I will be putting the question to bring this Bill to a conclusion at 5 p.m.
Exported Live Stock (Insurance) Bill, 1984: Second Stage.
I move: "That the Bill be now read a Second Time."
The Exported Live Stock (Insurance) Board was set up under statute in 1940 at the request of the Irish livestock trade. The Bill now before the House arises from a request from the trade and from the board themselves to wind-up the board because of the decline in live cattle exports to Britain. The basic legislation contained no provisions whereby the board might be dissolved and winding-up, therefore, requires enabling legislation.
Under the Exported Live Stock (Insurance) Acts, 1940 to 1950, exporters of cattle, sheep and pigs are required to pay into an insurance fund a levy in respect of each animal exported direct, or via Northern Ireland, to Britain. The fund is administered by the Exported Live Stock (Insurance) Board, a statutory body set up under the Acts and appointed by the National Executive of Irish Live Stock Trade. Payment of the levy entitles the exporter to compensation for damage to, or loss of, animals from the time of shipment, or from the time of entering Northern Ireland, until up to 84 hours after release from the landing place in Britain. These statutory insurance arrangements were set up at a time when livestock exports were almost exclusively to Britain and they were designed to be entirely self-financing.
In the past ten or 15 years there has been a sharp reduction in live cattle exports to Britain and in recent years disbursements — mainly administrative expenses — from the fund have exceeded receipts from the levy. In the forties exports of live cattle to Britain and Northern Ireland were running at 430,000 head per annum. In the late fifties they exceeded 700,000 head but by 1983 they had fallen below 24,000 head. Exports of live sheep and pigs to Britain over the years have not been significant.
The balance in the fund is presently less than £10,000 and consequently the board are operating under the threat of possible insolvency. The National Executive of Irish Live Stock Trade and the board have indicated that the possibility of regaining a situation of financial viability either by extending the compulsory insurance arrangements to cover exports to all destinations or by increasing the rates of insurance levy would not be acceptable to the live stock trade generally.
The current non-UK trade, which is mainly to North Africa, involves a much greater insurance risk and would call for very high premiums. The exporters involved in that trade prefer to make their own insurance arrangements, as would exporters to Britain if faced with substantially increased rates of levy. The National Executive and the board, therefore, see no option other than to wind up the activities of the board. Exporters of livestock to Britain will then have to make their own insurance arrangements in the same way as shippers of live stock to other destinations do at present. In view of the precarious state of its fund, the board have taken steps to have the risk of possible claims arising during the winding-up process underwritten by a commercial insurance company.
In addition to the fund balance of under £10,000 the only capital asset which the board own is an office at North Circular Road, Dublin, which was acquired in 1972. The Bill proposes that the disposal of these premises should be subject to my approval.
The board currently employ two officers who have service of 41 years each. Two other officers who had service of 39 years and 32 years were made redundant in March. The board have been contributing to a pension scheme with a pensions firm on behalf of the staff and the determination of final pension and other arrangements for the staff on the termination of their employment is a matter for agreement between them and the board management within the resources of the board. However, there is a provision in the Bill whereby the Minister for the Public Service will be the final arbitrator in the event of any dispute on pension or other terms between staff and management.
Finally, the Bill contains a provision whereby the disposal of any residue after all claims and liabilities have been discharged will be subject to my approval.
Because of the precarious financial state of the board it is important that the possibility of claims should cease as soon as possible. Therefore, I thank the House for agreeing to deal with this matter quickly so that the winding-up process can be concluded as soon as possible.
(Limerick West): We agree with the Minister that the winding up of this board should be proceeded with as quickly as possible and consequently we are prepared to give the Bill a speedy passage.
As the Minister rightly pointed out the purpose of the board was to provide insurance for the export of live cattle to the UK. It did not apply to the export of cattle to any other country. It is sad that the decline in cattle exports to the UK is continuing, and that has been the situation since the board was set up. The Government must devise ways and means of ensuring that that situation is reversed. The request for the winding up of the board has come from the livestock exporters. I shall deal in more detail with the Bill on Committee Stage and I will be asking the Minister to let us know what proposals he has in mind to ensure a sufficient number of cattle for export both for the live cattle trade and for the dead meat trade which is an important element also. We hope the Government have some programme for the further expansion of cattle numbers especially since beef production is one of the most important enterprises in our economy. Despite that, however, it is also the least developed and perhaps the most under-capitalised sector. Down through the years cattle production has been on an extensive rather than an intensive scale. Profits fluctuated and at times were quite low.
