Dáil Éireann díospóireacht -
Tuesday, 19 Feb 1985

Vol. 356 No. 1

Adjournment Debate. - Pig Industry.

Mr. E. O'Keeffe

I should like to thank you for giving me time to speak on this very important subject and to say that I have given portion of my time to Deputy Séamus Kirk. The pig industry is the third highest segment of the agricultural industry. In 1983 we produced pig meat to the value of £176 million, which indicates that it is a very fine industry.

However, the Irish pig industry is in the midst of a very serious financial crisis at present. Pig feeders are losing £4 per pig although food prices are £25 per tonne cheaper than they were 12 months ago. Financial losses are being made by an industry which, by EC and world standards, is extremely efficient. Output per sow has improved by approximately 21 per cent since 1977 and is now over 19 pigs sold per sow per annum, which compares more than favourably with any other pig industry in Western Europe. We are not talking about a sector which is a poor performer but about what is possibly our most efficient branch of farming, namely, pig production.

The current crisis in the pig production sector has arisen at a time when pig farmers have not recovered from the disaster experienced between October 1983 and March 1984. Direct employment in the pig industry accounts for approximately 3,000 people. These producers keep many other people in business. The main sectors dependent on pig producers are grain growers, and it is a very valuable asset to them because grain production in the EC is now in overproduction and there is a large surplus in this country. Feed compounders, pig slaughterers, meat processors and transport operators and many service sectors are associated with pig production. Approximately 25 per cent of all compound feeds used are manufactured in this country, and this is equivalent to half a million tonnes of feed for a sector employing 2,000 people, the feed compounding sector.

In 1984 the pig sector purchased about 101 million gallons of liquid skim milk at a time when milk was in oversupply and skim milk powder an embarrassment to the EC. This was also a major asset to the dairy industry, because their products would have polluted our rivers and lakes if the pig industry had not taken them up.

The curing industry here is, by and large, out of date. The modernisation of this sector has been very slow during the past decade. Consequently, pig processing costs are high and we have in general a legacy of weak, high cost processing units which puts us at a commercial disadvantage when we attempt to sell abroad. The industry needs a rapid injection of capital to modernise our many outdated plants so that we may sell competitively in foreign markets against the Danes and the Dutch.

Pork slaughters get preferential treatment as far as payment of veterinary levies is concerned. Curers are subject to a levy of £1.10 per pig while pork slaughterers are not obliged to pay any levy. This puts commercial and licensed curers at a very serious disadvantage and has caused certain damage to the industry, because many of the pigs are killed in slaughter houses which have very poor standards. I do not wish to elaborate on this as it might harm the industry but legislation must be introduced in this area as soon as possible. It has been going on for some time, we have now come to the end of the road and we must legislate. The Departments of Health and Environment must also be involved in drafting the necessary Bill.

The veterinary levy is an anomaly which should not exist. Southern curers should not be asked to pay this levy until such time as there is equality within the island. This applies to pork slaughter houses and licensed curers. The veterinary regulations and control of slaughtering premises should be similar irrespective of whether one refers to the licensed bacon curers or pork slaughterers. Standards of processing should be equal, irrespective of whether the product is being sold on the home or export markets. The distribution of pig meat on the home market is haphazard, erratic and extremely expensive. At present, pig producers get 52p per pound while the consumer pays, on average, £1.30 or £1.40 per pound. The producer is not getting an adequate reward for his efforts while many middle men are making substantial gains for that industry.

Marketing abroad is not as effective as it should be. Our bacon curers should be able to sell products equal to those of the Danes and Dutch on the UK, Japanese or other markets. While our processing industry is making the necessary rapid investment to compete effectively on foreign markets, we need a market development funds to tide us over this critical period. Within the constrains of EC legislation it should be no problem for the Minister for Agriculture to seek a grant of £1 million or thereabouts, interest free, for the retention and development of our pig industry in the short term. We did this in the past. A previous Minister for Agriculture set up a market development fund and I was a member of the committee dealing with this matter. It worked quite well for a while but, perhaps for lack of discipline by the curers, it did not make a profit, which was not good for the industry.

