asked the Minister for Agriculture the plans, if any, he has to make available restocking loans at low interest for farmers who had major cattle and sheep losses due to fodder shortage; and if he will make a statement on the matter.
23.
Ceisteanna — Questions. Oral Answers. - Aid for Farmers
1.
Mr. Cowen
asked the Minister for Agriculture if he will make available forthwith a Euro currency loan.
28.
asked the Minister for Agriculture the plans he has for agricultural development in 1986 and 1987; and if he will make a statement on the matter.
35.
(Limerick West) asked the Minister for Agriculture the plans he has to encourage farmers to start a secondary farm enterprise; and if he will make a statement on the matter.
36.
asked the Minister for Agriculture if he has any plans to grant-aid farmers to help them to increase production in 1986.
40.
asked the Minister for Agriculture the advise he will give to farmers to develop alternative farm enterprises in view of the quota restrictions on many of the farm commodities; the plans he has towards this end; and if he will make a statement on the matter.
52.
asked the Minister for Agriculture if he is aware of the inordinate cost of finance to the farming community; and if he will make a statement on the matter.
93.
asked the Minister for Agriculture if he has any plans to encourage alternative land use in view of the over-production levels in different food items.
I propose to take oral Questions Nos. 1, 23, 28, 35, 36 and 40, priority Question No. 52 and written Question No. 93 together.
While domestic and international influences favour further early reductions in interest rates, the Government have decided to introduce two exchange rate guarantee schemes. The schemes, which will operate through the ACC and associated banks, will provide working capital finance for farmers of up to £135 million in EMS currencies at favourable interest rates.
I am confident that the ACC and associated banks will provide these funds at the lowest possible commercial rates of interest and will endeavour to ensure that those farmers who are in greatest need will receive priority treatment in the allocation of funds.
These two schemes represent a significant contribution by the Government in helping farmers overcome difficulties caused by the adverse weather since last summer, the current level of commercial interest rates and recent developments in the Common Agricultural Policy.
The general outlook for Irish agriculture in the years ahead is one of cautious but not completely restrictive prices based on a Community policy that gives an assurance of reasonable returns to producers and fair prices to consumers for a given level of production but which is less supportive above that level. Thus, there must be a continuous adaption at producer level towards a more market orientated operation with particular regard to the development of new and higher quality products and a reduction in our dependence on EC support mechanisms such as intervention. I am confident that the new exchange rate guarantee scheme will give substantial encouragement to such developments and in particular will stimulate initiative and enterprise in new lines of production.
I welcome the scheme, but will the Minister agree that £135 million is a small sum of money in view of the total indebtedness of the farming community which, I understand, amounts to £1,500 million. I note from the Minister's statement that only £100 million will be available to cereal farmers and beef producers and I should like to know if it is the Minister's intention to take steps to make more money available under the scheme. Will the Minister tell the House what the "favourable interest rates" will be? I understand that they will be in the region of 9 per cent which is twice what other farmers in the EC have to pay for money. What steps is the Minister taking to have the overall level of interest rates, at present in the region of 15 per cent to farmers, reduced by the commercial banks and the ACC?
Contrary to the Deputy's statement, the loans we have announced have been welcomed generally, particularly by the farming organisations. The amount involved is considerable and I have no doubt it will do a lot to help farmers who are in financial difficulty. With regard to the general rate of interest, I must point out that the Minister for Finance made an announcement in that regard today. We are all very concerned that the general interest rate should drop much further as time progresses.
(Limerick West): Has the Minister made an assessment of the position of farmers following stock and other losses as a result of last year's weather?
I make assessments at the end of each year. The position is kept under constant review and as part of that review we decided to make Euro loans available because as everybody recognises, farmers had to endure dreadful hardships due to the bad summer last year and the bad weather throughout the spring. We bear all factors in mind.
(Limerick West): The package has been welcomed as a step in the right direction, but will the Minister accept that it is restrictive in its scope in the long term? Is the Minister aware that, as far as the package is concerned, farmers cannot plan ahead because they do not know what capital will be available for agricultural development 12 months hence?
The package is deliberately restrictive because were it not the effects would be so diluted that they would not help those in serious difficulty. The package is restricted to cereal growers, winter beef fatteners and small scale milk producers as well as providing an incentive for farmers to enter into new lines of production. The latter is a very attractive part of the package. If the package was open to all those involved in the agricultural industry it might affect the availability of money to those most in need who were our primary concern at the outset.
In my view this is too little too late. Interest rates are the major reason why farmers got into difficulty.
I cannot tolerate statements at Question Time.