Down through the years also the cattle trade has been characterised by different stages of production such as calf rearing while summer stores, grazing and beef production were distinct and were not integrated in any way. This led to a major difficulty because in some instances good profit margins in one sector were at the expense of another. The recent trend of encouraging calf-to-beef production is very sensible and should lead to much greater stability in the trade.
The introduction of the calf subsidy will help in a major way towards this trend. It is important to realise the crucial role of the cattle industry in our economy. In 1983, for instance, cattle output was valued at approximately £700 million. I consider it to be feasible to increase our exports of cattle by at least 20 per cent in volume alone within a relatively short time. This would result in increased earnings of perhaps more than £130 million having regard to the comparatively low levels of imports in respect of agricultural production compared with the imports for industry. This increase would be equivalent to about £400 million in terms of industrial exports. Such increased outputs is well within our capabilities. It is a guaranteed market. The main problem is one of increasing the cattle herd numbers. Apart from providing extra employment such expansion would have tremendous benefits for the community. The effects on the balance of payments would be dramatic. Like many other industries, the means and technology to secure this expansion is readily available. We must motivate farmers, ACOT and other agencies to pursue as vigorously as possible a programme which would increase cattle numbers. It is important to have a plan of development.
Our beef cow numbers, which are very responsive to the prevailing economic climate, have fallen dramatically over the last number of years. That decline is continuing. It is incumbent on the Government to provide guaranteed support for at least five years in the form of grants and capital at reasonable interest rates. In no other area would the return to the economy be greater. Interest rates are very high at the moment and the provision of such capital at subsidised rates is necessary. With the recent decline in farm incomes it would be unrealistic to expect farmers to expand their beef herds. If we had a greater number——
I appreciate the Deputy's concern with the livestock trade. However, that is not what the Bill is about. I can only allow a passing reference to it.
(Limerick West): If we exported sufficient livestock to the UK there would not be any need for this Bill. I am suggesting ways and means of overcoming that difficulty. I know the Bill is very narrow.
The Deputy must keep within the terms of the Bill.
(Limerick West): It is important that we embark on a campaign of increasing cattle numbers. In the late fifties we exported of the order of 700,000 head of cattle to the UK. We will not reach that figure again. The fact that our exports fell below 24,000 head in 1983 is something we should be concerned about. I know that the export of cattle to countries other than the UK is somewhat responsible for the low numbers exported to the UK. This situation has been allowed to continue for too long and not sufficient attention was paid to increasing the cattle herds.
Perhaps the Minister would consider encouraging the formation of producer groups and provide positive incentives. I understand these groups can be assisted through the EEC. I ask the Minister to look at this. Such groups are successful in other EEC countries. Community aid is available for their formation.
The Bill is a very narrow one. It does not give scope for expanding on the cattle industry. It is simply to wind up the livestock insurance board. It is sad that the occasion has to arise where we have to wind up the board because of a decline in the export of cattle to the UK. I know exporters are prepared to take the risk on their own insurance as they do when exporting to other countries. We support this Bill.
I endorse some of the remarks made by the previous speaker. It is sad that we have now reached the position with our nearest trading neighbour that we only export 24,000 head of cattle to them. In the late fifties we exported 700,000 head or more. British policy was to buy beef as cheaply as possible. They bought beef from us and we were condemned, so to speak, to accept low prices for our beef. We are now free from that since we have expanded our markets.
The Bill is basically about the winding up of the Livestock Insurance Board. There is no need for it any longer. In the main, livestock exporters provide their own insurance today. It is probably the cheapest way to do it. Producers and exporters want it that way. For that reason, there would appear to be agreement in the House about the quick passage of the Bill. The direction of live cattle exports is of considerable significance.
I hope that we would not forget that the UK was once a very important market for us and we should strive, as the previous speaker said, to encourage further development of that market. The beef industry generally is of great importance and significance to our economy and without a thriving and expanding cow herd number there will not be the requisite number of beef cattle for either export or processing.
There has been much conflicting opinion over the last number of years, particularly because of the job creation potential on the processing side. Nonetheless, there must be a balance between exporting live cattle and processing, as otherwise the producer would suffer in the longer term. That has been the experience, particularly since coming into the Common Market. Perhaps our entry in 1973 had something to do with our present situation, as Britain was no longer able to get beef at the customary low price — although that is a good thing as far as the Irish beef industry is concerned.
