With the permission of the House I wish to share some of my time with Deputy Clohessy.
I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
"notes and supports the efforts of the Minister for Agriculture and Food to have the forthcoming negotiations on reform of the Common Agricultural Policy progressed in a way that best promotes the interests of Irish farmers and the longer-term development of our agricultural economy."
I welcome this debate. It is very timely, even though the terms of Deputy Deasy's motion are not appropriate. There are, in fact, no formal proposals for reform of the Common Agricultural Policy and, therefore, formally calling for studies of their impact is, to say the least, premature. When proposals come on the table they will, of course, be quantified as all important proposals are. The Irish approach to the negotiations will be informed among other things by the result of that quantification.
I welcome the debate, however, because it gives us an opportunity to tease out the direction in which we would wish to see reform of the CAP go, and make no mistake about it, there will be proposals for substantial changes in the Community's agricultural policy in the near future. Inevitably, these proposals will result in real change. Even if the GATT negotiations never existed, pressure from a variety of factors make change a certainty. The question for us is not, therefore, whether there should be change but rather what aims we wish to see furthered in that change and how these aims should be attained.
Before going on to detail the Government's approach to CAP reorientation, I would like to comment briefly on the background to the public discussion which is currently under way in relation to this matter. In sketching the essential background I would hope to dispel some of the confusion which has, unfortunately, attended this issue and which has, in turn, given rise to some misplaced comment.
Last January a paper was leaked from within the EC Commission which contained ideas and suggestion for a radical re-orientation of CAP support. The Minister, Deputy Michael O'Kennedy, understandably refrained from commenting officially on this unauthorised "leak" and indeed the agriculture Commissioner, Mr. Ray MacSharry, has since been publicly quoted as saying that neither he nor his Commission colleagues are irrevocably committed to the specific ideas which the leaked document contained. As such, that document has no particular status and it may yet be the case that when they are eventually presented, the Commission's formal reform proposals will differ significantly from the ideas outlined in the January paper. That is why formally calling for its quantification is inappropriate, although I should inform the House that the Department have, of course, looked at its implications in some detail and furthermore the ESRI are, in any event, doing some work on its economic impact.
It is not, however, the precise detail of the document which should concern us — this, as I have said, could eventually be significantly changed — rather, it is the thinking behind the document and the way in which it envisages agricultural support moving in the future on which we should be focusing. This was set out in a formal paper submitted by the Commission to the Council of Ministers at its meeting in early February. This reflections paper envisages the most radical overhauls of the mechanisms of the CAP since the inception of the policy. It has been tabled by the Commission against the background of a deep, current crisis in Community agriculture the major manifestations of which are that budgetary costs are escalating rapidly, up 20 per cent compared with 1990; major market sectors, notably beef, milk and cereals, are displaying chronic imbalance and intervention stocks are mounting inexorably; and producers' incomes throughout the Community are failing to reflect increasing budgetary spending on agriculture.
In the light of this scenario, the Commission argues that the fundamental objectives of its suggested reform are to reorientate policy socially and economically so as to ensure that sufficient numbers of farmers are kept on the land, that the natural environment is preserved and that rural development is further stimulated.
In its document, the Commission suggests controlling surplus production and attaining market balance using such traditional instruments as price policy and quantitative controls but also proposes support for extensive production and measures which are specifically environment oriented. In addition, there would be a redistribution of support and compensatory measures — including direct income aids — which would, it is suggested, cushion small and medium sized producers from the adverse effects of reduced price and intervention support. Regional aspects, in particular the requirements of the less favoured areas, would also be addressed in the course of the overall reform exercise.
More specifically, cereals prices would be reduced to make them more competitive with imported substitutes and compensation on the basis of an aid per hectare would be paid to all producers with full compensation for smaller producers and partial compensation for others. In the Commission's view, the reduction in cereals prices would, in turn, allow for a downward adjustment of prices in the livestock sector, with livestock farmers being compensated through increased premiums.
The Commission's thinking would also assign farmers a greater role in protecting the rural environment and preserving the countryside and, accordingly, farmers would be encouraged to use environmentally friendly methods and to participate more actively in long term set aside schemes involving the promotion of afforestation.
