC thinking in the past number of years having regard to the heavy investment that was made in the dairy industry, investment that resulted in the provision of buildings and machinery to enable the processing of additional quantities of milk. The proposed levy will restrict the production capacity in the industry at a time when the EEC are grant aiding it. With hindsight we have not made the progress that we should have made since joining the Community. There are a number of reasons for this. We heard a lot about credit facilities being restricted and about how badly off some farmers were as a result, but most of their expenditure was used for the provision of additional facilities in the dairy industry.
The effect of the withdrawal of the farm modernisation grants has been referred to. In one of the counties in my constituency 230 farmers were disqualified as a result of the measures taken in the last budget. They were disqualified on the basis of not having received written approvals from the farm development offices. Most of those farmers were involved in dairying. I had the case of one man who had paid a large deposit on milking equipment to the value of £14,000 but he, too, was disqualified from receiving the grant. We would hope that in the re-introduction of these grants, the Minister will give recognition to those people who had been well ahead in carrying out work on the basis of receiving the grants but who were disqualified on foot of the new regulation. We had expected the grants to be reintroduced in this month, but I hope there will not be much further delay.
It has been estimated that the overall effect of the super-levy would be to reduce our GNP by at least 1 per cent. In that regard the figure of £146 million has been mentioned. We must not lose sight of the big question of the loss of confidence that would follow the imposition of the super-levy, because confidence is the most important factor in any industry. The producer must have confidence in his product.
While some of the figures I quoted earlier do not show us in a very good light vis-à-vis our EEC partners, there has been a tremendous improvement in the quality of our milk. We started from a very low base when quality control was unheard of. That was in the post-war years when we were returning to milk production but when there was not as much as a proper filtering system. Some of those heavily grant-aided processing industries to which I referred earlier are insisting on a very high grade of milk.
The introduction of the super-levy would be the imposition of a quota on Irish production and on the expansion of our dairy industry. In a situation of underdevelopment in the dairy sector and in which 85 per cent of farmers have fewer than 30 cows one can easily visualise the effects of the proposed levy. We talk often about the reduction in the numbers on the land, a reduction from 390,000 in 1960 to 220,000 in 1980, but that would be nothing to the numbers who would have to leave the land if the super-levy were to be imposed on us. It would sound the death knell of many farmers in the Cavan-Monaghan area, for instance, who had either developed their dairy industry or were at the stage of developing it.
I welcome the opportunity of speaking on this very important issue, and I compliment the Government for allowing time for this debate. We must let the rest of the Community see that we are united in our fight against the super-levy proposal, a proposal that would destroy our dairy industry.
The Minister for Agriculture must be complimented on the stand he has continued to take in negotiating on behalf of the farmers and of the Irish people generally in this matter and in trying to ensure that there is a derogation, a derogation of four years at least. If the levy as proposed were to be imposed on us, many farmers would be out of business overnight. At least 10,000 family farms would be affected to the extent that these farmers would have to withdraw from farming, from the only kind of life they have known. If we take the average number of people involved in any family farm as four, we are talking about the livelihoods of 40,000 people.
I do not think any of us could agree with such proposals.
Debate adjourned.