The Bill is designed to wind up the board and take account of any liabilities that might accrue in relation to the protecting of staff and so on, but that is clearly catered for in the Bill. In relation to the situation which has developed over the last four or five years, and perhaps even going back into the late seventies when there was a great investment and build up of confidence not only in the milk but in the beef area, we have now got what most Irish farmers would regard as a considerably good deal in the beef area and have secured what they would regard as a very good deal with regard to the super-levy. Perhaps we may reach a stage——
Only a passing reference is allowed to those matters, Deputy.
This is important in relation to the possibility of levies on the export of beef or of live cattle, and we must take note of that. There is an oversupply of beef in the developed world, even though we know that there is a market provided one goes after it. This is all about marketing and we should be grateful, even if there is a change in the direction of our live export trade. If that trade were not there and if the markets with North Africa, were not there, many farmers would find their incomes much less than they are. The export refund makes it profitable for them.
I draw the Minister's attention to a problem which is particularly prevalent in my own county, the number of locked up herds.
Deputy Dowling, you are getting away from the Bill.
That is what I call stretching the bow.
That is really stretching the point altogether.
This is in relation to livestock.
The locking up of herds is in no way related to the Bill under discussion. This is a very restricted and limited Bill.
I am developing the point.
I am endeavouring to prevent the Deputy from developing the point. He is moving away from the Bill.
I accept the Chair's ruling. The reason for this Bill being before the House is that the number of live cattle being exported to the UK is at the low level that it is. Perhaps that level could be increased if there was sufficient supply there. I am suggesting ways and means of increasing that supply and there are incentives which the Minister must take account of in this area of agriculture. Locked up herds prevent cattle from being exported and this has something to do with the 24,000——
The Agriculture Estimate will be before the House this week.
It finished three weeks ago.
(Limerick West): The Deputy is talking about beef orders.
Could we recall the Dáil?
Does what I am saying not make sense?
I happen to agree with Deputy Dowling.
We shall have a Supplementary Estimate on Friday, but Deputy Dowling will not be here — he will be playing golf. He probably will win first prize.
The Deputy is speaking to the Bill.
Whether it is part of the course or not, the Deputy is staying with the Bill. Deputy Dowling on the Bill, please. Get away from the locked up herds.
They should be exported.
I am sorry that the Chair is not allowing me the opportunity to develop that point.
I have given you the opportunity to develop that point.
Several farmers would offer their cattle for export were it not for their being locked up on one test and having to be held for a second test. There should be a regulation.
Deputy Dowling, please.
Were the Minister to——
I am surprised at you, Deputy Dowling, Normally you do not act in that manner. I indicated to you very clearly the limitation on this Bill and the debate thereon. You are continuing to move into the locked up area. You are locking yourself into a situation you will not get out of. I should be very grateful if you would abide by the rules of the Chair and stay within the terms of the Bill, which is very restricted. It is the winding up of a board. While I appreciate your concern for increasing the livestock numbers, I regret that that cannot be debated. I would allow a passing reference, but you are passing on it for ten minutes.
I did not think that the Chair would take that attitude.
An Leas-Cheann Comhiarle
You are not doing so badly yourself. Would you get back to the Bill now, please.
I accept the ruling of the Chair. Nonetheless, I was trying to make the point in relation to the winding up of this insurance board. We would not be winding up the board were it not that there is a lack of cattle. I accept that this is a technical Bill, but most legislation is technical in the legal sense. However, there are wide implications. I feel obliged to make that point.
You have made it, Deputy.
I am glad that the Chair feels that I have made my point. I do not see any problem with the legislation as it is drafted. I am certain that the Minister will take due account of the different provisions in the Bill, particularly with regard to those who find themselves without a job as a result of this legislation.
Very briefly, this Bill is a non-contentious one and we are winding up the Export of Livestock Insurance Board because of the decline in live cattle exports to Britain.
I agree with Deputy Dowling concerning the importance of the live export trade. It is one which affects small producers and in particular, small producers in the west of Ireland. As Deputy Dowling said, we hear much debate and argument about live export as against processing in this country. A balance must be struck. I am sure that the House will agree with that. I shall not go into the arguments for and against but am concerned that the Minister states that we have seen a big drop in exports to Great Britain and Northern Ireland from 430,000 head around the forties to 24,000 head in 1983. My information is, in fact, that in the first six months of 1984 the trade in live exports to Britain has fallen even further compared with last year. Obviously, in a situation like that we all agree to the winding up of the board. For that reason, this Bill is not contentious.