In the course of the preliminary Council debate which followed the presentation of the Commission's reflections, there emerged a general consensus that fundamental CAP reform is now unavoidable. There was, however, a wide divergence of views as regards the precise form which the necessary reforms might take. On the basis of the Council's initial exchange, however, Commissioner Mac-Sharry has undertaken to formulate detailed reform proposals and to present these formally to a future Council. As of now, it is expected that these proposals will be tabled by June but needless to say, the Minister has already given a clear indication of Ireland's likely priorities in the forthcoming discussions.
We start from the position that the primary objectives of the CAP, as laid down in Article 39 of the Rome Treaty, are as valid today as when they were originally adopted. These cannot be called into question. Furthermore, the policy must give effect to these principles in an effective way. For Ireland, therefore — and the Minister has already stated this in the Council — it is essential that whatever concrete proposals are eventually tabled will not be such as would undermine the effectiveness of the CAP. The Commission has, in fact, acknowledged that, whatever the nature of the proposed reforms, the CAP must continue to be based on its fundamental principles: a single market, Community preference and financial solidarity. But we must ensure that the policy solidly respects these principles in practice and not just in theory.
Time and again the Government have stated unequivocally their commitment to ensuring the continued viability of our agriculture and food industry, to maintenance of the fundamental principles of the CAP and to seeing that Irish vital national interests are safeguarded. Most recently, these commitments, together with a firm undertaking to maintain the maximum number of fullime, commercially viable family farm units, have been reiterated in the context of the Programme for Economic and Social Progress and I can promise the House that these commitments will inform our attitude towards the coming negotiations.
We accept, of course, that adjustments are inevitable, partly for the reasons already outlined and partly — although this is not necessarily being tied into the process at this stage — for GATT reasons. The Minister, however, has strongly underlined that change must not only respect the considerations I have already outlined but also be proportionate to the problems we face. A root and branch reform which goes beyond what is required at this time is unnecessary, untimely and undesirable and will not be supported.
What we must face up to is the fact that the policy will have to be more open to the market in the future and less dependent on Community support mechanisms. As well as being necessary, it is desirable. A long term future cannot be built on intervention and subsidy dependency. Such a policy development must mean some adjustment of support prices and some tighter supply control. What is important is that this takes place gradually and in a balanced way.
It is also important — and here we have no quarrel with the Commission's aim — that, if adjustment means some sacrifices for producers, smaller scale and other vulnerable producers are reasonably protected. Where we may have difficulty is in how this is to be done. Certainly, proposals which, while to some degree helping vulnerable producers, would undermine the more commercial element of our agriculture could not be justified. Here again it is a question of the degree and the speed of change which is at issue as well as finding a range of instruments — not all of which involve market supports — to protect smaller scale producers.
Most importantly, changes in support arrangements cannot be allowed undermine the competitiveness of grass based livestock production which is central to the Irish agricultural economy. The general thrust of the Commission's approach would, unfortunately, do this. Very much lower cereals prices will reduce the costs of livestock production but not for those who produce mostly from grass. Yet under the Commission approach cereal producers would, to varying degrees, receive direct compensation and producers of livestock from non-grass feed indirect compensation, while our more extensive grass based production would simply have its competitive position undermined. This cannot be justified on economic or social grounds. It is not, of course, impossible to find solutions to our problems in this regard and all our energies will be devoted in the negotiations to emphasising to our partners the critical nature of this question for us.
It is worth recalling at this stage that, while the Commission's approach is not directly being related to the GATT negotiations, these are a major factor in the background. Any policy adjustments made within the Community will inevitably count towards whatever we are eventually required to do if there is a GATT agreement. When the Community's GATT offer was agreed last November, the Council accepted that in its implementation account would be taken of the particularly difficult situation of certain categories of producers and regions. At the same time the Commission indicated that it would bring forward proposals for complementary measures, involving Community financial solidarity, aimed at offering a viable future to Community farmers through ensuring the competitiveness of European agriculture, guaranteeing appropriate levels of income support and reinforcing structural assistance. The Minister, Deputy O'Kennedy, has underlined the importance he attaches to these commitments in the context both of the GATT outcome and CAP reform process. Ireland will press consistently to ensure that these are fully honoured in the eventual decisions.
