I wish to thank the Chair for giving me permission to raise this important item on the Adjournment. It is timely to raise this matter on the eve of the meeting of the EC Commission when they are about to bring forward proposals for a substantial change in the EC intervention scheme and a radical reform of the system. I understand that on Thursday there will be a meeting of the Council of Ministers when the proposals will be put forward.
The Commission's proposals, if implemented, will be drastic and have serious consequences for the country. When we exported cattle on the hoof there was much criticism of the farming community and those involved in the export business. Since then we have carried out a system of slaughtering which has developed progressively and has been well managed. It is important that we retain the intervention system and export refunds in an open-ended way. The export of beef is a very valuable export earner — it is somewhere in the region of £1 billion. It runs hand-in-hand with dairying which is also a major earner. Both are the basis of our agricultural economy and they make a significant contribution to the national economy.
The EC are introducing the proposals as a panic measure. They introduced the super-levy and the quota system in 1984. The surplus of beef was created mainly by the slaughter of surplus dairy cattle and that led to a substantial increase of beef in intervention. The stock figures are as follows: at the end of 1984 the figure was 408,000; in 1985 the figure is estimated at 672,000; in 1986 at 712,000; in 1987 at 612,000 and in 1988 at 462,000. That shows there will be a substantial reduction at the end of a three-year period. If the proposals get the unanimous approval of the Commission it will be very hard for the Council of Ministers to veto them. It is vital that we strengthen the hand of our Minister for Agriculture if he is to defend our interests.
Approximately 80 per cent of our beef is exported and that is something of which no other country in the Community can boast. To compensate farmers for the replacement of the intervention system by an income supplement is an insult to them because it is a new form of dole. If the intervention system is removed beef prices may drop in value by 10p to 15p in the pound. In addition, because of the artificial devaluation of the dollar in recent weeks the value of export refunds will drop by 20 per cent. To date the shortfall has not been made up by the EC. If they tamper with the export refund system it will have serious consequences for us because of our level of exports to third countries, and it will sound the death knell of our exports to third countries, mainly to the Middle East.
We must look for a total derogation in respect of export refunds and intervention. The attractiveness of the intervention system which gives a floor price was one of the main factors for our entry into the EC. Our agriculture is not developed fully and we are trying to build up our beef herd. If we succeed in this we will be the envy of Europe in three or four years and we will be able to compare our herd with the best in the world. If the proposals are carried they will grossly interfere with that development and will spell economic ruin for the island. We must defend our position and fight all the way. It is much more serious than the quota system imposed on milk production.
Our beef exports are 10 per cent of our total exports and are 43 per cent of agricultural exports. Approximately 180,000 farmers are involved in the production of livestock. All our farmers are under tremendous pressure, economically and otherwise. Small cattle farmers in the west, the farmers in the southern dairy areas and the beef producers along the eastern seaboard are the life blood of the processing industry. That industry has grown over the last few years, and especially this year where there has been a major change in the method of sale of cattle from live to dead meat. There are now some 15,000 jobs in the processing sector which is growing.
In downstream or added-value processing the vacuum pack market for beef is growing. From the figure of 10 per cent at the moment, it is expected to rise to 20 or 30 per cent in the next few years. That is proof of our commitment to develop the beef industry. In the EC context it is proof that we are committed to marketing and selling our beef in processed form. For those reasons, it is in our interest that the EC Commission and the Council of Ministers should retain the intervention system for us.
It is expected that in the period 1985 to 1990 cattle sales will grow from 1.6 million to 1.85 million or higher. That will be a valuable increase and will provide increased moneys in foreign currency, particularly in dollars — very valuable from the point of view of purchasing power. Therefore, it is important that we would retain our third country market.
It has been suggested that the new arrangements would be gradually introduced with phased premiums for specialised beef production. There will be restrictions, possibly involving quotas. That will retard production at farm level, and income supplements built around that are not the answer for Irish farmers. We have been told about the headage premium for suckler cows at the rate of £15 per cow. Such a scheme should be open-ended and, if so, it would be very attractive on its own. It should lead to increases in our beef herd which, as I said, should be expanded to reach the targets I have given. We have sufficient room for greater development there and it is important from the point of view of farmers' income to make a sufficient income to maintain comfortable standards on family farms. We must have more intensive production and we cannot be seen to be tampering with existing mechanisms.
Thirty per cent of our cattle are presented for slaughter, because of seasonality, in the early part of the year. We are a grass producing country and therefore it is much more practical to produce beef in the later part of the summer than in the early part. Thirty per cent of cattle slaughtered are presented early and therefore there is the high cost of production because they are fed on imported grain.
The recent introduction of the quota system has started the same process in dairy farming. Farmers have been getting out of seasonal milk production and that had begun to grow, particularly in the later autumn, in November, December, January and February. We had begun to see later calving because our farmers want to maximise on the cheapest form of beef production, grass. In future we will see a lesser proportion of our cattle presented for slaughter in the off season months.
It is envisaged that the Commission will phase out intervention in the next two and a half years and in that time there will be a substantial reduction and a levelling out. Therefore, I cannot understand the panic in the Commission. The country that will suffer most is Ireland and therefore we must make a strong case in Brussels. I have no doubt that the Minister will do that but he must hit the table much harder so that we get a derogation for intervention buying here for a considerable time. It must not be based on a percentage and must be open-ended. We can produce milk cheaply and the same can be said of our beef production. We should be making our case as strongly as we can for flexibility, particularly because of the suitability of our climate for grass production.
We are disadvantaged in many ways in regard to animal feed. We have to import grain and we do not get the same concessions as other EC countries. I have no doubt that the Minister will heed what I have said. I again emphasise strongly my suggestion that he should make the strongest possible case in Brussels for derogation in our case.