I would add to what our spokesman, Deputy Noonan, said, that we should be concerned about increasing our cattle numbers and about our live export trade. Even yesterday I heard the CEO of the Meat Exporters Association mentioning their concern about that trade. Mention was also made of the price of meat in the shops to the consumer. These are all important matters when we are talking about the beef industry.
I commend the board for the work done down through the years. Before 1940 when the board was set up livestock had to be insured through Lloyds of London. It was a good idea to set up the board because it enabled exporters to lower their costs when sending livestock to Britain. When the Act was passed in 1940 exporters could insure their cattle with the one board which obviated their going outside the country to insure. Britain has now become more self-sufficient in livestock and I would like the Minister to comment on the situation.
I would also like to raise the situation of the members of the board and the people who are now employed. They will obviously not be going back to work in the public service. Taking their ages into consideration I would like the Minister to tell us if there is any question of compensation being paid to these four people. I take it their pensions will not become operative until they reach the age of 65. Perhaps the Minister would tell us what will happen to these people. There is also the question of the building in the North Circular Road which will be disposed of. If that building is disposed of there will be a capital sum available to the Minister. Some of the people employed by the board have seen service of up to 40 years. There are others with 39 and 32 years service respectively. I trust all these will be treated fairly and generously.
Many issues arise when one examines the question of cattle production and cattle exports generally. One point made by the Minister was that the trade mainly to North Africa involves a greater insurance risk and calls for higher premiums. Even if that is so those exporters are well able to look after themselves. For too long we seemed to be trying to put our shoulder under every wheel until eventually we have not enough shoulder for all the wheels that exist. It is a great change to see exporters looking after themselves.
There was a £760,000 industry in 1983 in the context of overall foreign trade. While the value content is increasing we are not able to increase our cattle numbers to the extent to which they should be increased. At one time it was claimed cattle numbers would increase to nine million by 1980 and ten million would be the figure based on the quality of our soil and based on what we are capable of doing. In fact we are just holding the line. That is one of the most dissatisfying features of the industry. Exports to Britain numbered 24,000 cattle. In 1983 we had a total export figure of 360,000. There had been more processing. That was the figure in 1982. In that year 59 per cent of sales went to the meat plants and of that 59 per cent 22 per cent went to Britain. There are some who talk about our losing the British market. The fact is we had a bigger export of dead meat to the British market than we had to the EEC and other countries. Admittedly only 3 per cent of live exports went to Britain but we made up for that in other areas.
Reference has been made to increasing the numbers of live cattle.
I must bring the Deputy to order. Would he stay with the Bill, please?
There have been tremendous strides in technology and new techniques and the Minister now has before him a complete new field from the point of view of the breeding and development of cattle. We will be looking to this area of cattle production because of the problems we have in other areas of production, notably milk.
Some time ago I was concerned when the EEC Commissioner for Agriculture referred to the need to control beef production and he referred to the action proposed to be taken. He gave the impression that there could be a problem in beef production in the years to come.
The Deputy is creating a problem. He is moving into the EEC. I wonder would he stay with the Bill.
I have to agree with this Bill. The board has outlived its usefulness. I am glad to see that the exporters who have taken over in foreign fields are not looking for assistance which was provided previously. The Bill allows for the withdrawal of that aid.
I should like to thank Deputies who took part in the debate. It is a quite restricted Bill. It is enabling legislation. Everyone is relieved — and probably the National Executive of the Livestock Board more than anybody else; it was at their request that this legislation was introduced — that the Bill is now about to be passed. Unlike some speakers, I am not sad because this body is being wound up. I do not think we should worry too much about the end of the livestock trade with Britain, for a number of reasons. One reason is that the livestock which were being exported were store cattle, not finished cattle. Any cattle we export nowadays are finished cattle.
I should also like to point out that their numbers are greatly diminished. In the late fifties, we were exporting over 700,000 head of store cattle to Britain. Today we are exporting 20,000 to 24,000 head. Admittedly we are exporting 200,000 head of cattle to North Africa, and principally to Egypt and Libya. It is a greatly diminished number from 700,000 to 200,000. The cattle which are being exported nowadays are finished cattle.