Pig producers are largely in favour of such a development but some curers and pork slaughterers are holding up progress. The pig industry needs the leadership of the Minister for Agriculture and his Department and, if this leadership is not forthcoming and if we do not establish a medium term development fund, that vital industry will contract by 30 or 40 per cent in a short space of time. It is obvious that that contraction has set in already, and one of the most efficient farming industries in Europe will drop possibly to one million pigs reared per annum. We cannot afford this at present, and many people will be on the dole. Thousands of farmers and pig producers will go out of business and there will be less demand for grain and other service sectors.

The Minister should act before it is too late. There should be rapid investment in the processing sector. He should introduce common legislation and veterinary standards for all processors. He should bring producers, curers and all other interested people around a table and set up a fund, which would not be outside his European brief. In order to save this vital industry £1 million would need to be invested in it. Northern producers have many advantages over us. They have a meat industry employment subsidy worth in the region of £1.50-£2 per pig and that is paid with EC approval. They have a transport subsidy to the UK which is paid by the UK Government because they are an island off the UK. We received a FEOGA subsidy from the EC in 1974. That saved the industry and gave it stability.

There are a total of 22 licensed curers and ten large pork slaughter houses. This is not covered by any legislation and no standards have been set. People in the pig industry have borrowed in the region of £80 million-£100 million from the banks and ACC. We cannot stand idly by and allow the industry to die. The value of the industry to the economy is £100 million or 8 per cent of gross agricultural output.

In today's Cork Examiner the Minister revealed that:

... he could not intervene to help the pig industry although he said it was going through "a particularly difficult time at present". This was mainly due to uncertainty over export arrangements, but was purely a matter for the industry itself to resolve, he added.

He said that in Cork last night to the Cork Dairy and Food Science Society at UCC. In his contribution on the budget he did not make any reference to the pig industry. I appeal to him to do something for the industry. Agriculture has suffered a lot, and I hope we do not see the same thing happen in this industry.

Mr. Kirk

I thank Deputy O'Keeffe for this opportunity to contribute to the debate. There is no doubt that those involved in the industry are primary producers, processors or in the marketing and distribution end. The industry is in a serious state.

Traditionally the pig industry has been of a cyclical nature. We have a good year, a mediocre year and a bad year. The ability of pig producers to balance the good and bad times means the difference between survival and going to the wall. Over the last number of years the pig industry improved enormously. There has been a dramatic change from the time when four or five sows were kept on a small holding. That kind of project is no longer viable. ACOT must be complimented for the contribution they have made to the overall efficiency of production in the industry. Without their input, advice and guidance the industry would not have developed as it has.

The industry is in a crisis. As a result of lack of know how at the marketing end and because of the costs involved in curing, slaughtering and marketing the good work done at the primary producing end goes for nought. It is only a matter of time until the large units into which huge investments have been pumped and on which huge repayments must be made will not be able to take any more. This is one of the more labour intensive segments of the agricultural industry, and if such units were to close it would be a sorry day for the nation. Most economic commentators agree that the pig industry has great potential for expansion and development. It is a question of the Minister indentifying the potential that exists and setting a campaign in motion to expand the industry. Without his intervention it is only a matter of time until the industry collapses. The consequences of that would be loss of revenue to the Exchequer and increased unemployment.

The threat of a levy on cereal production is hovering over us, and the prospects are not good for the coming year. In those circumstances one would think we would look to the pig industry. There is no outlet for barley and other cereals, and the EC are looking at ways and means of curtailing cereal production. If the Minister had a co-ordinated development plan of action for the pig industry he could do much to relieve the plight of cereal producers who will find themselves in difficulty before the end of the year.

I appeal to the Minister and Minister of State to examine the industry and take the necessary measures to get it back on the rails. They must ensure that it is on the road to expansion for the benefit of those who are involved in it and those who will become involved in it in the future.