Before we move to the longer term Commission proposals we have, of course, to deal with the price proposals for the coming marketing year. These were formally tabled at the beginning of this month and will be subject to resumed discussions in the Council of Ministers at the beginning of next week. In the light of the budgetary difficulties to which I have already referred and given the Commission's overriding concern to ensure that the agricultural guideline — the limit on FEOGA spending which was decided by the European Council in 1988 — is respected in the current year, it is not surprising perhaps that the 1991-92 price proposals are extremely restrictive and set in a short term time frame. Predictably, price cuts of varying degrees of severity are proposed for most products; a 2 per cent reduction in milk quotas and the elimination of "safety net" intervention for beef are also envisaged.
I need hardly say that these proposals cause us all extreme concern. It is abundantly clear that livestock products would be severely affected and this obviously is a specific aspect which we shall seek to redress during the forthcoming negotiations. The sheepmeat, cereals and sugar sectors would also have to bear cutbacks, as would sectors of lesser importance here. This House needs no reminding that 1990 was an extremely difficult year for Irish agriculture and that farm income registered a serious decline for the first time since 1986. The international trading environment remains unfavourable and the high level of intervention stocks for the major EC commodities will continue to put pressure on markets for some considerable time. Developments in the Gulf have undoubtedly had profound political and economic consequences, while events in the Soviet Union and Eastern Europe add to the general uncertainty and complexity of the situation. In these circumstances and having regard to the likely implications for Irish producers both of the GATT negotiations and the longer term CAP reorientation, it is, in our view, totally inappropriate that the Commission should at this point be proposing such far reaching adjustments to the various market mechanisms.
I do not deny that the Commission are now under considerable budgetary pressure or that intervention stocks, particularly for beef and cereals, have again reached unsustainable levels. We would argue, however, that the Commission are still not justified in drawing structural conclusions on the basis of factors which I believe will, in many cases, prove comparatively short lived. It is also a fact that the Community's budgetary control has improved in recent years, the present threat to the guideline notwithstanding. Also, we have argued strongly that some exceptional allowance must be made for the budgetary and market consequences of German unification.
Ireland's approach to the forthcoming price negotiations will be a constructive one. This, however, does not imply that we are willing to compromise the future livelihoods of Irish producers or that we are ready to contemplate support withdrawal to such an extent that the viability of Irish agriculture and the rural lifestyle which it sustains would be undermined. Accordingly, the Minister is determined to seek substantive adjustment to the Commission's proposals as presented and to do his utmost to ensure that the various commitments which the Government have given in relation to agriculture are delivered upon. We are pressing for a much less restrictive package. I said earlier, nobody is opposing the idea that the policy needs adjustment. This is of fundamental importance and requires detailed proposals from the Commission which we do not yet have. When they are available, all the institutions of the Community will need to reflect on their implications for agriculture and economies generally, with this reflection being followed by a patient negotiating process.
None of us can claim to have all the answers to all the problems facing us. We have, however, clear ideas on the type of agri-food industry and the type of rural economies we wish to see. The task before us is to adjust our support system in a way that facilitates rather than prevents the establishment of what we wish to see in place. Negotiations on this will be difficult and complex. They are not helped by some of the proposals which the Commission has tabled in this package. We will be arguing that the best approach for the coming year is to reach decisions largely confined to what is technically necessary and to bring forward the longer term proposals at the earliest possible date. Our energies should be spent dealing with those rather than on essentially short term proposals.
I would like to return to the longer term issues before concluding. It is important to put these in context and also to avoid losing heart and creating a feeling that we have lost the war before the first battle begins.
We are faced with a GATT negotiation which will be difficult but in which the Community has not lost sight of its interests or of where it is prepared to go. We have a definite Community offer which, if accepted, would ensure that the fundamentals of the CAP are preserved, even if there is some reduction in overall support levels. We will be insisting that the Community stick to its guns on this. We have obtained commitments on how we would implement GATT obligations and on the safeguards and complementary measures which would be put in place. The Minister will be insisting on these commitments being honoured.