If the 2½ per cent exchange surcharge is not availed of because of the exchange risk will it be returned to the farmers who borrowed the money when the loans are paid?
The risk element involved is 2 per cent for the first phase of the package and 2½ per cent for the four year scheme. I do not believe it will be returned, but that is a matter for negotiation with the banks. In fact, the whole scheme is being negotiated with the banks. The banks have indicated their willingness to operate it and their goodwill towards it.
Will they retain the 2½ per cent?
It is a matter for negotiation.
The package covers cereal growers, winter beef production and dairy farmers, but will sheep farmers qualify?
Existing sheep systems will not qualify but those who wish to get into sheep production will qualify under the £35 million scheme over a four year period. One of the elements of the package is to encourage the production of products which are not in surplus in the Community and sheep is one of those commodities.
In view of the huge losses that sheep farmers suffered it is discriminatory to exclude them from that package.
I should like to point out to the Deputy that we pay out £50 million in grants and subsidies to sheep farmers. So far this year we have paid out £30 million of that £50 million. That £50 million is paid to sheep farmers by way of a ewe premium of £16.74p in extent and a headage payment in disadvantaged areas of £9.60p. The sheep farmer in the disadvantaged area gets, in aid alone, something in excess of £26 per head whereas, in an area which is not disadvantaged, the sheep farmer will get £16.74p per head. That £50 million is a tremendous amount of money and, as I said, we have already paid out £30 million because of the particular difficulties experienced in the current year.
Would the Minister not agree that the greatest problem facing farmers over the past number of years has been the very high interest rates on loans? Until we become competitive with other countries and have rates 50 per cent lower than that referred to by the Minister, we shall not be in a position to compete.
Yes, but I think the Deputy will agree that it is a good start. We are endeavouring to bring down interest rates nationally and through the Euro loan scheme.
I welcome the statement made by the Minister. However, is he aware of the large number of sheep dying in the hill areas? While we may talk about headage payments for which sheep farmers qualify, there is the question of the number of sheep that will be alive at the end of the day. Livestock are dying in the lowlands, but in the hill areas the numbers dying of semi-starvation and malnutrition are rather high. Perhaps these farmers would need some special assistance, as they have gone through a very bleak period over the past couple of months.
I am aware that sheep and cattle breeders have had a particularly tough spring and more so their animals because of the problem of hunger. We give out substantial grants by way of headage payments and ewe premiums. We cannot compensate people for every eventuality. We appreciate that there are difficulties, but one just cannot cope with all of them. There will be abuses of schemes if one tries a blanket operation. One will end up often compensating not the genuine person but the person who claims to have a tough case but whose case is not as genuine as he would like us to believe.
Would the Minister accept that most people who owe money at present will find it very difficult to repay these loans? They have already spent substantial amounts in trying to maintain their present stocks because of the bad spring we have experienced. For that reason, would the Minister accept that it is necessary to introduce some other measures which would be of help to the farming community at this time, along with the suggested measures which he has mentioned here today?
We have brought forward a certain component of a suckler cow grant payment. We are paying £15 a head in advance, to try to alleviate the difficulties. Secondly, these Euro loans do apply to existing debts, so they can be offset against them.
I call Deputy Walsh and Deputy Moynihan and then I think that we should move on.
Would the Minister not agree that the real rate of interest and the overall indebtedness of farmers are crippling the farming community at present? It is, at 12 per cent, at least three times the rate of interest on indebtedness by German, French and other farmers in the Community. Has the Minister had any negotiations with the banks to reduce the overall interest which is exorbitantly high?
We always think of the countries whose economies are particularly strong and compare ourselves with them. We should look at the overall situation within the European Community. We will find that our interest rates — and particularly our rate of inflation — are not as great as those in some countries. People are very slow to admit that that is the case. We are not the worst as far as interest rates are concerned and certainly not the worst concerning inflation. Some countries are in a much worse position than we are.
As regards the Deputy's question about overall rates of interest, as I pointed out earlier on, the Minister for Finance and the Government are actively pursuing this matter. It is probably one of our chief priorities to get general interest rates down because that will improve the economy most quickly.
A rate of 1 per cent has been announced.
Considering the losses undergone by the sheep farmers, they will not qualify for the £26 headage payment and ewe premium mentioned by the Minister. Those farmers will have to replace the stock they have lost over the winter. Would it not be appropriate that they should be allowed to qualify for this loan?
There is a certain qualifying date. I am sorry, but people would have to have the sheep on that particular date. We cannot compensate people for every difficulty that arises.