I want to make a point which has not come across during the debate. The bulk of the beef exported from here at present is in a processed or semi-processed form. In 1950 the value of processed beef leaving here was less than £1 million. In 1980 the value of processed beef leaving the country was £466 million which constitutes the majority of all beef exported whether dead or alive. That is a tremendous turnabout in the cattle trade and a most welcome development. That point was not alluded to in the debate and it is a matter of paramount importance to the cattle trade. Nowadays cattle are being slaughtered at home and thousands of jobs are being created at home. By further processing of that slaughtered beef we can provide more and more jobs. That is to be welcomed.
In recent years with the help of the national meat board, CBF, we have been involved in further processing and in the production and exporting of vac-packed meat. It is to be found all over Britain and continental Europe. This development is very welcome indeed. I have some reservations about certain developments which are taking place. I notice that in Western Germany Irish beef is the best on offer. It is marketed as the best quality beef on offer. It is sold as Irish beef. It is up in front in the major supermarket chains. It fetches the highest price.
It is a little disturbing that our beef is marketed in Britain and France without being labelled as Irish. There are certain problems with the French farming unions and they do not like to have competition from Irish beef. They would rather not have it labelled as Irish beef. Because of certain political events in recent years, the retail outlets in Britain decided it would be wiser not to label the beef as Irish. That is unfortunate, but it is a fact of life. I was looking at the same supermarkets in France and Britain quite recently and this is a marketing strategy.
The important thing is that we are not exporting the same volume of beef on the hoof, and we are not exporting store cattle to Britain as was the case in years gone by. Last year we exported 200,000 head of cattle live. We exported 231,000 tonnes of beef. I am told the conversion rate is that one tonne of beef equates to 3.1 animals. Do not ask me how the .1 comes into it. It is an approximation. So, the 231,000 tonnes of beef would equate to about 700,000 head of cattle. Whereas 25 years ago we were exporting 700,000 head of store cattle on the hoof, today we are exporting the equivalent of 700,000 finished cattle in the form of processed beef.
We are exporting a further 200,000 finished cattle to North African countries because that is the way they like it. They like a mix of beef slaughtered and live. That is a very vibrant trade. It has done wonders for the beef trade generally. While people say we should abolish the live trade altogether, we all know that the competition between the live exporters and factories makes for very good prices for Irish farmers. While the number of live cattle being exported will decrease until it eventually becomes zero, we have to leave that to take its natural course. That is as it should be.
The figures which the Central Statistics Office produced — I am not referring to the more infamous figures which were produced a month or so ago — for live cattle differ somewhat from the figures I have from my veterinary people but they indicate that some cattle instead of going directly to Britain are going to Northern Ireland and then to Britain. Members of the House will be pleased to know that whereas last year we exported 176,000 head of cattle to Northern Ireland the figures for the first half of this year indicate that the numbers are down to something like 27,000 head of cattle. That is directly related to the modification of the variable premium subsidy which the British producers were getting.
It has eliminated the inequity which existed between processors of beef in Northern Ireland and in the South. That massive flow of cattle over the Border into the northern meat factories is virtually coming to a halt. Everyone will welcome that move. It means more business for the meat factories in the South. Actually that gives a distorted figure of the live cattle exports. Those cattle are staying in the 26 Counties at present and are providing considerably more employment in the meat factories.
We are all aware that there are not sufficient cattle in the country. I would not blame that on the decline in the British cattle trade, because this was a type of trade which we are glad to see disappearing as they were store cattle. A day may come when we will be glad to get back a live trade with Britain. We will have to wait and see if that occurs. The dying out of that trade has not caused any problems for the cattle business here. Actually it is welcome for the reasons I have outlined. A day may come when we will be glad to get it back, but hopefully it will be finished cattle and not store cattle.
One of the greatest drawbacks to agriculture is that despite all the incentives we have not been able to increase our cattle numbers sufficiently. That did not happen this year or last year but it goes back to the past 20 or 30 years. If anyone can tell me of some way to increase the herd number dramatically I should be glad to hear their ideas. There are enormous incentives for increasing our herd numbers but measures taken so far have not been effective. I am open to ideas as to how the numbers could be increased.
I am glad that Members of the House have welcomed the legislation and that they regard it as necessary.
Question put and agreed to.