It is against that background that the Commission's approach to the reform off the CAP has to be seen and where we disagree with that approach it is to the extent that it conflicts with those commitments. But it is important to remind ourselves that on many of the Commission's aims we are in agreement and that there are important elements in their approach we can support or at least accept. The most important of these are the underlining of the importance of preserving the fundamental principles of the CAP; the need to maintain competitive Community agriculture; the need to create a balance between price policy and supply control and, in that context, the increased emphasis on set-a-side in the case of cereals and related crops; the importance being given to environmental issues and the necessity to support more extensive farming systems; some switch in emphasis from intervention support to direct livestock payments, and the emphasis being placed on the protection of smaller scale and other vulnerable producers. We can build on these elements in a way that will ensure that reform will lead to a tighter, more effective and more viable policy in the future.
But we can only do that if we can get the Commission and our partners to accept that some elements in the approach go directly contrary to a number of the aims which I have already listed. In particular, the way in which support would be adjusted between different levels of farm production and, if the leaks turn out to be correct, the way in which intensity of production would be measured could undermine the competitiveness of much of Community agriculture. In our case the degree to which the balance would swing against grass based production, without appropriate compensation built into the relevant market organisations, would be a particular and critically overriding factor.
Our first task in the negotiations is to try to ensure that these central elements are changed and I believe we can rely on the support of all of Irish society in this. Our second task is to get a clear acceptance that, if there has to be a tightening of policy — and everybody accepts that there has — then economies such as Ireland's with their heavy dependence on agriculture, are the most vulnerable and will suffer the most in social and economic terms from the adjustment. If the commitments regarding taking account of the needs of the regions most affected are to be honoured — and it is a prime Government aim that they should — then elements in the proposals which hit hardest at those regions must be changed and adequate Community financial resources must be provided to fund suitable compensatory measures to meet their adjustment needs.
These resources would be primarily, but not exclusively, in the agricultural area and their provision is likely to require adjustments to existing arrangements.
The Minister has indicated that, as the budgetary problem which is one of the factors which dictated the form of the current price proposals is, in part, due to the costs of German unification, those costs should be met outside the guideline for agricultural expenditure. This is clearly logical and in line with earlier commitments. Obviously, the Minister is concerned that such a solution would continue into future years. But the question of resources goes further than that. If there is to be a partial but significant adjustment in the way in which CAP support is provided then the policy — including compensatory measures — will require additional funding for the foreseeable future. This will require new decisions in regard to the agricultural guidelines or the provision of new funding in some other way. Ireland will insist that adequate Community resources are provided to meet the needs of the policy as it emerges from the reorientation negotiations.
In all of this we are not alone. Many member states share our views both on the way in which policy should be adjusted and the need to provide for adequate compensatory arrangements. While we have always known this, in order to copperfasten that support the Minister and his officials have been engaged in a series of meetings with the Commission and our partners in recent months in particular. That process is continuing and will intensify in the weeks and months ahead. The Government as a whole, in the GATT context and in the context of agricultural policy adjustment, have made their position abundantly clear. For all of these reasons there is no need for this House to adopt motions such as the one suggested. We do not need to call for a special analysis of the effects of the Commission's suggested approach or for a Dáil committee to look at its implications. Full analysis is not possible until the detailed proposals are made and, to the extent that some analysis is possible at this stage, it is already being done. I have clearly indicated that the implications of the approach are well understood both for the agriculture sector and for the economy as a whole. The Minister, and the Government, are using all appropriate means in bilateral discussions and at Council to put across the Irish view of what needs to be done and of the consequences for the whole Irish economy if the eventual decisions to not take adequate account of that view.
We are confident that at the end of the day the decisions taken will be the right ones. We believe that our view of what needs to be done is sensible and that we can rely on the understanding of our partners and on Community solidarity to ensure that the balance of policy adjustments will not significantly disadvantage any region, particularly any of the Community's more vulnerable regions. What we need now is to stick to our view in the negotiations and to have the full support of all sections of Irish society for that position. The House can give voice to that support tonight by supporting my amendment which I now commend to all Deputies. I will give the remainder of my time to Deputy Clohessy.