Minister of State at the Department of Agriculture (Mr. Hegarty)

I should like to thank the Deputies for raising this important matter, and I shall respond briefly to a few of the points raised. Deputy O'Keeffe referred to pork slaughter houses. It is intended to have a Bill drafted to provide for standards of veterinary control and hygiene at local slaughtering premises catering for the home market on a par with those already applying to premises dealing with the export market.

With regard to the transport subsidy in the North, experience has proved that it helps our producers since it helps to divert products to Britain that might otherwise land on our doorsteps. With regard to expansion of the industry, we are already more than self-sufficient in pigmeat and any further expansion will have to be met with corresponding expansion in exports. I am sure Deputy O'Keeffe is aware of that.

The pig industry has been going through a difficult period for some time now, largely due to the combined effect of several separate problems. On the home market — where about 70 per cent of our pigment production is consumed — producer prices have fallen sharply. This situation has been caused by a continued weakening of demand resulting in excess supply and a consequent pressure on prices. On the export market, changes in export arrangements have created a difficult situation for exporters. Since we are well more than self-sufficient in pigmeat production, it is obvious that a significant expansion in export levels is essential to ensure the viability of the industry.

Mindful of the market difficulties, the EC Commission is being pressed by Ireland for the fullest utilisation of the EC support mechanisms for the pigmeat regime, specifically the earliest possible introduction of a scheme of aids for private storage and for the strengthening of the levels of refunds payable on exports from the EC. In relation to the introduction of a private storage scheme, however, the current decline in our producer prices has not been shared by most other EC member states, and this factor has mitigated against reintroduction of private storage aids. I will, of course, continue to do all in my power to help to secure this aid.

On the question of exports, however, the collapse of the industry's own export support scheme and the winding-up of the Pigs and Bacon Commission Ltd. are developments which are regrettable but I must remind Deputies these are really matters which are the responsibility of the industry itself. In this connection, I note the recent introduction of a new voluntary support scheme by the industry. There can, of course, be no question of any direct financial input by the State, as any such moves would be contrary to EC rules.

Notwithstanding the difficulties being experienced by the industry, it is heartening to note that we are still sending pork cuts to Japan. It is vital that having succeeded in gaining a foothold in this market in recent times we make strenuous efforts to retain our presence there even though the level of exports refunds is now lower than 1983 when we shipped over 10,000 tonnes to that market. Obviously there is a need in the longer term to seek the development of a more resilient industry at all levels. Our producers, while already among the most efficient in Europe, must strive for even higher levels of productivity. They must also aim for the highest quality, since that offers the surest means to compete effectively on the export and domestic markets.

At factory level, there is vital need for a rationalisation and modernisation of slaughtering premises and this involves our Department, the industry and the IDA. The recent spate of closures have highlighted the fact that rationalisation by attrition is not in the best interest of the industry. Rationalisation must be on a planned and orderly basis. This is the only sensible way to put the industry on a sound footing. A centralised slaughtering policy to implement this has been drawn up, and unless considerable advances can be made in the implementation of this policy there will be a very serious decline in plant investment with all the obvious consequences this would imply for the industry at all the various levels. Unless, therefore, we begin to tackle the job of rationalisation seriously now, we will be putting many more jobs at risk and we will be lessening our ability to compete.

Finally, I would like to draw attention to the fact that since 1982 pigmeat exporters have not been paying veterinary inspection fees on pigs. These fees are charged for a service provided and therefore, must be paid. The amount currently outstanding is in excess of £4 million. Discussions with a view to recouping these amounts are taking place between officials and bacon curers. I hope that common sense will prevail and that this problem will be satisfactorily resolved.

It is clear that as Minister the means of support open to me are limited but where we can help we will work willingly to do so, but in the final analysis the caution "physician heal thyself" applies with great force to the pigmeat industry.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday 20 February 1985.